LARRY D. JESINOSKI, et ux., PETITIONERS v...., --- S.Ct. ---- (2015)

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2015 WL 144681United States Supreme Court.

LARRY D. JESINOSKI,et ux., PETITIONERS

v.COUNTRYWIDE HOME

LOANS, INC., et al.

No. 13684 | Argued November4, 2014 | Decided January 13, 2015

Syllabus *Exactly three years after borrowing moneyfrom respondent Countrywide Home Loans,Inc., to refinance their home mortgage,petitioners Larry and Cheryle Jesinoskisent Countrywide and respondent Bank ofAmerica Home Loans, which had acquiredCountrywide, a letter purporting to rescind thetransaction. Bank of America replied, refusingto acknowledge the rescissions validity. Oneyear and one day later, the Jesinoskis filedsuit in federal court, seeking a declarationof rescission and damages. The DistrictCourt entered judgment on the pleadings forrespondents, concluding that a borrower canexercise the Truth in Lending Acts right torescind a loan, see 15 U. S. C. 1635(a), (f),only by filing a lawsuit within three yearsof the date the loan was consummated. TheJesinoskis complaint, filed four years andone day after the loans consummation, wasineffective. The Eighth Circuit affirmed.

Held: A borrower exercising his right to rescindunder the Act need only provide written noticeto his lender within the 3-year period, notfile suit within that period. Section 1635(a)s

unequivocal termsa borrower shall have theright to rescind . . . by notifying the creditor. . . of his intention to do so (emphasis added)leave no doubt that rescission is effectedwhen the borrower notifies the creditor of hisintention to rescind. This conclusion is notaltered by 1635(f), which states when theright to rescind must be exercised, but saysnothing about how that right is exercised. Nordoes 1635(g)which states that in additionto rescission the court may award relief . . .not relating to the right to rescindsupportrespondents view that rescission is necessarilya consequence of judicial action. And thefact that the Act modified the common-lawcondition precedent to rescission at law, see1635(b), hardly implies that the Act therebycodified rescission in equity. Pp. 25.

729 F. 3d 1092, reversed and remanded.

SCALIA, J., delivered the opinion for aunanimous Court.

ON WRIT OF CERTIORARI TO THEUNITED STATES COURT OF APPEALSFOR THE EIGHTH CIRCUIT

Opinion

JUSTICE SCALIA deliveredthe opinion of the Court.

The Truth in Lending Act gives borrowers theright to rescind certain loans for up to threeyears after the transaction is consummated.The question presented is whether a borrowerexercises this right by providing written no- ticeto his lender, or whether he must also file alawsuit before the 3-year period elapses.

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On February 23, 2007, petitioners Larry andCheryle Jesinoski refinanced the mortgageon their home by borrowing $611,000 fromrespondent Countrywide Home Loans, Inc.Exactly three years later, on February 23,2010, the Jesinoskis mailed respondents a letterpurporting to rescind the loan. RespondentBank of America Home Loans replied onMarch 12, 2010, refusing to acknowledgethe validity of the rescission. On February24, 2011, the Jesinoskis filed suit in FederalDistrict Court seeking a declaration ofrescission and damages.

Respondents moved for judgment on thepleadings, which the District Court granted.The court concluded that the Act requiresa borrower seeking rescission to file alawsuit within three years of the transactionsconsummation. Although the Jesinoskisnotified respondents of their intention torescind within that time, they did not filetheir first complaint until four years and oneday after the loans consummation. 2012 WL1365751, *3 (D Minn., Apr. 19, 2012). TheEighth Circuit affirmed. 729 F. 3d 1092, 1093(2013) (per curiam).

Congress passed the Truth in Lending Act,82 Stat. 146, as amended, to help consumersavoid the uninformed use of credit, and toprotect the consumer against inaccurate andunfair credit billing. 15 U. S. C. 1601(a).To this end, the Act grants borrowers theright to rescind a loan until midnight of thethird business day following the consummationof the transaction or the delivery of the[disclosures required by the Act], whichever islater, by notifying the creditor, in accordance

with regulations of the [Federal Reserve]Board, of his intention to do so. 1635(a)(2006 ed.). 1 This regime grants borrowersan unconditional right to rescind for threedays, after which they may rescind only if thelender failed to satisfy the Acts disclosurerequirements. But this conditional right torescind does not last forever. Even if a lendernever makes the required disclosures, the rightof rescission shall expire three years afterthe date of consummation of the transactionor upon the sale of the property, whichevercomes first. 1635(f). The Eighth Circuitsaffirmance in the present case rested upon itsholding in Keiran v. Home Capital, Inc., 720 F.3d 721, 727728 (2013) that, unless a borrowerhas filed a suit for rescission within three yearsof the transactions consummation, 1635(f)extinguishes the right to rescind and bars relief.

