# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 2- 19 47

__ __ __ __ __ __ __ __ __ __ __ __ __ _

Mav is Hart m an , Rog er Hart m an ,
an d M au l Lee Hart m an

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll an ts

v.

Bri an J. Sm it h, J en ni fer Sm it h,

an d P rime Secu rit y

Ban k

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

Mi dwe st Equ it y

Co ns ul ta nt s, In c., a Mi nn es ot a

co rp or at io n, an d M id wes t Eq ui ty Con su lt an ts

, In c., an Ill in oi s C or

po rat io n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t s

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 2- 20 12

__ __ __ __ __ __ __ __ __ __ __ __ __ _

Mav is Hart m an , Rog er Hart m an ,
an d M au l Lee Hart m an

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll ees

v.

Pri m e Sec ur it y

Ban k

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an tBri an J. Sm it h, J en ni fer Sm it h,
Mi dwe st Equ it y

Co ns ul ta nt s, In c., a Mi nn es ot a co rp or at io n, an d
Mi dwe st Equ it y

Co ns ul ta nt s, In c.,

an Ill in oi s C or

po rat io n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t s

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: Feb ru ary 13 , 20 13
Fil ed : Au gu st 19 , 20 13

__ __ __ __ __ __

Befo re SM ITH, MELLOY, an d B ENTON, Ci rcu it Ju dg es

.

__ __ __ __ __ __

SMI TH, Circ ui t J ud ge

.

Ro ge r an d Mav is Hart m an , a m arri ed co u p l e , ( co ll ect iv el y , "t he Hart m an s" )

an d th ei r da ug ht er, Mau l Lee Hart m an , ( c ol le ct iv el y , "t he pl ai nt iff s" ) fil ed su it

se ek in g da m ag es an d res ci s s i o n un de r TILA a nd as se rti ng va rio us st at e la w c la im s

ag ai ns t pe rs on s an d en ti ti es in vo lv e d i n t r a ns act io ns rel at ed to th e fin an ci ng of an
ad di ti on to a ho us e on th ei r pr op ert y . Th e di st ric t co ur t gr an te d s um m ary jud gm en t

to de fen da nt s on th e TILA res ci ss io n cl ai m , di sm is se d se ve ral ot he r cl ai m s, an d th en
he ld a jury tri al on th e res t. The jury fo un d fo r th e de fen da nt s on al l rem ai ni ng cl ai m s,

an d th e co ur t en te red jud gm en t in fav or of th e de fen da nt s. The pl ai nt iff s no w ap pe al

,
arg ui ng th at th e di st ric t co ur t erre d in gr an ti ng su m m ary jud gm en t an d in di sm is si ng

va rio us cl ai m s be fo re tri al

. Defen da nt Pri m e Secu rit y Ban k ("P rime") cro ss -ap pe al s,

arg ui ng th at th e co ur t erre d in fin di ng th at th e pl ai nt iff s' no ti ce w a s s u f

fic ie nt to

-2

-ex erci se th e TILA st at ut or y rig ht of res ci ss io n. We r e v e r s e on th e no ti ce is su e, bu t

ot he rwis e aff

irm th e jud gm en t o f th e d is tri ct co ur t.

I. Bac kg ro un d

The Hart m an s joi nt ly own ed an un im pr ov ed pr ope rt

y loc at ed in Ca

rv er Co unty

, Mi nn es ot a. The ci ty of Vict or ia is su ed th e Hart m an s a pe rm it to bu il d a st ru ct ur e on
th e pr op ert y fo r no n- res id en ti al us e. Ro ge r Hart m an bu il t a si ng le -fam il y dwe ll in g on
th e pr op ert y an d m ov ed in to t h e h o me. Sev eral y ears la te r, on Ju ne 23

, 20 06

, th e

Hart m an s fil ed a pl at wit h th e co un ty th at id en ti fie d th e pr op ert y as Bl oc k 1, Lot 2 of

th e Hart m an Add it io n Pl at 3. The Hart m an s reco rd ed th e pr op ert y in th e real es ta te

reco rd s ex cl us iv el y in th e na m e of Mav is Hart m an

. On Aug us t 3, 20 06

, Mav is si gn ed

an d de li ve red a qu it cl ai m de ed fo r th e pr op ert y to Mau l Lee Hart m an , and fil ed th e

qu it cl ai m de ed wit h th e Carv er Co un ty Offi ce of th e Reg is tra r of Tit le s. Ro ge r di d no t

si gn th e q ui tc la im

de ed

.

Ro ge r be ga n co ns tru ct io n of an ad di ti on to th e ho us e on th e p ro pe rty. By

Ja nu ary 20 07

, Ro ge r de te rm in ed th at he ne ed ed m or e m on ey to co m pl et e th e

co ns tru ct io n. Ro ge r was un ab le to o b t ai n fin an ci ng fro m tra di ti on al le nd ers , so he

co nt act ed Bri an Sm it h of Mi dwe st Equ it y Co ns ul ta nt s, In c. ("M id wes t" ), a

co rp or at io n in th e bu si ne ss of ob ta in in g lo an s fo r fin an ci al ly di st res se d cl ie nt s. Bri an

Sm it h an d hi s wife

, Je nn ife r Sm it h, (co ll ect iv el y , "t he Sm it hs ") an d th e pl ai nt iff s

to ge th er en te red in to an un co nv en ti on al real es ta t e f i na nc in g arra ng em en t. On

Feb ru ary 21

, 20 07

, th ree tra ns act io ns oc cu rred

. Fi rs t, th e pl ai nt iff s e x e c ut ed an d

de li ve red a warra nt y de ed tra ns ferr in g th e p r o p e rty to th e Sm it hs in fee si m pl e.

Seco nd

, th e Sm it hs ob ta i n e d a lo an fro m Anc ho r Ban k fo r $2 80 ,00 0 an d pl aced a

m or tg ag e on th e pr op ert y fo r th e sa m e am ou nt

. Fi na ll y , th e Sm it hs lo an ed $2 80 ,00 0

to th e pl ai nt iff

s an d th en en te red in to a co nt ract fo r de ed wit h th em , ag reei ng to

reco nv ey th e pr op ert y to Mav is an d Mau l Lee up on rep ay m en t of th e $2 80 ,00 0. The

co nt ract fo r de ed sp eci fie d th at th e Sm it hs res erv ed th e rig ht to pl ace a m or tg ag e on

-3

-th e pr op ert y in an am ou nt up t o t h e rem ai ni ng ba la nc e of th e pu rch as e pr ic e, an d

Mav is an d M au l Lee ag reed to ex ecu te an y su ch m or tg ag e.

By A u g u s t 20 07

, Ro ge r de te rm in ed th at he ne ed ed m or e m on ey to co m pl et e

co ns tru ct io n. On Aug us t 1, 20 07

, fo ur m or e tra ns act io ns oc cu rred

. Fi rs t, th e Sm it hs

an d t he pl ai nt iff

s amend ed th e co nt ract for de ed to in crea se th e p rin ci pa l am ou nt to
$4 95 ,50 0. Seco nd

, Bri an ob ta in ed a ne w lo an fro m Pri m e in th e am ou nt of $4 95 ,50 0.

As th e pl ai nt iff

s ha d ag reed un de r th e or ig in al c o n t r a c t f or de ed

, th ey joi ne d th e

Sm it hs in pl aci ng a m or tg ag e o n t he pro pe rty with Pri m e fo r $4 95 ,00 0. Th e Sm it hs

s a t i s f ie d th e $2 80 ,00 0 m or tg ag e wit h Anc ho r Ban k. Thi rd

, th e Sm it hs an d th e pl ai nt iff s a s s i g n e d al l of th ei r res pe ct iv e in te res ts in th e co nt ract fo r de ed an d th e

un de rlyin g pr op ert y to Pri m e. Fo ur th

, th e Sm it hs si gn ed a $4 95 ,50 0 pr om is so ry no te

to Pri m e.

Mo re t ran sa ct io ns oc cu rred on Nov em be r 13

, 20 07

. Fi rs t, the Sm it hs

, Mav is

,

an d Mau l Lee am en de d th e co nt ract fo r de ed to $6 64 ,00 0. An d, s eco nd , th e Sm it hs

m od ifi ed th ei r no te an d m or tg ag e wit h Pri m e to $6 64 ,00 0. The pl ai nt iff s ag ai n joi ne d

in th e m od ifi ed m or tg ag e.

