IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

WILLIAM J. PAATALO, 

Plaintiff, 

vs. 

JPMORGAN CHASE BANK, 

Defendant. 

John A. Cochran 

The Cochran Law Firm 

3404 SE 45th Ave 

Portland, OR 97206 

Attorney for plaintiff 

Frederick B. Burnside 

Davis Wright Tremaine, LLP 

1201 Third Avenue 

Suite 2200 

Seattle, WA 98101-1688 

Kaley L. Fendall 

Kevin H. Kono 

Davis Wright Tremaine, LLP 

1300 SW Fifth Avenue 

Suite 2400 

Portland, OR 97201-5630 

Attorneys for defendant 

PAGE 1 - OPINION AND ORDER 

Case No. 6:15-cv-01420-AA 

OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 1 of 18
AIKEN, Chief Judge: 

Plaintiff William J. Paatalo seeks a declaratory judgment 

deeming null and void the 2009 foreclosure of his home loan and 

trustee's sale of the property securing the loan. Defendant 

JPMorgan Chase, the purchaser of the property at the trustee's 

sale, moves to dismiss. For the reasons set forth below, 

defendant's motion is denied. 

BACKGROUND 

In 2006, plaintiff refinanced the loan on his property ("the 

property") in Yachats, Oregon. Compl. 'JI 2. He obtained a $880,000 

"Option Arm" loan and a nearly $110, 000 (later increased to 

$155,000) home equity line of credit ("HELOC") from Washington 

Mutual Bank, F .A. ("WaMu"). Compl. 'J['J[ 2, 3. Both loans were 

secured by deeds of trust on the property. Compl. 'JI 2. 

Plaintiff alleges WaMu misapplied payments and reported false 

derogatory information to credit reporting agencies on the HELOC 

account. Compl. 'JI 5. After disputing those actions with WaMu, 

plaintiff alleges he began to suspect fraud. Compl. 'JI 6. He 

alleges WaMu inflated the appraised value of his property, 

falsified plaintiff's income on his loan application without his 

knowledge or consent, 1 and committed numerous violations of the 

1 Contrary to the complaint, defendant characterizes the 

statement of income on plaintiff's loan application as "a 

representation [p]laintiff made to WaMu, not a lender 

disclosure." Def.'s Reply Supp. Mot. Dismiss at 7 (emphasis in 

original). But allegations a lender altered or otherwise 

PAGE 2 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 2 of 18
Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., including 

"fail[ing] to provide proper 'Notices of Rescission' on the 2006 

loans[.]" Plaintiff further alleges he sent a written "Notice of 

Rescission" on both loans to WaMu on or about March 29, 2008. 

Plaintiff asserts WaMu sent him a letter declining his rescission 

and attaching a "payoff quote" of just under one million dollars. 

Compl. ~ 7. According to plaintiff, the letter stated he could not 

rescind unless he first paid off the amount of the debt in full -

something he was unable to do. In July 2008, plaintiff filed suit 

against WaMu. 

On September 25, 2008, at the "height of the global financial 

crisis, [WaMu] was seized by its regulator . in what has been 

described as 'the largest bank failure in U.S. history.'" Anchor 

Savs. Bank, FSB v. United States, 121 Fed. Cl. 296, 302 (Fed. Cl. 

2015) (quoting Robin Sidel et al., WaMu Is Seized, Sold Off to J.P. 

Morgan, In Largest Failure in U.S. Banking History, Wall Street 

Journal, Sept. 2 5 ' 2 0 0 8 ' available at 

Pursuant to a Purchase 

and Assumption Agreement, the Federal Deposit Insurance Corporation 

("FDIC") transferred many of WaMu' s assets and liabilities to 

falsified the income on a borrower's loan application in order to 

obtain approval for a higher loan amount are common components of 

predatory lending claims. See, ~' Penaloza v. Select 

Portfolio Servicing, Inc., No. CV 14-02571-AB (PJWx), 2014 WL 

6910334 at *2 (C.D. Cal. Dec. 8, 2014); Garner v. Bank of Am. 

Corp., No. 2:12-CV-02076-PMP-GWF, 2013 WL 5492691 at *1 (D. Nev. 

Sept. 30, 2013). 

