Supreme Court Will Determine What Exercises Right to Rescind Under TILA

Supreme Court Will Determine What Exercises Right to Rescind Under TILA

 WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today granted a petition brought by a couple seeking a determination whether a letter or lawsuit is necessary to properly exercise the right to rescind under the Truth in Lending Act (TILA) (Larry D. Jesinoski, et al. v. Countrywide Home Loans Inc., et al., No. 13-684, U.S. Sup.; See November 2013, Page 8).

Larry and Cheryle Jesinoski asked the high court to review a decision by the Eighth Circuit U.S. Court of Appeals affirming a federal judge in Minnesota’s ruling awarding judgment on the pleadings to Countrywide Home Loans Inc. A divided panel of the federal appeals court held that the couple needed to file a lawsuit within three years of consummating their loan to exercise their right to rescind under TILA.

In affirming U.S. Judge Donovan W. Frank of the District of Minnesota’s decision to dismiss the Jesinoskis’ lawsuit, the federal appeals court panel relied on the ruling in Keiran v. Home Capital Inc., 720 F.3d 721 (8th Cir. 2013) [an enhanced version of this opinion is available to subscribers].

Lawsuit Required

The Jesinoskis obtained a mortgage loan from Countrywide for $611,000. Three years to the day of the loan’s closing, the couple sent the lender a notice of their right to rescind the loan due to alleged violations of TILA. The lender refused to honor the rescission notice. A year and a day after sending the letters, the Jesinoskis sued Countrywide, Bank of America N.A., BAC Home Loans Servicing LP and Mortgage Electronic Registration Systems Inc. (MERS) in Minnesota federal court.

Judge Frank granted the defendants’ motion for judgment on the pleadings, finding that they were required to file a lawsuit within three years to properly exercise their right to rescind. The Jesinoskis appealed.

The Eighth Circuit affirmed Judge Donovan’s ruling on Sept. 10, holding that it is bound by the court’s earlier ruling in Keiran, where it held that borrowers must file a lawsuit to exercise the right to rescind. Alan G. Keiran is also asking the Supreme Court to address the issue.

Circuit Judge Michael J. Melloy wrote that he concurred only because “this Court is bound by the decisions of prior panels” and said he believed that sending written notice within three years of a loan’s consummation is sufficient to exercise the right to rescind. Circuit Judge Steven M. Colloton wrote in a separate opinion that he thought that the Keiran case was wrongly decided and that he “would reverse the judgment of the district court if the question presented were open in this circuit.”

The Jesinoskis filed their petition before the Supreme Court on Dec 6. The high court reviewed the petition during its April 18 and 25 conferences.


Michael J. Keogh of Keogh Law Office in St. Paul, Minn., is counsel for the Jesinoskis.

Andre Timothy McCoy Hanson, Ronn B. Kreps and Sparrowleaf Dilts McGregor of Fulbright & Jaworski in Minneapolis and Andrew Brooks Messite of Reed & Smith in New York represent Countrywide.

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