Ro ge r co m

pl et ed co ns tru ct io n on th e ho m e in la te 20 07

. Bu t Mav is an d Mau l

Lee fai le d to m ak e sc he du le d pa y m en ts to ward th e co nt ract fo r de ed wit h th e Sm it hs

,

an d on Ju ne 26

, 20 08

, th e Sm it hs se rv ed a st at ut or y no ti ce of can cel la ti on of th e

co nt ract fo r de ed . On Aug us t 15 , 2 00 8, th e pl ai nt iff s se n t a le tt er to th e Sm it hs an d

to Pri m e, st at in g th at th ey can cel le d an d res ci nd ed an y an d al l tra ns act io ns oc cu rri ng

on Feb ru ary 21

, Aug us t 1, an d Nov em be r 13

, 20 07

. Pri m e rep li ed th at it co ul d no t

res ci nd be cau se it ha d no tra ns act io ns wit h th e pl ai nt iff s. On Aug us t 25

, 20 08

, th e 60

- da y can cel la ti on pe rio d fo r th e co nt ract of de ed ex pi red wit ho ut th e pl ai nt iff s ta ki ng

act io n to rei ns ta te th e c o n t ract fo r de ed or se ek in g jud ic ia l rel ie f to en joi n it s

can cel la ti on

. The S mi t hs ceas ed m ak in g m or tg ag e pa y m en ts to Pri m e, an d Pri m e

co m m en ced fo recl os ur e pr oc eed in gs on Nov em be r 25

, 20 08

. On Feb ru ary 10

, 20 09

,

-4

-th e pr op ert y was so ld at a sh eri ff's sa le

. The si x- m on th red em pt io n pe rio d ex pi red on Aug us t 9 , 20 09

.

On Ju ne 24

, 20 09

, th e pl ai nt i f f s fil ed a 13 -co un t co m

pl ai nt na m in g as
de fen da nt s th e Sm it hs ; Mid wes t Equi ty Co ns ul ta nt s, In c., a Mi nn es ot a co rp or at io n;
Mi dwe st Equ it y Co ns ul ta nt s, In c., an Ill in oi s co rp or at io n; a n d P r i me. Und er co un t

on e, pl ai nt iff

s so ug ht a de cl arat or y jud gm en t th at th e warra nt y de ed tra ns ferr in g fee

ti tl e to th e Sm it hs an d th e co rres po nd in g co nt r a c t f o r de ed be twee n th e Sm it hs an d

th e p l a i n t i f

fs co ns ti tu te d an eq ui ta bl e m or tg ag e. Und er co un t two

, th e pl ai nt iff s

so ug ht da m ag es an d res ci ss io n of al l tra ns act io ns wit h al l of th e de fen da nt s pu rs ua nt

to th e Trut h in Len d i n g A ct (TILA), as am en de d by th e Hom e Owner sh ip Equ it y

P r o t e ct io n Act, 15 U.S.C. § 16 02 et se q. Und er co un ts el ev en an d twel ve , th e pl ai nt iff s al le ge d st at e-l aw cl ai m s un de r Mi nn es ota St at ute s A nnot at ed § 58.1 8. Pri m e
fil ed an an swe r in whi ch it pl ead ed affi rm at iv e de fen se s ba se d on va rio us st at ut es of

li m it at io n an d th e do ct rin e of la ch es

. The Sm it hs al so fil ed an an swe r st at in g va rio us
affi rm at iv e de fen se s an d co u nt ercl ai m in g fo r un jus t en ric hm en t. The Sm it hs

th er e a f t e r f ai le d to m ak e fu rth er fil in gs wit h th e co ur t or to res po nd to req ue st s fo r
di sc ov ery. Neit he r of th e Mi dwe st Equ it y Co ns ul ta nt s co rp or at io ns fil ed an an swe r,

an d o n Oct ob er 1 4, 2 00 9, t he co ur t en te red de fau lt jud gm en t ag ai ns t t he m

.

The pl ai nt iff

s an d Pri m e fil ed cro ss -m ot io ns fo r su m m ary jud gm en t. In it s

su mm a r y -jud gm en t m em or an du m , Pri m e arg ue d th at th e pl ai nt iff s' rig ht to res ci nd

un de r TILA is ba rred by st at ut e b e c a u s e th e pl ai nt iff s' act io n was no t co m

m en ced

un ti l Ju ly 20 09 an d th e pr op e r t y ha d al read y be en so ld at th e sh eri ff's sa le on
Feb ru ary 10

, 2 0 0 9

. S e e 15 U.S.C. § 16 35 (f). The pl ai nt iff s fil ed a res po ns e

m em or an du m , and th en Pri m e su bm it te d i ts rep ly. In th at rep ly, Pri m e arg ue d t ha t

[I]n Aug us t o f 2 0 06 Pl ai nt iff Mav is Hart m an , th e fee own er of th e Su bjec t Pro perty

, tra ns ferr ed own ers hi p of th e Su bjec t Pro pe rty by a qu it
cl ai m de ed to he r da ug ht er Mau l Lee Hart m an , who own ed an d oc cu pi ed
he r own to wnh om e at all ti m es rel ev an t t o t he se pro ceed in gs

. . . . .

-5

-At th e ti m e of th e Feb ru ary 20 07 ti tl e tra ns fer to th e Sm it hs

, Mau l

Le e w as th e so le own er of th e Su bjec t Pro pe rty. Afte r th e co nt ra c t f o r de ed ba ck fro m th e Sm it hs

, sh e ha d an un di vi de d on e-h al f in te res t as a

co -v en de e wit h he r m ot he r. It is Pl ai nt iff s' co nt en ti on th at th e Feb ru ary 20 07 Sm it h tra ns act io n was an eq ui ta bl e m or tg ag e an d no t a tra ns fer of
ti tl e. (Co m

pl ai nt

, Co un t I) Und er Pl ai nt iff 's th eo ry of th e cas e, Mau l Lee
Hart m an rem ai ne d th e so le o wne r su bjec t to th e Sm it h eq ui ta bl e

m or tg ag e an d th e Pri m e Secu rit y Ban k m or t g a g e w hi ch sh e ex ecu te d.
Alt ern at iv el y , Mau l Lee Hart m an own ed an un di vi de d on e-h al f in te res t

as a co -v en de e un de r th e co nt ract fo r de ed

. In ei th er ev en t sh e was

ne it he r ob li ga te d on th e pr om is so ry no te s gi ve n by th e Sm it hs to Pri m e Secu rit y no r is sh e co ns id ered a co ns um er un de r 12 C.F.R. [§ ]
22 6.2 (a)( 11 ) si nc e sh e di d no t g ran t a li en on he r pr in ci pa l dwe ll in g. Pri m e Secu rit y 's m or tg ag e ag ai ns t Mau l Lee Hart m an 's in te res t in th e
pr op ert y is no t s ub

ject t o re sc is si on

.

Thu s, Pri m e arg ue d th at Mau l Lee ha d no res ci ss io n rig ht s be cau se th e pr op ert y was

no t h er p rimary

res id en ce.

The di st ric t co ur t he ld a he ari ng on th e cro ss -m ot io ns fo r su m m ary jud gm en t.

The reaf te r, th e co ur t is su ed an or de r gr an ti ng su m m ary jud gm en t to th e pl ai nt iff s on

co un t on e, fin di ng th at th e tra ns act io ns wit h th e Sm it hs were an eq ui ta bl e m or tg ag e.
As fo r th e p la in ti ffs ' TILA resc is si on cla im , th e co ur t fo un d t ha t

ne it he r Ro ge r Hart m an no r Mav is Hart m an he ld an own ers hi p in te res t in th e Su bjec t Pro pe rty at th e ti m e of th e tra ns act io ns at is su e he re. The y pl aced fee ti tl e to th e Su bjec t Pro pe rty in Mav is Hart m an 's na m e on Ju ne 23

, 20 06

, an d Mav is Hart m an tra ns ferr ed th at o w n ers hi p in te res t to
Mau l Lee H art m an by a qu it cl ai m de ed on Aug us t 3, 20 06 . M or eo ve r, by tre at in g th e Feb ru ary 20 07 t r a n s act io n as an eq ui ta bl e m or tg ag e, Mau l Lee rem ai ne d th e so le own er of th e Su bjec t Pro pe rty af t e r N o v e mb e r 13

, 20 07

, su bjec t to th e Sm it h eq ui ta bl e m or tg ag e an d t h e Pri m e m or tg ag e. The refo re, at al l m at eri al ti m es in th is cas e, Mau l Lee
Hart m an was th e so le own er of th e Su bjec t Pro pe rty. As a res ul t,

-6

-P l a i nt iff s Ro ge r Hart m an an d Mav is Hart m an co ul d ne ve r res ci n d
be cau se th ey di d no t ha ve th e req ui si te own ers hi p. Fu rth er, be cau se th e Su bjec t Pro pe rty was no t Mau l Lee Hart m an 's pr in ci pa l dwe ll in g at th e ti m e of th es e tra ns act io ns , sh e a l s o d i d no t ha ve a rig ht of res ci ss io n

un de r th e TILA. Acco rd in gl y , Defen da nt s are en ti tl ed to su m m ary jud gm en t on Pl ai nt iff

s' TILA res ci ss io n c la im

an d P la in ti ffs ' m ot io n is

co rres po nd in gl y

de ni ed

.

