The Bank argues it was a third party beneficiary of the Subordination Agreement, and that its reliance on the agreement precludes AMG from seeking to abrogate it. It relies upon Principal Mutual Life Ins. Co. v. Vars, Pave, McCord & Freedman (1998) 65 Cal.App.4th 1469, 77 Cal.Rptr.2d 479 ( Principal Mutual ) and Gill v. Rich (2005) 128 Cal.App.4th 1254, 28 Cal.Rptr.3d 52 ( Gill ). Neither case arises in the context presented here.

Defendants' argument that rescission is an all or nothing proposition—either the Insurers must seek to recover from the injured workers what they paid to them or the policies remain available for all third party claimants—is without merit. "Rescission is an equitable remedy" (Gill v. Rich (2005) 128 Cal.App.4th 1254, 1264), and "[e]quitable relief is by its nature flexible." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 390.)

"Rescission is an equitable remedy." ( Gill v. Rich (2005) 128 Cal.App.4th 1254, 1264 [ 28 Cal.Rptr.3d 52].) Its purpose is to restore both parties to their former position as far as possible.

“A party to a contract may rescind if ‘the consent of the party rescinding... was given by... fraud....’ (Civ. Code, § 1689, subd. (b)(1).) (Gill v. Rich (2005) 128 Cal.App.4th 1254, 1265.) ‘Rescission for illegality... is a remedy which enables a party, in the circumstances specified, to procure restitutionary relief with respect to a contract that was never enforceable.’

After over two years have passed and countless parties have relied on Monfort's release of his claims to over 30 million shares of stock, the Court finds as a matter of law that it would be inequitable to now allow him to rescind the Release. See Gill v. Rich, 128 Cal. App. 4th 1254, 1265 (2005) ("[T]here can be no rescission where the rights of third parties would be prejudiced.") (quoting Angle v. United States Fid. & Guar. Co., 201 Cal. App. 2d 758, 763 (2001)). Given the more than two years that passed after Monfort first learned of his right to rescind, and considering his course of conduct in the interim facilitating Adomani's reincorporation and initial public offering, the Court finds that Monfort ratified the Release as a matter of law.

In contrast, Cal-Regent's evidence shows that, after the disclosure concerning the Waldersens' claims and the formatting error, Century renewed the E & O Policy. Waiver is ordinarily a question for the trier of fact; "[h]owever, where there are no disputed facts and only one reasonable inference may be drawn, the issue can be determined as a matter of law." Gill v. Rich, 128 Cal.App.4th 1254, 1264, 28 Cal.Rptr.3d 52 (2005). On this record, the court finds that genuine issues of material fact prevent summary judgment on the materiality of the undisclosed information in the Application because a reasonable jury could infer, based upon the entirety of the factual record, that Century waived its right to rescind the E & O Policy.

Defendants contend that Plaintiff has waived his right to rescind because he concedes he received the proceeds from the loans at issue and has been living on the property ever since. Defendants cite Gill v. Rich, 128 Cal. App. 4th 1254, 1264 (2005) and California Civil Code sections 3515 and 3521 in support of this contention. Plaintiff contends that the state law waiver doctrine that Defendants rely upon is inapplicable to TILA claims for rescission.

Defendant cites to case law stating that parties to a contract can waive their right to rescind by accepting the contract's benefits. See Gill v. Rich, 128 Cal. App. 4th 1254, 1264 (2005). However, Defendant has not produced any authority that in a TILA case where the three year period to rescind has been triggered by a TILA violation, the plaintiff's acceptance of loan benefits waives the right to rescind.

Holder v. Maaco Enterprises, 644 F.2d 310, 313 (4th Cir. 1981); Gertsch v. Johnson Johnson, Fin. Corp. (In re Gertsch), 237 B.R. 160, 171 (B.A.P. 9th Cir. 1999). Bank One counters that, where a new creditor is substituted for an original creditor, and "the rights of others have intervened and circumstances have so far changed that rescission may not be decreed without injury to those parties and their rights . . .", Gill v. Rich, 128 Cal. App. 4th 1254, 1265 (2d Dist. 2005), then an obligor must be barred from asserting fraudulent inducement by the original creditor as a defense against the innocent new creditor. Since the Court finds herein that no substitution of creditors, and thus no novation, was intended by the parties, the Court need not determine whether a finding of novation herein would preclude Safeco's assertion of fraud defenses in these proceedings.

To the extent Atlantic Coast does not rely on section 3543, and instead relies on equitable principles disallowing rescission where a third party's rights have intervened, examination of those equitable principles also would involve fact questions. See, e.g., Gill v. Rich, 128 Cal. App. 4th 1254, 1265 (2005) ("when the rights of others have intervened and circumstances have so far changed that rescission may not be decreed without injury to those parties and their rights, rescission will be denied and the complaining party left to his other remedies. . . .") (internal quotation omitted); Principal Mutual Life Ins. Co. v. Vars, Pave, McCord Freedman, 65 Cal. App. 4th 1469, 1487, n. 9 (2d Dist. 1998) (rescission will be denied where third party beneficiary has relied on promises made for its benefit). These cases speak in terms of third-party beneficiary rights under a contract, and the determination of any such status on the part of Atlantic Coast cannot be determined on a dispositive motion.