Ninth Circuit Rules on Viability of Rescission Claim under TILA

By David Venables

Ninth Circuit Court of Appeals Determines that a Borrower Does Not Need to Tender Before Suit or Allege Ability to Tender in Complaint for a Viable Rescission Claim under TILA

In Merritt v. Countrywide Financial Corp. et al, the Ninth Circuit reversed a 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.

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