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Hoang v. Bank of America, N.A.

United States Court of Appeals, Ninth Circuit

December 6, 2018

Jerry Hoang; Le Uyen Thi Hoang, Plaintiffs-Appellants,
v.
Bank of America, N.A.; Federal National Mortgage Association, Inc., Defendants-Appellees.

          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 ...


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