PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

ETC - 1

PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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JOHN A. COCHRAN, WSBA # 020022

PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 519-5982

FAX (360) 953-8083

 

COUNSEL FOR PLAINTIFF WILLIAM J. PAATALO

 

IN THE UNITED STATES DISTRICT COURT

 FOR THE DISTRICT OF OREGON

WILLIAM J. PAATALO 

 Plaintiff,

v.

WASHINGTON MUTUAL BANK, F.A.

J.P. MORGAN CHASE BANK

 Defendant.

 CASE NO. 15-cv-1420 

PLAINTIFF’S REPLY IN SUPPORT OF 

MOTION TO STRIKE DEFENDANT’S 

AMENDED AFFIRMATIVE 

DEFENSES PER FRCP 12(f) AND 

DEEM AMENDED ANSWERS

ADMITTED, AND FOR JUDGMENT 

ON THE PLEADINGS PER FRCP 12(c)

COMES NOW Plaintiff, William J. Paatalo, by and through Pacific Property Law

LLC, hereby submit this Reply in support of their Motions to Strike Defendant’s 

Affirmative Defenses under FRCP 12(f) and to deem amended answers admitted, 

and Motion for Judgment on the Pleadings under FRCP 12(c).

 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 1 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

ETC - 2

PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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INTRODUCTION

“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.” (ORD, pg.18,¶2).

The fact that Plaintiff has had to file this action is a burden Plaintiff shouldn’t 

have to bear. Plaintiff has properly cited the authorities under 15 U.S.C. § 1601 et seq. 

(“TILA”) and 12 C.F.R. § 226 et seq. (“Reg. Z”) to which he relies. The Defendant has 

failed to argue any authority as to how Plaintiff’s completed rescission 20-days after

March 29, 2008 with creditor “Washington Mutual Bank, FA” (WMB) can be legally 

re-opened and challenged by Defendant in 2016. The reason for these failures is 

simple, to wit: there is no such authority and in fact, the only authorities in existence 

— 15 USC 1635, Reg Z, and the Supreme Court of the Untied States (Jesinoski) are in 

rare agreement that there is no room for stonewalling a mailed notice of rescission 

even if the recipient is certain they could dispute it because of some perceived defect. 

In spite of the controlling case law (Jesinoski), Defendant is attempting to litigate

TILA related claims that were forever waived by WMB in 2008, and which it lacks 

any standing to litigate in the first place.

Plaintiff is not seeking any claims or any damages against Defendant; only a 

declaratory acknowledgement that the rescission he mailed on March 29, 2008 

effectively voided the notes and deeds, and for cancelation of the instruments on 

title. The consequence of the rescission under TILA means no interest in title to 

Plaintiff’s property transferred to Defendant, and as such, Defendant cannot defend

interests it never possessed. 

Plaintiff concedes that the result is punitive — as it was meant to be when 

Congress initially passed the Truth in Lending Act 50 years ago. Like minimum 

mandatory sentencing the result may not be appreciated by the bench or the banks; 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 2 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

ETC - 3

PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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but the law is to be followed exactly as it is written. No interpretation is allowed 

under the directive issued by the Supreme Court of the United States. The TILA 

rescission statute, as a matter of law, is clear on its face, as stated by the Court of final 

resort. (See Jesinoski).

ARGUMENT

A. Defendant Cites No Authority In Which A Completed Rescission Under 

TILA Can Be Re-Opened And Re-litigated Outside Of TILA’s Statutory 

Sequence.

The 9th Circuit noted in the case of Causey v. U.S. Bank Nat 7 Ass 'n, 464 F. App'x 

634 (9th Cir. 2011), referencing Yamamoto, “Although the district court is authorized 

to modify the default sequence, that authority ends once rescission is accomplished. 

15 U.S.C. § 1635(b); 12 C.F.R. § 226.23(d)(4). In a case where the creditor disputes the 

consumer's asserted ground for rescission, rescission is not accomplished until a 

court determines that the consumer had the right to rescind. See Yamamoto v. Bank 

of N.Y., 329 F.3d 1167, 1172 (9th Cir. 2003). But in a case where the creditor 

acquiesces in the consumer's notice of rescission or fails to respond within the 20-

day response period, rescission is accomplished automatically.” See id. (Emphasis 

in bold).

Any creditor that ignores rescission, and then tries to challenge that rescission 

from a defensive posture outside of 20-days, is attempting to use motion practice and 

the appeal as a vehicle to sidestep the basic requirements of obtaining relief in court. 