PAGE 3 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 3 of 18
defendant. Id.; Compl. ~ 28. After WaMu's failure, plaintiff's 

pending claims against WaMu "went to the FDIC," pursuant to the 

Federal Institutions Reform, Recovery, and Enforcement Act of 1989 

("FIRREA"), 12 U. S.C. §§ 1811 et seq. Compl. ~ 8. Plaintiff 

alleges he did not file a TILA rescission claim in court or assert 

one in the FIRREA claims process because WaMu told him he had to 

first be able to tender the full payoff amount for the loan. 

Compl. ~ 9. 

Plaintiff alleges on April 2, 2009, WaMu recorded a "Notice of 

Default and Election to Sell" in connection with the property. 

Compl. ~ 10. Plaintiff further alleges a set of additional 

documents were recorded in connection with the property on July 31, 

2009. Compl. ~ 11. These documents included a Notice of 

Foreclosure, Trustee's Notice of Sale, and affidavits claiming WaMu 

was the beneficiary of plaintiffs' deeds of trust. At the 

trustee's sale, defendant purchased the property for $410,000 cash, 

and on August 18, 2009, a Trustee's Deed was issued to defendant 

for the property. Compl. ~ 13. 

In late 2010, defendant filed an unlawful detainer action 

against plaintiff in state court. Compl. ~ 14. Plaintiff recorded 

a lis pendens on the property. Compl. ~ 15. On July 12, 2011, 

while the unlawful detainer action was still being litigated, 

defendant sold the property for $285,000. 

PAGE 4 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 4 of 18
In February 2015, the United States Supreme Court decided 

Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). After 

Jesinoski was decided, plaintiff alleges he sent defendant a notice 

memorializing the March 29, 2008 rescissions. Compl. <JI 18. 

Plaintiff asserts Jesinoski makes clear "[t]he loan and contracts 

were void as of March 29, 2008, and must be cancelled as a matter 

of law." Compl. <JI 40. 

Plaintiff filed this action on July 29, 2015. He asks this 

court to declare (1) plaintiff is the sole owner of the property; 

(2) the foreclosure of the Deeds of Trust was null and void; and 

( 3) all documents recorded on or against title to the subject 

property after the March 29, 2008 notices of rescission are null 

and void. Compl. <JI 41. Defendant moves to dismiss for failure to 

state a claim. 

STANDARD 

Under Fed. R. Civ. P. 12 (b) (6), a complaint is construed in 

favor of the plaintiff, and its factual allegations are taken as 

true. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th 

Cir. 2010). "[F] or a complaint to survive a motion to dismiss, the 

non-conclusory 'factual content,' and reasonable inferences from 

that content, must be plausibly suggestive of a claim entitling the 

plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 

(9th Cir. 2009) (quoting Ashcroft v. Igbal, 556 U.S. 662, 678 

(2007)). "A claim has facial plausibility when the plaintiff 

PAGE 5 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 5 of 18
pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged." 

Igbal, 556 U.S. at 678. "[O]nce a claim has been stated 

adequately, it may be supported by showing any set of facts 

consistent with the allegations in the complaint." Bell Atl. Corp. 

v. Twombly, 550 U.S. 544, 563 (2007). "[G]enerally the scope of 

review on a motion to dismiss for failure to state a claim is 

limited to the [c]omplaint[.]" Daniels-Hall, 629 F.3d at 998. 

DISCUSSION 

Defendant argues the complaint should be dismissed for two 

reasons. 2 First, it asserts plaintiff never completed the steps 

required to rescind the loans under TILA. Second, it contends even 

if plaintiff rescinded the loans in March 2008, any rights 

plaintiff had to the property were cut off by the trustee's sale. 

2 Defendant also argues the complaint should be dismissed 

because (1) plaintiff is barred from asserting any claims 

stemming from WaMu's allegedly wrongful conduct against 

defendant; and (2) the statute of limitations has run on all 

affirmative TILA claims related to the 2006 loans. Those 

statements are both correct as a matter of law, but it does not 

follow dismissal is warranted. First, plaintiff is not 

attempting to hold defendant liable for WaMu's actions; plaintiff 

is arguing WaMu's security interest in the property was void as 

of the date of the notice of rescission, which means WaMu had no 

interest in the property to transfer to defendant when WaMu was 

placed in receivership. Second, plaintiff has specifically 

disclaimed any intent to assert affirmative TILA claims in this 

lawsuit. 

PAGE 6 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 6 of 18
I. Rescission Under TILA 

"Congress enacted 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, and to protect the consumer against 

inaccurate and unfair credit billing and credit card practices.'" 

