HARRELL, J.
May one undo what one has not done yet? Although the answer to this abstract question has been the premise for many a time travel "B" movie, it bodes even less well for a borrower or borrowers attempting to rescind loans that have not been consummated, within the meaning of the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. (2012). Prior to closing on a home refinancing loan, Respondent, Jeffrey G. Capps, submitted a notice of rescission of the loan to the lender. A
In March of 2003, Respondent, Jeffrey G. Capps (hereinafter "Capps"), purchased a home located at 2909 Loch Haven Court, Ijamsville, Maryland. Early in 2007, Capps decided to pursue refinancing his home loan. He applied for refinancing through Endeavor Mortgage Group—a loan broker—to EquiFirst Corporation. In February of 2007, EquiFirst offered Capps terms of a refinancing, which offer he rejected. In March of 2007, EquiFirst offered Capps a second proposal, which he rejected as well. In April of 2007,
The state of this record conjures illusions of multiple factual currents, pulling in seemingly different directions. Although we find no material disputes of fact were generated properly with regard to the dispositive question before us,
The Deed of Trust and Adjustable Rate Note implementing the third offer were signed by Capps on 17 April 2007.
On April 15 or 16,
On 30 September 2009, Petitioners (the Substitute Trustees,
Capps filed on 23 February 2012 Exceptions to the Foreclosure Sale, where he argued again that he had rescinded the loan. The Substitute Trustees reiterated their position that Capps's TILA claim was barred by the applicable statute of limitations, that they had standing to foreclose, and further that Capps did not raise any allegations which, if true, could result in the sale being rescinded. The exceptions were overruled at a hearing on 3 April 2012,
In an unreported opinion, the Court of Special Appeals reversed the Circuit Court, addressing the question of whether the loan had been rescinded "lawfully."
We granted the Trustees' Petition for Writ of Certiorari. 435 Md. 501, 79 A.3d 947 (2013). The Trustees posed the following three questions in their petition:
Because of our answer to the first question, we do not reach the others.
Before us, the Trustees argue that Capps could not have rescinded the loan at a point in time when he had not yet signed the deed of trust, note, and other loan documents. He may have gone through the motion of submitting a Notice of Right to Cancel, but he did so prematurely—namely, before he consummated the transaction. If he had wanted actually to avoid the obligations of the loan, the Trustees argue, he should not have signed the note and deed of trust, nor should he have accepted the net loan proceeds and authorized the lender to pay off the existing mortgage and his other creditors. Capps, for his part, echoes the reasoning of the Court of Special Appeals, and further argues that the Notice of Right to Cancel, regardless of when it was sent, operated to cancel the transaction, and that the funds never should have been disbursed.
Before a foreclosure sale takes place, "the defaulting borrower may file a motion to `stay the sale of the property and dismiss the foreclosure action.'" Bates v. Cohn, 417 Md. 309, 319, 9 A.3d 846, 852 (2010) (quoting Md. Rule 14-211(a)(1)). In
When ruling on exceptions to a foreclosure sale:
Jones v. Rosenberg, 178 Md.App. 54, 68, 940 A.2d 1109, 1117 (2008) (citations omitted). Once a foreclosure sale has been ratified:
Fagnani v. Fisher, 418 Md. 371, 384, 15 A.3d 282, 290 (2011).
The right of rescission dispute joined in this case derives from that right as granted in the federal Truth in Lending Act ("TILA"). TILA was designed to "assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit...." 15 U.S.C. § 1601(a) (2012). TILA requires creditors "to provide borrowers with clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights." Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998); see McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325, 1327 (9th Cir.2012) ("TILA protects consumers from fraud, deception, and abuse within the residential secured lending marketplace
When interpreting TILA and its implementing regulations, federal and Maryland principles of statutory construction agree that we begin with its text. "`The Supreme Court has repeatedly emphasized the importance of the plain meaning rule, stating that if the language of a statute or regulation has a plain and ordinary meaning, courts need look no further and should apply the regulation as it is written.'" Gilbert v. Residential Funding LLC, 678 F.3d 271, 276 (4th Cir.2012) (quoting Textron, Inc. v. Comm'r, 336 F.3d 26, 31 (1st Cir.2003)). By the same token, "`absent some obvious repugnance to the statute, the ... regulation implementing [TILA] should be accepted by the courts." Textron, Inc., 336 F.3d at 27 (quoting Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981)). Our goal in interpreting TILA, as with any legislation, is "to ascertain and implement the legislative intent, which is to be derived, if possible, from the language of the statute (or Rule) itself. If the language is clear and unambiguous, our search for legislative intent ends and we apply the language as written in a commonsense manner." Downes v. Downes, 388 Md. 561, 571, 880 A.2d 343, 349 (2005). We "presume that [a] legislature says in a statute what it means and means in a statute what it says there." Turner v. Kight, 406 Md. 167, 175, 957 A.2d 984, 988 (2008) (internal quotations omitted). The interpretation of a word or phrase "depends upon reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authorities that inform the analysis." Turner, 406 Md. at 175, 957 A.2d at 989 (internal quotations omitted).
