Jesinoski v. Countrywide Home Loans, Inc. , 135 S. Ct. 790 ( 2015 )

(Slip Opinion) OCTOBER TERM, 2014 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
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.
SUPREME COURT OF THE UNITED STATES
Syllabus
JESINOSKI ET UX. v. COUNTRYWIDE HOME LOANS,
INC., ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
No. 13–684. Argued November 4, 2014—Decided January 13, 2015
Exactly three years after borrowing money from respondent Country-
wide Home Loans, Inc., to refinance their home mortgage, petitioners
Larry and Cheryle Jesinoski sent Countrywide and respondent Bank
of America Home Loans, which had acquired Countrywide, a letter
purporting to rescind the transaction. Bank of America replied, re-
fusing to acknowledge the rescission’s validity. One year and one day
later, the Jesinoskis filed suit in federal court, seeking a declaration
of rescission and damages. The District Court entered judgment on
the pleadings for respondents, concluding that a borrower can exer-
cise the Truth in Lending Act’s right to rescind a loan, see 15 U.S. C.
§1635(a), (f), only by filing a lawsuit within three years of the date
the loan was consummated. The Jesinoskis’ complaint, filed four
years and one day after the loan’s consummation, was ineffective.
The Eighth Circuit affirmed.
Held: A borrower exercising his right to rescind under the Act need only
provide written notice to his lender within the 3-year period, not file
suit within that period. Section 1635(a)’s unequivocal terms—a bor-
rower “shall have the right to rescind . . . by notifying the creditor . . .
of his intention to do so” (emphasis added)—leave no doubt that re-
scission is effected when the borrower notifies the creditor of his in-
tention to rescind. This conclusion is not altered by §1635(f), which
states when the right to rescind must be exercised, but says nothing
about how that right is exercised. Nor does §1635(g)—which states
that “in addition to rescission the court may award relief . . . not re-
lating to the right to rescind”—support respondents’ view that rescis-
sion is necessarily a consequence of judicial action. And the fact that
the Act modified the common-law condition precedent to rescission at
2 JESINOSKI v. COUNTRYWIDE HOME LOANS, INC.
Syllabus
law, see §1635(b), hardly implies that the Act thereby codified rescis-
sion in equity. Pp. 2–5.
729 F.3d 1092, reversed and remanded.
SCALIA, J., delivered the opinion for a unanimous Court.
Cite as: 574 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–684
_________________
LARRY D. JESINOSKI, ET UX., PETITIONERS v.
COUNTRYWIDE HOME LOANS, INC., ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
[January 13, 2015]
JUSTICE SCALIA delivered the opinion of the Court.
The Truth in Lending Act gives borrowers the right to
rescind certain loans for up to three years after the trans-
action is consummated. The question presented is whether
a borrower exercises this right by providing written no-
tice to his lender, or whether he must also file a lawsuit
before the 3-year period elapses.
On February 23, 2007, petitioners Larry and Cheryle
Jesinoski refinanced the mortgage on their home by bor-
rowing $611,000 from respondent Countrywide Home
Loans, Inc. Exactly three years later, on February 23,
2010, the Jesinoskis mailed respondents a letter purport-
ing to rescind the loan. Respondent Bank of America
Home Loans replied on March 12, 2010, refusing to
acknowledge the validity of the rescission. On February
24, 2011, the Jesinoskis filed suit in Federal District Court
seeking a declaration of rescission and damages.
Respondents moved for judgment on the pleadings,
which the District Court granted. The court concluded
that the Act requires a borrower seeking rescission to file
a lawsuit within three years of the transaction’s consum-
2 JESINOSKI v. COUNTRYWIDE HOME LOANS, INC.
Opinion of the Court
mation. Although the Jesinoskis notified respondents of
their intention to rescind within that time, they did not
file their first complaint until four years and one day after
the loan’s consummation. 2012 WL 1365751, *3 (D Minn.,
Apr. 19, 2012). The Eighth Circuit affirmed. 729 F.3d
1092, 1093 (2013) (per curiam).
Congress passed the Truth in Lending Act, 82 Stat. 146,
as amended, to help consumers “avoid the uninformed use
of credit, and to protect the consumer against inaccurate
and unfair credit billing.” 15 U.S. C. §1601(a). To this
end, the Act grants borrowers the right to rescind a loan
“until midnight of the third business day following the
consummation of the transaction or the delivery of the
[disclosures required by the Act], whichever is later, by
notifying the creditor, in accordance with regulations of
the [Federal Reserve] Board, of his intention to do so.”
§1635(a) (2006 ed.).* This regime grants borrowers an
unconditional right to rescind for three days, after which
they may rescind only if the lender failed to satisfy the
Act’s disclosure requirements. But this conditional right
to rescind does not last forever. Even if a lender never
makes the required disclosures, the “right of rescission
shall expire three years after the date of consummation of
the transaction or upon the sale of the property, whichever
comes first.” §1635(f). The Eighth Circuit’s affirmance in
the present case rested upon its holding in Keiran v. Home
Capital, Inc., 720 F.3d 721, 727–728 (2013) that, unless a
borrower has filed a suit for rescission within three years
of the transaction’s consummation, §1635(f) extinguishes
the right to rescind and bars relief.
