Ninth Circuit Holds That Six-Year Limitations Period Applies to TILA Rescission Action Based on Analogous State Law Limitations Period

The United States Court of Appeals for the Ninth Circuit recently held that a six-year statute of limitations period applied to an action seeking to rescind a loan under the Truth in Lending Act (“TILA”).  See Hoang v. Bank of Am., N.A., 2018 WL 6367268 (9th Cir. Dec. 6, 2018).  The case involved a home loan that plaintiffs, residents of Washington, refinanced with defendant on April 30, 2010.  Defendant failed to provide plaintiffs with a notice of right to rescind the loan, which is required under TILA.  15 U.S.C. 1635(a).  Thus, plaintiffs had three years to rescind the loan, which they did by sending a notice of intent to rescind on April 15, 2013.  Defendant did not respond to this request or take any steps to effectuate the rescission of the loan and, in 2017, initiated non-judicial foreclosure proceedings based on plaintiffs’ default under the loan.  Plaintiffs responded by bringing this action seeking to rescind the loan.  The trial court dismissed plaintiffs’ claim as time-barred, holding that because TILA was silent as to when a rescission action must be brought, TILA’s one-year statute of limitations for monetary damages should apply to the rescission claim.

On appeal, the Ninth Circuit reversed.  The Supreme Court’s 2015 decision in Jesinoski v. Countrywide Home Loans, Inc. found that a borrower must notify a creditor of his intention to rescind within three years, but that “the statute does not also require him to sue within three years.”  Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790, 792 (2015).  Thus, the Supreme Court left open the question of “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?”  Although the Ninth Circuit rejected plaintiffs’ claim that there should be no statute of limitations because the statute was silent, it found that the district court’s finding of a one-year limitations period based on another TILA provision also was incorrect.  Instead, finding that it was required to borrow the limitations period from the most analogous state law unless a federal statute “clearly provides a closer analogy,” the Ninth Circuit applied Washington’s six-year limitation period for an “action upon a contract in writing, or liability express or implied arising out of a written agreement.”  The Court also found that the claim ripened in May 2013 when defendant failed to take steps to effectuate the rescission of the loan, and that the action was not time-barred.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Dylan Goetsch at