TILA grants homeowners a right to rescission in certain circumstances:
15 U.S.C. § 1635(a) (emphasis added). See 12 C.F.R. § 226.23(a)(3) (2013) ("The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last." (emphasis added)). This three-day rescission window is a cooling-off period within which the borrower may rescind with no questions asked. The lender may not disburse the funds until those three days have passed (unless the borrower waives the
Regulation Z, TILA's implementing regulation, describes how the right to rescind is to be exercised:
12 C.F.R. § 226.23(a)(2).
Once the right to rescission has been exercised timely and properly, the borrower is "not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission." 15 U.S.C. § 1635(b); see 12 C.F.R. § 226.23(d)(1) ("When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge."). Upon receipt of a notice of rescission, "the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction." 15 U.S.C. § 1635(b).
Capps bows, as he must, to what the statute provides as to when the three-day window for rescission shuts—at midnight three business days after closing, or, if the notice was delivered after closing, three days after that later date. We must decide here when that window sash is flung open.
TILA does not define the term "rescission." Regulation Z provides that, when a term is not defined, "the words used have the meanings given to them by state law or contract." 12 C.F.R. § 226.2(b)(3). The Court of Special Appeals had occasion to consider the definition of "rescission" in Maslow v. Vanguri, where the intermediate appellate court sought to determine the point at which a breach of contract became material enough to warrant rescission under Maryland common law. 168 Md.App. 298, 323-24, 896 A.2d 408, 423 (2006). The court adopted the definition of rescission in an earlier iteration of Black's Law Dictionary:
168 Md.App. at 323, 896 A.2d at 423 (quoting Black's Law Dictionary 1306-07 (6th ed.1990)).
See Barrett v. JP Morgan Chase Bank, N.A., 445 F.3d 874, 879 (6th Cir.2006) (citations omitted). For present purposes, we understand the term "rescission" in TILA to mean "to cancel" or "to undo."
The right of rescission belongs to borrowers only "in the case of any consumer credit transaction." 15 U.S.C. § 1635(a). In those cases, the borrower may rescind until midnight of the third business day "following the consummation of the transaction." Id. § 1635(a). Regulation Z defines "consummation" as "the time that a consumer becomes contractually obligated on a credit transaction."
Regulation Z presumes that, at the time a borrower wishes to exercise his or her rescission right, there is something to rescind. It notes that the effect of rescission is to render void "the security interest giving rise to the right of rescission." 12 C.F.R. § 226.23(d)(1). There must be a security interest in being to rescind in order for it to be rendered void. See 12 C.F.R. Pt. 226, Supp. I, pp. 709-10 (Official Staff Commentary) ("In order for the right of rescission to apply, the security interest must be retained as part of the credit transaction."); 12 C.F.R. Pt. 226, Supp. I, p. 712 (Official Staff
In the case at bar, Capps could not have rescinded what he had not yet created. On the 15th of April, when he faxed a Notice of Right to Cancel, the arguably rescindable transaction had not come into being yet, and therefore could not be cancelled then. Capps consummated the transaction on Tuesday, April 17, when he signed the loan documents. April 17, then, is the earliest that the three-day window could have opened.
The United States Court of Appeals for the Fourth Circuit shares our view of § 1635. In Weintraub v. Quicken Loans, Inc., 594 F.3d 270 (4th Cir.2010), the Fourth Circuit considered whether the TILA right to rescind applies in cases where the transaction had not closed yet. The borrowers in that case argued, like Capps, that the text of § 1635(a) does not require that a loan be consummated before the right to rescind may arise, but rather that rescission is possible any time after the parties begin negotiations for a potential extension of credit. Weintraub, 594 F.3d at 273-74. The Fourth Circuit held that "no `consumer credit transaction' exists for which the right to rescind can be exercised until that transaction has been consummated, or put another way, until credit is in fact extended." Weintraub, 594 F.3d at 275 (internal quotations omitted).