Har tma n v. Smi th

, Ci vi l No. 09 -0 16 18 MJ D/RLE, 20 10 W L 37 35 72 4, at *9 (D. Mi nn

. Sep t. 1 7, 2 01 0)

.

The pl ai nt iff

s an d Pri m e each su bm it te d a le tt er req ue st to f i l e a m ot io n fo r

reco ns id erat io n. The pl ai nt iff s' le tt er re q u e s t a r g ue d fo r th e fir st ti m e th at th e
Mi nn es ot a ho m es te ad la w m ay ap pl y to vo id Mav is 's qu it cl ai m co nv ey an ce of th e

pr op ert y to Mau l Le e

. The co ur t gr an te d each pa rty's req ue st to fil e a m ot io n fo r

reco ns id erat io n. The pl ai nt iff s an d Pri m e each fil ed m ot io ns al o n g wit h su pp or ti ng

m em or an da

. The pl ai nt iff s arg ue d th at th e qu it cl ai m de ed was an at te m pt to co nv ey

a ho m es te ad in te res t un de r th e Mi nn es ot a ho m es te ad la w bu t th at su ch a co nv ey an ce
is v o id wit ho ut th e si gn at ur es of bo th sp ou se s, se e Mi nn

. St at

. Ann

. § 50 7.0 2, an d

Ro ge r di d no t si gn th e qu it cl ai m de ed

. Pri m e's m em or an du m arg ue d th at th e pl ai nt iff s

were at te m

pt in g to m ak e im

pr op er us e of th e Mi nn es ot a ho m es te ad la w "as a swo rd

fo r th e pu rp os e[] of crea ti ng a TILA rev oc at io n rig ht rat he r th an [as ] a sh ie ld to de feat

a cl ai m by Ro ge r's da ug ht er th at sh e own s th e pr op e r t y." Fu rth er, Pri m e's

m em or an d u m arg ue d th at Ro ge r was es to pp ed fro m as se rti ng th e pr ot ect io n of

Mi nn es ot a's ho m es te ad la w be cau se he co ns en te d wit h fu ll kn owl ed ge to Mav is 's

qu it cl ai m co nv ey an ce of th e pr op ert y to Mau l Lee. The pl ai nt iff s fil ed a res po ns e

m em or an du m in whi ch th ey fu rth er arg ue d th e ho m es te ad is su e. The co ur t fo un d th at

Ro ge r co ns en te d to th e tra ns act io n wit h fu ll kn owl ed ge an d th at th e Hart m an s were

es to pp ed to cl ai m th at Ro ge r or Mav is ha s an y in te res t in th e pr op ert y

. The co ur t th us
de ni ed bo th m ot io ns for reco ns id erat io n.

-7

-The reaf te r, th e co ur t se nt a le tt er to th e pa rti es req ue st in g writ te n res po ns es to

si x q ue st io ns . Two of

th os e q ue st io ns were as fol lo ws:

Ju dg e Dav is 's Sep te m

be r 17

, 20 10 Ord er st at es th at "at al l m at eri al ti m es in th is cas e, Mau l Le e H a r t m an was th e so le own er of th e Su bjec t
Pro pe rty. As a res ul t, Pl ai nt iff s Ro ge r Hart m an an d Mav is Hart m an

co ul d ne ve r res ci nd be cau se th ey di d no t ha ve th e req ui si te own ers hi p."
In li gh t of th is ru li ng , wha t st an di ng do Mav is an d Ro ge r Hart m an ha ve if t he y ha d n o ri gh t t o t he Su bjec t Pr op ert y ?

* * *

Do Pl ai nt iff

s ha ve an y sp eci fic au th or it y , o th er th an th at li st ed in th ei r

su bm it te d jury in st ru ct io ns , th at as si gn m en t fo r co ll at eral pu rp os es

wou ld m ak e Pri m e Sec ur it y Ban k a n a ss ig ne e u nd er TILA?

Th e pa rti es su bm it te d writ te n res po ns es , a nd th e co ur t he ld a te le ph on e co nf er e n c e

on th e is su es

. In an or de r da te d Mar ch 6, 20 12

, t h e c o u r t fo un d th at th e Hart m an s

were n o l on ge r pa rti es in in te res t t o t he li ti ga ti on ba se d on th e fac t t ha t t he y ha d n o

own ers hi p in te res t in th e pr op ert y su bs eq ue nt to t h e q u it cl ai m de ed of th e pr op ert y

to Mau l Lee. Co ns eq ue nt ly, th e co ur t di sm is se d th e Hart m an s as part ie s to th e cas e.

In th e s a me o r de r, th e co ur t fo un d th at Pri m e is no t an as si gn ee fo r pu rp os es of th e pl ai nt iff s' TILA da m ag es cl ai m

. The refo re, in a s u b s e qu en t or de r da te d Mar ch 9,

2 0 1 2

, t h e co ur t di sm is se d th e TILA da m ag es cl ai m ag ai ns t Pri m e. A jury tri al was
he ld on se ve ral rem ai ni ng cl ai m s. Bas ed on th e jury's ve rd ic t, th e di st ric t co ur t

en te red jud gm en t i n fa vo r of th e d efen da nt s o n a ll rem ai ni ng cla im s.

II. Dis cu ss io n
On ap pe al

, th e pl ai nt iff

s arg ue th at th e di st ric t co ur t erre d in gr an ti ng su m m ary jud gm en t to Pri m e on th ei r TILA res ci ss io n cl ai m , in di sm is si ng th ei r TILA da m ag es
cl ai m an d t he ir st at e la w c la im s ag ai ns t Pri m e un de r Mi nn es ot a St at ut es Ann ot at ed
§ 58 .18 , a nd in di sm is si ng th e Hart m an s as pl ai nt iff s. Pri m e cro ss -ap pe al s, arg ui ng

-8

-th at th e co ur t erre d in fin di ng th at th e pl ai nt iff s' no ti ce was su ffi ci en t to ex erci se th e

TILA st at ut or y

rig ht of r es ci ss io n.

A. Exer ci se of

th e TILA Ri

gh t o f Res ci ss io n
The pl ai nt iff

s arg ue th at th e di st ric t co ur t erre d in gr an ti ng su m m ary jud gm en t

to Pri m e on th e TILA res ci ss io n cl ai m

. On cro ss -ap pe al

, Pri m e arg ue s th at th e co ur t

co rrec tl y gr an te d it s m ot io n fo r su m m ary jud gm en t, bu t it arg ue s th at th e co ur t erre d

in fin di ng th at th e p la in ti ffs ' no ti ce was su ffi ci en t t o e xe rci se th e ri gh t o f res ci ss io n

un de r 15 U.S.C. § 16 35

. P rime co nt en ds th at th e pl ai nt iff s no lo ng er ha ve th e rig ht

to se ek res ci ss io n of th e tra ns act io ns be cau se th e pl ai nt iff s fai le d to fil e th ei r su it fo r

res ci ss io n p rio r to th e fo recl os ur e sa le on Feb ru ary 10 , 20 09

.

We r e vi ew de no vo a di st ric t co ur t's gr an t of a m ot io n f o r

su m m ary jud gm en t. J.E. Jon es Co ns tr

. Co

. v. Ch ub b & So ns , Inc

. , 48 6
F.3 d 33 7, 34 0 (8 th Ci r. 20 07 ). "Su m m ary jud gm en t is ap pr op ria te whe n, vi ewin g th e fact s in th e li gh t m os t fav or ab le to th e no n- m ov an t, th ere are

no ge nu in e is su es of m at eri al fact an d th e m ov an t is en ti tl ed to jud gm en t

as a m at te r of

law." Id

.

