Argued
and Submitted October 12, 2018 Seattle, Washington
Appeal
from the United States District Court No. 2:17-cv-00874-JLR
for the Western District of Washington James L. Robart,
Senior District Judge, Presiding
Jill
J. Smith (argued), Natural Resource Law Group PLLC, Seattle,
Washington, for Plaintiffs-Appellants.
Elizabeth Holt Andrews (argued), Jon D. Ives, and Jan T.
Chilton, Severson & Werson, San Francisco, California;
for Defendants-Appellees.
Before: N. Randy Smith and Morgan Christen, Circuit Judges,
and Robert E. Payne, [*] District Judge.
SUMMARY[**]
Truth
in Lending Act
The
panel reversed the district court's dismissal of an
action brought by a borrower against Bank of America, N.A.,
alleging claims under the Truth in Lending Act
("TILA") after the bank declared the borrower in
default on a loan and initiated non-judicial foreclosure
proceedings.
If a
creditor fails to make required disclosures under TILA,
borrowers are allowed three years from the loan's
consummation date to rescind certain loans. 15 U.S.C. §
1635(f). The borrower sent the bank notice of intent to
rescind the loan within three years of the consummation date.
The
panel held that under Jesinoski v. Countrywide Home
Loans, 135 S.Ct. 790, 792 (2015), borrowers may affect
rescission of such a loan simply by notifying the creditor of
their intent to rescind within the three-year period from the
loan's consummation date. The panel further held that
because TILA did not include a statute of limitations
outlining when an action to enforce such a rescission must be
brought, courts must borrow the most analogous state law
statute of limitations and apply that limitation period to
TILA rescission enforcement claims. The panel held that in
Washington, the state's six-year contract statute of
limitations was the most analogous statute. The panel
rejected the district court's application of TILA's
one-year statute of limitations for legal damages claims. The
panel also rejected the bank's argument that
Washington's two-year catch-all statute of limitations
should apply. Because the borrower brought this action within
six years, the district court erred in dismissing the TILA
claim as time barred.
The
panel held that the district court improperly denied the
borrower leave to amend the complaint. The district court
made its determination based on its determination that
amendment would be futile because the claims were
time-barred. The panel held that because the borrower's
TILA rescission enforcement claim was not time-barred, an
amendment by the borrower would not be futile.
OPINION
N.R.
SMITH, Circuit Judge.
If a
creditor fails to make required disclosures under the Truth
in Lending Act (TILA), borrowers are allowed three years from
the loan's consummation date to rescind certain
loans.[1] 15 U.S.C. § 1635(f). Borrowers may
effect that rescission simply by notifying the creditor of
their intent to rescind within the three-year period.
Jesinoski v. Countrywide Home Loans, 135 S.Ct. 790,
792 (2015). TILA does not include a statute of limitations
outlining when an action to enforce such a rescission must be
brought. Without a statute of limitations in TILA, courts
must first borrow the most analogous state law statute of
limitations and apply that limitation period to TILA
rescission enforcement claims. Cty. of Oneida v. Oneida
Indian Nation of N.Y. State, 470 U.S. 226, 240 ...