In support of its decision, the Fourth Circuit looked to TILA disclosure cases in the context of automobile loans for the proposition that TILA liability under the analogous § 1638 does not attach until after the consummation of a consumer credit transaction. Weintraub, 594 F.3d at 274-75 (examining Nigh v. Koons Buick Pontiac GMC, Inc., 319 F.3d 119 (4th Cir.2003), rev'd on other grounds, 543 U.S. 50, 125 S.Ct. 460, 160 L.Ed.2d 389 (2004), and Baxter v. Sparks Oldsmobile, Inc., 579 F.2d 863 (4th Cir.1978)). In Baxter, the
The Fourth Circuit relied also on "a commonsense reading of the text of § 1635(a)" in holding that the term transaction "refers to a consummated, binding agreement, rather than to the whole course of the parties' interactions. The right to rescind a transaction defined as the whole course of interactions between the parties would essentially be meaningless—there would often be nothing to rescind." Weintraub, 594 F.3d at 276.
We could find little else on point across the country. In an unreported opinion
We are aware of only one additional opinion that speaks to the question of whether, under TILA, a loan may be rescinded before it is consummated. In 1997, a City Court for Mt. Vernon, New York (a trial court-equivalent), held in Community Mutual Savings Bank v. Gillen, 171 Misc.2d 535, 655 N.Y.S.2d 271 (N.Y.City Ct.1997), that consumers have a right to rescind even when they do not close on the loan. Cmty Mut. Sav. Bank, 655 N.Y.S.2d at 273. In that case, the borrowers applied for a loan and received a firm commitment letter, which scheduled closing for 12 July 1996. Cmty Mut. Sav. Bank, 655 N.Y.S.2d at 272. Due to a dispute over real property taxes, the borrowers did not sign the loan documents at the closing table. Id. Nonetheless, the representatives of the lender gave the rescission notice to the borrowers and asked that they sign it immediately, which they did. Cmty Mut. Sav. Bank, 655 N.Y.S.2d at 274. The City Court reasoned that, because the notice of rescission itself did not say that the loan needed to be consummated before it could be used, and because the lender gave the notice to the borrowers and instructed them to sign it, the lender "must be bound by its own notice of rescission." Id. From the court's perspective,
In the present case, the Court of Special Appeals relied on another Fourth Circuit case, Gilbert v. Residential Funding LLC, 678 F.3d 271 (4th Cir.2012), in holding that Capps did what a borrower is supposed to do to rescind a loan. In Gilbert, the Fourth Circuit considered what actions by borrowers were sufficient to exercise the right of rescission. There, the borrowers notified the lender by letter, within three years of the execution of the note, that they were rescinding their mortgage transaction. Gilbert, 678 F.3d at 274-75. The Fourth Circuit considered whether a borrower must file a lawsuit within three years after the consummation of a loan transaction, or whether he or she may assert the right simply through a written notice. Gilbert, 678 F.3d at 276. Based on the plain meaning of the statute, the court concluded that 15 U.S.C. § 1635 "does not require borrowers to file a claim for the invocation of that right." Gilbert, 678 F.3d at 278. Although Gilbert is instructive as to the appropriate demonstrative methodologies by which a borrower may rescind a loan, it has little to contribute on the subject of when a borrower may rescind under TILA. At most, Gilbert suggests that Capps may have chosen a proper method when he employed a form Notice of Right to Cancel; however, he deployed it prematurely.
ADKINS and McDONALD, JJ., concur in part and dissent in part.
Judge WATTS joins the judgment only.
McDONALD, J., concurring and dissenting, in which ADKINS, J., joins.
The Majority opinion holds that a borrower's right to rescind a loan transaction under the federal Truth in Lending Act does not extend to a transaction that has yet to occur. I have no quarrel with that legal proposition, but it is not at all clear that it applies to this case. The Majority opinion essentially engages in its own fact-finding in an effort to apply that holding and to resolve this case. But that is not our role. I would remand this matter to the Circuit Court for further factual development in the appropriate forum.
