Opinion ID: 2743348
Heading Depth: 3
Heading Rank: 3

Heading: Violation of TILA

Text: The Derbabians contend that the district court erred by holding that their TILA claim fails because it is barred by the applicable statute of limitations. TILA requires those who extend loans to “provide borrowers with clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower’s rights.” Marais v. Chase Home Fin. LLC, 736 F.3d 711, 714 (6th Cir. 2013) (quoting Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998)). “[A]ny action under [TILA] may be brought . . . within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). The limitations period for claims alleging violation of disclosure requirements begins running when the agreement is entered and the lender does not make the required disclosures. See Wike v. Vertrue, Inc., 566 F.3d 590, 593 (6th Cir. 2009) (citing Wachtel v. West, 476 F.2d 1062, 1065–66 (6th Cir. 1973)); see also Khadher, 2014 WL 4057880, at  (explaining that the “occurrence of the violation” is the date of the loan agreement). “For claims arising under 15 U.S.C. § 1639(f), pertaining to negative amortization, the statute of limitations is extended to three years from ‘the date of the occurrence of the violation.’” Khadher, 2014 WL 4057880, at  (citing 15 U.S.C. § 1640(e)). This claim is barred by the statute of limitations: the loan was obtained on February 23, 2005, and the complaint was filed May 21, 2013—more than seven years after the statute of limitations passed. To the extent the Derbabians are attempting to make a claim based on negative amortization, the three-year statute of limitations has also long passed. Id. Even if it was not time-barred, the Derbabians’ claim would still fail because they do not adequately plead any specific violations of TILA. See id. (holding that the plaintiff’s “argument fails because he does not explain how [the defendant] violated these sections”). -9- Case No. 14-1253 Derbabian v. Bank of America, N.A. The Derbabians cite to another portion of TILA’s statute of limitations in arguing that their claim is timely. Appellants’ Br. 11-12. That provision states that the statute of limitations does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law. 15 U.S.C. § 1640(e). The statute further states: Notwithstanding any other provision of law, when a creditor, assignee, or other holder of a residential mortgage loan . . . initiates a judicial or nonjudicial foreclosure of the residential mortgage loan, or any other action to collect the debt in connection with such loan, a consumer may assert a violation by a creditor of paragraph (1) or (2) of section 1639b(c) of this title, or of section 1639c(a) of this title, as a matter of defense by recoupment or set off without regard for the time limit on a private action for damages under subsection (e). 15 U.S.C. § 1640(k)(1). The Derbabians thus claim a defense by recoupment or set off against the “nonjudicial” foreclosure. The problem with the Derbabians’ recoupment and set-off argument is that they are not raising TILA violations “as a matter of defense”; on the contrary, they brought this suit—an affirmative action—seeking damages and other relief. As one court explained, “This expanded statute of limitations applies only to actions to defend against a foreclosure including claims for recoupment.” Bhandari v. Capital One, N.A., No. 12-4533 PSG, 2013 WL 1736789, at  (N.D. Cal. Apr. 22, 2013). In other words, the one-year statute of limitations applies to “offensive” TILA claims like this one, thereby barring it. See Qadeer v. Bank of Am., N.A., No. 12-14310, 2013 WL 424776, at  (E.D. Mich. Feb. 4, 2013). In any event, the foreclosure has already occurred here, so even if the statute of limitations did not apply, these provisions do not help the Derbabians. - 10 - Case No. 14-1253 Derbabian v. Bank of America, N.A.