Jerry Hoang v. Bank of America, N.A.

If a creditor fails to make required disclosures under the

Truth in Lending Act (TILA), borrowers are allowed three

years from the loan’s consummation date to rescind certain

loans.1 15 U.S.C. § 1635(f). Borrowers may effect that

rescission simply by notifying the creditor of their intent to

rescind within the three-year period. Jesinoski v. Countrywide

Home Loans, 135 S. Ct. 790, 792 (2015). TILA does not

include a statute of limitations outlining when an action to

enforce such a rescission must be brought. Without a statute

of limitations in TILA, courts must first borrow the most

analogous state law statute of limitations and apply that

limitation period to TILA rescission enforcement claims. Cty.

of Oneida v. Oneida Indian Nation of N.Y. State, 470 U.S.

226, 240 (1985). In Washington, the state’s six-year contract

statute of limitations is the most analogous statute. We have

jurisdiction under 28 U.S.C. § 1291, and we reverse and

remand for further proceedings.

1 Section 1635 applies to consumer credit transactions, as defined in

15 U.S.C. § 1602, which include refinanced home loans such as the loan

at issue here.

HOANG V. BANK OF AMERICA 5

I.2

In December 2004, Plaintiffs, Jerry Hoang and Le Uyen

Thi Hoang (Hoang), borrowed money from Wells Fargo

Bank, N.A. to purchase a home in Tukwila, Washington. On

April 30, 2010, Hoang refinanced the Wells Fargo home loan

with Bank of America, N.A. and the Federal National

Mortgage Association (collectively, the Bank). At the time of

the refinancing, the Bank failed to give Hoang notice of the

right to rescind the loan, thereby violating TILA’s disclosure

requirement. See 15 U.S.C. § 1635(a). As a result, Hoang had

three years from the loan’s consummation date of April 30,

2010, to rescind the loan. See 15 U.S.C. § 1635(f). On April

15, 2013 (within the three-year period), Hoang sent the Bank

notice of intent to rescind the loan under TILA. The record

reflects that the Bank took no action in response to receiving

the notice.

In February 2017, the Bank declared Hoang in default on

the loan and initiated non-judicial foreclosure proceedings.

To stop the non-judicial foreclosure proceedings, Hoang filed

suit on May 9, 2017. Hoang requested enforcement of the

loan rescission under TILA, 15 U.S.C. § 1635(f), through

declaratory and injunctive relief. In addition, Hoang’s prayer

for relief requested monetary damages under the Washington

Consumer Protection Act (WCPA), although reference to that

statute appeared nowhere else in the complaint. The Bank

moved to dismiss the case, arguing that Hoang’s claims were

2 Because this case arises from the district court’s grant of the Bank’s

motion to dismiss, “we accept the factual allegations in the complaint as

true and construe the pleading in the light most favorable to [Hoang].”

Northstar Fin. Advisors Inc. v. Schwab Invest., 779 F.3d 1036, 1042 (9th

Cir. 2015) (alteration and citation omitted).

HOANG 6 V. BANK OF AMERICA

time barred, because Hoang failed to bring a suit for

rescission within three years of the loan’s consummation.

The district court held that Hoang timely rescinded the

loan by sending notice of rescission to the Bank within three

years of the loan’s consummation.3 Nevertheless, the district

court granted the Bank’s motion to dismiss, because Hoang’s

claims were time barred. To find the claims time barred, the

district court adopted the one-year statute of limitations

applicable to TILA claims for monetary damages, 15 U.S.C.

§ 1640(e). However, it adopted that statute, because it

misread Hoang’s request for damages under the WCPA (in

Hoang’s prayer for relief) as a claim for monetary relief

under TILA. The district court dismissed Hoang’s claim as

untimely for failure to bring suit within one year. Neither

party disputes that the district court erred in interpreting

Hoang’s complaint as requesting TILA damages.

As to Hoang’s requests for declaratory and injunctive

relief, the district court acknowledged that the limitations

period applicable to TILA rescission enforcement claims is an

“unsettled issue of law” post-Jesinoski. See Jesinoski v.

Countrywide Home Loans, 135 S. Ct. 790 (2015). The district

court determined that some statute of limitations must apply

and borrowed the limitations period for monetary damages

under TILA, 15 U.S.C. § 1640(e) (based, in part, on its

misconception that Hoang asserted a claim under that

section). Under the one-year statute of limitations, the district

court found that Hoang’s claim for injunctive and declaratory

relief was also time barred. Because it found that all of

Hoang’s claims were time barred, the district court

3 This determination by the district court resolved this issue, and it has

not been raised on appeal.

HOANG V. BANK OF AMERICA 7

determined that any amendment would be futile.

Accordingly, the district court granted the Bank’s motion and

dismissed the case without leave to amend.

II.