Hauk v. JP Morgan Chase Bank USA, 552 F. 3d 1114, 1118 (9th Cir. 

2009) (quoting 15 U.S.C. § 1601). "To effectuate TILA's purpose, 

a court must construe 'the Act's provisions liberally in favor of 

the consumer' and require absolute compliance by creditors." Id. 

(quoting In re Ferrell, 539 F.3d 1186, 1189 (9th Cir. 2008)). TILA 

provides special rescission rights for loans secured by a 

borrower's principal dwelling. 15 U . S . C . § 16 3 5 (a) ; S ema r v . 

Platte Valley Fed. Sav. & Loan Ass'n, 791 F.2d 699, 701 (9th Cir. 

1986) . TILA's "buyer's remorse" provision, S ema r, 7 91 F . 2 d at 

701, grants buyers the right to rescind within three days of either 

"the consummation of the transaction or the deli very of the 

information and rescission forms required under this section 

together with a statement containing the material disclosures 

required under this subchapter, whichever is later[.]" 15 U.S.C. 

§ 1635 (a). The right to rescind expires "three years after the 

date of consummation of the transaction or upon the sale of the 

property, whichever occurs first." Id. § 1635(f). 

PAGE 7 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 7 of 18
The effect of this provision is to create two separate 

rescission rights. The first is an "unconditional" right to 

rescind, good for three business days after the transaction. 

Jesinoski, 135 S. Ct. at 792. The second is a "conditional" right. 

Id. If more than three days have passed since the transaction was 

consummated, the right to rescind exists only if the lender has 

failed to provide the required information, forms, and disclosures. 

This conditional right "does not last forever"; it expires after 

three years or upon the sale of the property "[e]ven if a lender 

never makes the required disclosures [.]" Id. (emphasis in 

original). 

Under the statute, rescission triggers an unwinding process. 

TILA provides "[w]hen an obligor exercises his right to rescind 

, he is not liable for any finance or other charge, and any 

security interest given by the obligor, including any interest 

arising by operation of law, becomes void upon such a rescission." 

15 u.s.c. § 1635(b). Within 20 days after "receipt of notice of 

rescission," the lender must "return to the obligor any money or 

property given as earnest money, downpayment, or otherwise, and 

shall take any action necessary . . . to reflect the termination of 

any security interest created under the transaction." Id. At that 

point, the borrower is required to "tender the property to the 

creditor [.]" Id. 

PAGE 8 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 8 of 18
Plaintiff alleges because WaMu failed to provide the required 

notices, he possessed a conditional right to rescind in March 2008, 

and he timely delivered written notice of his intent to rescind as 

required by 15 U.S.C. § 1635(a). He further alleges WaMu told him 

he would have to tender the full payoff amount of the loan in order 

to rescind, contrary to 15 U.S.C. § 1635(b), which instead required 

WaMu to take the first steps to unwind the loan. 

It is undisputed more than three years have passed since the 

consummation of plaintiff's 2006 loans and plaintiff's right to 

rescind, if not yet exercised, has expired. Thus, the viability of 

plaintiff's claim that WaMu's security interest in his property was 

voided in March 2008 hinges on the effect of the notices of 

rescission to WaMu. Taking the allegations in the complaint as 

true, if those notices actually rescinded the loan, plaintiff's 

complaint will survive the motion to dismiss. If, on the other 

hand, notice of intent to exercise the conditional right of 

rescission did not actually effect the rescission, defendant is 

entitled to dismissal. The Supreme Court answered this question in 

Jesinoski. A unanimous Court declared "rescission is effected when 

the borrower notifies the creditor of his intention to rescind." 

Jesinoski, 135 S. Ct. at 7 92 (emphasis added) . Thus, if - as 

plaintiff alleges - WaMu failed to provide the required disclosures 

and plaintiff delivered written notice of rescission in March 2008, 

PAGE 9 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 9 of 18
the rescission was effected and the security interest in 

plaintiff's property voided at that time. 

