Barnes v. Chase Home Fin., LLC

• Decision Date: 14 August 2019
• Docket Number: No. 18-35616,18-35616
• Citation: 934 F.3d 901
• Parties: Timothy BARNES, Plaintiff-Appellant, v. CHASE HOME FINANCE, LLC, a Delaware corporation; Chase Bank USA, N.A., a subsidiary of JP Morgan Chase & Co., a Delaware corporation; IBM Lender Business Process Services, Inc., a Delaware corporation; Federal National Mortgage Association, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

934 F.3d 901

Timothy BARNES, Plaintiff-Appellant,

v.CHASE HOME FINANCE, LLC, a Delaware corporation; Chase Bank USA, N.A., a subsidiary of JP Morgan Chase & Co., a Delaware corporation; IBM Lender Business Process Services, Inc., a Delaware corporation; Federal National Mortgage Association, Defendants-Appellees.

No. 18-35616

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 9, 2019 Seattle, Washington

Filed August 14, 2019

Elizabeth S. Weinstein (argued), Yarmuth Wilsdon PLLC, Seattle, Washington, for Plaintiff-Appellant.

Kevin Hisashi Kono (argued) and Kaley L. Fendall, Davis Wright Tremaine LLP, Portland, Oregon; Frederick B. Burnside, Davis Wright Tremaine LLP, Seattle, Washington; for Defendants-Appellees Chase Home Finance LLC and Chase Bank USA N.A. Lance E. Olsen (argued), McCarthy Holthus LLP, Seattle, Washington; John M. Thomas, McCarthy Holthus LLP, Portland, Oregon, for Defendants-Appellees IBM Lender Business Process Services Inc., and Federal National Mortgage Association.

Before: Paul J. Watford and Eric D. Miller, Circuit Judges, and Barbara Jacobs Rothstein,^* District Judge.

ROTHSTEIN, Senior District Judge:

Timothy Barnes appeals the district court’s grant of summary judgment in favor of defendants in his action under the Truth in Lending Act ("TILA"), seeking rescission of a mortgage as well as damages and declaratory and injunctive relief. In a prior appeal, we held that Barnes gave proper, timely notice of rescission under TILA, and we vacated the district court’s judgment and remanded for further proceedings. Barnes v. Chase Home Fin., LLC , 701 F. App'x 673, 674–75 (9th Cir. 2017) (unpublished memorandum disposition). On remand, the district court granted summary judgment on a different ground, concluding that Barnes had no right of rescission under TILA because his loan was a residential mortgage transaction under 15 U.S.C. § 1635(e)(1).

We conclude that the district court properly considered defendants’ new argument on remand and properly granted summary judgment because Barnes obtained the mortgage in order to reacquire a residential property in which his prior ownership interest had been extinguished; thus, the right of rescission did not apply. We therefore affirm the district court’s judgment.

FACTUAL BACKGROUND

Timothy Barnes and his now ex-wife obtained title to the property in question in 1990. In 1997, the wife transferred title to the property to Barnes by quitclaim deed. In 2003, Barnes quitclaimed the property back to his wife. She then encumbered the property with a series of deeds of trust, listing her as the sole borrower.

The couple divorced in 2007. The divorce judgment, dated September 12, 2007, provided for a money judgment of $100,000.00 to be entered in favor of the wife and against Barnes. The divorce judgment further provided as follows:

The Family Residence Husband is awarded the real property located at ... Greenwood Road ... free of all right, title and interest of Wife thereto, and subject to the encumbrance of record owing thereon which Husband shall pay, indemnify and hold Wife harmless therefrom. Husband shall immediately refinance the mortgage owing on said property in order to remove Wife’s name from said financial obligation. Wife shall cooperate in signing any documents necessary in order to accomplish this purpose. Title to said property shall not transfer until the money judgment provided in paragraph 5.11 is paid in full and Wife shall be required to submit an executed Bargain and Sale Deed to any escrow which Husband establishes for the payment of said judgment.

On November 15, 2007, Barnes obtained the loan at issue, signing a balloon note with defendant Chase Bank USA, N.A. ("CBUSA") for $378,250.00. On the same date, he executed a deed of trust securing the note on the property. According to a statement of First American Title Insurance Company of Oregon, Barnes used $254,438.92 of the loan funds to pay off his ex-wife’s outstanding loan balance, and he paid $100,000.00 to her to satisfy the money judgment provided for in the divorce judgment. The ex-wife conveyed title to the property to Barnes via a Statutory Special Warranty Deed, signed on November 16 and recorded on November 20, 2007. Barnes married his current spouse in September 2008, and they reside on the property.

