UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

LARI KEI TADEHARA; JULIA KAY TADEHARA, Plaintiffs-Appellants,

v. ACE SECURITIES CORP. HOME EQUITY LOAN TRUST SERIES 2007-HE4; OCWEN LOAN SERVICING; HSBC BANK USA, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants-Appellees, and DB STRUCTURED PRODUCTS; DB HOME LENDING, Defendants. No. 11-4176 (D.C. No. 2:11-CV-00436-DS) (D. Utah)

ORDER AND JUDGMENT *

* After examining the briefs and appellate record, this pane l has determined unanimously that oral argument would not mate rially assist the de termination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R App. P. 32.1 a nd 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### July 5, 2012
Elisabeth A. Shumaker Clerk of Court- 2 - Before BRISCOE , Chief Judge, PORFILIO , Senior Circuit Judge, and MURPHY , Circuit Judge.
In the underlying action, Lari Kei Tade hara and Julia Kay Tadehara sought to quiet title to property on whic h they had given a mortgage to secure a loan. They also brought a claim seeking rescission of the loan based on alleged violations of the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667f, and they asserted state-law claims for fraud and wrongful disclosure. The district c ourt dismissed their action, and the Tadeharas appealed. We have jurisdiction under 28 U.S.C. § 1291 and affirm. I. Background On February 8, 2007, the Tadeharas obtained a loan secured by a mortgage on their house in Murray, Utah. They gave a promissory note secured by a Deed of Trust to defendant DB Home Lending. Th e beneficiary of the Deed of Trust was identified as defendant Mortgage Electr onic Registration Systems, Inc. (MERS), “(solely as nominee for Lender and Lend er’s successors a nd assigns) and the successors and assigns of MERS .” R. at 141. The Deed of Trust gave MERS the power to foreclose and sell the property. Thereafter, two separate as signments of the Deed of Tr ust were recorded in the Salt Lake County Recorder’s Office. The assignments tran sferred MERS’s interest to materially identical assign ees. In the first, which had an execution date of February 5, 2009, and a recordation date of August 5, 2009, MERS assigned the- 3 - Deed of Trust to “HSBC Bank USA, N.A. [(HSBC)], as trustee on behalf of Ace Securities Corp. Home Equity Loan Trust, Series 2007-HE4 [(Ace Loan Trust)], and for the registered holders of Ace Securities Corp. Home Equity Loan Trust, Series 2007-HE4, Asset Backed Pass-Through.” Id. at 43 (capitalization omitted). HSBC and the Ace Loan Trust are defendants here. The second assignment had an execution date of November 17, 2009 (alth ough it stated in th e body that it was entered into on April 30, 2007). It wa s recorded on November 30, 2009, and assigned the Deed of Trust from MERS, as nominee for DB Home Lending, to HSBC “as trustee on behalf of [ACE Loan Trust] and for the registered holders of Ace Securities Corp. Home E quity Loan Trust, Series 2007-HE4, Asset Backed Pass-Through Certificates.” Id. at 45 (capitalization omitted). With regard to the loan, the Tadehara s alleged that prior to April 30, 2007, DB Home Lending sold its in terest in the promissory not e to either DB Structured Products, (a defendant here), or another buyer that so ld the note to DB Structured Products. The Tadeharas also alleged that DB Structured Products then sold its rights in the loan to defenda nt Ace Securities Corp., 1 as evidenced by a Mortgage Loan Purchase Agreement executed on April 30, 2007. Further, the Tadeharas alleged that Ace Securities Corp. tran sferred all of its inte rest in the note to HSBC, as trustee for

1 In their complain t, the Tadeharas listed Ace S ecurities Corp. as a defendant. However, Ace Securities Corp . is not listed in the di strict court’s docket as a defendant, so we have omitte d it from the caption of this case. In any event, the omission appears immaterial to th e issues we decide on appeal.- 4 - the Ace Loan Trust, via a pooling and service agreement cr eated on or about April 30, 2007, among Ace Securities Corp .; defendant Ocwen Loan Servicing; HSBC; DB Structured Products; a nd other, unidentified parties. On August 27, 2009, the Tadeharas sent a notice of rescission to all defendants, claiming that DB Lending fa iled to provide required disclosures under TILA. Defendants took no action. The Ta deharas apparently stopped paying their mortgage, and the trustee sent them a No tice of Default, which was recorded on March 18, 2010, and an Ame nded Notice of Default, whic h was recorded on June 4, 2010. Through counsel, the Tadeharas fi led an action in federal court on September 16, 2010, raisi ng a number of claims agai nst some of these same defendants, including a request for declarat ory judgment that they had a right to rescind under TILA and prop erly exercised that right. 2 Defendants filed a motion to dismiss. The court scheduled a heari ng on the motion for May 3, 2011. The Tadeharas fired their attorney and appeared at the hearing pr o se. At the hearing, the district court orally dismis sed the action without prejudi ce, and a written order of dismissal was filed on May 16, 2011, stating that the ac tion was dismissed for the reasons stated in th e defendants’ motion.