That was error. Section 1635(a) explains in unequivocal
——————
* Following the events in this case, Congress transferred the author-
ity to promulgate rules implementing the Act to the Consumer Finance
Protection Bureau. See Dodd-Frank Wall Street Reform and Consumer
Protection Act, §§1061(b)(1), 1100A(2), 1100H, 124 Stat. 2036, 2107,
2113.
Cite as: 574 U. S. ____ (2015) 3
Opinion of the Court
terms how the right to rescind is to be exercised: It pro-
vides that a borrower “shall have the right to rescind . . .
by notifying the creditor, in accordance with regulations of
the Board, of his intention to do so” (emphasis added). The
language leaves no doubt that rescission is effected when
the borrower notifies the creditor of his intention to re-
scind. It follows that, so long as the borrower notifies
within three years after the transaction is consummated,
his rescission is timely. The statute does not also require
him to sue within three years.
Nothing in §1635(f) changes this conclusion. Although
§1635(f) tells us when the right to rescind must be exer-
cised, it says nothing about how that right is exercised.
Our observation in Beach v. Ocwen Fed. Bank, 523 U.S.
410, 417 (1998), that §1635(f) “govern[s] the life of the
underlying right” is beside the point. That case concerned
a borrower’s attempt to rescind in the course of a foreclo-
sure proceeding initiated six years after the loan’s con-
summation. We concluded only that there was “no federal
right to rescind, defensively or otherwise, after the 3-year
period of §1635(f) has run,” id., at 419, not that 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 notice suffices to rescind a loan within the first
three days after the transaction is consummated. They
further concede that written notice suffices after that
period if the parties agree that the lender failed to make
the required disclosures. Respondents argue, however,
that if the parties dispute the adequacy of the disclo-
sures—and thus the continued availability of the right to
rescind—then written notice does not suffice.
Section 1635(a) nowhere suggests a distinction between
disputed and undisputed rescissions, much less that a
lawsuit would be required for the latter. In an effort to
sidestep this problem, respondents point to a neighboring
4 JESINOSKI v. COUNTRYWIDE HOME LOANS, INC.
Opinion of the Court
provision, §1635(g), which they believe provides support
for their interpretation of the Act. Section 1635(g) states
merely that, “[i]n any action in which it is determined that
a creditor has violated this section, in addition to rescis-
sion the court may award relief under section 1640 of this
title for violations of this subchapter not relating to the
right to rescind.” Respondents argue that the phrase
“award relief ” “in addition to rescission” confirms that
rescission is a consequence of judicial action. But the fact
that it can be a consequence of judicial action when
§1635(g) is triggered in no way suggests that it can only
follow from such action. The Act contemplates various
situations in which the question of a lender’s compliance
with the Act’s disclosure requirements may arise in a
lawsuit—for example, a lender’s foreclosure action in
which the borrower raises inadequate disclosure as an
affirmative defense. Section 1635(g) makes clear that a
court may not only award rescission and thereby relieve
the borrower of his financial obligation to the lender, but
may also grant any of the remedies available under §1640
(including statutory damages). It has no bearing upon
whether and how borrower-rescission under §1635(a) may
occur.
Finally, respondents invoke the common law. It is true
that rescission traditionally required either that the re-
scinding party return what he received before a rescission
could be effected (rescission at law), or else that a court
affirmatively decree rescission (rescission in equity). 2 D.
Dobbs, Law of Remedies §9.3(3), pp. 585–586 (2d ed.
1993). It is also true that the Act disclaims the common-
law condition precedent to rescission at law that the bor-
rower tender the proceeds received under the transaction.
15 U.S. C. §1635(b). But the negation of rescission-at-
law’s tender requirement hardly implies that the Act
codifies rescission in equity. Nothing in our jurisprudence,
and no tool of statutory interpretation, requires that a
Cite as: 574 U. S. ____ (2015) 5
Opinion of the Court
congressional Act must be construed as implementing its
closest common-law analogue. Cf. Astoria Fed. Sav. &
Loan Assn. v. Solimino, 501 U.S. 104, 108–109 (1991).
The clear import of §1635(a) is that a borrower need only
provide written notice to a lender in order to exercise his
right to rescind. To the extent §1635(b) alters the tradi-
tional process for unwinding such a unilaterally rescinded
transaction, this is simply a case in which statutory law
modifies common-law practice.
* * *
The Jesinoskis mailed respondents written notice of
their intention to rescind within three years of their loan’s
consummation. Because this is all that a borrower must
do in order to exercise his right to rescind under the Act,
the court below erred in dismissing the complaint. Accord-
ingly, we reverse the judgment of the Eighth Circuit and
remand the case for further proceedings consistent with
this opinion.
It is so ordered.