Barnes v. Chase Home Finance, LLC et al

Filing 111

ORDER: The Court ADOPTS Magistrate Judge Papak's Findings and Recommendation 82 . The Court (1) DENIES as moot the Motion 63 for Extension of Time by Fannie Mae and LBPS; (2) GRANTS Plaintiffs Motion 69 for Leave to Amend and deems Plaintiffs proposed Second Amended Complaint 95 as properly filed; (3) DENIES as moot LBPSs Motion 73 to Strike or, in the Alternative, to Dismiss Plaintiffs First Amended Complaint 58 ; and (4) GRANTS in part and DENIES in part Fannie Maes Mot ion 77 to Dismiss or, in the Alternative, to Strike Plaintiffs Second Amended Complaint 95 only to the extent that this Court DISMISSES with prejudice Plaintiffs claim for rescission against all Defendants; and DENIES as moot the balance of Fanni e Maes Motion 77 . Thus, Plaintiffs claims in his Second Amended Complaint for declaratory judgment, injunctive relief, and damages related to Defendants alleged failure to give effect to Plaintiffs timely notice to rescind remain pending. Signed on 06/20/2012 by Judge Anna J. Brown. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

TIMOTHY BARNES,
Plaintiff,

3:11-CV-142-PK
ORDER

v.
CHASE HOME FINANCE, LLC; CHASE
BANK USA, N.A.; IBM LENDER
BUSINESS PROCESS SERVICES,
INC.; JOHN AND JANE DOES 1-10;
and FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
Defendants.

BROWN, Judge.
Magistrate Judge Paul Papak issued Findings and
Recommendation (#103) on March 19, 2012, in which he recommends
the Court (1) DENY as moot the Motion (#63) for Extension of Time
by Defendants Federal National Mortgage Association (Fannie Mae)
1 - ORDER

and IBM Lender Business Process Services (LBPS); (2) GRANT
Plaintiff’s Motion (#69) for Leave to Amend and deem Plaintiff’s
proposed Second Amended Complaint (#95) as properly filed;
(3) DENY as moot LBPS’s Motion (#73) to Strike or, in the
Alternative, to Dismiss Plaintiff’s First Amended Complaint
(#58); and (4) GRANT in part Fannie Mae’s Motion (#77) to Dismiss
or, in the Alternative, to Strike Plaintiff’s Second Amended
Complaint (#95) to the extent that Fannie Mae seeks dismissal
with prejudice of Plaintiff’s claim for rescission; and to DENY
as moot the balance of Fannie Mae’s Motion (#77).

The matter is

now before this Court pursuant to 28 U.S.C. § 636(b)(1) and
Federal Rule of Civil Procedure 72(b).
Timely Objections to the Findings and Recommendation were
filed by Plaintiff appearing pro se (#108); LBPS and Fannie Mae
(#107); and Chase Bank USA (#106) only with respect to the
Magistrate Judge’s Findings and Recommendation as to Fannie Mae’s
Motion.

The Court, therefore, is relieved of its obligation to

review the record de novo as to those portions of the Findings
and Recommendation to which the parties do not object.

Shiny

Rock Min. Corp v. U.S., 825 F.2d 216, 218. (9th Cir. 1987).

See

also Lorin Corp. v. Goto & Co., 700 F.2d 1202, 1206 (8th Cir.
1983).

Having reviewed the legal principles de novo, the Court

does not find any error in these portions of the Findings and
Recommendation.
2 - ORDER

With respect to the parties’ Objections, the Court notes
when any party objects to any portion of the Magistrate Judge's
Findings and Recommendation, the district court must make a de
novo determination of that portion of the Magistrate Judge's
report.

28 U.S.C. § 636(b)(1).

See also Dawson v. Marshall, 561

F.3d 930, 932 (9th Cir. 2009); United States v. Reyna-Tapia, 328
F.3d 1114, 1121 (9th Cir. 2003)(en banc).
I.

Plaintiff’s Objections.
Plaintiff objects to the Magistrate Judge’s recommendation

to dismiss with prejudice as untimely Plaintiff’s claim for
rescission of his home-mortgage loan under the Truth in Lending
Act (TILA), 15 U.S.C. § 1601(a), et seq., based on the Ninth
Circuit’s recent decision in McOmie-Gray v. Bank of America Home
Loans, NA, 667 F.3d 1325 (9th Cir. 2012).
In its Order (#50) issued on October 18, 2011, the Court
addressed at length Plaintiff’s objection to the Magistrate
Judge’s earlier recommendation to dismiss Plaintiff’s rescission
claim as untimely.

In its Order the Court did not adopt the

Magistrate Judge’s recommendation to dismiss Plaintiff’s
rescission claim as untimely based in part on a lack of direction
by the Ninth Circuit and a significant split among the trial
courts in this circuit as to the interpretation of the
limitations period for filing an action to enforce a right of
rescission under TILA.
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See 15 U.S.C. § 1635.

In McOmie-Gray the

Ninth Circuit adopted an interpretation of the limitations period
in § 1635(f) for filing an action to enforce a borrower’s
extended right of rescission that resolved the split of authority
and foreclosed this Court’s interpretation that the limitations
period in § 1635(f) is not a statute of ultimate repose.

