Appeal from the United States District Court for the District of Utah (D.C. No. 2:10-CV-00183-DAK)
The opinion of the court was delivered by: O'brien, Circuit Judge.
United States Court of Appeals Tenth Circuit
Elisabeth A. Shumaker Clerk of Court
Before KELLY, McKAY, and O'BRIEN, Circuit Judges.
For certain mortgage loans covered by the Truth-in-Lending Act (TILA), a timely written notice of rescission triggers the creditor's duty to release its security interest and refund any finance charges. Once the creditor satisfies this duty, the borrower must return the loan proceeds. Although we have not spoken authoritatively on the issue, several circuits allow district courts to equitably condition the creditor's duty on the borrower's ability to repay the loan proceeds.
In this case, however, the district court went further by concluding a borrower seeking to compel rescission must plead ability to repay. The court invoked this rule to dismiss the TILA rescission claim of the appellants, Scott and Lisa Sanders. It also dismissed the Sanderses' claims under the Equal Credit Opportunity Act and Fair Credit Reporting Act. We affirm in part, reverse in part, and remand for further proceedings.
I. BACKGROUND AND PROCEDURAL HISTORY
In 2007, while the Sanderses were attempting to refinance their home, they discovered Salt Lake City Credit Union had "reported twelve new maxed-out accounts on the Sanders[es]' credit [reports]." (Aplt. App'x 139.) They say this "destroyed [their] credit and made it impossible to refinance." (Id.) Afterward, the credit union "apologized for the misreporting" and "offered to make amends by providing [them] with a 'free' refinance." (Id.) They accepted this conciliatory offer and closed on the refinancing loan in July 2007. Salt Lake City Credit Union later merged with appellee Mountain America. In March 2009, the Sanderses applied to Mountain America to again refinance their loan. They completed the application by phone, but Mountain America denied their application at the end of the call.
As pertinent to this appeal, the Sanderses' complaint alleges: (1) they had not been provided with the disclosures required under the Truth-in-Lending Act (TILA) thereby entitling them to invoke statutory rescission; (2) Mountain America violated the Equal Credit Opportunity Act (ECOA) when it failed to provide a notice of adverse action after denying their application for refinancing; and (3) Mountain America's inaccurate credit reporting violated the Fair Credit Report Act (FCRA). The district court dismissed these claims on the pleadings. See Fed. R. Civ. P. 12(c).
An order dismissing a case on the pleadings is reviewed de novo. Park Univ. Enters., Inc. v. Am. Cas. Co., 442 F.3d 1239, 1244 (10th Cir. 2006). In this review, "we accept all facts pleaded by the non-moving party as true and grant all reasonable inferences from the pleadings" in that party's favor. Id. Judgment on the pleadings is appropriate only when "the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." Id. (quotations omitted).
III. TRUTH-IN-LENDING ACT RESCISSION CLAIM
The Sanderses correctly contend the district court erred when it concluded they were not entitled to TILA rescission of their mortgage loan because they failed to plead ...