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Pohl v. U.S. Bank

United States District Court, D. Colorado

March 28, 2016

US BANK, as trustee for Merrill Lynch First Franklin Mortgage Loan Trust Back Certificates Series 2007-4, and DEBRA JOHNSON, Public Trustee of Denver County; and all unknown persons who claim any interest in the subject matter of this action, Defendants.



This matter is before the Court on United States Magistrate Judge Michael J. Watanabe’s Report and Recommendation (the “Recommendation”) [Docket No. 147] on Plaintiffs’ Motion for Partial Summary Judgment [Docket No. 90] and the Cross-Motion for Summary Judgment of defendant U.S. Bank [Docket No. 108]. The magistrate judge recommends that the Court deny plaintiffs’ Motion for Summary Judgment and grant defendant U.S. Bank’s Cross-Motion for Summary Judgment. The Recommendation states that objections to the Recommendation must be filed within fourteen days after service on the parties. See 28 U.S.C. § 636(b)(1)(C). The Recommendation was served on February 11, 2016. Pursuant to an order granting plaintiffs an extension of time to file objections to the Recommendation, see Docket No. 149, plaintiffs filed a timely objection on March 4, 2016. Docket No. 152.

The Court will “determine de novo any part of the magistrate judge’s disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3). In the absence of a proper objection, the Court may review a magistrate judge’s recommendation under any standard it deems appropriate. See Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) (“[i]t does not appear that Congress intended to require district court review of a magistrate’s factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings”). An objection is proper if it is specific enough to enable the Court “to focus attention on those issues - factual and legal - that are at the heart of the parties’ dispute.” United States v. 2121 East 30th Street, 73 F.3d 1057, 1059 (10th Cir. 1996).


Summary judgment is warranted under Federal Rule of Civil Procedure 56 when the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986); Concrete Works, Inc. v. City & Cty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994); see also Ross v. The Board of Regents of the University of New Mexico, 599 F.3d 1114, 1116 (10th Cir. 2010). A disputed fact is “material” if under the relevant substantive law it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). Only disputes over material facts can create a genuine issue for trial and preclude summary judgment. Faustin v. City & Cty. of Denver, 423 F.3d 1192, 1198 (10th Cir. 2005). An issue is “genuine” if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997). When reviewing a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Id.; see McBeth v. Himes, 598 F.3d 708, 715 (10th Cir. 2010). However, where, as here, there are cross motions for summary judgment, the reasonable inferences drawn from affidavits, attached exhibits, and depositions are rendered in the light most favorable to the non-prevailing party. Jacklovich v. Simmons, 392 F.3d 420, 425 (10th Cir. 2004). Furthermore, “[w]hen the parties file cross motions for summary judgment, we are entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts.” Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000) (internal quotation marks omitted).


This case concerns U.S. Bank’s efforts to foreclose on a Note and Deed of Trust on plaintiffs’ residence. Docket No. 90 at 4. Plaintiffs argue that they rescinded the Note and Deed of Trust on March 30, 2010 pursuant to the Truth in Lending Act (“TILA”). See id.[1] Additional relevant facts are set forth in the Recommendation, see Docket No. 147 at 4-5, and will not be recited here except as relevant to the Court’s de novo review.

A. Failure to Consider Relevant Law

Although plaintiffs nominally make five objections, see Docket No. 152 at 1-2, four of those objections rely on plaintiffs’ interpretation of the Supreme Court’s opinion in Jesinoski v. Countrywide Home Loans, Inc., __ U.S. __, 135 S.Ct. 790 (2015). In Jesinoski, the Supreme Court considered the manner by which a borrower could give notice of rescission under the Truth In Lending Act. 15 U.S.C. § 1601 et seq. (“TILA”). Under TILA, borrowers have 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.” Jesinoski, 135 S.Ct. at 792 (citing 15 U.S.C. § 1635(a)) (alteration marks in original). If a lender never makes the required disclosures, the borrower’s right of rescission expires “three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first.” 15 U.S.C. § 1635(f). In other words, “[c]onsumers have an absolute right to rescind for three business days after closing on the loan.” Sherzer v. Homestar Mortg. Servs., 707 F.3d 255, 256 (3d Cir. 2013). After three days from the closing of the loan, a borrower only has the right to rescind the loan “[i]f the lender fails to make the requisite disclosures before the loan commences[.]” Id.

The court of appeals in Jesinoski held that, to effect a timely rescission under § 1635(f)’s three-year bar, a plaintiff must file a lawsuit seeking rescission within three years of the transaction’s consummation. 135 S.Ct. at 792. On that basis, it affirmed a district court’s order granting judgment on the pleadings to a lender where the borrowers provided notice of their intent to rescind the loan within three years of the transaction, but did not file a lawsuit until more than a year later. See Id. at 791-93.

The Supreme Court reversed, holding that, under TILA, a borrower may exercise his or her right to rescind a loan by notifying the creditor. Id. at 792. The Court reasoned:

The language [of § 1635(a)] 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 require him to sue within three years.


Plaintiffs argue that, pursuant to Jesinoski, their “action of notifying the [lender] within three years, which is undisputed . . ., means that the relevant note and deed of trust were rescinded as a matter of law and therefore void.” Docket No. 152 at 5. Under plaintiffs’ reading of Jesinoski, any notification of rescission immediately rescinds the relevant loan and the rescinding borrower need make no showing that the lender did not provide the required disclosures to effectuate the rescission. See Docket No. 152 at 5; Docket No. 116 at 1-2, 6-7. U.S. Bank argues that Jesinoski’s holding was addressed to the narrow question of whether a borrower may ...

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