Si pe v. W or kh or se Cu st om Ch as si s, LL C , 57 2 F .3d 52 5, 5 28 (8t h C ir. 2 00 9)

.

Und er TILA,

i n t he cas e of an y co ns um er cred it tra ns act io n

. . . in whi ch a se cu rit y i n t e r e s t

. . . is or wil l be ret ai ne d or acq ui red in an y pr op ert y whi ch is

us ed as th e pr in ci pa l dwe ll in g of th e pe rs on to who m cred it is ex te nd ed

, th e ob li go r sh al l ha ve th e rig ht to res ci nd th e tra ns act io n un ti l

. . . th e de li ve ry of th e in fo rm at io n an d res ci ss i o n fo rm s req ui red un de r th is

se ct io n to ge th er wit h a st at em en t co nt ai ni ng th e m at eri al di sc lo su res

r e qu ire d un de r th is su bc ha pt er,

. . . by no ti fy in g th e cred it or , i n

acco rd an ce wi th reg ul at io ns of t he Bo ard , of h is in te nt io n t o d o s o.

-9

-15 U.S.C. § 16 35 (a) (1 99 5) ; se e al so Bea ch v. Ocwen Fed

. Ban k

, 52 3 U.S. 41 0, 41 1 ( 1 9 9 8 ) ("[ W ]hen a lo an m ad e in a co ns um er cred it tra ns act io n is se cu red by th e
bo rro wer's pr in ci pa l dwe ll in g, t h e b o r ro wer m ay res ci nd th e lo an ag reem en t if th e
le nd er fai ls to de li ve r cert ai n fo rm s or to di sc lo se im po rta nt te rm s accu rat el y ."). "An 1

ob li go r's rig ht of res ci ss io n sh al l ex p i r e t hr ee y ears aft er th e da te of co ns um m at io n
of th e tra ns act io n or up on th e sa le of th e pr op ert y , whi ch ev er oc cu rs fir st

. . . ." 15

U.S.C. § 16 35 (f). Fu rth erm or e, th e im pl em en ti ng Reg ul at io n Z pr ov id es , in pe rti ne nt

pa rt:

To ex erci se th e rig ht to res ci nd

, th e co n s u mer sh al l no ti fy th e cred it or of th e res ci ss io n by m ai l, te le gr am or ot he r m ean s of w rit te n

co m m un ic at io n. Not ic e is co ns id ered gi ve n whe n m ai le d, whe n fil ed fo r
te le gr ap hi c tra ns m is si on or , if se nt by ot he r m ean s, whe n de l i v e red to th e cre di to r's de si gn at ed pl ace o f bu si ne ss

.

12 C.F.R. § 22 6.2 3( a)(2 ).

The di st ric t co ur t "d is ag ree[ d] wit h Pri m e's as su m pt io n th at a pl ai nt iff m

us t fil e

a la wsu it in or de r to ex erci se th ei r rig ht of res ci ss io n." Har tma n , 20 10 W L 37 35 72 4,

at *8

. Fu rth erm or e, th e co ur t fo un d th at th e "[p ]lain ti ffs ' Aug us t 20 08 Res ci s si on

Lett er was wit hi n th e th ree- y ear res ci ss io n pe rio d an d well be fo re th e Feb ru ary 20 09

fo recl os ur e sa le ." Id

. Co ns eq ue nt ly, th e co ur t ru le d th at th e "[p ]lain ti ffs ' cl ai m is no t

ba rred by sect io n 1 63 5( f)." Id

.

The pl ai nt iff

s arg ue th at th is co ur t's op in io n in Ran d Co rp

. v. Y er So ng Mou a , 55 9 F.3 d 84 2 (8 th Ci r. 20 09 ), req ui res th at we affi rm th e di st ric t co ur t's ru li ng on th is

is su e. In Ran d

, bo rro wers faci ng fo recl os ur e se nt a le tt er no ti fy in g th e le nd er th at th ey

Para gr ap h 15 4 of th e pl ai nt iff s' c o mp l a in t al le ge s th at "Def en da nt s fai le d to 1

pr ov id e each Pl a in ti ff wit h: * * * [a] cl ear an d co ns pi cu ou s Not ic e of Ri gh t to
Res ci nd th e m or tg ag e lo an tra ns act io n as requ ire d by 15 U.S.C. § 16 35 (a) and Reg

. Z[,] [C.F.R.] § 2 26 .23 (a) a nd (b) ." Thi s al le ga ti on is no t d is pu te d o n a pp eal

.

-1 0-were res ci nd in g th ei r m or tg ag e. Id

. a t 84 4. The pr op ert y was so ld at a sh eri ff's sa le

an d th e bo rro wers ' red em

pt io n pe rio d ex pi red si x m on th s la te r. Id

. The bo rro wers di d

no t ex erci se th ei r red em

pt io n ri gh ts

. Id

. The l en de r fil ed su it ag ai ns t th e bo rro wers ,

an d the borr owe rs co un te rcl ai m ed

, al le gi ng , in te r al ia

, th at TI L A ' s sta tut or y thr ee -y ea

r rig ht to res ci nd ha d be en "t rig ge red by Ran d's fai lu re to pr ov id e cl ear an d

co ns pi cu ou s no ti ce of TILA's th ree- da y po st -tr an sa ct io n rig ht to can cel ." Id

. at 84 5.

The di st ric t co ur t gr an te d su m m ary jud gm en t to th e le nd e r, an d th e bo rro wers

ap pe al ed

. W e rev ers ed

, fin di ng th at th e le nd er ha d "v io la t e d TILA by fai li ng to

cl earl y an d co ns pi cu ou sl y di sc lo se th e [b or ro wers '] th ree- da y rig ht to res ci nd th e

tra ns act io n, th ereb y gi vi ng ris e to a th ree- y ear pe rio d of res ci ss io n." Id

. at 84 8. Here,

th e pl ai nt iff

s arg ue th at

, "[i ]n [rev ers in g], [th is co ur t] be li ev ed th e in te rv en in g, ex tra

jud ic ia l 'sa le ' di d no t ba r th e [b or ro wers ] fro m se cu rin g an or de r en fo rci ng " th ei r rig ht

of res ci ss io n. Here, th e pl ai nt iff s m ai nt ai n th at th e bo rro wers in Ran d "h ad a rig ht to

res ci nd an d th e co ur t be li ev ed it ha d juri sd ic ti o n t o de cl are th e rig ht was ex erci se d

an d t o a ls o e nf

or ce t he rig ht . Oth erwi se , it co ul d n ot ha ve de ci de d t he m eri ts ."

Ran d is di st in gu is ha bl e. "[T]he co re is su e" be fo re ou r co ur t in th at cas e was
"wh et he r th e [b or ro wers ] ha d a th ree- y ear— rat he r th an th ree- da y —p eri od in whi ch

to res ci nd th e tra ns act io n." Ran d

, 55 9 F.3 d at 84 2. Our an al y si s fo cu se d on whe th er
th e le nd er ha d fu lfi ll ed it s i ni ti al di sc lo su re an d n ot ic e req ui rem en ts

. Id

. at 84 5– 48

. The qu es ti on of whe th er th e bo rr ow er s' no ti ce was su ffi ci en t t o e xe rci se th ei r ri gh t

of res ci ss io n un de r 1 5 U

. S

. C

. § 16 35 was no t ad dr es se d. Se e id

. "Qu es ti on s whi ch

m erel y lu rk in th e reco rd

, ne it he r br ou gh t to th e at te nt io n of th e co ur t no r ru le d up on ,

are no t to be co ns id ered as ha vi ng be en so d e c i d ed as to co ns ti tu te pr eced en ts ."

W eb st er v. Fal l

, 26 6 U.S. 50 7, 51 1 (1 92 5)

. Bec au se Ran d di d no t ad dr es s th e qu es ti on

pr es en te d he re, we fin d t h a t Ran d is no t co nt ro ll in g on whe th er fil in g a la wsu it is

ne ces sa ry to ex erci se co ns um er re sc is si on rig ht s u nd er TILA.

