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Kathryn v. Bank of America Home

February 8, 2012

KATHRYN MCOMIE-GRAY, PLAINTIFF-APPELLANT,
v.
BANK OF AMERICA HOME LOANS, MCE-EFB FKA COUNTRYWIDE HOME LOANS, INC., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Eastern District of California Morrison C. England, District Judge, Presiding D.C. No. 2:09-cv-02422-

The opinion of the court was delivered by: Pallmeyer, District Judge:

FOR PUBLICATION

OPINION

Argued and Submitted December 6, 2011-San Francisco, California

Before: Carlos T. Bea and Stephen S. Trott, Circuit Judges, and Rebecca R. Pallmeyer, District Judge.*fn1

Opinion by Judge Pallmeyer

OPINION

Kathryn McOmie-Gray appeals the dismissal of her lawsuit for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). McOmie-Gray sought rescission of her loan secured by a trust deed with Bank of America Home Loans ("the Bank") for alleged violations of disclosure requirements under the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. On the Bank's motion, the district court dismissed the suit as untimely because it was filed after the three-year period set by 15 U.S.C. § 1635(f). McOmie-Gray argues that because she gave the Bank timely notice of rescission, she was not required to bring suit within the three-year period, and the district court erred in dismissing this case.

For us, the question presented is a matter of first impression. McOmie-Gray cites decisions from several district courts in this circuit that apply the one-year statute of limitations set forth in 15 U.S.C. § 1640(e), measuring the time from the date on which the lender fails to respond to the borrower's notice of rescission. We disagree with those courts, and conclude, as set forth below, that the time limit established by 15 U.S.C. § 1635(f) is applicable here. Moreover, as we explained in Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir. 2002), 15 U.S.C. § 1635(f) is a three-year statute of repose, requiring dismissal of a claim for rescission brought more than three years after the consummation of the loan secured by the first trust deed, regardless of when the borrower sends notice of rescission.

I

On April 14, 2006, McOmie-Gray obtained a first trust deed loan from Paramount Equity Mortgage. At the closing, McOmie-Gray was presented with several loan documents to sign, including two Notice of Right to Cancel forms. McOmie-Gray alleges, however, that neither of these forms explained when the borrower's right to cancel would expire. Subsequently, Paramount assigned its interest in the loan to Countrywide Home Loans, Inc., a company that the Bank later acquired.

On January 18, 2008, McOmie-Gray, through her attorney, sent the bank notice of her intent to rescind the loan, citing the Bank's failure to advise McOmie-Gray of the final date to cancel the transaction. The Bank refused rescission, asserting that McOmie-Gray had received proper notice of her right to rescind. According to McOmie-Gray, although the Bank initially refused to accept her notice of rescission, it "negotiated with [her] for over a year regarding the rescission." McOmieGray's Opening Brief at 5. McOmie-Gray further alleges that to facilitate this negotiation, the Bank agreed to toll the statute of limitations with respect to her TILA claims until August 30, 2009.

On August 28, 2009, McOmie-Gray filed a complaint with the district court seeking rescission of the loan secured by a first trust deed. On the Bank's motion, the district court dismissed the initial complaint with leave to amend because McOmie-Gray failed to allege tender. McOmie-Gray then filed her First Amended Complaint on March 30, 2010. The district court dismissed the First Amended Complaint as well. In its June 23, 2010 order, the court concluded that McOmieGray's right to rescission was subject to a three-year statute of repose under 15 U.S.C. ยง 1635(f). Because this period expired on its face on April 14, 2009-three years after ...


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