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Keiran v. Home Capital, Inc.

United States Court of Appeals, Eighth Circuit

June 2, 2017

Alan G. Keiran; Mary Jane Keiran Plaintiffs - Appellants
Home Capital, Inc.; BAC Home Loans Servicing, L.P.; Bank of New York Mellon, as Trustee for the Holders of CWABS, Inc., Asset-Backed Certificates, Series 2007-6; John and Jane Does 1-10 Defendants - Appellees

          Submitted: March 7, 2017

         Appeal from United States District Court for the District of Minnesota - Minneapolis

          Before BENTON, BEAM, and MURPHY, Circuit Judges.

          BEAM, Circuit Judge.

         This Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667f, case is before our court on the Keirans' attempt to rescind their 2006 mortgage. The Keirans appeal the district court's[1] grant of summary judgment in favor of a lending bank and its loan servicer (collectively, the bank). We affirm.

         I. BACKGROUND

         On December 30, 2006, the Keirans and Home Capital, Inc.[2] executed a promissory note in the amount of $404, 000 in exchange for a mortgage upon real property located in Lakeville, Minnesota. The Keirans stopped making payments on the note in November 2008. On October 8, 2009, the Keirans sent rescission notices to the bank alleging that the Keirans did not receive sufficient copies of disclosures required by the TILA at the December 2006 closing. On January 7, 2010, the bank informed the Keirans that no basis for rescission existed. On October 29, 2010, the Keirans filed the current action seeking rescission of the mortgage loan, money damages and a declaratory judgment voiding the bank's security interest in the Keirans' mortgage loan.

         The bank moved for summary judgment, which the district court granted, holding that the claims for money damages for TILA deficiencies were barred by a one-year statute of limitations; that the claim for rescission was barred by the three-year statute of repose; and that the claim for money damages for refusal to rescind failed because there were no evidently deficient TILA notices in the Keirans' paperwork at closing. We affirmed, holding in relevant part that the Keirans were required to actually file suit for rescission within three years, rather than just giving notice of their intent to rescind. Keiran v. Home Capital, Inc., 720 F.3d 721, 728-29 (8th Cir. 2013), vacated, 135 S.Ct. 1152 (2015) (mem.). We also upheld the district court's decision on money damages, finding that the Keirans were not entitled to money damages because any alleged defects were not apparent on the face of the loan documents, thus absolving the assignee banks from any defects which occurred at the original closing. Id. at 730. The Supreme Court granted certiorari in a similar case to resolve a split in the circuits over whether notice or the actual filing of a lawsuit was required to effect rescission within the three-year statute of repose. The Court decided that notice of rescission, rather than filing suit, is all that is required. Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct. 790 (2015). Thereafter, the Court granted the Keirans' petition for certiorari, vacated our opinion and remanded in light of its Jesinoski decision. 135 S.Ct. 1152. On the Supreme Court's remand, we remanded to the district court for further consideration.

         Before the district court, both parties again moved for summary judgment. The Keirans argued that they were entitled to rescission because (1) the bank did not provide them with the required amount of TILA disclosure statements; (2) the disclosure statements contained material inaccuracies regarding finance charges associated with the loan; and (3) the bank did not timely and adequately respond to their October 2009 notice of rescission. The district court again granted summary judgment for the bank, holding that the Keirans did not rebut the presumption in 15 U.S.C. § 1635(c) (stating that if a consumer acknowledges in writing that he has received the required disclosures, "a rebuttable presumption of delivery" arises) that they received all of the disclosures required by law. The court found that the Keirans' self-serving affidavits to the contrary were not adequate to rebut the presumption. The district court also rejected the argument that the disclosure statements were materially inaccurate. Finally, the district court held that because no violations of the TILA occurred, the bank was not required to respond to the notice of rescission-the right of rescission expired three days after closing in December 2006 (instead of three years later) because no violation occurred. Id. § 1635(a), (f). The Keirans appeal.


         Congress enacted the TILA "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit." Id. § 1601(a). Courts broadly construe the TILA in favor of consumers. Rand Corp. v. Yer Song Moua, 559 F.3d 842, 845 (8th Cir. 2009). In transactions secured by a principal dwelling, the TILA gives borrowers an unconditional three-day right to rescind. 15 U.S.C. §§ 1635(a) (rescission as to original lenders); 1641(c) (extending rescission to assignees). The three-day rescission period begins upon the consummation of the transaction or the delivery of the required rescission notices and disclosures, whichever occurs last. Id. § 1635(a). Required disclosures must be made to "each consumer whose ownership interest is or will be subject to the security interest" and must include two copies of a notice of the right to rescind, see 12 C.F.R. § 1026.23(a), (b)(1), and a TILA disclosure statement, outlining:

the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number and amount of payments, [and] the due dates or periods of payments scheduled to repay the indebtedness.

15 U.S.C. § 1602(u). These disclosures must be made "clearly and conspicuously in writing, in a form that the consumer may keep." 12 C.F.R. § 1026.17(a)(1). If the creditor fails to make the required disclosures or rescission notices, the borrower's "right of rescission shall expire three years after the date of consummation of the transaction." 15 U.S.C. § 1635(f); see 12 C.F.R. § 1026.23(a)(3)(i). However, and importantly in this case, if no disclosure violation occurs, "the right to rescind is not extended for three years and instead ends at the close of the three-day window following consummation of the loan transaction." Keiran, 720 F.3d at 730 n.8. If the Keirans can establish that their TILA rights at closing were violated, their right of rescission expired December 30, 2009, and their October 8, 2009, notice of rescission to the bank was timely. If they cannot establish a violation, their right of rescission expired in early January 2007, three days after the December 30, 2006, closing.

         A.Number of Disclosure ...

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