Am on g th e fed e r a l c i rcu it s, "[t ]here is a sp li t of au th or it y as to whe th er th e
bo rro wer m

us t fi le a la wsu it wit hi n [th e rep os e pe rio d] aft er the co ns um m at io n of a

-1 1-lo an tra ns act io n to ex erci se [h is or ] he r rig ht to res ci nd

, or whe th er th e bo rro wer ne ed

on ly ass ert th e ri gh t t o re sc in d t hr ou gh a writ te n n ot ic e wit hi n t he [rep os e] peri od ."

Gil be rt v. Resi de nt ia l Fun di ng LLC

, 67 8 F.3 d 27 1, 27 6 (4 th Ci r. 20 12 ). The Thi rd an d

Fo ur th Ci rcu it s ha ve he ld th at va li d, writ te n no ti ce is effe ct iv e, by it se lf, to effe ct ua te

res ci ss io n. Se e id

. a t 2 7 6

– 7 7 ; Sh er ze r v. Homes ta r Mor tg

. Se rv s. , 70 7 F.3 d 25 5,

25 8– 61 (3 d Ci r. 20 13 ). The Nin th an d Ten th Ci rcu it s, on th e o th er ha nd , h av e he ld

th at no ti ce i s n o t s u f

f ic ie nt ; th os e co ur ts ha ve he ld th at th e bo rro wer m us t as se rt

res ci ss io n in a le ga l act io n to co m pl et e th e ex e r c is e of th e res ci ss io n rig ht

. Se e
McOmie -Gra

y v. Ban k of

Am. Home Lo an s , 66 7 F.3 d 13 25

, 13 27 –3 0 (9 th Ci r. 20 12 );

Ros en fi el d v . HSBC Ba nk

, USA , 68 1 F .3d 11 72 , 11 85 (10 th Cir . 20 12 ).

Very rece nt ly, we joi ne d th e Nin th an d Ten th Ci rcu it s in ho ld in g th at no ti ce is

no t s uf fic ie nt to ex erci se th e ri gh t o f res ci ss io n. Kei ra n v. Home Cap it al

, In c. , Nos

. 11 -3 87 8, 1 2- 10 53 , 20 13 W L 34 81 36 6, at *5 (8t h C ir. J ul y 12 , 20 13 ). Kei ra n fo un d

pe rs ua si ve th e Ten th Ci rcu it ' s a n a l ys is of th e "re m ed ia l eco no m y " of TILA's

res ci ss io n rem ed y in Ros en fi el d

. Id

. at *4

. Ros en

fi el d co nc lu de d th at "t he fil in g of an

act io n in a co ur t (o r pe rh ap s a d efen si ve ass ert io n o f th e res ci ss io n rig ht in a co ur t)

. . . is req ui red to in vo ke th e rig ht li m it ed by th e TILA st at ut e of rep os e." 68 1 F.3 d at

11 83 . As th at cas e ex pl ai ne d,

It m ay be

, st ric tl y sp eak in g, th at "b y no ti fy in g t h e cred it or , in

acco rd an ce wit h [Reg ul at io n Z] ," 15 U.S.C. § 16 35 (a), a bo rro wer m ay
pr op erl y al e r t th e cred it or of he r in te nt to re sc in d th e un de rlyin g
tra ns act io n. Howev er, as [th e bo rro wer] wou ld ha ve it

, tra ns m is si on of

su ch no ti ce wou ld be al l th at is r e q u i r e d to ex erci se th e rig ht of

res c i s s io n. The pr ob le m wit h th is arg um en t is th at

, in a si gn ifi can t

nu m be r of in st an ces , th e reme d i a l e c on om y of th e rem ed y wou ld be jeop ard iz ed

. Se e [An dr ew Kul l, Resc is si on an d Res t it ut io n, 61 Bu s. Law. 56 9, 57 7 (2 00 6) ]. Sp eci f i c a l l y, it is se lf- ev id en t th at whe n a bo rro wer wh o h as pr ov id ed no ti ce to a cred it or de ci de s l at er— at so m e

un kn own , an d pe rh ap s di st an t, po in t i n t h e fu tu re— to effe ct ua te th e

res ci ss io n rig ht th ro ug h judi ci al pr oc es s, the un de rlyin g ci rcu m st an ces

-1 2-in no sm al l nu m be r of c a s e s are li ke ly to ha ve ch an ge d si gn ifi can tl y

. Ju st to pro vi de on e ex am pl e: ne w act or s m ay

ha ve co m e o nt o t he fie ld

po st -tr an sa ct io n an d ob ta in ed so m e in te res t in th e lo an or th e un de rlyin g
pr op ert y

. Cf

. Beac h, 52 3 U.S. at 41 8– 19 , 11 8 S. Ct. 1 40 8 (r eco gn iz in g
t ha t TILA's st at ut e of rep os e act s to li m it th e cl ou di ng of a pr op ert y's
ti tl e). And

, as a co ns eq ue nc e of th is real it y , en fo rcem en t wou ld li ke ly be

co st ly an d di ffi cu lt

. In sh or t, su ch an ou tc om e is no t co ns is te nt wit h th e
ge ne ral go al an d a pp li cat io n o f a res ci ss io n re m ed y

.

Id

. at 11 85 (fi rs t al te rat io n in or ig in al ). The Ten th Ci rcu it 's op in io n fu rth er ex pl ai ne d

th at TILA and Reg ul at io n Z d o n ot

es ta bl is h[ ] th at no ti ce is a su ff ic ie nt co nd it io n fo r th e e x e r c i s e of th e TILA res ci ss io n rig ht

. Re a d pl ai nl y , se e Bea ch

, 52 3 U.S. at 41 6, 11 8
S. Ct

. 1 4 0 8 ( "[I ]n th is in st an ce, th e an swe r is ap pa ren t fro m th e pl ai n la ng ua ge of § 16 35 (f)." ); se e al so Uni te d St at es v. La mir an d, 66 9 F.3d
10 91

, 10 94 (1 0t h Ci r.20 12 ) ("[ W ]e be gi n wit h th e te xt of [th e st at ut e].");
Co pa r Pumi ce Co

. v

. Ti dw el l, 60 3 F.3 d 78 0, 79 4 (1 0t h Ci r.20 10 ) (s ug ge st in g th at de fere nc e m us t be gi ve n to an a g e n c y's in te rp ret at io n of a reg ul at io n, un le ss th e pl ai n la ng ua ge co un se ls ot he rwis e), th es e
pr ov is io ns su gg es t on ly th at th e gi vi ng of no ti ce is a ne ces sa ry pr ed ic at e
act to th e ul ti m at e ex erci se of th e rig ht

, s e e 12 C.F.R. § 22 6.2 3( a)(2 ) (s ug ge st in g th at "t he co ns um er sh al l no ti fy th e cred it or of th e res cissi on"

in or de r to "ex erci se th e rig ht to res ci nd ")— no t th at it is su ffi ci en t fo r

su ch ex erci se

.

Id

. (se co nd , th ird , and fou rth alt erat io ns in ori gi na l).

Co ns is te nt wit h Kei ra n , and wit h Ros en fi el d 's p ers ua si ve reas on in g, we ho ld

th at "t he gi vi ng of n ot ic e is a ne ces sa ry pr ed ic at e act to th e u lt im at e ex erci se of th e rig ht ." Id

. Giv in g no ti ce, as th e mea n s b y w h i ch on e co m es to "h av e th e rig ht to

-1 3-res ci n d

, " i s n o t su ffi ci en t, in it se lf, to co m pl et e th e ex erci se of th at rig ht

. Se e 15 2

U.S.C. § 16 35 (a). The di st ric t co ur t erre d in fin di ng th at th e pl ai nt iff s' no ti ce was

su ffi ci en t to e x e r c i s e th e rig ht of res ci ss io n un de r § 16 35

. Co ns eq ue nt ly, th e pl ai nt iff s' "ri gh t of res ci ss io n

. . . ex pi re[d ]

. . . up on th e sa le of th e pr op ert y " on
Feb ru ary 10

, 20 09

. Id

. at § 16 35 (f). Bec au se th e pl ai nt iff s fai le d to fil e a res ci ss io n 3

"ac ti on in a co ur t (o r pe rh ap s a de fen si ve as se rti on of th e res ci ss io n rig ht in a co ur t)"

pr io r to th e sa le

, th ei r cl ai m is ba rred

. Ros en fi el d

, 68 1 F.3 d at 11 83

. It fo ll ows th at th e
di st ric t co ur t di d n o t err in gr an ti ng su m m ary jud gm en t to Pri m e on th e pl ai nt iff s'