We review the district court’s choice of the applicable

statute of limitations de novo. Hooper v. Lockheed Martin

Corp., 688 F.3d 1037, 1045 (9th Cir. 2012). We also review

dismissal on statute of limitations grounds de novo, because

we have accepted all factual allegations in the complaint as

true and draw all reasonable inferences in favor of the

nonmoving party. Gregg v. Hawaii, Dep’t of Public Safety,

870 F.3d 883, 886–87 (9th Cir. 2017).

TILA gives borrowers the right to rescind certain loans

within three business days after consummation of the loan.

15 U.S.C. § 1635(a). However, if the creditor fails to make

required TILA disclosures to the borrower, the window for

rescission is expanded to three years from consummation of

the loan. 15 U.S.C. § 1635(f). Once a borrower rescinds a

loan under TILA, the borrower “is not liable for any finance

or other charge, and any security interest given by the

[borrower] . . . becomes void upon such a rescission.”

15 U.S.C. § 1635(b); see 12 C.F.R. § 226.23(a)(3). Within

20 days after the creditor receives a notice of rescission, the

creditor must take steps to wind up the loan. 15 U.S.C.

§ 1635(b). “Upon the performance of the creditor’s

obligations under this section, the [borrower] shall tender the

property to the creditor . . . [or] tender its reasonable value.”

Id. Once both creditor and borrower have so acted, the loan

has been wound up.

HOANG 8 V. BANK OF AMERICA

Previously, we required that borrowers effectuate TILA

loan rescissions by giving lenders their notice of rescission

and also bringing suit to enforce that rescission, both to be

accomplished within the three-year window set forth in

15 U.S.C. § 1635(f). See, e.g., McOmie-Gray v. Bank of Am.

Home Loans, 667 F.3d 1325, 1328 (9th Cir. 2012)

(“[R]escission suits must be brought within three years from

the consummation of the loan.”); Miguel v. Country Funding

Corp., 309 F.3d 1161, 1164 (9th Cir. 2002) (“[S]ection

1635(f) represents an ‘absolute limitation on rescission

actions’ which bars any claims filed more than three years

after the consummation of the transaction.”) (quoting King v.

California, 784 F.2d 910, 913 (9th Cir. 1986)). However, the

Supreme Court altered that usual procedure in Jesinoski. It

eliminated the need for a borrower to bring suit within the

three-year window to exercise TILA rescission. Instead,

“rescission is effected when the borrower notifies the creditor

of his intention to rescind.” Jesinoski, 135 S. Ct. at 792. “[S]o

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.”

Id. Thus, although emphasizing that the borrower need only

give the notice of rescission within the three years, the Court

did not clarify when a suit to enforce the rescission must be

brought after a lender’s failure to act on that notice of

rescission. We are now presented with that question: when a

borrower effectively rescinds a loan under TILA, but no steps

are taken to wind up the loan, when must suit be brought to

enforce that rescission?

Hoang argues that no statute of limitations applies to such

an action in the absence of an express statute of limitations

set forth in TILA and in light of Jesinoski. Alternatively, the

Bank agrees with the district court that a limitation period

HOANG V. BANK OF AMERICA 9

must apply but argues that the district court should have

applied Washington’s two-year catchall statute of limitations.

Neither party on appeal argues that we should adopt the

district court’s view and borrow the TILA damage limitation

period in 15 U.S.C. § 1640(e). After review, we agree with

the district court that there is a statute of limitations

applicable to TILA rescission enforcement actions, but we

reject the district court’s decision and the parties’ arguments

as to what that limitation period should be.

When there is no statute of limitations expressly

applicable to a federal statute, “we do not ordinarily assume

that Congress intended that there be no time limit on actions

at all.” DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151,

158 (1983). Rather, “the general rule is that a state limitations

period for an analogous cause of action is borrowed and

applied to the federal claim.” Cty. of Oneida, 470 U.S. at 240.

As a “narrow exception to the general rule,” courts may

“decline to borrow a state statute of limitations only when a

rule from elsewhere in federal law clearly provides a closer

analogy than available state statutes, and when the federal

policies at stake and the practicalities of litigation make that

rule a significantly more appropriate vehicle for interstitial

lawmaking.” Reed v. United Transp. Union, 488 U.S. 319,

324 (1989) (internal quotation marks omitted). However,

“application of a federal statute will be unusual, and resort to

state law remains the norm for borrowing of limitations

periods.” Id. (internal quotation marks omitted).

As above explained, TILA does not provide a statute of

limitations for rescission enforcement claims. Accordingly,

our precedent requires that we borrow from analogous

Washington state law. See Sharkey v. O’Neal, 778 F.3d 767,

770–71 (9th Cir. 2015). Under Washington’s general contract

HOANG 10 V. BANK OF AMERICA

law, the statute of limitations sets forth a six-year limitation

period for an “action upon a contract in writing, or liability

express or implied arising out of a written agreement.” Wash.

Rev. Code § 4.16.040. The loan agreement between Hoang

and the Bank is a contract in writing. An action to rescind that

loan (under TILA or otherwise) arises out of that written

agreement. Because TILA rescissions necessarily require a

contract to be rescinded, contract law provides the best

analogy and we adopt the general contract law statute of

limitations. The district court agreed, acknowledging that the

Washington contract statute of limitations provided the

closest state law analogy to TILA rescission enforcement

(although it declined to borrow it).4 There is no federal law

that provides a closer analogy, nor do TILA policies at stake

and the practicalities of TILA rescission litigation make

federal law a more appropriate vehicle for interstitial

lawmaking.

