Shaw v. Bank of America Corp., No. 17-56706 (9th Cir. 2019)
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The Ninth Circuit affirmed the district court's dismissal of a Truth in Lending Act (TILA) claim for lack of subject matter jurisdiction based on the jurisdiction-stripping provisions of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). In this case, plaintiff sought rescission of a mortgage loan under TILA, claiming that the lender provided him with defective notice of the right to cancel when the loan was signed.
The panel held that FIRREA's administrative exhaustion requirement applied, and plaintiff had a claim under FIRREA because his cause of action gave right to an equitable remedy of rescission and was susceptible of resolution by FIRREA's claims process. The panel agreed with the Fourth Circuit and concluded that there was no requirement that the loan have passed through an FDIC receivership. The panel also held that plaintiff's claim related to an act or omission, the lender failed to comply with TILA, and the FDIC was appointed as receiver.
However, the panel held that plaintiff failed to exhaust his administrative remedies with the FDIC because his complaint included no allegations that he presented his TILA claim to the FDIC before filing suit. Furthermore, because subject matter jurisdiction was lacking when this action was filed, plaintiff's later communications with the FDIC did not prevent dismissal of his TILA claim. Finally, the district court did not abuse its discretion in denying plaintiff’s request for further discovery.
Court Description: Truth in Lending Act. The panel affirmed the district court’s dismissal of a Truth in Lending Act claim for lack of subject matter jurisdiction based on the jurisdiction-stripping provisions of the Financial Institutions Reform, Recovery, and Enforcement Act. Plaintiff sought rescission of a mortgage loan on the ground that the lender violated TILA by providing him with defective notice of the right to cancel when the loan was signed. The panel held that FIRREA’s administrative exhaustion requirement applied because there was (1) a “claim” that (2) related to “any act or omission” of (3) an institution for which the Federal Deposit Insurance Corp. had been appointed receiver. First, the panel held that plaintiff had a “claim” because his cause of action gave right to the equitable remedy of rescission and was susceptible of resolution via FIRREA’s claims process. Agreeing with the Fourth Circuit, the panel concluded that there was no requirement that the loan have passed through an FDIC receivership. Second, the panel held that plaintiff’s claim related to an act or omission, that is, the lender’s alleged failure to comply with TILA’s disclosure requirements. Finally, the third element was met because the lender had failed and the FDIC had been appointed as receiver. The panel further held that FIRREA’s statutory exhaustion SHAW V. BANK OF AMERICA 3 requirement does not contain a futility exception, allowing a claim to proceed when filing with the FDIC would be futile. The panel held that plaintiff did not exhaust his remedies with the FDIC before filing suit, and his later communications with the FDIC did not prevent dismissal of his TILA claim for lack of subject matter jurisdiction. In addition, the district court did not abuse its discretion in denying plaintiff’s request for further discovery.
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