TILA resc is si on cla im

. 4

Sect io n 16 35 (a) cre a t e s th e rig ht to res ci nd un de r TILA. Tha t su bs ect io n 2

pr ov id es , in pe r t i n e n t pa rt, th at "t he ob li go r sh al l ha ve th e rig ht to res ci nd th e
tra ns act io n

. . . by no ti fy in g th e cred i t o r

. . . of hi s in te nt io n to do so ." 15 U.S.C. § 16 35 (a). By th e pl ai n la ng ua ge of th e st at u t e , g i v in g no ti ce is no t th e m ean s by
whi ch th e ob li go r exer ci se s th e rig ht to res ci nd

, bu t th e m ean s by whi ch th e ob li go r

" ha [ s ] th e rig ht to res ci nd ." Id

. (em ph as is ad de d)

. Fu rth er, th e ob li go r's no ti ce to th e

cre d i to r do es no t act ua ll y res ci nd th e tra ns act io n bu t m erel y co m m un ic at es th e ob li go r's " in te nt io n to [res ci nd th e tra ns act io n]." Id

. (em ph as is ad d e d )

. Sect io n 16 35 (a) es ta bl is he s ho w th e st at ut or y rig ht to res ci nd ari se s, i.e., by gi vi ng ti m el y an d

pr op er no ti ce of in te nt to res ci nd

. Ass um in g th at on e ac ti va te s th e st at ut or y rig ht by gi vi ng ti m el y an d pr op er no ti ce (as th e pl ai nt iff s di d he re), § 16 35 (f) es ta bl is he s th e

co nd it io ns un de r whi ch th at rig ht exp ir es

.

The pl ai nt iff

s al so arg ue th at th e sh eri ff's sa le was no t a "s al e" w i t h i n t h e 3

m ean in g of 15 U.S.C. § 16 35 (f). Thi s arg um en t was rai se d in W or th y v. W or ld W id e Fin an ci al Se rv ic es
, In c. , 34 7 F. Su pp

. 2d 50 2 (E.D. Mi ch

. 20 04 ) af f'd

, 19 2 F. App 'x.
36 9 (6 th Ci r. 20 06 ). As th at co ur t no te d, th e Offi ci al St aff Co m m en ta ry to Reg ul at io n Z pr ov id es , "'A sa le or tra ns fer of th e pr op ert y ne ed no t be vo lu nt ary to te rm in at e th e rig ht to res ci nd

. Fo r ex am pl e, a fo recl os ur e sa le wou ld te rm in at e an un ex pi red rig ht

to res ci nd .'" Id

. at 5 06 (qu ot in g 1 2 C .F.R. § 2 26 .23 (a)( 3) (Su pp . I. 19 95 )).

Bec au se we ho ld th at th e pl ai nt iff s' no ti ce was no t su ffi ci en t to ex erci se th e 4 rig ht of res ci ss io n, we do no t reac h th e pl ai nt iff s' cl ai m th at th e di st ric t co ur t erre d in
al lo win g Pri m e to as se rt es to pp el as a de fen se to th e pl ai nt iff s' ho m es te ad arg um en t in it s m ot io n- to -rec on si de r m em or an du m

.

-1 4-B. Dis mis sa l o f TI LA Dama ge s C la im a nd

Min ne so ta St at ut es Ann ot at ed § 5 8.1 8

Cl ai m s

"We rev ie w de no vo

. . . th e di st ric t co ur t's di sm is sa l of pl ai nt iff 's cl ai m s

. . . ."

Helv ey v. Ci ty of Map le wo od

, 15 4 F.3 d 84 1, 84 4 (8 th Ci r. 19 98 ) (ci ti ng Ko hl v.
Ca ss on
, 5 F.3 d 11 41

, 11 48 ( 8t h Ci r. 19 93 )). Co un t two of th e pl ai nt iff s' co m pl ai nt

so ug ht da m ag es un de r TILA ag ai ns t bo th th e Sm it hs an d Pri m e. The pl ai nt iff s arg ue
th at Pri m e was th e Sm it hs ' as si gn ee fo r pu rp os es of 15 U.S.C. § 16 41 ( e ) ( 1 )

, whi ch

st at es th at "an y

civ il act io n a ga in st a cred it or for a vi ol at io n o f th is su bc ha pt er, an d

an y pr oc eed in g un de r se ct io n 16 07 of th is t i t le ag ai ns t a cred it or , wit h res pe ct to a

co ns um er cred it tra ns act io n se cu red by real pr op ert y m ay be m ai nt ai ne d ag ai ns t an y

as si gn ee of su ch cred it or ." In a pr et ria l or de r da te d Mar ch 6, 20 12

, th e di st ric t co ur t

fo un d th at Pri m e was no t an as si gn ee fo r pu rp os es of § 16 41 (e)( 1)

. The co ur t st at ed :

Und er TILA, a "cr ed it or " is on e to who m th e ob li ga ti on is in it ia ll y
pa ya b l e

. A cred it or 's as si gn ee, th en , wou ld be on e to who m th e ob li ga ti on is i n i t i a l ly pa y ab le by way of an as si gn m en t. Here, th e ob li ga ti on is th e Sm it hs ' lo an to t h e H a r tm an s. The Co nt ract fo r Deed
be twee n th e Sm it hs an d Mav is an d Mau l Lee Hart m an —n ot th e lo an be twee n th e Sm it hs an d th e Hart m an s— was as si gn ed

. [Pri m e] is no t th e

on e to who m th e Hart m an s' ob li ga ti on is in it ia ll y pa y ab le ; th e Hart m an s'
ob li ga ti on is in it ia ll y pa y ab le to t h e Sm it hs

. The in te res t as si gn ed to [Pri m e] t hr ou gh th e Ass ig nm en t of [ C o nt ract fo r Deed ] was a se cu rit y in t e r es t fo r th e lo an fro m [Pri m e] to th e Sm it hs

. Und er th es e ci rcu m st an ces , [Pri m e] do es no t fal l wit hi n TILA's co nc ep t of as si gn ee.

(Fo ot no te om it te d) (th ird al te rat io n in or ig in al ). In a se pa r a t e pr et ria l or de r da te d

Mar ch 9, 20 12

, th e co ur t di sm is se d th e pl ai nt iff s' TILA da m ag es cl ai m ag ai ns t Pri m e.

Pri m e arg ue s th at th e pl ai nt iff s' cl ai m fo r da m ag es ag ai ns t it is no w m oo t.

Pri m e arg ue s th at be cau se th e pl ai nt iff s "s ub se qu en tl y di sm is se d th e TILA da m ag es
cl ai m s ag ai ns t th e Sm it hs at tri al ," th e pl ai nt iff s cl ai m s ag ai ns t it un de r § 16 41 (e)( 1)

m us t fai l. Pri m e m ai nt ai ns , es se nt ia ll y , th at "an as si gn ee's li ab il it y can be no gr eat er

-1 5-th an th e as si gn or 's." W hi te v. Homef

ie ld Fin

., In c. , 54 5 F. Su pp

. 2d 11 59

, 11 65 (W. D.

W as h. 20 08 ) (q uo ta ti on a n d ci ta ti on om it te d)

. In rep ly, th e pl ai nt iff s arg ue th at

"Pr im e di d no t or de r a tri al tra ns cri pt to su pp or t it s th eo ry an d it sh ou ld be ig no red ."

Neit he r th e pl ai nt iff

s no r Pri m e or de red a tri al tra ns cri pt

, so th e tri al tra ns cri pt

is no t in th e reco rd on ap pe al

. Nev ert he le ss , th e pl ai nt iff s' op e n i n g br ie f

ack no wled ge s th at th e di st ric t "co ur t di sp os ed of al l cl ai m s an d en te red jud gm en t on

Mar ch 19

, 20 12 ." Tha t jud gm en t, whi ch is pa rt of th e reco r d on ap pe al

, Fed

. R. App

. P. 10 (a)( 1)

, sh ows th at "[j]ud gm en t [wa]s en te red in fav or of th e
de fen da nt s an d ag ai ns t each pl ai nti ff." Thu s, ev en su pp os in g th at th e pl ai nt iff s di d no t

di sm is s th ei r da m ag es cl ai m ag ai ns t th e Sm it hs du rin g tri al

, th ei r cl ai m cert ai nl y di d

no t su rv iv e th e Mar ch 19

, 20 12 jud gm en t ag ai ns t th em

. The refo re, on th is reco rd

, we
de te rm in e th at th e pl ai nt iff s' da m ag es cl a i m ag ai ns t th e Sm it hs ha d no m eri t. The
pl ai nt iff s' da m ag es cl ai m can no t no w " be m ai nt ai ne d a ga in st " Pri m e be cau se it ha s

no gr eat er li ab il it y th an th e Sm it hs

. 15 U.S.C. § 16 41 (e)( 1)

. Co ns eq ue nt ly, th e di st ric t

co ur t d id no t er r in di sm is si ng pl ai nt iff s' TILA d am ag es cla im

ag ai ns t Pr im e.

