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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 transaction 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 borrowing $611,000 from
respondent Countrywide Home Loans, Inc. Exactly three years later,
on February 23, 2010, the Jesinoskis mailed respondents a letter
purporting 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 consummation. 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,82Stat.146, as amended,
to help consumers “avoid the uninformed use of
credit, and to protect the consumer against inaccurate and unfair
credit billing.â€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.).[
1] 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 terms
how the right to rescind is to be exercised: It provides 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 rescind. 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 exercised, 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 foreclosure proceeding initiated six years after the
loan’s consummation. We concluded only that
there was “no federal right to rescind,
defensively or otherwise, after the 3-year period of
§1635(f) has run,â€
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 disclosures—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 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 rescission 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 reliefâ€
“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 rescinding 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 borrower 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 congressional Act must be construed
as implementing its closest common-law analogue. Cf.
Astoria
Fed. Sav. & Loan Assn. v.
Solimino,501
U. S. 104–109 (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 traditional
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.
Accordingly, we reverse the judgment of the Eighth Circuit and
remand the case for further proceedings consistent with this
opinion.
It is so ordered.