Defendant disputes this reading, arguing Jesinoski concerns 

the time period in which a borrower must provide written notice of 

his intent to exercise a right to rescind. The court agrees 

Jesinoski's holding concerns the three-year life of the rescission 

right. The question, however, was whether a borrower can exercise 

her rescission right by sending written notice of rescission within 

three years, or whether she must also file a lawsuit within that 

time period to enforce her rescission right. Jesinoski, 135 S. Ct. 

at 791. The Court had to determine when rescission actually 

occurred in order to answer that question: 

The language of [the statute] leaves no doubt that 

rescission is effected when the borrower notifies the 

creditor of his intention to rescind. It follows that, 

so long as the borrower notifies within three years after 

the transaction is consummated, his rescission is timely. 

Thus, the Jesinoski holding rested on the Court's 

determination, as a matter of statutory interpretation, that 

written notice actually effects the rescission. Defendant 

correctly notes a number of federal appellate courts, prior to 

Jesinoski, distinguished between notice of intent to exercise the 

rescission right and the rescission itself. See, ~' Gilbert v. 

Residential Funding, LLC, 678 F.3d 271, 277 (4th Cir. 2012) ("We 

must not conflate the issue of whether a borrower has exercised her 

right to rescind with the issue of whether the rescission has, in 

PAGE 10 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 10 of 18
fact, been completed and the contract voided.") ; accord Yamamoto v. 

Bank of New York, 329 F.3d 1167, 1172 (9th Cir. 2003). That 

distinction, however, cannot survive the Court's clear statement 

"rescission is effected" at the time of notice. Jesinoski, 135 S. 

Ct. at 792. 

Defendant argues this reading of Jesinoski cannot be correct 

because it means "a borrower's mere notice of rescission 

automatically converts a secured lender into an unsecured lender, 

leaving the lender with no other remedy but to file suit to 

challenge the validity of a borrower's rescission." Def.'s Reply 

Supp. Mot. Dismiss at 3-4. Essentially, defendant argues 

rescission cannot be the default rule. Taken to its logical 

conclusion, defendant's argument would require borrowers to file 

suit to enforce their right to rescind, rendering no rescission the 

default rule. The Supreme Court implicitly rejected defendant's 

argument when it declared "rescission is effected" at the time of 

notice, without regard to whether a borrower files a lawsuit within 

the three-year period. Jesinsoki, 135 S. Ct. at 7 92; see also 

Sherzer v. Homestar Mortg. Servs., 707 F.3d 255, 258 (3d Cir. 2013) 

(text of TILA and implementing regulation "support[] the view that 

to timely rescind a loan agreement, an obligor need only send a 

valid notice of rescission"); Lippner v. Deutsche Bank Nat'l Trust 

Co., 544 F. Supp. 2d 695, 703 (N. D. Ill. 2008) (plaintiff's timely 

written notice under TILA entitled him "as a matter of law . . . to 

PAGE 11 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 11 of 18
rescission"); Alexandra P. Everhart Sickler, And the Truth Shall 

Set You Free: Explaining Judicial Hostility to the Truth in 

Lending Act's Right to Rescind a Mortgage Loan, 12 Rutgers J.L. & 

Pub. Pol'y 463, 481 (Summer 2015) ("As a practical consequence of 

[the Jesinoski] ruling, a lender now bears the burden of filing a 

lawsuit to contest the borrower's ability to rescind.") 

This reading of Jesinoski does not, as defendant asserts, 

amount to holding "the process of unwinding a loan is automatic and 

complete upon a borrower's written notice of rescission." Def.'s 

Reply Supp. Mot. Dismiss at 3. After WaMu received plaintiff's 

notice of rescission, it had two options. It could have begun the 

unwinding process by returning plaintiff's down payment or earnest 

money and taking action to "reflect the termination of [the] 

security interest," pursuant to 15 U.S.C. § 1635(b). Those actions 

would, in turn, have triggered plaintiff's obligation to tender a 

payoff of the remaining loan amount. See Lippner, 544 F. Supp. 2d 

at 702 ("The issue of whether [the borrower] can satisfy her 

rescission obligations [does] not arise until [the lender] ha[s] 

completed [its] obligations pursuant to TILA.") In the 

alternative, WaMu could have filed a lawsuit to dispute plaintiff's 

right to rescind the loan. Plaintiff alleges WaMu did neither of 

those things. Compl. ~ 9. The question here is what happens when 

the unwinding process is not completed and neither party files suit 

within the TILA statute of limitations. In such circumstances, 

PAGE 12 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 12 of 18
Jesinoski directs that the rescission and voiding of the security 

interest are effective as a matter of law as of the date of the 

notice. 