We reject the district court’s application of TILA’s oneyear

statute of limitations for legal damages claims. 15 U.S.C.

§ 1640(e). First, the district court’s choice to apply the TILA

one-year legal damages statute of limitations was based

primarily on a misreading of Hoang’s complaint as requesting

TILA relief rather than relief under the WCPA. More

importantly, TILA provides for both legal damages and

equitable relief but only includes a statute of limitations for

legal damages relief. The statute does not suggest that the

statute of limitations for legal damages relief is also

applicable to claims for equitable remedies. If Congress

intended that statute to apply, Congress surely knew how to

4 The district court declined to borrow Washington’s contract

limitations period, because it reasoned that 15 U.S.C. § 1640(e), TILA’s

damages statute, provided a closer analogy.

HOANG V. BANK OF AMERICA 11

draft the statute accordingly. Thus, the district court erred

when it declined to follow the “norm for borrowing [state

law] limitations periods.” See Reed, 488 U.S. at 324. Only

when a state statute of limitations would “frustrate or

significantly interfere with federal policies” do we turn

instead to federal law to supply the limitation period. Id. at

327. Application of Washington’s longer six-year contract

statute of limitations would actually further TILA’s purpose,

which is to protect consumers from predatory lending

practices and promote the informed use of credit. 15 U.S.C.

§ 1601(a).

We also reject the Bank’s argument that Washington’s

two-year catchall statute of limitations should apply. The

catchall provision applies to “[a]n action for relief not

hereinbefore provided for[.]” Wash. Rev. Code § 4.16.130. In

similar contexts, the Supreme Court previously determined

that catchall statutes were not substantively analogous and

declined to borrow them. See Agency Holding Corp. v.

Malley-Duffy & Assoc., Inc., 483 U.S. 143, 152–53 (1987);

see also DirecTV, Inc. v. Webb, 545 F.3d 837, 849 (9th Cir.

2008). We decline to find that Washington’s catchall is

analogous to TILA and do not borrow it here. Additionally,

because we find that Washington’s contract statute of

limitations is closely analogous, we need not resort to

Washington’s catchall limitation period.

Last, because “we do not ordinarily assume that Congress

intended that there be no time limit on actions at all,”

DelCostello, 462 U.S. at 158, we reject Hoang’s argument

that no statute of limitations applies to TILA rescission

enforcement claims.

HOANG 12 V. BANK OF AMERICA

Applying Washington’s six-year contract statute of

limitations, Hoang’s TILA claim is timely. Hoang’s cause of

action arose in May 2013 when the Bank failed to take any

action to wind up the loan within 20 days of receiving

Hoang’s notice of rescission.5 See 15 U.S.C. § 1635(b).

Because Hoang brought this suit within six years, the district

court erred in dismissing the claim as time barred.

III.

The district court improperly denied Hoang leave to

amend the complaint. We review denial of leave to amend for

abuse of discretion. AE ex rel. Hernandez v. Cty. of Tulare,

666 F.3d 631, 636 (9th Cir. 2012).

A party may amend its pleading with the court’s leave,

which “[t]he court should freely give . . . when justice so

requires.” Fed. R. Civ. P. 15(a)(2). “This policy is to be

applied with extreme liberality.” Eminence Capital, LLC v.

Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal

quotation marks omitted). “Dismissal with prejudice and

without leave to amend is not appropriate unless it is clear on

de novo review that the complaint could not be saved by

amendment.” Id. at 1052. Leave to amend can and should

generally be given, even in the absence of such a request by

the party. See Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th

Cir. 2016) (“[A] district court should grant leave to amend

even if no request to amend the pleading was made, unless it

determines that the pleading could not possibly be cured by

the allegation of other facts.”). However, leave to amend need

5 Although the complaint alleges that Hoang sent the notice of

rescission to the Bank on April 15, 2013, it is not clear when the notice

was actually received or when the 20-day period would have run.

HOANG V. BANK OF AMERICA 13

not be granted when “any amendment would be an exercise

in futility,” Steckman v. Hart Brewing, Co., 143 F.3d 1293,

1298 (9th Cir. 1998), such as when the claims are barred by

the applicable statute of limitations. See Platt Elec. Supply,

Inc. v. EOFF Elec., Inc., 522 F.3d 1049, 1060 (9th Cir. 2008).

The district court here dismissed Hoang’s claims without

leave to amend. However, the district court made that

determination based on its finding that an amendment would

be futile because the claims were time barred by the one-year

statute of limitations applicable to TILA damage claims.

15 U.S.C. § 1640(e). With the six-year contract statute of

limitations, Hoang’s TILA rescission enforcement claim is

not time barred. Therefore, an amendment by Hoang may not

be futile.

REVERSE AND REMAND.