2 According to the compla int in that action, the Tadeharas filed for Chapter 13 bankruptcy four days after se nding the notice of rescission.- 5 - On May 9, 2011, less than a week af ter the hearing in the first case, the Tadeharas filed the present su it in Utah state court thro ugh new counsel . Defendants removed the action to the Unite d States District Court for the District of Utah. The Tadeharas raised four clai ms: quiet title/declarat ory judgment; fraud; wrongful foreclosure; and TILA resc ission/monetary damages. Defendants filed a motion to dismiss, which the district court granted. Because the Tadeharas have appealed only the district court’s dismissa l of their quiet title and TILA claims, we limit our discussion to those claims. In their quiet title/declaratory judgmen t claim, the Tadeha ras asserted that none of the defendants had any right in the note, the Deed of Trust, or their property. According to the Tadeharas, MERS and DB Home Lending had no interest in the property to assign to HSBC in 2009 becau se HSBC claimed that it acquired “such interest,” id. at 18, from Ace Securities Corp ., not DB Home Lending, on April 30, 2007, and at that time no agency existe d between Ace Securitie s Corp. and MERS. Further, the Tadeharas main tained that no written assignm ent was ever executed from DB Home Lending to DB Structured Products or an intervening buyer, or from an intervening buyer to DB Structured Products . Also, they assert ed that no written assignment from DB Structured Products to Ace Securities Corp. was ever executed and recorded prior to eith er of the assignments fro m MERS to HSBC in 2009. In their TILA claim, th e Tadeharas asserted that their loan was a consumer credit transaction subject to TILA’s rescission remedy, 15 U.S.C. § 1635, and that- 6 - they had timely asserted their right to re scission when they se nt their notice of rescission on August 27, 2009. For relief, the Tadeharas asked for a d eclaration “that none of the Defendants have a claim on the Real Es tate, that none of the De fendants are creditors of Defendants [sic] under the Note, and that Title to the Real Estate is quieted against defendants in favor of Plaintiffs, and that the 1 st Trust Deed is a nullity.” Id. at 22-23. They also sought an order voiding the Deed of Trust, an injunction directing defendant to ta ke actions necessary for rescission under § 1635, and damages, penalties, and costs. In their motion to dismiss, defendants argued that the quiet title/declaratory judgment claim should be dismi ssed because the Tadeharas ha d failed to allege they held title to the property, instead focusing on alleged weaknesses in defendants’ title interests. Defendants also claimed that the Tadeharas’ argument that MERS lacked standing to authorize the assignment of the Deed of Trust and the resulting foreclosure had been consisten tly rejected in the Utah fede ral district court. On the TILA claim, defendants advanced four re asons for dismissal: (1) rescission was time-barred because the property had been so ld in foreclosure on May 24, 2011, and under 15 U.S.C. § 1635(f), when a lende r fails to provide the required TILA disclosures, the right to rescind extends fo r three years from the date the transaction was completed or until the sale of the prop erty, whichever occurs first; (2) rescission was time-barred by § 1635(f)’s three-year li mitations period because the loan closed- 7 - on February 8, 2007, but the Tadeharas di d not file this acti on until May 9, 2011; (3) damages were barred by a one-year statute of lim itations, 15 U.S.C. § 1640(e), which defendants claimed ran from the date that the first payment of principal was due in March 2007; and (4) rescissi on was improper under the reasoning of Yamamoto v. Bank of New York , 329 F.3d 1167, 1171 (9th Cir. 2003), because the Tadeharas did not allege their willingness or ability to tende r amounts owed under the loan. In their response to defendants’ motion to dismiss their quiet title claim, the Tadeharas relied on Utah Code Ann. § 57-1- 35, which provides, “T he transfer of any debt secured by a trust deed sh all operate as a transfer of the security therefor.” Based on that statute, they argued that de fendants were not holde rs of the note and therefore were not beneficiaries of the Deed of Trust. They