Finally, defendant argues even if Jesinoski means rescission 

is effective upon a borrower's notice, that holding cannot be 

applied "retroactively" to 2008. Def.'s Reply Supp. Mot. Dismiss 

at 4 (emphasis omitted). But there is no retroactivity issue here. 

When a court interprets a statute, it is not "retroactive" to apply 

the decision to transactions already entered into, because the 

court is determining what the law has always meant. As the Supreme 

Court explains, 

[W]hen this Court construes a statute, it is explaining 

its understanding what the statute has meant continuously 

since the date when it became law. . . . Thus, it is not 

accurate to say that the Court's decision ... 'changed' 

the law that previously prevailed . . . when the case was 

filed. Rather, given the structure of our judicial 

system, [a Supreme Court] opinion [interpreting a 

statute] finally decide[s] what [the statute] had always 

meant and explain[s] why the Courts of Appeals ha[ve] 

misinterpreted the will of the enacting Congress. 

Rivers v. Roadway Exp., Inc., 511 U.S. 298, 313 n.12 (1994). 

It is unclear what should happen this many years down the 

road, after the original lender has failed and been placed in 

receivership, and the property has been sold at a trustee's sale, 

then re-sold following the trustee's sale. However, because 

plaintiff has adequately alleged (1) he had a conditional right to 

PAGE 13 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 13 of 18
rescind in 2008; 3 and (2) he exercised that right, he has stated a 

claim for at least some of the relief he seeks - a declaratory 

judgment deeming the foreclosure of the Deeds of Trust null and 

void. 

II. The Trustee's Sale 

Defendant contends even if plaintiff's 2008 notice of 

rescission voided WaMu's security interest in the property, any 

right plaintiff had to the property was extinguished by the 2009 

trustee's sale. The Oregon Trust Deed Act ("OTDA") provides 

If, under [Or. Rev. Stat.§§] 86.705 to 86.815, a trustee 

sells property covered by a trust deed, the trustee's 

sale forecloses and terminates the interest in the 

property that belongs to a person to which notice of the 

sale was given under [Or. Rev. Stat. §§] 86. 764 and 

86.774 or to a person that claims an interest by, through 

or under the person to which notice was given. 

Or. Rev. Stat. § 86. 797 (1). The OTDA is "a well-coordinated 

statutory scheme to protect grantors from the unauthorized 

foreclosure and wrongful sale of property, while at the same time 

3 Defendant contends plaintiff's allegations regarding his 

conditional rescission right give rise to only a "speculative" 

claim for relief. Twombly, 550 U.S. at 545. Plaintiff, however, 

does not broadly assert WaMu violated TILA; he specifically 

alleges WaMu failed to give "proper Notices of Rescission." 

Compl. ~ 6. That allegation is sufficient to put defendant on 

notice of the nature of plaintiff's claim, and at this stage, 

plaintiff is not required to set out more specifically the 

alleged deficiencies in WaMu's notices. See id. at 570 ("[W]e do 

not require heightened fact pleading of specifics, but only 

enough facts to state a claim to relief that is plausible on its 

face"); Stanislaus Food Prods. Co. v. USS-POSCO Indus., 782 F. 

Supp. 2d 1059, 1074 (E.D. Cal. 2011) ("Twombly does not require 

that plaintiff [s] prove their case or include every factual 

detail in support of their claims in their complaints.") 

PAGE 14 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 14 of 18
providing creditors with a quick and efficient remedy against a 

defaulting grantor." Staffordshire Invs. , Inc. v. Cal-Western 

Reconveyance Corp., 149 P.3d 150, 157 (Or. Ct. App. 2006). 

Because plaintiff does not allege he did not receive notice of 

the sale, the question before the court is whether the trustee's 

sale constituted a sale "under" the OTDA. Or. Rev. Stat. § 

86. 797 (1). In Mikityuk v. Nw. Trustee Servs., Inc., 952 F. Supp. 

2d 958, 960 (D. Or. 2013), the borrowers received a home loan 

secured by a deed of trust. The deed of trust was assigned to a 

third party, and then to a successor trustee. The successor 

trustee recorded a Notice of Default and Election to Sell, and sold 

the property at a trustee's sale. A year and a half later, the 

borrowers sued to challenge the sale, asserting various violations 

of Oregon law. Id. at 960-61. The borrowers admitted being in 

default at the time of the sale and acknowledged receiving notice 

of the trustee's sale. Id. at 9 61. This court held " [v] oiding the 

sale under these circumstances would 'frustrate the legislature's 

objective to provide a quick and efficient remedy for creditors 

against defaulting buyers.'" Id. at 969 (quoting Staffordshire, 149 

P.3d at 158). Moreover, because the borrowers could have asserted 

their rights before the sale, permitting the borrowers' action to 

proceed "would encourage grantors who receive notice of a sale to 

sit on their rights." Id. at 970. 

