Hartman, et al. v. Smith, et al., No. 12-1947 (8th Cir. 2013)
Annotate this CasePlaintiffs filed suit against defendants alleging claims under, inter alia, the Truth in Lending Act (TILA), as amended by the Home Ownership Equity Protection Act, 15 U.S.C. 1602 et seq. Defendants are persons and entities involved in the transactions related to the financing of an addition to a house on plaintiffs' property. The court recently joined the Ninth and Tenth Circuits in holding that notice was not sufficient to exercise the right of rescission. In this instance, the court concluded that the district court erred in finding that plaintiffs' notice was sufficient to exercise the right of rescission under section 1635 of TILA. Therefore, plaintiffs' right of rescission expired upon the sale of the property. Accordingly, the court reversed the district court's finding that plaintiffs' notice was sufficient to exercise the TILA statutory right of rescission. The court affirmed, however, the district court's grant of summary judgment, the dismissal of plaintiffs' claims, and the dismissal of the Hartmans as parties to the case.
Court Description: Civil Case - Truth in Lending Act. Following a complicated financing transaction to borrow money to finance a house improvement, the Hartmans failed to make scheduled payments toward the contract for deed and the Smiths served a statutory notice of cancellation. The Hartmans sent notice to Prime Security Bank. Prime commenced foreclosure proceedings and the property was sold. The Hartmans brought suit for damages and rescission of all transactions under the Truth in Lending Act and brought state law claims. The district court concluded plaintiffs' notice was sufficient to exercise the TILA statutory right of rescission, granted summary judgment to Prime on the TILA rescission claim, dismissed the damages claims and dismissed the Hartmans as parties. The district court erred in concluding notice was sufficient to exercise the right of rescission under 15 U.S.C. sec. 1635. Noting a split in the circuits, this court joins the 9th and 10th Circuits in holding notice is not sufficient. Because plaintiffs failed to file a rescission action prior to the sale, the right of rescission expired upon the sale of the property. The district court properly dismissed the damages claim, the state law claims, and the Hartmans as parties. Judge Melloy concurs in the judgment. [ August 16, 2013
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.