The Majority opinion makes heroic efforts, largely in footnotes,
In the Circuit Court, the substitute trustees relied on a host of other legal arguments, but not the one on which the Majority opinion decides this case. Indeed, the substitute trustees did not suggest that Mr. Capps' rescission of the transaction was premature until this case reached the Court of Special Appeals. In its unreported opinion, the intermediate appellate court held that a rescission notice is effective under the Truth in Lending Act, even if it is sent before the consummation of a transaction. Thus, resolution of the time line in Mr. Capps' case was not essential to that court's decision. That court apparently accepted the substitute trustees' belated assertion that the rescission notice pre-dated the transaction and held that, under its view of the rescission right, that timing did not matter.
In this Court, the substitute trustees challenge the timeliness of the rescission notice based on typewritten and handwritten dates that appear on various documents, although they offered no evidence in the Circuit Court as to the accuracy of any particular date. The Majority appears to accept the idea that the typewritten and handwritten dates on various documents may not be the dates on which the particular documents were actually executed. Majority op. at pp. 335-36 nn. 7, 9, 102 A.3d at 358 nn. 7, 9. Nevertheless, it generally draws inferences in favor of the substitute trustees and against Mr. Capps as to the accuracy of particular dates.
In the oral argument before us, the substitute trustees conceded that a borrower receives the form to rescind a loan only at the closing—a fact that suggests that the borrower (Mr. Capps) could only have submitted the rescission form—however the documents may have been dated or misdated—after the closing. The Majority opinion dismisses this information as to when a borrower receives a rescission form in relation to a closing as "not material" to the question of when this borrower would have been able to submit the rescission form related to the loan transaction in this case. Majority op. at p. 336 n. 9, 102 A.3d at 358 n. 9. But the Majority opinion can only speculate as to how Mr. Capps would have come into possession of the rescission form prior to the closing.
As the Majority opinion notes, at the hearing on exceptions in the Circuit Court, the judge summarized the history of the case as to the rescission issue—without any contradiction or objection by counsel for the substitute trustees—as follows:
Record Excerpts at 109-10. The Majority opinion dismisses the trial judge's statement as the result of "confusion." Majority op. at pp. 334-35 n. 5, 102 A.3d at 357-58 n. 5.
At times, it appears that it is the Majority opinion that is confused or that simply disregards parts of the record. For example, the Majority opinion relies heavily on the undisputed facts that Mr. Capps accepted the proceeds of the loan and made payments on it until he lost his job. Majority op. at pp. 333-34 n. 4, 340-41, 349 n. 21, 102 A.3d at 356-57 n. 4, 361, 366 n. 21.
The Majority opinion disregards Mr. Capps' factual allegations by noting that the order granting a writ of certiorari did not address fraud. This is not surprising, as the Court of Special Appeals did not
In sum, in concluding that Mr. Capps' rescission was premature, the Majority is making a decision that is premature. Now that the question of the timing of the rescission has been raised, further proceedings in the Circuit Court would clarify what documents were post-dated or pre-dated, whether Mr. Capps was purposely vague or the substitute trustees were purposely silent, and whether there is other evidence of when the closing took place in relation to the rescission notice. It may be that the Majority's speculation as to the facts of this case would ultimately prove accurate and that Mr. Capps' rescission notice would be held ineffective or that the lender had not misled him and he had waived the rescission. But the trial court is the appropriate forum for determining the dispositive facts. Pursuant to Maryland Rule 8-604(d),
Judge ADKINS has advised that she joins this opinion.
15 U.S.C. § 1635(a) (2012) (emphasis added).
12 C.F.R. § 226.23(a) (2013).
Capps urges an inference—but does not allege actually—that the loan documents were misdated. Sometimes Capps implied before the Circuit Court that the loan documents were signed before April 17. See Def.'s Mot. to Stay & Dismiss Foreclosure Action ("In this case, the lender EquiFirst provided defendant with the proper notice [of the right to rescission] and forms, and defendant completed the forms and exercised that right. At that point, the Note was rescinded and had no legal effect."); Def.'s Exceptions to Foreclosure Sale (arguing the same, but referring to the Note and Deed of Trust); see also Resp't's Opp'n to Pet. for Cert. 4; Official Tr. of Proceedings (Exceptions Hr'g); Br. of Resp't 4-5. Before us, Capps implies that the loan documents were signed after April 17. See Resp't's Opp'n to Pet. for Cert. 3 ("It is obvious in this case that the lender violated [12 C.F.R. § 226.23(c), requiring the lender to disburse the funds at least three days after the loan documents were signed] and disbursed the funds before the three day waiting period had expired."). Elsewhere, Capps alleged, in the same pleading, that the loan documents were signed both before and after April 17. Compare Resp't's Opp'n to Pet. for Cert. 3 with id. at 4; compare Br. of Resp't 4 with id. at 4-5.