The

Ninth Circuit held:
Section 1635(f) is therefore not merely a
statute of limitations-it completely
extinguishes the underlying right itself.
. . . [We] now hold that adopting § 1640's
one-year statute of limitations to rescission
actions contradicts the plain language of the
statute.
* * *
Because § 1635(f) is a statute of
repose, it extinguished McOmie–Gray's right
to rescission on April 14, 2009, three years
after the consummation of the loan.
McOmie–Gray did not file her rescission suit
until August 28, 2009. Therefore, the
district court properly dismissed this case
as untimely and, as McOmie–Gray herself
conceded at oral argument, whether she and
Bank of America Home Loans had an agreement
tolling the statute of limitations is
irrelevant.
667 F.3d at 1329-30.
Although Plaintiff now attempts both to undermine the Ninth
Circuit’s legal interpretation and to distinguish this matter
from the facts in McOmie-Gray, the Court concludes McOmie-Gray
conclusively establishes § 1635(f) is a statute of ultimate
repose that extinguishes entirely a right to rescission under
TILA three years after the date of the consummation of the loan
4 - ORDER

transaction.
As this Court and the Magistrate Judge have noted, Plaintiff
initiated this action in February 2011, well beyond three years
from the November 2007 closing date of the loan at issue.

Thus,

Plaintiff’s claim to enforce his right to rescission under §
1635(f) is not timely and should be dismissed with prejudice.
Accordingly, the Court concludes Plaintiff’s Objections are
not a basis for modifying or reversing the Magistrate Judge’s
Findings and Recommendation.
Plaintiff also appears to request an evidentiary hearing
regarding his remaining claims in this matter.

Plaintiff,

however, has not made a proper motion or sought a hearing under
any particular rule of the Federal Rules of Civil Procedure.

The

Court, therefore, does not make any ruling as to such a request.
Plaintiff may raise that issue with the Magistrate Judge in a
proper motion in due course.
II.

Defendants’ Objections.
In their Objections (#106, #107), Defendants Chase Bank,

LBPS, and Fannie Mae assert it is unclear from the Findings and
Recommendation whether the Magistrate Judge recommends dismissing
only Plaintiff’s rescission claim or the whole of Plaintiff’s
Second Amended Complaint.

In any event, these Defendants object

to the Magistrate Judge’s failure to dismiss all of Plaintiff’s
remaining claims for damages, declaratory judgment, and

5 - ORDER

injunctive relief.

The Magistrate Judge, however, stated in

footnote four of his Findings and Recommendation:
In the event that the reviewing judge adopts
my recommendations herein, [Plaintiff’s]
claims for declaratory judgment, for
injunctive relief, and for statutory and
actual damages in connection with defendants’
failure to effect rescission of [Plaintiff’s]
mortgage loan following receipt of
[Plaintiff’s] timely notice of inten[t] to
rescind will remain pending in this matter.
Thus, the Magistrate Judge clearly does not recommend
dismissing the balance of Plaintiff’s Second Amended Complaint.
Defendants each object to the Magistrate Judge’s failure to
dismiss Plaintiff’s entire Second Amended Complaint and contend
each of Plaintiff’s remaining claims is dependent on Plaintiff’s
now-dismissed claim for rescission.

The Magistrate Judge points

out, however, that Plaintiff’s claim for damages resulting from
Defendants’ failure to give effect to Plaintiff’s timely notice
of rescission is not dependent on and is separate from the
availability of a civil remedy to enforce his right to rescission
under § 1635.

In addition, as noted in the Findings and

Recommendation, this Court previously denied Defendants’ motions
to dismiss such a claim.
With respect to Plaintiff’s remaining claims for declaratory
judgment or injunctive relief, neither Fannie Mae nor LPBS made
any argument to the Magistrate Judge in Motions (#73, #77)
specifically seeking dismissal of those claims.

6 - ORDER

Thus, such a

ruling by this Court would be outside of the scope of the
Findings and Recommendation under review.
Accordingly, the Court concludes Defendants’ Objections are
not a basis for modifying or reversing the Magistrate Judge’s
Findings and Recommendation.

CONCLUSION
The Court ADOPTS Magistrate Judge Papak's Findings and
Recommendation (#82).

Accordingly, the Court (1) DENIES as moot

the Motion (#63) for Extension of Time by Fannie Mae and LBPS;
(2) GRANTS Plaintiff’s Motion (#69) for Leave to Amend and deems
Plaintiff’s proposed Second Amended Complaint (#95) as properly
filed; (3) DENIES as moot LBPS’s Motion (#73) to Strike or, in
the Alternative, to Dismiss Plaintiff’s First Amended Complaint
(#58); and (4) GRANTS in part and DENIES in part Fannie Mae’s
Motion (#77) to Dismiss or, in the Alternative, to Strike
Plaintiff’s Second Amended Complaint (#95) only to the extent
that this Court DISMISSES with prejudice Plaintiff’s claim for
rescission against all Defendants; and DENIES as moot the balance
of Fannie Mae’s Motion (#77).

Thus, Plaintiff’s claims in his

Second Amended Complaint for declaratory judgment, injunctive
relief, and damages related to Defendants’ alleged failure to

7 - ORDER

give effect to Plaintiff’s timely notice to rescind remain
pending.
IT IS SO ORDERED.
DATED this 20th day of June, 2012.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

8 - ORDER