Although the Trustee's claims for statutory damages are barred by the one year statute of limitations, her claim to enforce rescission remains viable. As the Sixth Circuit Court of Appeals noted in June McCoy v. Harriman Utility Board, 790 F.2d 493 (6th Cir. 1986), the one year statute of limitations of "Section 1640(e) bars only plaintiff's suit for damages under TILA, and not her asserted cause of action for rescission pursuant to 15 U.S.C. § 1635. Under § 1635, if the defined disclosures are made, the obligor has three days to rescind a credit transaction; if defined disclosures are not made, the obligor has a right to rescind up to three years after consummation of the transaction pursuant to 15 U.S.C. § 1635(f)." June McCoy v. Harriman Utility Board, 790 F.2d 493, 496 (6th Cir. 1986) citing Rudisell v. Fifth Third Bank, 622 F.2d 243, 246-48 (6th Cir. 1980); Littlefield v. Walt Flanagan Co., 498 F.2d 1133, 1136 (10th Cir. 1974).
Count Six-seeking recission under TILA-is also untimely. As the Sixth Circuit noted in McCoy v. Harriman Util. Bd., 790 F.2d 493, 496 (6th Cir. 1986), while a right to damages under the TILA is barred after one year under § 1640(e), an obligor retains the right to rescind a credit transaction for a failure to make the statutory disclosures for three years under § 1635. Plaintiff's federal TILA claim for recission was not brought within three years of the loan, and, for the same reasons already discussed above, plaintiff is not entitled to equitable tolling.
If the required disclosures were made, "the obligor has [only] three days to rescind a credit transaction." McCoy v. Harriman Util. Bd., 790 F.2d 493, 496 (6th Cir. 1986). The borrower's continuing right to rescind "'shall expire three years after the date of consummation of the transaction or upon sale of the property, whichever occurs first, notwithstanding the fact that' the required disclosures have not been made."
If the required disclosures were made, "the obligor has [only] three days to rescind a credit transaction." McCoy v. Harriman Util. Bd., 790 F.2d 493, 496 (6th Cir. 1986). The borrower's continuing right to rescind "'shall expire three years after the date of consummation of the transaction or upon sale of the property, whichever occurs first, notwithstanding the fact that' the required disclosures have not been made."
If the required disclosures were made, "the obligor has [only] three days to rescind a credit transaction." McCoy v. Harriman Util. Bd., 790 F.2d 493, 496 (6th Cir. 1986). The borrower's continuing right to rescind "'shall expire three years after the date of consummation of the transaction or upon sale of the property, whichever occurs first, notwithstanding the fact that' the required disclosures have not been made."
A borrower may therefore retain a right to rescind even though her damages claim from the failure to provide the required disclosures is barred by § 1640(e)'s one-year limitations period running from consummation. SeeMcCoy v. Harriman Utility Bd., 790 F.2d 493, 496 (6th Cir. 1986). In disallowing McNerney's claim based on failure to rescind, the bankruptcy court did not determine whether the disclosures provided to her at the loan's origination were inadequate, finding her rescission claim time-barred even if they were.
Therefore, Thornton had "[only] three days to rescind a credit transaction." McCoy v. Harriman Utility Bd., 790 F.2d 493, 496 (6th Cir. 1986). She failed to do so. Specifically, it is undisputed that Plaintiff entered into the subject transaction on March 21, 2006, but did not file this complaint until August 2010 — more than four years after the loan closing.
The reverse is also true: "if the defined disclosures are made, the obligor has [only] three days to rescind a credit transaction." McCoy v. Harriman Utility Bd., 790 F.2d 493, 496 (6th Cir. 1986). Nevertheless, the debtor's continuing right to rescind "'shall expire three years after the date of consummation of the transaction or upon sale of the property, whichever occurs first, notwithstanding the fact that' the required disclosures have not been made."
Section 1640(e) bars only a plaintiff's untimely suit for damages under the TILA, and not a cause of action for rescission under 15 U.S.C. § 1635. McCoy v. Harriman Utility Bd., 790 F.2d 493, 496 (6th Cir. 1986). "Under § 1635, if the defined disclosures are made, the obligor has three days to rescind a credit transaction; if defined disclosures are not made, the obligor has a right to rescind up to three years after consummation of the transaction pursuant to 15 U.S.C. § 1635(f)."Id. Equitable tolling does not apply to the right of rescission under § 1635(f).
Pursuant to 15 U.S.C. § 1640(e), TILA actions for damages may be brought within one year from the date of the occurrence of the violation. See McCoy v. Harriman Util. Bd., 790 F.2d 493, 496 (6th Cir. 1986). Under 15 U.S.C. § 1635(f), actions for rescission expire three years after the transaction is completed.