Opinion ID: 202177
Heading Depth: 2
Heading Rank: 3

Heading: The TILA Expiration Provision.

Text: 43 At oral argument, Vergara pointed out that the TILA, in terms, permits a debtor claiming that the lender omitted certain material disclosures to assert a right of rescission up to three years after the date of consummation of the transaction or [until] the sale of the property, whichever occurs first. 15 U.S.C. § 1635(f); see Beach v. Ocwen Fed. Bank, 523 U.S. 410, 413, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998). Seeking refuge in this provision, Vergara asseverates that even if his TILA counterclaim otherwise would be barred under Puerto Rico res judicata law, the window for asserting his TILA rescission right remains open because neither terminating event — the expiration of the three-year period or the sale of the residence — has occurred. As we explain below, this argument sails wide of the mark. 44 Although the statutory language admits of no explicit exception, at least one other court of appeals has concluded that events other than the expiration of the three-year period or the sale of the encumbered property can cut off the debtor's right of rescission. See Albano v. Norwest Fin. Haw. Inc., 244 F.3d 1061, 1064 (9th Cir.2001) (obtaining a default judgment of foreclosure extinguishes the debtor's right of rescission); Hefferman v. Bitton, 882 F.2d 379, 383-384 (9th Cir.1989) (entering into a contract to sell the encumbered property terminates the debtor's right of rescission). We agree with the Ninth Circuit that the TILA statute merely sets out the right's maximum life span [and] does not affect procedural or substantive requirements that might end its existence even earlier. Albano, 244 F.3d at 1064 n. 2. We hold, therefore, that ordinary preclusion principles continue to operate in the TILA milieu and that those principles may hasten the demise of a debtor's TILA-based right of rescission. 45 This is a result driven not only by precedent but also by common sense. Fairly read, the TILA contains no hint of a legislative intent to preempt normally applicable state-law preclusion rules or otherwise to undercut Congress's general directive that federal courts should afford state-court judgments the same preclusive effect that they would receive in the courts of the rendering state. See 28 U.S.C. § 1738. We already have determined that, as a matter of Puerto Rico law, the earlier foreclosure judgment precluded Vergara's later assertion of a TILA claim. See supra Part II(B). Accordingly, the entry of this preclusive judgment extinguished Vergara's TILA right of rescission. See Albano, 244 F.3d at 1064 (reaching a similar conclusion when a TILA claim was barred under state preclusion law).