also claimed that they had “alleged facts calling into question th e validity of the re corded assignments statements [sic] purporting to transfer beneficial interest in the trust d eed. Only the beneficiary, or its agent can transfer its inte rests. Therefore, pursuant to . . . § 57-1-35, only the Note holder, or its agent can transfer the bene ficial interest.” R. at 214-15. The Tadeharas further claime d that even if MERS had authority from the members of the Ace Loan Trust (which they contested), ther e was still a problem with the assignments of the Deed of Tr ust from MERS to HSBC in 2009; in the assignments, MERS purported to assign as nominee for DB Home Lending, but by the time of the assignments, there had alrea dy been at least two intervening owners of- 8 - the promissory note, and DB Home Lendi ng had nothing to assign, even if MERS was acting as its agent. On the TILA claim, the Tadehara s argued that they exercised their right of rescission by filing their not ice of rescission within the three-year limitations period of § 1635(f) and prior to th e foreclosure sale of their house. They also asserted that it was unnecessary to plead tender or the ability to tender amounts they owed under the note. In reply to the Tadeharas’ quiet-title arguments, defendants pointed to a case that was filed on the same day they filed their motion to dismiss, Commonwealth Property Advocates, LLC v. Mortgage Electronics Registration System, Inc. , 263 P.3d 397 (Utah Ct. App.), cert. denied , 268 P.3d 192 (Utah 2011), in which the Utah Court of Appeals reject ed arguments similar to thos e the Tadeharas’ advanced. Defendants also reiterated their TILA arguments. In ruling on the state-law qui et title claim, th e district court concluded that the Tadeharas failed to state a claim under the principle that “a plaintiff must prevail on the strength of his own claim to title and not on the weakness of a defendant’s title or even its total l ack of title.” Church v. Meadow Spr ings Ranch Corp. , 659 P.2d 1045, 1048-49 (Utah 1983). The court observed th at the Tadeharas had not alleged that they held clear title to the property, had not alleged th at they were not in default on the note, and had admitted to conveying thei r interest in the prop erty for the purpose of securing the loan. The c ourt also rejected the Tade haras’ argument that MERS lacked standing to authorize the assignmen t of the Deed of Trust and the resulting- 9 - foreclosure, noting that they had agreed in the Deed of Trus t that MERS was the beneficiary and its successors and assigns had foreclosure authority. Turning to the TILA claim, the district court conclude d that the transaction at issue was a “residenti al mortgage transaction,” as defined in 15 U.S.C. § 1602(x), and therefore exempt from TILA’s resc ission remedy under 15 U. S.C. § 1635(e)(1) and 12 C.F.R. § 226.23(f)(1). The court also concluded that the TILA claim failed because the Tadeharas had not alleged that they tendered or had the ability to tender the amounts they owed under the note. The court did not address defendants’ arguments that the TILA claim was time-barred by § 1635(f) or § 1640(e). II. Analysis Although the Tadeharas were represented by counsel in the dist rict court, they have proceeded on appeal pro se. Thus, only their appellate filings are entitled to the liberal construction afforded to pro se litigants. See Celli v. Shoell , 40 F.3d 324, 327 (10th Cir. 1994). We review de novo a dismissal for fa ilure to state a claim. Kan. Penn Gaming, LLC v. Collins , 656 F.3d 1210, 1214 (10th Ci r. 2011). “[I]n ruling on a motion to dismiss, a court should disregar d all conclusory stat ements of law and consider whether the remaini ng specific factual allegations , if assumed to be true, plausibly suggest the de fendant is liable.” Id. A. Quiet title/declaratory judgment claim We first address the quiet title/declaratory judgmen t claim. The Tadeharas take issue with the di strict court’s conclusion that they failed to alle ge clear title.