United States District Court, D. Nevada
J. Dawson United States District Judge
before the Court are Defendants' Motions to Dismiss
(#5/7/11). Plaintiff filed responses in opposition
(#16/18/21) to which Defendants replied (#21/23).
about December 11, 2006, Borrower Thomas A. Smith (deceased)
executed a Promissory Note (“Note”) in favor of
predecessor-in-interest Countrywide Home Loans, Inc.
(“Countrywide”) in the amount of $375, 000.00. As
part of the same transation, the Note was and is secured by a
Deed of Trust in favor of MERS as nominee for Countrywide,
which was recorded on December 20, 2006. On January 24, 2011,
an Assignment of Deed of Trust from MERS, as nominee for
Countrywide, to Defendant The Bank of New York Mellon
(“BNY Mellon”) was recorded. On October 16, 2015,
a Substitution of Trustee naming Defendant Sables in the
place of original trustee Reconstrust Company, N.A., was
recorded. On May 25, 2016, the Notice of Default was recorded
by Sables on behalf of BNY Mellon.
on or about October 13, 2010, Plaintiff, asserting that she
was acting as successor to the estate of the Borrower, sent a
letter via certified mail to Bank of America asserting that
she was rescinding the loan in accordance with 15 U.S.C.
§ 1635. On June 22, 2016, she filed the present
complaint alleging a claim for rescission under § 1635
against Bank of America and for quiet title against all
Defendants. The crux of her claims is that because the loan
was securitized there was no consummation of the loan
agreement, and therefore, no duty to send notice of
rescission within three days or three years of the execution
of the loan agreement. Further, with no such
“consummation” all later assignments of trustees
and recording of notices is without affect. Defendants then
filed the present motions to dismiss.
Standard for a Motion to Dismiss
considering a motion to dismiss, “all well-pleaded
allegations of material fact are taken as true and construed
in a light most favorable to the non-moving party.”
Wyler Summit Partnership v. Turner Broadcasting System,
Inc., 135 F.3d 658, 661 (9th Cir. 1998) (citation
omitted). Consequently, there is a strong presumption against
dismissing an action for failure to state a claim. See
Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th
Cir. 1997) (citation omitted).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). Plausibility, in the context of a motion to
dismiss, means that the plaintiff has pleaded facts which
allow “the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal evaluation illustrates a two prong analysis.
First, the Court identifies “the allegations in the
complaint that are not entitled to the assumption of truth,
” that is, those allegations which are legal
conclusions, bare assertions, or merely conclusory.
Id. at 1949-51. Second, the Court considers the
factual allegations “to determine if they plausibly
suggest an entitlement to relief.” Id. at
1951. If the allegations state plausible claims for relief,
such claims survive the motion to dismiss. Id. at
1950. III. Analysis The purpose of the Truth in
Lending Act (“TILA”) is “to assure a
meaningful disclosure of credit terms so that the consumer
will be able to compare more readily the various credit terms
available to him and avoid the uninformed use of credit
...” 15 U.S.C. § 1601(a). In transactions, like
the one here, secured by a principal dwelling, TILA gives
borrowers an unconditional three-day right to rescind. 15
U.S.C. § 1635(a); see also Id. § 1641(c)
(extending rescission to assignees). The three-day rescission
period begins upon the consummation of the transaction or the
delivery of the required rescission notices and disclosures,
whichever occurs later. Id. § 1635(a). Required
disclosures must be made to “each consumer whose
ownership interest is or will be subject to the security
interest” and must include two copies of a notice of
the right to rescind. 12 C.F.R. § 226.23(a)-(b)(1). If
the creditor fails to make the required disclosures or
rescission notices, the borrower's “right of
rescission shall expire three years after the date of
consummation of the transaction.” 15 U.S.C. §
1635(f); see 12 C.F.R. § 226.23(a)(3);
Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct.
790, 792-93 (2015)(notice to lender of intent to rescind must
be sent within three years of loan execution).
for Plaintiff, it is clear that the underlying note and deed
of trust were executed on or about December 11, 2006.
Therefore, notice of rescission had to be provided to the
lender no later than December 11, 2009. Plaintiff does not
dispute that notice was not sent until October 13, 2010. The
statute of repose established by § 1635 is applied
strictly and her claim for rescission must be dismissed.
Further, her arguments that the loan was never consummated
due to the underlying securitization of the note do not save
her action. See Lial v. Bank of Am., N.A., 2016 WL
6405812 (D. Nev. October 27, 2016)(alleged securitization of
a loan does not invalidate the deed of trust or allow
challenge to the loan's validity)(citing Lial v. Bank
of Am. Corp., 2011 WL 5239242 (D. Nev. Nov. 1, 2011),
affd Lial v. Bank of Am. Corp., 633 Fed.Appx. 406
(9th Cir. 2016); Beck v. Nationstar Mortg., 2015 WL
6755276 (D. Nev. Nov. 4, 2015)).
in response to Defendants' arguments that her claims for
quiet title must be dismissed, Plaintiff asserts
“Plaintiff has standing to raise all of these issues
because her loan has been legally rescinded under 15 U.S.
Code § 1635 et. seq., not because of some failed
securitization theory[.]” Opposition to Motion to
Dismiss . . . Filed by Defendant Bank of America, Docket
No. 16, p. 6., l. 1-3. However, the Court has already ruled
that her October 13, 2010 rescission letter was too late and
is barred by the statute of repose. Therefore, Plaintiffs
complaint must be dismissed. Normally, the Court would grant
Plaintiff leave to amend the complaint, but it is clear that
doing so would be futile.
IT IS HEREBY ORDERED that Defendants' Motions to Dismiss
(#5/7/11) are GRANTED; IT IS FURTHER ORDERED that the Clerk
of the Court enter ...