PAGE 15 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 15 of 18
The Mikityuk court contrasted the situation with the facts in 

Staffordshire. In Staffordshire, after notice of a trustee's sale 

was published, the creditor and grantor entered into a loan 

forbearance agreement. 149 P.3d at 152. The agreement expressly 

stated the loan was in default, but provided the creditor was not 

entitled to foreclose so long as the grantor did not default on his 

modified payment obligations under the forbearance agreement. Id. 

at 155. Notwithstanding the forbearance agreement, due to a 

miscommunication, the trustee's sale went forward and the property 

was sold. Id. at 153. 

The plaintiff in Staffordshire was the high bidder at the 

auction. The debtor convinced the creditor "not to issue the 

trustee's deed to [the] plaintiff," and the creditor "returned 

[the] plaintiff's purchase funds." Id. The plaintiff sued the 

creditor, "seeking to recover lost profits that it would have 

realized after reselling the property." The creditor 

responded "the sale of the property was void" because it had been 

conducted in violation of the forbearance agreement. The 

court agreed, declaring "there is nothing in the language of [the 

predecessor provision to Or. Rev. Stat. §86.797(1)], or, indeed, 

elsewhere in the Act, to indicate that the legislature intended the 

auction to be final in the absence of legal authority to sell the 

property." Id. at 158 (emphasis in original). The court went on 

to note the trustee's deed had not been executed or delivered. 

PAGE 16 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 16 of 18
Thus, "the statutory presumption of finality" had not yet arisen. 

Id. Under those circumstances, "the discovery of the agreement to 

postpone 

render [ed] 

the sale before 

the [trustee's 

the execution of 

sale] void [.]" 

the trustee's deed 

Id. The court 

specifically declined to address how the analysis would have been 

affected had the deed been recorded before the forbearance 

agreement was discovered. 

The facts here do not perfectly align with the facts in either 

Mikityuk or Staffordshire. Unlike Staffordshire, the trustee's 

deed here was recorded years ago, so the statutory presumption of 

finality has arisen. But unlike Mikityuk, plaintiff did not sit on 

his hands. Although it has been six years since the trustee's 

sale, plaintiff promptly filed suit after the Supreme Court issued 

its decision in Jesinoski. Had he made the arguments he now makes 

at the time of the trustee's sale, they would have been foreclosed 

by Ninth Circuit precedent. 

Plaintiff has alleged sufficient facts to survive a motion to 

dismiss with respect to the effect of the trustee's sale. Although 

plaintiff does not appear to dispute he was no longer making 

payments at the time of the foreclosure sale, he does allege he was 

current on his payments when he sent the rescission notices. If 

WaMu had no security interest in the property due to a rescission 

in March 2008, the FDIC could not have transferred any interest in 

the property to defendant, and defendant would have had no "legal 

PAGE 17 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 17 of 18
authority to sell the property." Staffordshire, 149 P.3d at 158 

(emphasis omitted). 

The timing of Jesinoski is also significant. Although 

foreclosing trustees and purchasers at trustee's sales have a 

significant interest in finality, consumers have a countervailing 

interest in avoiding wrongful foreclosure. Jesinoski revealed the 

majority of federal courts had "misinterpreted the will of the 

enacting Congress," Rivers, 511 U.S. at 313 n.12, in allocating to 

borrowers the burden to go to court to enforce their statutory 

rescission rights under TILA. Further factual development is 

necessary to determine what effect that revelation should have on 

the property rights of subsequent buyers of the property. 

Defendant's motion to dismiss is denied with leave for defendant to 

renew its arguments about the effect of the trustee's sale. 

CONCLUSION 

Defendant's motion to dismiss (doc. 6) is DENIED. Defendant's 

request for oral argument is DENIED as unnecessary. 

IT IS SO ORDERED. 

Dated this f November 2015. 

Ann Aiken 

United States District Judge 

PAGE 18 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 12 Filed 11/12/15 Page 18 of 18