That was error. Section 1635(a) explains inunequivocal terms how the right to rescind isto be exercised: It provides that a borrowershall have the right to rescind . . . bynotifying the creditor, in accordance withregulations of the Board, of his intention todo so (emphasis added). The language leavesno doubt that rescission is effected when theborrower notifies the creditor of his intention torescind. It follows that, so long as the borrowernotifies within three years after the transactionis consummated, his rescission is timely. Thestatute does not also require him to sue withinthree years.

Nothing in 1635(f) changes this conclusion.Although 1635(f) tells us when the right torescind must be exercised, it says nothing abouthow that right is exercised. Our observation inBeach v. Ocwen Fed. Bank, 523 U. S. 410, 417

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(1998), that 1635(f) govern[s] the life of theunderlying right is beside the point. That caseconcerned a borrowers attempt to rescind inthe course of a foreclosure proceeding initiatedsix years after the loans consummation. Weconcluded only that there was no federal rightto rescind, defensively or otherwise, after the 3-year period of 1635(f) has run, id., at 419, notthat there was no rescission until a suit is filed.

Respondents do not dispute that 1635(a)requires only written notice of rescission.Indeed, they concede that written noticesuffices to rescind a loan within the first threedays after the transaction is consummated.They further concede that written noticesuffices after that period if the parties agreethat the lender failed to make the requireddisclosures. Respondents argue, however,that if the parties dispute the adequacyof the disclosuresand thus the continuedavailability of the right to rescindthen writtennotice does not suffice.

Section 1635(a) nowhere suggests a distinctionbetween disputed and undisputed rescissions,much less that a lawsuit would be required forthe latter. In an effort to sidestep this problem,respondents point to a neighboring provision,1635(g), which they believe provides supportfor their interpretation of the Act. Section1635(g) states merely that, [i]n any actionin which it is determined that a creditor hasviolated this section, in addition to rescissionthe court may award relief under section 1640of this title for violations of this subchapter notrelating to the right to rescind. Respondentsargue that the phrase award relief in additionto rescission confirms that rescission is aconsequence of judicial action. But the fact

that it can be a consequence of judicial actionwhen 1635(g) is triggered in no way suggeststhat it can only follow from such action. TheAct contemplates various situations in whichthe question of a lenders compliance with theActs disclosure requirements may arise in alawsuitfor example, a lenders foreclosureaction in which the borrower raises inadequatedisclosure as an affirmative defense. Section1635(g) makes clear that a court may notonly award rescission and thereby relieve theborrower of his financial obligation to thelender, but may also grant any of the remediesavailable under 1640 (including statutorydamages). It has no bearing upon whether andhow borrower-rescission under 1635(a) mayoccur.

Finally, respondents invoke the common law.It is true that rescission traditionally requiredeither that the rescinding party return whathe received before a rescission could beeffected (rescission at law), or else that a courtaffirmatively decree rescission (rescission inequity). 2 D. Dobbs, Law of Remedies9.3(3), pp. 585586 (2d ed. 1993). It isalso true that the Act disclaims the common-law condition precedent to rescission atlaw that the borrower tender the proceedsreceived under the transaction. 15 U. S. C.1635(b). But the negation of rescission-at-laws tender requirement hardly implies thatthe Act codifies rescission in equity. Nothingin our jurisprudence, and no tool of statutoryinterpretation, requires that a congressional Actmust be construed as implementing its closestcommon-law analogue. Cf. Astoria Fed. Sav.& Loan Assn. v. Solimino, 501 U. S. 104,108109 (1991). The clear import of 1635(a)is that a borrower need only provide written

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notice to a lender in order to exercise hisright to rescind. To the extent 1635(b) altersthe traditional process for unwinding sucha unilaterally rescinded transaction, this issimply a case in which statutory law modifiescommon-law practice.

* * *

The Jesinoskis mailed respondents writtennotice of their intention to rescind within three

years of their loans consummation. Becausethis is all that a borrower must do in order toexercise his right to rescind under the Act, thecourt below erred in dismissing the complaint.Accordingly, we reverse the judgment of theEighth Circuit and remand the case for furtherproceedings consistent with this opinion.

It is so ordered.

Footnotes* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience

of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

1 Following the events in this case, Congress transferred the author- ity to promulgate rules implementing the Act to the ConsumerFinance Protection Bureau. See Dodd-Frank Wall Street Reform and Consumer Protection Act, 1061(b)(1), 1100A(2), 1100H,124 Stat. 2036, 2107, 2113.

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