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Hoang v. Bank of America, N.A.

United States District Court, W.D. Washington, Seattle

November 16, 2017

JERRY HOANG, et al., Plaintiffs,
v.
BANK OF AMERICA, N.A., et al., Defendants.

          ORDER ON MOTION TO DISMISS

          JAMES L. ROBART UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the court is Defendants Bank of America, N.A. ("BANA") and Federal National Mortgage Association's ("Fannie Mae") (collectively, "Defendants") motion to dismiss Plaintiffs Jerry Hoang and Le Uyen Thi Nguyen's (collectively, "Plaintiffs") complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (MTD (Dkt. # 4).) The court has considered the parties' submissions, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court GRANTS Defendants' motion and DISMISSES Plaintiffs' complaint without leave to amend for the reasons set forth below.

         II. BACKGROUND

         In December 2004, Plaintiffs purchased a property located at 13522 43rd Avenue South, Tukwila, Washington, 98168, with a home loan they received from Wells Fargo Bank, N.A.[2] (Compl. (Dkt. # 1-1) ¶ 4.1.) Plaintiffs then refinanced their home loan with BANA on April 30, 2010, and secured the refinance loan with a Deed of Trust on the property.[3] (Id. ¶ 4.2.) Plaintiffs allege, and Defendants do not dispute, that Defendants failed to deliver to Plaintiffs notice of their right to rescind the loan. (Id. ¶ 4.3; see generally MTD; Reply (Dkt. #15).) As a result, Plaintiffs argue Defendants failed to satisfy the Truth in Lending Act's ("TILA") disclosure requirement, thereby extending Plaintiffs' right to rescind the loan to three years past the loan's consummation date.[4](Compl. ¶ 4.4 (citing 12 C.F.R. § 226.23(a)(3)).)

         On April 15, 2013, Plaintiffs allege they sent Defendants notice of their intention to rescind the loan, exercising their right under TILA to rescind within three years of its consummation. (Id. ¶ 4.5.) Plaintiffs assert that Defendants took no action upon receiving the notice. (Id. ¶ 4.7.) In February 2017, over three years later, Defendants initiated a non-judicial foreclosure proceeding on Plaintiffs' property. (Id. ¶ 4.9.)

         On May 9, 2017, Plaintiffs filed suit under § 1635 of TILA in King County Superior Court, seeking declaratory, injunctive, and monetary relief. (See Id. ¶ 6.1.) Specifically, Plaintiffs seek (1) declaratory judgments that they properly rescinded the loan under TILA, that they properly completed loan rescission on April 15, 2013, that all encumbrances on the property are removed, and that Defendants are precluded from seeking foreclosure; (2) an injunctive order preventing Defendants from "using voided instruments against the Plaintiffs['] property"; and (3) attorney's fees and costs for the litigation, as well as triple damages caused by Defendants' "assertion of a lien against the property or claim against Plaintiffs." (Id.)

         Defendants removed the action to federal court based on diversity jurisdiction (Not. of Removal (Dkt. #1)) and moved to dismiss the action under Federal Rule of Civil Procedure 12(b)(6) (MTD at 9). Defendants argue that (1) Plaintiffs' TILA claims are time-barred, and (2) Plaintiffs were required to but did not plead their ability to tender the loan in their complaint. (Id. at 5-9.) Plaintiffs disagree. (See generally Resp. (Dkt. #14).) The court now addresses Defendants' motion.

         III. ANALYSIS

         Defendants make two timeliness arguments in support of dismissal. (See MTD at 4.) First, they argue that Plaintiffs failed to timely rescind their loan by not filing suit within three years of the loan's consummation. (See MTD at 6-7.) Second, they contend that even if the rescission is timely, Plaintiffs' claims are still time-barred because they cannot wait seven years to bring suit.[5] (See Reply at 2 (citing 15 U.S.C. § 1640(e); Jacques v. Chase Bank USA, N.A., Civ. No. 15-548-RGA, 2016 WL 423770, at *9-10 (D. Del. Feb. 3, 2016)).)

