Court Opinion

ID: 4194955
Source: CourtListenerOpinion
Date Created: 2017-08-10 20:01:22.416616+00
Date Added: 2024-06-11T07:47:28.021033
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                             AUG 10 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

TIMOTHY BARNES,                                  No.   13-35716

              Plaintiff-Appellant,               D.C. No. 3:11-cv-00142-PK

 v.
                                                 MEMORANDUM*
CHASE HOME FINANCE, LLC, a
Delaware corporation; CHASE BANK
USA, N.A., a subsidiary of JP Morgan
Chase & Co., a Delaware corporation;
IBM LENDER BUSINESS PROCESS
SERVICES, INC., a Delaware corporation;
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,

              Defendants-Appellees.

                    Appeal from the United States District Court
                             for the District of Oregon
                     Anna J. Brown, District Judge, Presiding

                        Argued and Submitted May 10, 2017
                                 Portland, Oregon

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: BYBEE and HURWITZ, Circuit Judges, and RAKOFF,** District Judge.

       Timothy Barnes mailed a notice that he was exercising his right to rescind

his mortgage to his creditor, Chase Bank USA, N.A. (CBUSA), and the loan

servicers to which he had been making monthly payments, Chase Home Finance,

LLC (CHF) and later IBM Lender Business Process Services, Inc. (LBPS). For

reasons that are unclear from the record, the letter to the creditor was returned to

Barnes undelivered. The loan was not rescinded, and Barnes brought suit for

rescission and violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et

seq., and its requirements regarding rescission procedures against CBUSA, CHF,

and LBPS.1 The district court granted the defendants’ motion for summary

judgment. Because notice of rescission was properly given, we vacate the grant of

      **
            The Honorable Jed S. Rakoff, Senior United States District Judge for
the Southern District of New York, sitting by designation.
      1
        The Federal National Mortgage Association (Fannie Mae) was later added
as a defendant in an amended complaint.
                                           2
summary judgment on Barnes’s claims for rescission and failure to effect

rescission and remand for further proceedings.2

      1.     A borrower may rescind a loan within three years of the loan

transaction if the creditor fails to provide specific disclosures required by TILA.

See 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3). To exercise that right, a

borrower must “notify[] the creditor, in accordance with regulations of the Bureau,

of his intention to do so.” 15 U.S.C. § 1635(a); see also Jesinoski v. Countrywide

Home Loans, Inc., 135 S. Ct. 790, 792 (2015) (“[R]escission is effected when the

borrower notifies the creditor of his intention to rescind.”). TILA’s core

implementing regulation, known as Regulation Z, outlines further details on how

the borrower is to exercise the right to rescind. See 12 C.F.R. § 226(a).

Specifically, Consumer Financial Protection Bureau (CFPB) Official Staff

Commentary to Regulation Z provides: “Where the creditor fails to provide the

consumer with a designated address for sending the notification of rescission,

delivery of the notification to the person or address to which the consumer has

      2
        Fannie Mae became a creditor after the three-year statute of repose date
passed. Any claim against CBUSA can be brought against Fannie Mae as an
assignee of CBUSA’s interest, and should not have been be dismissed. See 15
U.S.C. § 1641(c) (“Any consumer who has the right to rescind a transaction under
section 1635 of this title may rescind the transaction as against any assignee of the
obligation.”).
                                           3
been directed to send payments constitutes delivery to the creditor or assignee.” 12

C.F.R. § 226, Supp. I, para. 23(a)(2); Truth in Lending, 69 Fed. Reg. 16,769-03,

16,771 (Mar. 31, 2004).

      Barnes attempted to notify both the creditor, CBUSA, and the servicer, CHF,

of his intent to rescind by mailing letters to the addresses they had provided him.

CBUSA “fail[ed] to provide [Barnes] with a designated address for sending the

notification of rescission” because the address it did provide was not successfully

receiving mail when Barnes sent his notice there. See 12 C.F.R. § 226, Supp. I,

paras. 15(a)(2), 23(a)(2). The only remaining action for Barnes to take, per

Regulation Z and the CFPB Official Staff Commentary, was to notify the servicer,

which he had already done. Barnes’s letter to CHF therefore provided sufficient

notice to CBUSA that he was exercising his right to rescind.

      2.     There remain disputed issues of fact warranting reversal of summary

judgment for the claims against the defendants for failure to effect rescission in

accordance with TILA’s requirements. Because the rescission notice was timely

provided, failure to comply with the requirements in 15 U.S.C. § 1635(b) within 20

days is actionable under 15 U.S.C. § 1640(a). Barnes’s claim for damages, a

declaratory judgment, and injunctive relief for failure to effect rescission following

                                           4
timely notice of intent to rescind against CBUSA and Fannie Mae were thus

improperly dismissed on summary judgment by the district court.

      Barnes also argues that CHR and LBPS are liable for failure to rescind based

on the theory that they are assignees. Due to the lack of clarity in the record on the

relationship between the lenders and the servicers, Barnes has established a

genuine dispute as to material fact on this question sufficient to survive summary

judgment.

      3.     Barnes argues that the servicers, CHF and LBPS, are liable under 15

U.S.C. § 1640(a) for failure to provide requested information about the creditor

under § 1641(f)(2) (“Upon written request by the obligor, the servicer shall provide

the obligor, to the best knowledge of the servicer, with the name, address, and

telephone number of the owner of the obligation or the master servicer of the

obligation.”). Barnes requested information about the name, address, and

telephone number of the creditor from CHF and LBPA, and the record is not clear

whether he actually received it. Because Barnes has raised a genuine issue of

material fact regarding compliance with TILA, the district court erred in granting

summary judgment on this issue.

      VACATED AND REMANDED.

                                           5