- 10 - They argue that they held a warranty deed on the property and sought to quiet title as to the defendants, who allegedly recorded interests hostile to their own. They continue to rely on Utah Code Ann. § 57-1- 35. Again, that statute provides: “The transfer of any debt secured by a trust deed shall operate as a tran sfer of the security therefor.” They claim that under the statute, once the promissory note was transferred, the benefit of the Deed of Trus t was transferred to the holder of the note, and only the holder of the note or its agent can transfer the beneficial interest in the Deed of Trust. Thus, they conclude, none of the defendants are beneficiaries of the Deed of Trust because none of them are holders of the note. The Tadeharas’ interpretation of § 57-1- 35 was squarely rejected by the Utah Court of Appeals in Commonwealth Property Advocates , 263 P.3d 397, and the reasoning of that case has been endorsed by this court in a case bearing the same caption, Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration Systems, Inc. , 680 F.3d 1194 (10th Cir. 2011) . In the state case, the Utah Court of Appeals addressed the argum ent that a note was separated from its accompanying deed of trust wh en it was “securitized,” whic h the court explained as “the process of pooling debts, such as mort gage loans, and selling shares in the pool to investors as a means of infusing the le nding markets with more capital.” 263 P.3d at 399 & n.2. The court interpreted § 57-1-35 as “simply describ[ing] the long-applied principle in our jurisprudence that when a debt is transferred, the- 11 - underlying security continue s to secure the debt.” Id. at 403. The court further reasoned that the statute ensur[es] the basic presumption that “a transfer of an obligation secured by a mortgage also transfers the mo rtgage unless the parties to the transfer agree otherwise,” see Restatement (Third) of Prop.: Mortgages § 5.4. The plain language of the statute does nothing to prevent MERS from acting as nominee for Lender a nd Lender’s successors and assigns when it is permitted by the Deed of Trust. Id. (brackets omitted). Even more, the court refused to “interpret the statute as preventing, implying, or somehow indicating th at the original parties to the Note and Deed of Trust cannot validly contract at the outset to have someone other than the beneficial owner of the debt act on behalf of that owner to enforce rights granted in the security instrument.” Id. (quotation and brackets omitt ed). Finally, the court noted that “the Deed of Trus t explicitly gave MERS the right to foreclose on behalf of ‘Lender and Lender’s successors and assigns.’ The statute does not prohibit parties from contracting for these arra ngements, and nowhere in the documents themselves is MERS explicitly prohibited from then as signing its beneficial interest under the Note . . . .” Id. at 403-04

. In the Tenth Circuit Commonwealth case, we followed the Utah Court of Appeals’ Commonwealth case, concluding that the Ut ah Supreme Court would not reach a different conclusion and noting that the Utah Supreme Court had chosen not to grant certiorari. See Commonwealth Prop. Advocates, LLC , 680 F.3d at 1203-05. We also noted that the Utah Court of A ppeals “reinforced its decision in an even more recent appeal by” the same plaintiff. Id. at 1205 (citing Commonwealth Prop.- 12 - Advocates, LLC v. U.S. Bank Nat’l Ass’n , ___ P.3d ___, No. 20110596-CA, 2011 WL 6091684 (Utah Ct. App. Dec. 8, 2011)). We added: Even assuming Plaintiff is correc t that securitization deprives Defendants of their implicit power to foreclose as holders of the trust deeds, the trust deeds explicitly granted Defendants the authority to foreclose. Contrary to Plaintif f’s contention, § 57-1-35 in no way prohibits such an authorization. The statute merely says the transfer of a debt operates as the tran sfer of the security. It says nothing about who is or is not authorized to foreclose on a trust deed. Id. at 1204-05. Here, the Tadeharas have not made a point of the fact that the pooling and servicing agreement into which the promis sory note eventually found its way was a securitization of the note, but that is pr ecisely what happened. Thus, we see no analytical distinction between this case and the Utah and Tenth Circuit Commonwealth cases regarding the legal conclusi on that § 57-1-35 does not operate to strip the beneficiary of a Deed of Trust or its assigns of the power to foreclose on the secured property on behalf of the original lender or any of its assignees. This is precisely what the Tadeharas agreed to and what happened here: an assignee of the Deed of Trust foreclosed on behalf of an as signee of the note. He nce, it was entirely proper for the district court to dismiss the quiet title/declar atory judgment claim under Fed. R. Civ. P. 12(b)(6). See Commonwealth Prop. Advocates, LLC , 680 F.3d at 1202 (explaining that “[d]ismissal is a ppropriate if the law simply affords no relief”).