Court Opinion

ID: 4018679
Source: CourtListenerOpinion
Date Created: 2016-07-25 20:01:02.937415+00
Date Added: 2024-06-11T07:44:57.130868
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                            JUL 25 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
MICHAEL GRADY and JENNIFER                       No.   14-16457
GRADY,
                                                 D.C. No. 2:11-cv-02060-JAT
              Plaintiffs-Appellants,

 v.                                              MEMORANDUM*

JONATHAN LEVIN; et al.,

              Defendants-Appellees,

TRI CITY NATIONAL BANK, a national
bank,

              Defendant-counter-claimant-
Appellee,

 and

FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver for Bank of
Elmwood, a Wisconsin corporation,

              Intervenor-Defendant.

                    Appeal from the United States District Court
                             for the District of Arizona

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                    James A. Teilborg, District Judge, Presiding

                             Submitted July 21, 2016**
                             San Francisco, California

Before: GRABER and TALLMAN, Circuit Judges, and RAKOFF,*** District
Judge.

      This case centers on whether Michael and Jennifer Grady (the Gradys) can

assert violations of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.,

against Tri City National Bank (TCNB) for conduct preceding its acquisition of the

assets of a failed bank. In 2008, the Gradys entered into a loan with the Bank of

Elmwood. The bank was subsequently placed into receivership, and its assets were

purchased by TCNB. The district court denied the Gradys’ motion for leave to

amend their complaint to add TILA claims against TCNB, finding that amendment

would be futile. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      We hold that the Gradys’ proposed TILA claims against TCNB “relat[e] to

any act or omission” of the original bank—the Bank of Elmwood—and are subject

to dismissal under the Financial Institutions, Reform, Recovery, and Enforcement

Act (FIRREA) of 1989, 12 U.S.C. § 1821(d)(13)(D)(ii). The Gradys’ proposed

         **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
         ***
            The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
                                         2
TILA claim that stems from alleged disclosure defects in the original loan

documents, see 15 U.S.C. § 1641(e), is “based on the conduct of the failed

institution” because the operative loan documents were drafted and executed by the

Bank of Elmwood, not TCNB. Rundgren v. Wash. Mut. Bank, FA, 760 F.3d 1056,

1064 (9th Cir. 2014), cert denied, 135 S. Ct. 1560 (2015). And TCNB never

assumed liability for the Bank of Elmwood’s potential malfeasance prior to the

acquisition from the Federal Deposit Insurance Corporation.

      Similarly, we find that the Gradys’ proposed TILA rescission claim against

TCNB, see 15 U.S.C. § 1635, plainly qualifies as “functionally, albeit not formally

against [the] failed bank.” Benson v. JPMorgan Chase Bank, N.A., 673 F.3d 1207,

1215 (9th Cir. 2012) (internal quotation marks omitted). Because the Gradys did

not exercise their right to rescind within the unconditional three-day period, the

timeliness of their notice of rescission is entirely contingent on the Bank of

Elmwood’s alleged “fail[ure] to satisfy [TILA’s] disclosure requirements.”

Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790, 792 (2015).

      In sum, we hold that the Gradys’ proposed TILA claims must first be

exhausted under FIRREA.

      AFFIRMED.

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