Supreme Court Docket Report - April 28, 2014

Yesterday, the Supreme Court granted certiorari in one case of interest to the business community:

Truth in Lending Act—Home Loans—Manner of Exercising Right of Rescission

The Truth in Lending Act (TILA) provides certain borrowers an unconditional right to rescind a home loan "until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms" required by the TILA. 15 U.S.C. § 1635(a). The borrower exercises this right by "notifying the creditor ... of his intention to do so." Id. After the three-day period expires, the borrower may rescind the loan only if the creditor has not delivered "the information and rescission forms required under this section." Id. And in all events, the borrower's right to rescission "shall expire three years after the date of consummation of the transaction" even if the "disclosures required under [TILA] have not been delivered" to the borrower. 15 U.S.C. § 1635(f). Today, the Supreme Court granted certiorari in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684, to consider whether, in order to rescind a transaction after the three-day rescission period has passed based on the lender's failure to provide the required loan documents, a borrower may simply notify the creditor in writing, or whether the borrower must instead sue the creditor for rescission within three years after consummation of the transaction.

The Jesinoskis, the plaintiffs in this action, refinanced their home loan with defendant Countrywide in 2007. The Jesinoskis allege that Countrywide failed to furnish the disclosures required by the TILA; they sent a written notice of rescission to Countrywide three years to the day after consummating the loan transaction. Countrywide, however, disputed that it had violated the TILA and refused to honor the Jesinoskis' attempt at rescission. One year after they sent their written notice to Countrywide, but four years after the loan was consummated, the Jesinoskis brought suit against Countrywide to rescind the loan. The district court granted judgment on the pleadings in favor of Countrywide and the Eighth Circuit, bound by circuit precedent, affirmed on the ground that the Jesinoskis had not filed suit against Countrywide before three years had elapsed from the date of their loan transaction. See Jesinoski v. Countrywide Home Loans, Inc., 729 F.3d 1092 (8th Cir. 2013) (per curiam).

Central to resolution of this issue is the...