This presumes however that Defendant is/was the “creditor” which it has never 

been. Defendant’s Affirmative Defenses should be stricken with prejudice as raising 

issues that are untimely and raising issues in which the jurisdiction of the Court have 

not been invoked. TILA Rescission is not a claim, but rather a private right of action. 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 3 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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A TILA Rescission cannot be vacated by a Court outside of a timely challenge by the 

creditor upon notice.

Even Plaintiff’s notice to Defendant sent on April 21, 2015 “memorializing the 

March 29, 2008 rescission,” which Defendant admits it received (AA ¶18), should 

have triggered Defendant to file its own action for declaratory relief if it felt it held 

any interest in the subject property, along with a request to expunge the lis pendens

from the title records. However, Defendant did not do this as it would have required 

proof of standing; something Defendant lacks.

If a creditor contests a rescission under TILA, it needs to do the following: 

(1) They must file an action within 20-days of receipt of the rescission.

(2) The creditor must be an injured party with standing — i.e., loss of finance 

charges on the loan, along with fees (or other charges) that they loaned or 

paid for. 

(3) The a ction would need to allege that the borrower rescinded the loan

improperly.

(4) The prayer for relief would be to enter an order vacating the rescission for 

whatever reason they think it was wrong.

Defendant cites to no authority that allows for a challenge to an already 

completed TILA rescission. If the Court were to allow any “defenses” to a TILA 

rescission enforcement action AFTER the 20-day window, the goal of allowing the 

borrower to pay off the old lender(s) with a new loan would be impossible. Of note, 

Plaintiff put forth an affidavit in opposition to Defendant’s motion to dismiss stating 

as fact that he was current on his payments to WMB at the time he rescinded, and 

there was no default at issue on March 29, 2008. Had WMB unwound the 

transactions and cancelled the instruments as required under the law, Plaintiff could 

have sought alternative financing with his good credit rating intact. Defendant

improperly tries to argue, “Moreover, and notably, Plaintiff does not allege in his 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 4 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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complaint nor aver in his Affidavit that he was not in fact in default prior to March 2008.”

(Reply, MTD, FN, pg.11). Though all of Defendant’s arguments in defense are moot

for being improper, it should be pointed out that if Defendant claims to hold 

servicing records for Plaintiff’s rescinded loans, it clearly could have rebutted 

Plaintiff’s testimony if it felt the facts were not accurate. Instead, Defendant wishes to

make the inference that Plaintiff is a “deadbeat” who was in default, an inference 

which is simply not true or factual.

B. Plaintiff Has Made His Prima Facie Case.

Defendant has put forth no facts or evidence to rebut Plaintiff’s affidavit of facts.

"Indeed, no more than (Affidavits) is necessary to make the Prima Facie Case." Cert 

Denied, 50 U.S. L.W. 2169; S.Ct. March 22, 1982. Non Rebutted Affidavits are "Prima 

Facie Evidence in the Case, "United States vs. Kis, 658 F.2d, 526, 536-337 (7th Cir. 1981);

“uncontested allegations in affidavit must be accepted as true.”, Cert. Denied, 50 U.S. 

L. W. 2169; S. Ct. March 22, 1982 Morris v National Cash Register.”

Defendant’s responses are inaccurate, promote conclusory statements based on 

hearsay, and promote denials that suffer from the same defects. None of the 

preceding are sufficient to defeat Plaintiff’s motions. 

Defendant argues that Plaintiff’s Affidavit is improper because it contains matters 

outside the pleadings, but acknowledges the affidavit “simply mirrors the factual 

allegations of his complaint.” (Resp. p18,¶2). As such, Defendant argues that 

Plaintiff’s motion for judgment on the pleadings should be considered a summary 

judgment motion under Rule 56, and thus Defendant should be allowed more time to 

respond. 

Plaintiff’s Affidavit presents nothing outside of the pleadings, and simply serves 

to verify the facts in the complaint. Defendant has been aware of these facts, and has 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 5 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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had ample time to rebut Plaintiff’s Affidavit in support of the facts with evidence of 

its own. 

Plaintiff has met the legal standard for his requested relief, as Defendant has no 

standing to raise a claim upon which relief could be granted due to the rescission’s 

completion in 2008.

In addition, Defendant cannot now rebut Plaintiff’s Affidavit of facts because it

states in its Amended Answer that it “lacks knowledge or information sufficient to 

form a belief as to the truth or falsity of the allegations” that Plaintiff sent a written 

“Notice of Rescission” on both loans via certified mail to WMB on or about March 29, 

2008 (AA ¶6), or that WMB responded with conditions of tender. (AA ¶7).

