Merritt v. Countrywide Financial Corp., No. 09-17678 (9th Cir. 2014)
Annotate this CasePlaintiffs filed suit against Countrywide and others involved in their residential mortgage, alleging violations of numerous federal statutes. The district court dismissed the claims with prejudice and plaintiffs appealed. The court held that plaintiffs can state a claim for rescission under the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., without pleading that they have tendered, or that they have the ability to tender, the value of their loan; only at the summary judgment stage may a court order the statutory sequence altered and require tender before rescission - and then only on a case-by-case basis; and, therefore, the court reversed the district court's dismissal of plaintiffs' rescission claim and remanded for further proceedings. The court held that, although the limitations period in the Real Estate Settlement Practices Act (RESPA), 12 U.S.C. 2614, ordinarily runs from the date of the alleged RESPA violation, the doctrine of equitable tolling may, in the appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the violation; just as for TILA claims, district courts may evaluate RESPA claims case-by-case; and, therefore, in this case, the court vacated the dismissal of plaintiffs' Section 8 of RESPA claims on limitations grounds and remanded for reconsideration.
Court Description: Truth in Lending Act / Real Estate Settlement. Practices Act The panel reversed in part and vacated in part the district court’s dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of an action under the Truth in Lending Act and the Real Estate Settlement Practices Act against Countrywide Financial Corporation and various other defendants involved in the plaintiffs’ residential mortgage. The panel reversed the district court’s dismissal of the plaintiffs’ TILA rescission claim for failure either to tender the rescindable value of their loan prior to filing suit or to allege ability to tender its value in their complaint. Declining to extend Yamamoto v. Bank of New York, 329 F.3d 1167 (9th Cir. 2003), the panel held that an allegation of tender or ability to tender is not required. The panel held that only at the summary judgment stage may a court order the statutory sequence altered and require tender before rescission, and then only on a case-by-case basis, once the creditor has established a potentially viable defense. The panel vacated the district court’s dismissal of the plaintiffs’ claims under § 8 of RESPA, which prohibits kickbacks and unearned fees, as barred by the one-year statute of limitations. The panel held that although the RESPA statutory limitations period ordinarily runs from the date of the alleged RESPA violation, the doctrine of equitable tolling may, in appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the violation. The panel declined to address two issues of first impression: (1) whether, while straight overcharges are not actionable under RESPA § 8(b), markups for services provided by a third party are actionable; and (2) whether an inflated appraisal qualifies as a “thing of value” under RESPA § 8(a). Dissenting, Judge Kleinfeld wrote that the dismissal with prejudice should stand because the complaint failed to comply with the “short and plain statement” requirement of Fed. R. Civ. P. 8(a)(2).
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.