Jesinoski v. Countrywide Home Loans, Inc.

PETITIONER: Larry D. Jesinoski, et ux.
RESPONDENT: Countrywide Home Loans, Inc., et al.
LOCATION: United States District Court
for the District of Minnesota

DOCKET NO.: 13-684
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 574 US (2015)
GRANTED: Apr 28, 2014
ARGUED: Nov 04, 2014
DECIDED: Jan 13, 2015

ADVOCATES:
David C. Frederick - for the petitioner
Elaine J. Goldenberg - Assistant to the Solicitor General, Department of Justice, for the United States as amicus curiae supporting the petitioner
Seth P. Waxman - for the respondent

Facts of the case

On February 23, 2007, Larry and Cheryle Jesinoski refinanced their Eagan, Minnesota, home by borrowing $611,000 from Countrywide Home Loans, Inc. The Jesinoskis received a Truth in Lending Act (TILA) disclosure and a Notice of the Right to Cancel, which gave them until midnight on February 27, 2007, to rescind the loan. The Jesinoskis did not exercise their right to cancel the loan, and they used the money to pay off several consumer debts. On February 23, 2010, the Jesinoskis attempted to rescind the loan and argued that they did not receive sufficient copies of the TILA disclosure and the Notice of the Right to Cancel. After the request to rescind the loan was denied, the Jesinoskis sued Countrywide Home Loans for failure to rescind their loan on February 24, 2011.

Countrywide Home Loans sought a judgment on the pleadings and argued that the Jesinoskis did not file their suit within the three-year time period allowed by TILA. The Jesinoskis argued that, because they attempted to rescind the loan within the three-year time period, their suit fulfills that requirement and should be allowed to proceed. The district court found in favor of Countrywide Home Loans; the U.S. Court of Appeals for the Eighth Circuit affirmed.

Question

Does the Truth in Lending Act allow a borrower to rescind a loan by notifying the creditor within the three-year time frame, even though a lawsuit has not yet been filed?

Media for Jesinoski v. Countrywide Home Loans, Inc.

Audio Transcription for Oral Argument - November 04, 2014 in Jesinoski v. Countrywide Home Loans, Inc.

Audio Transcription for Opinion Announcement - January 13, 2015 in Jesinoski v. Countrywide Home Loans, Inc.

John G. Roberts, Jr.:

Justice Scalia has the opinion of the Court in two cases this morning.

He has asked that I announce them.

The first is in case 13-684 Jesinoski v. Countrywide Home Loans et al.

This case comes to us on Writ of Certiorari to the United States Court of Appeals for the Eighth Circuit.

Petitioners Larry and Cheryle Jesinoski refinanced their home mortgage with a loan from respondent Countrywide.

Exactly three years after consummating the loan transaction, the Jesinoskis mailed a letter to Countrywide and respondent Bank of America which had acquired Countrywide purporting to resume the transaction under the Truth and Lending Act.

Bank of America responded, challenging the validity of the rescission.

One year and one day later the Jesinoskis filed suit in Federal District Court.

The courts below granted judgment on the pleadings to respondents.

The statue they pointed out provided that the right to rescind “shall expire three years after the date of consummation of the transaction" and the suit here was filed more than four years after that date.

We reverse.

The Act confers upon borrowers the right rescind by notifying the creditor in accordance with the regulations of the Federal Reserve Board of his intention to do so.

This leaves no doubt that recession is effected once notice is given.

The provision that the right to rescind “shall expire three years after the date of consummation of the transaction” says nothing about how a borrower exercises the right to rescind within that period.

And the fact that the act clearly states that courts may award recession in certain circumstances hardly implies that recession can only be affected through judicial action.

Because the Jesinoskis notified respondents of their intention to rescind within the statutory three-year period, the court below erred in dismissing their suit.

The judgment of the Eighth Circuit is reversed and remanded for further proceedings.

The decision of the Court is unanimous.