The trial court seems to have gotten caught up in the confusion during its exceptions hearing. The judge stated:
Capps came close to alleging explicitly that the loan documents were signed before April 17 in his brief to this Court. Br. of the Resp't 6 ("[I]n this case, Respondent signed the loan documents, and then he sent the notice of rescission in a timely manner." (emphasis added)). In his First Amended Third Party Complaint, which was dismissed ultimately, see infra note 13, Capps alleged that he told a Wells Fargo representative that "he had tried to rescind the loan immediately after he had signed the loan papers and that EquiFirst had improperly not allowed him to rescind. He told the Wells Fargo representative that he wanted to rescind, and Wells Fargo refused to allow rescission." This pleading was not made under oath or affirmation and was not supported by affidavit. He did not reiterate this allegation subsequently under oath or affidavit. Paradoxically, Capps has never alleged that the loan documents were misdated.
The confusion was perpetuated at oral argument before us. The attorney for Capps suggested repeatedly that Capps signed the Deed of Trust and Note—and then was provided with the precompleted Notice of Right to Cancel forms—before he faxed the Notice, which would have been necessarily before April 17, the date on the documents. (Counsel responded to the question: "So, under your theory, after he—he signs this Notice of Rescission at closing?" with "No, he signed it afterwards.") When asked how counsel's theory could be compatible with the April 17 date, counsel referred simply to an email chain between EquiFirst and Endeavor Mortgage employees. See infra note 10.
It was suggested by the Trustees in their brief to us that this Notice may have been left over from the first or second refinance offer and perhaps Capps submitted this Notice before going through with the third mortgage offered to him, in an attempt to ensure that he was working on a clean slate with the third offer. This is supposition, as the record is silent as to the actual origin of this particular document. The record also does not contain any information as to whether Capps was provided with a new Notice of Right to Cancel on April 17 or at any point thereafter. Regardless, it is not material to the disposition of this case precisely when Capps received the form or who altered it.
Second, Capps argues in his brief to this Court that EquiFirst committed fraudulent conduct when it told him that his rescission was not effective and that he was still bound by the Note and its terms. Accordingly, the Note and Deed of Trust are not enforceable. Third, at oral argument, Capps's attorney suggested that the Trustees violated the Maryland Rules by not serving him with a Report of Sale, instead sending the document only to Capps. Neither of these two questions were preserved properly for appeal.
The concurring and dissenting opinion implies that Capps's allegation of fraudulent conduct might still be a live question. See Concurring and Dissenting op. at pp. 355-56, 356-58, 102 A.3d at 369-70, 370-71. Capps did not file, however, a cross-petition for a writ of certiorari as to that question. See Maryland Rules 8-131(b). Even if that issue were properly before this Court, Capps failed to argue the question with particularity in that he failed to cite even a single case or authority relevant to the question in his brief either to us or the intermediate appellate court. "[A]rguments not presented in a brief or not presented with particularity will not be considered on appeal." Klauenberg v. State, 355 Md. 528, 552, 735 A.2d 1061, 1074 (1999) (refusing to consider an argument when one statement to that effect was "lumped in" with another argument); Mathis v. Hargrove, 166 Md.App. 286, 318, 888 A.2d 377, 396 (2005) (refusing to review one argument on appeal because no authority for the position was cited); Poole v. State, 207 Md.App. 614, 633, 53 A.3d 479, 491 (2012) (refusing to consider an argument when it was made in one sentence, in a footnote, with no supporting argument). The full extent of his argument to this Court on the question of fraudulent conduct attributable to the Substitute Trustees is as follows: "[I]nstead of honoring Respondent's request, the lender told him that his request was legally not effective and that he was bound by the Note and its terms. This was both a violation of TILA and fraudulent conduct, and, as a result, the Note and Deed of Trust are not enforceable." The point was argued similarly in his brief to the Court of Special Appeals as well. This is plainly insufficient under our appellate Rules and case law. Further, certiorari was not granted as to either question. We decline to consider them. See 8504(a)(3), (5); Comptroller of Treas. v. Aerial Prods., Inc., 210 Md. 627, 644, 124 A.2d 805, 814 (1956).
