Iqbal S. Randhawa v. Bank of New York Mellon, fka The Bank of New York

In 1968 Congress passed the Federal Consumer Credit Protection Act, Title 1, known as the Federal Truth-in-Lending Act, 15 U.S.C.A. §§ 1601 et seq., which provides consumer protections, including the right to serve a notice of rescission. In Jesinoski v. Countrywide Home Loans, Inc. 574 U.S. 259 (2015), this court rejected a lower court’s holding that under the Truth in Lending Act (TILA) a borrower has to file suit for rescission or be barred by a statute of limitations, and held that rescission is effected when the borrower notifies the creditor of his intention to rescind. No lawsuit is required to accomplish this. The California Supreme Court has ruled since the 1800s that, in a Quiet Title action, statutes of limitations do not run against plaintiffs in possession of the property, and also that actions to remove a cloud from title have a four year statute of limitations. Petitioner, owner of and residing on his property, in 2005 served a Notice of Rescission under TILA of transactions occurring in 2004. The Lender ignored it, taking no action to dispute the rescission, thus the rescission was effective and the Security Interest and related Instruments were void. The lender consequently foreclosed and conducted a trustee’s sale. Randhawa remained in possession until he was later evicted in 2015. Randhawa filed this action in 2018, less than four years after eviction, and later sought to amend his complaint to allege Quiet Title to remove the cloud of the void security interest and trustee’s deed and prior clouds on title. The District Court dismissed the action without leave to amend based on the three year statute of limitations for fraud which it found started running 20 days after the notice of rescission was served, without regard to possession of the property. The court of appeals affirmed, finding the claims time-barred.