The pl ai nt iff

s al so arg ue th at th e co ur t erre d in di sm is si ng th ei r cl ai m s ag ai ns t

Pri m e fo r vi ol at io ns of Mi nn es ot a St at ut es Ann ot at ed § 58 .18 in co nn ect io n wit h

co un ts el ev en an d twel ve of t he co m pl ai nt . The p la in ti ffs arg ue fo r th e fir st ti m e on

ap pe al th at th ei r st at e-l a w c l a i m s aro se fro m Pri m e's co nd uc t as th e se rv ic er of th e

eq ui ta bl e m or tg ag e wit h th e Sm it hs

. The pl ai nt iff s di d no t as se rt th is arg um en t

be lo w, an d "[w]e wil l no t ad dr es s arg um en ts rai se d fo r th e fir st ti m e on ap pe al ."

5

Co lo ni al In s. C

o

. o f C a l

. v. Sp ir co Env tl

., In c. , 13 7 F.3 d 56 0, 56 1 (8 th Ci r. 19 98 )
(ci ta ti on s o m it te d)

.

The pl ai nt iff

s di d m en ti on th is is su e ve ry la te in th e li ti ga ti on be lo w. Bu t th at 5

m en ti on cam e on ly in a si ng le pa rag rap h of a le tt er to th e co ur t req ue st in g le av e to fil e a m ot io n to reco ns id er th e co ur t's o r d e r o f d is m is sa l da te d Mar ch 6, 20 12

. The

co ur t tre at ed th e pl a i n t i f f s ' le tt er as a m ot io n to reco ns id er an d de ni ed it wit ho ut ad dr es si ng th e m eri ts of t he arg um en t.

-1 6-C. Dis mis sa l o f t he Har tma ns as Pla in ti ff s
Fi na ll y , th e pl ai nt iff

s arg ue th at th e co ur t erre d in di sm is si ng th e Hart m an s as

pa rti es to th e cas e. The co ur t d is m is se d t he Hart m an s as pl ai nt iff s i n a n o rd er dat ed

Mar ch 6, 20 12

, fin di ng th at th ey were n o l o n g e r p art ie s in in te res t to th e li ti ga ti on
be cau se th ey ha d n o o w n e r s hi p in te res t in th e pr op ert y su bs eq ue nt to Mav is 's

qu it cl ai m of th e pr op ert y to Mau l Lee. Giv en th e di sp os it io n of th e va rio us cl ai m s by

th e di st ric t co ur t an d th is co ur t's pa rti cu la r affi rm at io ns ab ov e, it is no t ne ces sa ry fo r

u s to ve nt ur e in to th e th ic ke t of le ga l is su es rai se d by Mav is 's qu it cl ai m of t h e

pr op ert y to Mau l Lee. The cl ai m s res ol ve d by th e di st ric t co ur t an d no w rev ie wed on

ap pe al wou ld no t in crea se th ei r m eri t at ei th er le ve l by ha vi ng th e Hart m an s ad de d

as pa rti es

. Pl ai nt iff

s ha ve sh ow n n o o t h er reas on why th e co ur t's act io n was erro r.

Co ns eq ue nt ly, we fin d no erro r in th e d i s t r ic t co ur t's di sm is sa l of th e Hart m an s as pl ai nt iff s.

III. Co nc lu si on
Acco rd in gl y , we rev ers e th e di st ric t co ur t's fin di ng th at th e pl ai nt iff s' no ti ce

was su ffi ci en t to ex erci se th e TILA st at ut or y rig ht of res ci ss io n. W e affi rm th e di st ric t

co ur t's gr an t of su m

m ary jud gm en t, th e di sm is sa l of th e pl ai nt iff s' c l a i ms , a nd th e
di sm is sa l o f th e Hart m an s as pa rti es to th e cas e.

MELLOY, Circu it Ju dg e, co nc ur rin g i n t he jud gm en t.

I co nc ur in th e jud gm en t in so far as th is Co ur t is bo un d by de ci si on s o f p r i or

pa ne ls

. Owsl ey v. Lue bb ers , 28 1 F.3 d 68 7, 69 0 (8 th Ci r. 20 02 ). W ere we writ in g on

a c l e a n s l a te , h owe ve r, I wou ld ho ld fo r th e reas on s st at ed by J ud ge Mu rp hy i n he r
di ss en t i n K e i r a n th at se nd in g no ti ce wit hi n th ree y ears of co ns um m at in g a lo an is

s u f f i c i e nt to "ex erci se " th e rig ht to res ci nd

. See 12 C.F.R. § 10 26 .23 (a)( 2)

. I n o t e
th ree a dd it io na l p oi nt s:

-1 7-Fi rs t, al th ou gh TILA do es no t pr ov id e an ex pr es s st at ut e of li m it at io ns fo r

bo rro wers to su e fo r res ci ss io n, th e st at ut e do es pr ov id e a n e x p r e s s st at ut e of

li m it at io ns fo r bo rro wers to su e fo r da m ag es

. See 15 U.S.C. § 16 40 (e) ("[ A] ny act io n

un de r [§ 16 40 ] m ay b e b r o u g h t i n an y Uni te d St at es di st ric t co ur t, or in an y ot he r

co ur t of co m

pe te nt juri sd ic ti on , wit hi n on e y ear fro m th e da te of th e oc cu rren ce of th e
vi ol at io n

. . . ."). Tha t Co ng res s pr ov id ed a st at ut e of li m it at io ns go ve rn in g su it s fo r
da m ag es de m on st rat es th at it kn ew ho w to im po se su ch a li m it at io n an d wou ld ha ve
do ne th e sa m e reg ard in g su it s fo r res ci ss io n if it so de si red ; in st ead

, h o w e v er, th e

pr ov is io n go ve rn in g res ci ss io n st at es on ly th at "t he ob li go r sh al l ha ve th e r i g h t to

res ci nd th e tra ns act io n

. . . b y no ti fy in g th e cre di to r, in acco rd an ce wi th reg ul at io ns
of th e Bu reau , of hi s in te nt io n to do so ." 15 U.S.C. § 16 35 (a) (em ph as is ad de d)

. And

as th e Keir an m ajor it y reco gn iz e d

, " R e gu la ti on Z sa y s no th in g ab ou t fil in g su it ."

__ F.3 d at

__ , 20 13 W L 34 81 36 6, at *5

. Bu t un li ke th e Keir an maj o rit y , who

as su m ed th at "wh il e Reg ul at io n Z s et s fo rth on e of th e th in gs an ob li go r m us t do to

res ci nd th e lo an —g iv e writ te n no ti ce to th e ba nk —i t d o es no t se t fo rth th e en ti re ty

of th in gs ne ces sa ry to acco m pl is h res ci ss io n," id

. (em

ph as es ad de d)

, I "d o no t li gh tl y

as su m e th at Co ng res s ha s om it te d fro m it s ad op te d te xt req ui rem en ts th a t it

no ne th el es s in te nd s to ap pl y , an d [m y ] rel uc ta nc e is ev en gr eat er whe n Co ng res s ha s
sh own els ewh ere i n t he same sta tu te th at it kn ows ho w t o m ak e su ch a req ui rem en t

m an ife st ." Ja m a v. Im

m ig rat io n & Cu st om s Enfo rcem en t, 54 3 U.S. 33 5, 34 1 (2 00 5) ;

se e Bat es v. Uni te d St at es , 52 2 U.S. 23

, 29 –3 0 (1 99 7) ("[ W ]here Co ng res s in cl ud es

p a r t i c ul ar la ng ua ge in on e se ct io n of a st at ut e bu t om it s it in an ot he r se ct io n of th e

sa m e Act, it is ge ne ral ly pr es um ed th at Co ng res s act s in te nt io na ll y an d pu rp os el y in

t h e di sp arat e in cl us io n or ex cl us io n." (al te rat io n in or ig in al ) (ci ta ti on an d in te r n a l

qu ot at io n m ark s o m it te d) ).