         In response, Plaintiffs first argue that they timely exercised their rescission right by providing written notice of their intent to rescind the loan within three years of the loan's consummation. (Resp. at 5-6 (citing Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct. 790, 792 (2015)).) Second, they assert that their rescission claim is not barred by any statute of limitations, citing as authority the Third Circuit's statement that '"rescission of the loan agreement occurs when a valid notice of rescission is sent, not when a court enters an order enforcing the obligor's rights.'" (Resp. at 6 (quoting Sherzer v. Homestar Mortg. Servs., 707 F.3d 255, 257 (3d Cir. 2013)).)

         When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court construes the complaint in the light most favorable to the non-moving party. Livid Holdings Ltd. v. Salomon Smith Barney, Lnc, 416 F.3d 940, 946 (9th Cir. 2005). Dismissal is proper on the ground that a claim is barred by the applicable statute of limitations where the ranning of the limitations period is apparent on the face of the complaint. See Jones v. Block, 549 U.S. 199, 215 (2007) ("If the allegations .. . show that relief is barred by the applicable statute of limitations, the complaint is subject to dismissal for failure to state a claim."); Morales v. City of L.A., 214 F.3d 1151, 1153 (9th Cir. 2000).

         Although the court finds that Plaintiffs timely rescinded their loan, the court concludes that Plaintiffs did not timely bring suit for monetary, declaratory, or injunctive relief. Accordingly, the court dismisses Plaintiffs' complaint with prejudice. A. Timeliness of Plaintiffs' Rescission For certain consumer credit transactions, TILA provides borrowers the unconditional right to rescind a loan within three business days following the loan's consummation. 15 U.S.C. § 1635(a). In addition, TILA provides borrowers the conditional right to rescind a loan for up to three years following the loan's consummation, but only if the lender fails to make certain disclosures required under TILA. See Id.; Jesinoski, 135 S.Ct. at 792. For instance, the three-year rescission period is triggered if the lender does not disclose the borrower's unconditional right to rescind a loan. See 15 U.S.C. § 1635(a). This conditional right to rescind expires three years after the loan's consummation date or the sale of the property, whichever comes first. See Jesinoski, 135 S.Ct. at 792 (citing 15 U.S.C. § 1635(f)).

         Against this three-year timeline, Defendants' first argument that Plaintiffs untimely rescinded their loan is meritless. The Supreme Court's holding in Jesinoski upends Defendants' contention that Plaintiffs' claims are time-barred due to their failure to file suit within three years. (See MTD at 6-7); see also 135 S.Ct. at 792. In Jesinoski, the Court held that borrowers need only send written notice of their intent to rescind within three years of the loan's consummation date in order to exercise their rescission right; they are not required to sue within that time frame as well. 135 S.Ct. at 792. In doing so, the Court clarified that § 1635's language "leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind." Id.

         The Plaintiffs did exactly as Jesinoski required. The loan at issue was consummated on April 30, 2010, and Defendants did not disclose Plaintiffs' unconditional right to rescind. (Compl. ¶¶ 4.2-4.3.) As a result, Plaintiffs had three years to send notice of their intent to rescind. See 15 U.S.C. § 1635(a). Plaintiffs allege they sent their notice of rescission on April 15, 2013, within that three-year time period. (Compl. ¶¶ 4.2, 4.5.) Accordingly, the court concludes that Plaintiffs properly alleged that they timely exercised their right to rescind by sending their notice within three years of the loan's consummation.

         B. Timeliness of Plaintiffs' Suit

         Although Plaintiffs properly allege the timely exercise of their right to rescind, their suit to enforce[6] that rescission is time-barred. First, their damages claim is barred by the one-year statute of limitations in § 1640(e). Second, because TILA does not establish a limitations period for declaratory and injunctive relief claims brought under § 1635-and the Court's holding in Jesinoski suggests that none applies-the court borrows the closest applicable statute of limitations, the one-year limitations period in § 1640(e), and applies it to the remaining claims. The timeliness of each of Plaintiffs' claims will be addressed in turn.

         1. D ...


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