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Merritt v. Countrywide Financial Corporation

United States Court of Appeals, Ninth Circuit

July 16, 2014

DAVID MERRITT; SALMA MERRITT, Plaintiffs-Appellants,
v.
COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation; COUNTRYWIDE HOME LOANS, INC., a New York corporation; ANGELO MOZILO, an individual; MICHAEL COLYER, an individual; DAVID SAMBOL, an individual; BANK OF AMERICA, NA; KEN LEWIS, an individual; JOHN BENSON, Defendants-Appellees

Argued and Submitted, San Francisco, California: November 9, 2012.

Page 1024

[Copyrighted Material Omitted]

Page 1025

[Copyrighted Material Omitted]

Page 1026

Appeal from the United States District Court for the Northern District of California James Ware, District Judge, Presiding. D.C. No. 5:09-cv-01179-JW.

REVERSED IN PART, VACATED IN PART, AND REMANDED FOR FURTHER PROCEEDINGS.

SYLLABUS

SUMMARY[**]

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" ...


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