Seco nd

, th e Nin t h C irc ui t's de ci si on in McOm ie -Gray v. Ban k of Am eri ca

Hom e Loa ns , 66 7 F.3 d 13 25

, 13 28 (9 th Ci r. 20 12 )—wh ic h, pr io r to Keir an , ba la nc ed

th e two –t wo ci rcu it sp li t be twee n th e Thi rd an d Fo ur th Ci rcu it s an d Nin th an d Ten th

Ci rcu it s— of

fers on ly ho ll ow su pp or t fo r th e pr op os it io n th at a bo rro wer m us t fil e su it

-1 8-to ex erci se th e rig ht to res ci nd

. The McOm ie -Gray co ur t ack no wled ge d th at "[w]ere

[it ] writ in g on a bl an k sl at e, [it ] m ig ht co ns id er wh e t h e r n o t i fic at io n wit hi n th ree

y ears of th e tra ns act io n co ul d e xt en d th e ti m e li m it im po se d by § 16 35 (f)[,]" id

.
at 13 28 ; ho wev er, th e co ur t de cl ared it se lf "b ou nd " by Mi gu el v

. C o u n t r y Fu nd in g

Co rp ., 30 9 F.3d 11 61 (9 th Ci r. 20 02 ). 66 7 F.3d at 13 29

. In m y vi ew, Mi gu el is no t

in st ru ct iv e on th e is su e th at was be fo re th e McOm ie -Gray co u r t or pr es en te d in

Keir an or in th is cas e in so far as th e bo rro wer in Mi gu el di d no t se nd no ti ce to th e
le nd er of he r in te nt to res ci nd or fil e su it fo r res ci ss io n wit hi n th e th ree- y ear st at ut or y

pe rio d. Mi gu el

, 30 9 F.3 d at 11 63 ; se e McOm ie -Gray, 66 7 F.3 d a t 1 3 2 9 ("[ T] he

6

bo rro wer [in Mi gu el ] ne ve r s e n t a t i m el y no ti ce of res ci ss io n." ). Acco rd in gl y , th e
Mi gu el bo rro wer's rig ht to res ci nd ha d " co m pl et el y ex ti ng ui sh e[d ] . . . at th e en d o f

th e 3- y ear pe rio d." Bea ch v. Ocwe n F e d

. Ban k, 52 3 U.S. 41 0, 41 2 (1 99 8)

. Thi s

m at eri al fact di ffer en ti at es Mi gu el fro m McOm ie -Gray, Keir an , an d th is cas e, whe re
th e bo rro wers di d ti m el y se nd no ti ce to th e le nd ers wit hi n th ree y ears of th e

res pe ct iv e lo an co ns um m at io ns

.

Last ly, whi le I reco gn iz e th e Keir an m ajor it y 's co nc ern s reg ard in g th e po ss ib le

te m po rary un cert ai nt ie s in ti tl es if pr ov id in g no ti ce were su ffi ci en t to ex erci se th e rig ht to res ci nd

, I do no t be li ev e th at re q u i r i n g le nd ers to in it ia te de cl arat or y

jud gm en t act io ns —ra th er th an de fen d in res ci ss io n act io ns —i s so un de si rab le th at it

reac he s a le ve l of ab su rd it y su ch th at th is Co ur t sh ou ld ig no re the pl ai n la ng ua ge of

th e st at ut e an d Reg ul at io n Z. See Co nt em p. In du s. Co rp

. v. Fro st

, 56 4 F.3 d 98 1, 98 5

The bo rro wer in Mi gu el ti m el y n o t i f ie d an d fil ed su it ag ai ns t th e le nd er's 6

ag en t
, bu t th e co ur t de te rm in ed th at th is was no t th e sa m e as pr ov id in g no ti ce to th e le nd er it se lf. See 30 9 F.3 d at 11 65 ("Whi le th e [le nd er's ] se rv ic in g ag en t

. . . rece iv ed

no ti ce of can cel la ti on wit hi n th e rel ev an t th ree- y ear pe rio d, no au th or it y su pp or ts th e
p r op os it io n th at no ti ce to [th e ag en t] sh ou ld su ffi ce fo r no ti ce to th e [l e n d e r ].
The refo re, [th e] rig ht to can cel la ti on was ex ti ng ui sh ed as ag ai ns t th e [le nd er]."), an d
id

. ("B ecau se th e co m

pl ai nt na m ed on ly [th e le nd er's ag en t]

. . . it was no t an effe ct iv e

can cel la ti on , an d th e ri gh t i n q ue st io n was ex ti ng ui sh ed when th e th ree- y ear per io d

ex pi red .").

-1 9-(8 th Ci r. 20 09 ) ("Wher e st at ut or y la ng ua ge is pl ai n, 'th e so le f u nc ti on of th e

co ur ts —at le as t whe re th e di sp os it io n req ui red by th e te xt is no t ab su rd —i s to en fo rce
it acco rd in g to it s te rm s.'" (q uo ti ng Lam ie v. U.S. Tr., 54 0 U.S. 52 6, 53 4 (2 00 4) ); se e
al so Harb is on v. Bel l, 55 6 U.S

. 1 8 0, 19 8 (2 00 9) (Tho m as , J., co nc ur rin g in th e jud gm en t) ("Ev en if th e pr op er in te rp ret at io n of a st at ut e up ho ld s a 've ry ba d po li cy ,'

it 'is no t wit hi n ou r pr ov in ce to se co nd -g ue ss ' th e 'wis do m of Co ng res s' act io n' by
pi ck in g an d ch oo si ng ou r pr efer red in te rp ret at io n fro m am on g a ran ge of po te nt ia ll y pl au si bl e, bu t li k e l y i n accu rat e, in te rp ret at io ns of a st at ut e." (q uo ti ng Eld red v.
Ash cro ft, 53 7 U.S. 18 6, 22 2 (20 03 ))). Thi s is es pe ci al ly tru e "b ecau se th e ob li go r's

in it ia ti on of a la wsu it wou ld al so un il at eral ly crea te a cl ou d on th e ti tl e th at wou ld no t

b e r e s o l ve d un ti l a co ur t or de r or a ne go ti at ed se tt le men t ." Keir an ,

__ F.3 d at

_ _ , 20 13 W L 34 81 36 6, at *1 1 (Mu rp hy, J., di ss e n t i n g ) (em ph as is ad de d) (in te rn al

qu ot at io n m ark s o m it te d)

.

Mo reo ve r, "ca ut io n req ui res at te nt iv en es s to th e vi ews o f t he ad m in is tra ti ve

en ti ty ap po in te d to ap pl y an d en fo rce a st at ut e," an d " d e f e r en ce is es pe ci al ly

ap pr op ria te in th e pr oc es s of in te rp ret in g [TI LA ] a n d R eg ul at io n Z," un le ss su ch

de fere nc e wou ld le ad to "d em on st rab ly irr at io na l" res ul ts

. Fo rd Mo to r Cred it Co

. v.
Mi lh ol li n, 44 4 U.S. 55 5, 56 5 (19 80 ). Here, th e ad m in is tra ti ve ag en cy ch arg ed wit h

en fo rci ng TILA an d Reg ul at io n Z is th e Co ns um er Fi na nc ia l Pro te ct io n Bu reau (th e

"Bu reau "). See Dod d– Fran k W al l St reet Refo rm an d Co ns um er Pro te ct io n A ct

, Pu b. L. No. 11 1- 20 3, § 11 00 A(2 ) (2 01 0 )

. Th e Bu reau ha s weig he d in as am ic us

cu ria e in co ur ts aro un d th e co un try on th e is su e of ho w a bo rro wer pr op erl y ex erci se s
th e ri gh t t o re sc in d a lo an tra ns act io n, se e, e.g ., She rzer v. Ho m es ta r Mo rtg . Serv s.,

70 7 F .3d 25 5 (3d Ci r. 20 13 )—i nc lu di ng in Keir an —an d arg ue d th at se nd in g n ot ic e
is all th at is req ui red

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-2 0-