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Dunn v. Bank of America N.A.

United States Court of Appeals, Eighth Circuit

January 4, 2017

John D. Dunn; Christina Dunn, formerly known as Christina L. Lapetina Plaintiffs - Appellants
v.
Bank of America N.A., doing business as BANA, doing business as Bank of America Corporation, doing business as BANA Holding Corporation, doing business as BAC North America Holding Company, doing business as NB Holdings Corporation; Nationstar Mortgage, LLC, doing business as Nationstar Sub l, LLC, doing business as Nationstar Sub2, LLC, doing business as Nationstar Mortgage Holdings, Inc. Defendants-Appellees

          Submitted: September 19, 2016

         Appeal from United States District Court for the Western District of Arkansas - Fayetteville

          Before RILEY, Chief Judge, MURPHY and SMITH, Circuit Judges

          RILEY, Chief Judge.

         John and Christina Dunn brought this action under the Truth in Lending Act (TILA), see 15 U.S.C. § 1601, et seq., alleging Bank of America failed to provide necessary disclosures. The district court[1] dismissed their complaint. Having appellate jurisdiction, we affirm. See 28 U.S.C. § 1291.

         I. BACKGROUND

         On October 5, 2009, John and Christina Dunn (the Dunns) obtained a loan for $262, 525 from Bank of America. The loan was secured by a mortgage granting Bank of America a security interest in 2355 Sequoyah Drive in Rogers, Arkansas, which was recorded in Benton County, Arkansas.

         On February 28, 2011, the Dunns sent Bank of America a letter invoking their "Right of Rescission per the Truth in Lending Act, Regulation Z" under 15 U.S.C. § 1635 and 12 C.F.R. § 226.23. The Dunns' letter stated they sought to rescind their loan because they "were not provided with any completed copies of the notice of our right to rescind the above consumer credit transaction." The Dunns asserted Bank of America had twenty days to return "all monies paid and to take action necessary and appropriate to terminate the security interest." Bank of America responded in a letter dated March 17, 2011. The letter stated the request for rescission was "forwarded to the appropriate department" and that the loan "remain[ed] in full force and effect."

         In July 2013, Bank of America assigned the Dunns' mortgage to Nationstar Mortgage, and three months later, Nationstar Mortgage foreclosed. In August 2015, the Dunns brought suit against Bank of America and Nationstar Mortgage alleging Bank of America failed to provide them with two required copies of the "Notice of Right to Cancel" indicating the Dunns had three days to cancel the transaction. See 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23. The Dunns claimed defendants have failed to honor their notice of rescission and have not returned any money or terminated the security interest. The complaint also charged defendants with wrongful foreclosure and sought to quiet title of "the Property." The Dunns requested declaratory and injunctive relief and actual and statutory damages. Attached to the complaint was a copy of the loan agreement.

         Defendants moved for judgment on the pleadings, attaching to their motion a notarized warranty deed from the prior owners to John D. Dunn and Christina L. Lapetina[2] executed on October 5, 2009, and recorded in Benton County, Arkansas. Defendants claimed this property was the same property secured by the loan, and, accordingly, the loan was a residential mortgage transaction exempted from the TILA's right of rescission, see 15 U.S.C. §§ 1602(x), 1635(e). The district court took judicial notice of the warranty deed and concluded the Dunns' claims failed as a matter of law, agreeing with the defendants that the loan was a residential mortgage transaction to which 15 U.S.C. § 1635(a) did not apply. See id. §§ 1602(x), 1635(e). Therefore, the notice of rescission the Dunns sent to Bank of America in February 2011 could not cancel the loan or provide a basis for wrongful foreclosure and quiet title actions. The district court determined even if defendants had been required to provide disclosures under the TILA, any claim for damages would have been barred by its one-year statute of limitations. See id. § 1640(e). The Dunns appeal.

         II. DISCUSSION

         "We review de novo a grant of a motion for judgment on the pleadings, " affirming "only if the moving party clearly establishe[d] that there are no material issues of fact and that it is entitled to judgment as a matter of law." Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).

         The TILA requires creditors to provide "a meaningful disclosure of credit terms . . . to protect the consumer against inaccurate and unfair credit billing . . . practices." 15 U.S.C. § 1601(a). Within Part B, Credit Transactions, of Subchapter I, Consumer Credit Cost Disclosure, § 1635 provides consumers with the right of rescission in certain applicable transactions. The statute provides:

[I]n the case of any consumer credit transaction . . . in which a security interest . . . will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the ...

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