- 13 - B. TILA claim The Tadeharas also take issue with the dismissal of their TILA claim. They argue that the district cour t erroneously characterized th eir loan transaction as a residential mortgage transaction exempt from TILA rescission and that the court erred in requiring them to plead the abili ty to tender the amounts owed under the note. We need not resolve these issues be cause a recent decision of this court leads us to exercise our discretion to affirm th e district court’s j udgment on another ground supported by the record, namely, that the Tade haras’ right to TILA rescission expired before they filed this action. In exerci sing our discretion to affirm on an alternate ground, we consider whether “t he issue was fully briefed a nd argued in district court, the issue was raised on appeal, the parties had ample opportunity to present relevant evidence, and there are no mate rial factual disputes.” Elkins v. Comfort , 392 F.3d 1159, 1162 (10th Ci r. 2004). These fa ctors are sufficiently satisfied here. TILA provides an obligor with the right to rescind a consumer credit transaction that involves a s ecurity interest in the obli gor’s principal dwelling. See 15 U.S.C. § 1635(a). When a creditor fails to make the notice or material disclosures required under TILA, the “right of rescission shall expire th ree years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first.” Id. § 1635(f); see also 12 C.F.R. § 226.23(a)(3) (“ If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after- 14 - consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first.”). The Tadeharas argue that giving notice to their lender of their intent to rescind in August 2009, less than three years after consummati ng their loan transaction on February 8, 2007, was all that was required to timely exercise th eir right under TILA. This court has recently reje cted this argument. In Rosenfield v. HSBC Bank, USA , ___ F.3d ___, No. 10-1442, 2012 WL 2087193, at *6 (10th Cir. June 11, 2012), we considered whether a plain tiff’s written notice of resci ssion within the three-year period was sufficient to invoke the right of rescission where the plaintiff did not file her action until after the three-year period ha d expired. We concluded that it was not enough “where a credito r fails to respond,” id. , holding “that the me re invocation of the right to rescission via a written letter, without more, is not enough to preserve a court’s ability to effectuate (or recognize) a rescission claim after the three-year period has run,” id. at *7. As we explained, § 16 35(f) is a statute of repose which limits the ability to file an action or assert a defense: TILA establishes a right of action that is generally redressable only when a party seeks recognition of it by invoking the power of the courts. Indeed, we believe that it is the fili ng of an action in a court (or perhaps a defensive assertion of the rescission ri ght in a court) that is required to invoke the right limited by the TILA statute of repose; the concept of repose itself (especially in th e context here) fundamentally limits the ability to file an action. Id. (footnote omitted). Based on this unders tanding, we concluded that the district court correctly dismissed the plaintiff’s ac tion, which was filed after the three-year- 15 - period had elapsed, stating that “[t]he commencement of a lawsuit within the three-year TILA repose period was required.” Id. at *11. Like the plaintiff in Rosenfield , the Tadeharas filed onl y a written notice of rescission within the three-year TILA repose peri od. Their action was filed on May 9, 2011, more than three years after they consummated thei r loan transaction on February 8, 2007. Their right of rescission, therefore, expi red before they filed suit. Thus, they are not entitled judicial effectuation of a rescission remedy. The judgment of the dist rict court is AFFIRMED.

Entered for the Court
Michael R. Murphy Circuit Judge