PROCEDURAL HISTORY

Barnes, appearing pro se, filed suit against Chase Home Finance, LLC ("CHF"); CBUSA; IBM Lender Business Process Services, Inc. ("LBPS"); and Federal National Mortgage Association ("Fannie Mae"), seeking rescission of the November 2007 mortgage loan and other relief. The district court dismissed Barnes’s claim for rescission as time-barred, and it granted summary judgment on his claims for declaratory and injunctive relief and damages. We vacated the district court’s judgment and remanded, holding that Barnes’s letter to CHF, a loan servicer, gave proper, timely notice of rescission to his creditor, CBUSA, within three years of the loan transaction under 15 U.S.C. § 1635(a) and (f).

On remand, the district court granted summary judgment in favor of defendants, holding that Barnes had no statutory right under TILA to rescind the 2007 mortgage, and no statutory right of disclosure of any such right of rescission, because the loan was secured by Barnes’s residence and thus was a residential mortgage transaction. The district court concluded that, although Barnes had a partial interest in the property from 1990 to 1997 and was the sole owner from 1997 to 2003, his interest in the property was fully extinguished in 2003 when he conveyed the entirety of his interest to his wife via quitclaim deed. The district court further found that, "pursuant to his obligations under the 2007 Dissolution of Marriage, Barnes entered into the 2007 Balloon Note loan transaction specifically in order to acquire ownership interest in the property (for the second time)." "The 2007 Balloon Note was secured by the property ..., and the property was thereafter Barnes’ place of residence .... The necessary implication is that the 2007 Balloon Note was a residential mortgage transaction as to which TILA provides no statutory right of rescission." The district court held that, under the plain language of 15 U.S.C. § 1602(x), in which the word "construction," but not the word "acquisition," is modified by the term "initial," Barnes’s prior ownership interest in the property did not preclude characterization of the 2007 loan as a residential mortgage transaction. The district court concluded that the Official Staff Interpretations to Regulation Z, 12 C.F.R. Pt. 226, Supp. I, Subpt. A § 226.2(a)(24)–(5)(i) & (ii), was not to the contrary because it applied only to a situation in which a borrower increases an existing ownership interest using loan proceeds. See 12 C.F.R. Pt. 226, Supp. I, Subpt. A § 226.2(a)(24)–(5)(i) (the term residential mortgage transaction "does not include a transaction involving a consumer’s principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title"). The district court rejected Barnes’s arguments that, pursuant to the September 2007 divorce judgment, he enjoyed some degree of interest in the property prior to entering into the 2007 Balloon Note; that the 2007 Balloon Note was not a residential mortgage transaction because the loan documents refer to the transaction as a refinancing and refer to Barnes as the titleholder of the property; and that the Chase defendants were estopped from denying that he enjoyed a statutory right of rescission because they provided him with notice of his right to rescind.

DISCUSSION

Standard of Review

"We review the grant of summary judgment de novo, viewing the evidence and drawing all reasonable inferences in the light most favorable to the non-moving party." Edwards v. Wells Fargo & Co. , 606 F.3d 555, 557 (9th Cir. 2010). "Summary judgment is proper if the pleadings and other evidence before the court ‘show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.’ " Id . (quoting Fed. R. Civ. P. 56 ).

Scope of District Court’s Authority on Remand

Barnes argues that the issue whether his loan was a residential mortgage transaction, to which the right of rescission did not apply, was not properly before the district court on remand because defendants waived the issue by failing to raise it until after the prior appeal, and because defendants’ argument was barred by law of the case and this court’s mandate in the prior appeal. We disagree. The issue was not waived as a defendant need not raise every possible argument in a motion for summary judgment and may make a different argument on remand if a grant of summary judgment in its favor is reversed on appeal. See Fed. R. Civ. P. 56(a) (providing that a party may move for partial summary judgment); Biel v. St. James Sch. , 911 F.3d 603, 611 n.6 (9th Cir. 2018) (reversing grant of summary judgment to defendant on the basis of the ministerial exception to employment laws, including the Americans with Disabilities Act, and noting that, on remand, defendant could make a different argument).

Further, neither law of the case nor the mandate on appeal barred the district court from addressing defendants’ residential mortgage transaction argument. See Rocky Mtn. Farmers Union v. Corey , 913 F.3d 940, 951 (9th Cir. 2019) (law of the case doctrine); Edgerly v. City & Cty. of S.F. , 713 F.3d 976, 985 (9th Cir. 2013) (rule of mandate). In Barnes’s prior appeal, we held that Barnes’s letter to CHF provided sufficient notice to CBUSA that he was exercising his right to rescind, and the district court therefore erred in dismissing Barnes’s claims for rescission and failure to effect rescission on the ground of improper notice. Barnes , 701 F. App'x at 674–75. In so holding, we did not rule that Barnes had an otherwise valid right...