Aside from standing issues, Defendant was not the original creditor, was not 

involved in the transactions, underwriting, or closing of the loans; nor could Chase 

possibly have personal knowledge as to whether any disclosures were actually given 

to, and retained by Plaintiff at the closing. Chase admittedly has no knowledge of the 

disputes leading up to the rescission, the voluminous phone discussions Plaintiff had 

with WMB’s customer service, dispute, and loss mitigation departments regarding 

the misapplied payments, the hyper-inflated appraisal, the falsification of Plaintiff’s 

income figures, and the actual rescission itself.

Defendant takes the position that it has no knowledge and information, and 

“can’t find anything regarding the rescission in their records.” This is not enough to 

defeat Plaintiff’s motions. Defendant’s Affirmative Defenses are improper under the 

statutory requirements of TILA and must be stricken with prejudice. Jesinoski is 

controlling, and the law is settled. An affirmative defense may not be stricken unless 

"it appears to a certainty that plaintiffs would succeed despite any state of the facts 

which could be proved in support of the defense." Barnes v. AT&T Pension Ben. PlanNonbargained Program, 718 F.Supp.2d 1167, 1170 (N.D. Cal. 2010).

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 6 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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Defendant has offered no evidence which contradicts the fact that Plaintiff sent

the “Notice of Rescission” to WMB on March 29, 2008. This being the case, the facts 

show WMB received the rescission, they failed to respond in court to contest it in the 

mandated 20 days as required, and no set of facts can change the outcome of the 

rescission or cure Defendant’s lack of standing.

C. Plaintiff Has Only Requested Declaratory Relief, And Has Brought No 

TILA Claims Against Defendant Requiring Proof Of Any TILA Claims. 

 Plaintiff does not bear a burden of proving any TILA claim(s) as Defendant 

asserts. Defendant argues that it must be allowed to defend itself if it is being sued 

on a claim. Plaintiff re-emphasizes the fact that TILA Rescission is not a claim, and he 

is not suing Chase for any claim(s) seeking damages for liability. Yet, Defendant

continues its attempt to turn this declaratory action into that of a TILA lawsuit, 

arguing that Plaintiff needs to prove all of the elements of any TILA claim(s) first 

before the relief sought can be granted. This is not the law, nor is it the nature of this 

action. 

It was the creditor (WMB), not Defendant, that had the right to defend itself from 

the rescission within 20-days of March 29, 2008 and failed to do so; effectively 

waiving all defenses to the rescission and making the rescission complete. This 

means that no interest in the title to Plaintiff’s property ever passed from WMB to 

Defendant through the FDIC receivership, which in turn means Defendant has no 

standing. 

CONCLUSION

The statute, the regulations and the Supreme Court are clear: the mailing of the 

TILA rescission is effective by operation of law, to wit: it cancels the loan contract, 

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 7 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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voids the note, and voids the deed of trust. All three branches of government are in 

complete agreement on this issue.

For the reasons set forth, Plaintiff has met his burden by establishing his prima 

facie case that he had a conditional right to rescind his loans, and timely did so on 

March 29, 2008 to which the rescission was completed when no challenge was raised.

Therefore Defendant did not acquire any interest in the title to Plaintiff’s property via

the FDIC receivership. Defendant inherited nothing, and has no standing to 

challenge and defend rights it never possessed, and certainly has no legal authority 

to challenge Plaintiff’s rescission outside of the statutory construction of TILA. 

Defendant has put forth no set of facts or evidence to rebut Plaintiff’s Affidavit, nor 

could it. Defendant’s Affirmative Defenses must be stricken for lack of standing, and 

Plaintiff’s right for judgment on the pleadings granted.

DATED this 19th day of January, 2016.

Respectfully Submitted

By: PACIFIC PROPERTY LAW, LLC

By: /s/ John A. Cochran

JOHN A. COCHRAN, WSBA # 020022

Counsel for Plaintiff William J. Paatalo

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 8 of 9
PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO STRIKE

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PACIFIC PROPERTY LAW, LLC

10121 SE Sunnyside Rd., Ste. 300

CLACKAMAS, OR 97015

PHONE (503) 756-0299

FAX (360) 953-8083

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CERTIFICATE OF SERVICE

I hereby certify that on January 19, 2016, a copy of the foregoing was filed electronically. 

Notice of this filing will be sent to the following parties through the Court’s Electronic Case 

Filing System:

KEVIN H. KONO, OSB #023528 

kevinkono@dwt.com 

KALEY L. FENDALL, OSB # 093509 

kaleyfendall@dwt.com 

DAVIS WRIGHT TREMAINE LLP 

1300 S.W. Fifth Avenue, Suite 2400 

Portland, Oregon 97201-5610 

Telephone: (503) 241-2300

Parties may access this filing through the Court’s system.

Case 6:15-cv-01420-AA Document 20 Filed 01/19/16 Page 9 of 9