ChaseAnswerBrief PDF

Case: 13-35716 02/04/2014 ID: 8965915 DktEntry: 13-1 Page: 1 of 36
CA No.: 13-35716
IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT
TIMOTHY BARNES,
Plaintiff-Appellant,
v.
CHASE HOME FINANCE, LLC; CHASE BANK USA, N.A., a subsidiary of
JPMorgan Chase & Co.; IBM LENDER BUSINESS PROCESS SERVICES, INC.;
FEDERAL NATIONAL MORTGAGE ASSOCIATION,
Defendants-Appellees.
On Appeal from the United States District Court

for the District of Oregon, 3:11-CV-00142-PK
Honorable Anna J. Brown
JOINT ANSWERING BRIEF of DEFENDANT-APPELLEES CHASE

HOME FINANCE, LLC; CHASE BANK USA, N.A., a subsidiary of
JPMorgan Chase & Co.; IBM LENDER BUSINESS PROCESS SERVICES,
INC.; FEDERAL NATIONAL MORTGAGE ASSOCIATION
Michael J. Farrell, OSB No. 902587 John M. Thomas, OSB No. 024691
Thomas W. Purcell, OSB No. 114938 RCO Legal PS
Martin, Bischoff , Templeton, 511 SW 10th Ave Ste 400
Langlset & Hoffman, LLP Portland OR 97205
888 SW 5th Ave Ste 900 Telephone: 503-517-7180
Portland OR 97204
Telephone: 503-224-3113 Attorney for Defendant-Appellees
IBM Lender Business Process
Attorneys for Defendant-Appellees Services, Inc. and Federal National
Chase Home Finance, LLC and Chase Mortgage Association
Bank USA, N.A.
February 2014
CORPORATE DISCLOSURE STATEMENT
Pursuant to Fed. R. App. P. 26.1 the following Defendant-Appellees hereby
disclose:
Defendant-Appellee IBM Lender Business Process Services Inc. is now
known as Seterus, Inc., and it is a Delaware corporation which is wholly owned by
Pixel Acquisition Corporation, which is wholly owned by International Business
Machines Corporation, a publicly traded corporation.
Defendant-Appellee Federal National Mortgage Association is a government
sponsored enterprise and is publicly traded.
RCO LEGAL PS
By: s/ John M. Thomas

John M. Thomas, OSB No. 024691
Email: jthomas@rcolegal.com
511 SW 10th Ave Suite 400
Portland, OR 97205
Telephone: 503-517-7180
Attorneys for Defendant-Appellees IBM

Lender Business Process Services, Inc. and
Federal National Mortgage Association
CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant-Appellee
Chase Home Finance LLC provides the following information:
1. PARENT CORPORATION: Chase Home Finance LLC merged into
JPMorgan Chase Bank, National Association. JPMorgan Chase Bank, National
Association, as successor by merger to Chase Home Finance LLC is 100% owned
by JPMorgan Chase & Co., which is a publicly traded corporation.
2. PUBLICLY HELD CORPORATIONS OWNING 10% OR MORE
OF STOCK: No publicly held corporation owns ten percent (10%) or more of
JPMorgan Chase & Co.s stock.
Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant-Appellee
Chase Bank USA, N.A. provides the following information:
1. PARENT CORPORATION: Chase Bank USA, N.A. is 100% owned
by CMC Holding Delaware Inc., which is 100% owned by J.P. Morgan Equity
Holdings, Inc., which is 100% owned by JPMorgan Chase & Co., which is a
publicly traded corporation.
///
///
///
///
2. PUBLICLY HELD CORPORATIONS OWNING 10% OR MORE
OF STOCK: No publicly held corporation owns ten percent (10%) or more of
JPMorgan Chase & Co.s stock.
MARTIN, BISCHOFF, TEMPLETON,

LANGSLET & HOFFMAN LLP
By: s/ Michael J. Farrell

Michael J. Farrell, OSB No. 902587
Email: mfarrell@martinbischoff.com
Thomas W. Purcell, OSB No. 114938
Email: tpurcell@martinbischoff.com
Attorneys for Defendant-Appellees

Chase Home Finance, LLC and Chase
Bank USA, N.A.
i
Table of Contents
Page
JURISDICTIONAL STATEMENT .......................................................................... 1
ISSUES PRESENTED............................................................................................... 1
STATEMENT OF THE CASE .................................................................................. 1
SUPPLEMENTAL STATEMENT OF FACTS ........................................................ 2
SUMMARY OF ARGUMENT ................................................................................. 6
STANDARD OF REVIEW ....................................................................................... 7
ARGUMENT ............................................................................................................ 8
Issue 1: The Courts Procedure for Interpreting Federal Statutes .................... 8
Issue 2: Barness Claim for Rescission. ............................................................ 9
Issue 3A: Barness Claim for Statutory Damages Against

CHF and CBUSA ............................................................................................. 11
A. Barness Attempt to Mail His Notice of Rescission to CBUSA

Was Insufficient to Trigger CBUSAs Duty to Respond
Because CBUSA Never Received the Purported Notice. ................ 13
B. Barness Notice to CHF was Insufficient to Constitute

Constructive Notice to CBUSA, Regardless of CHFs Status
as an Agent of CBUSA. .................................................................... 16
C. CHF Was Not Barness Creditor Despite the Fact that CHF
May Have Been a Nominal Assignee of Barness Note as a
Matter of Administrative Convenience. ........................................... 18
Issue 3B: Barness Claim for Statutory Damages Against IBM LBPS
and Fannie Mae ................................................................................................ 20
ii
Issue 3C: Defendant-Appellees Alleged Failure to Respond to

Barness Notice of Rescission.......................................................................... 21
Issue 4: Barness Failure to Timely File His Lawsuit .................................... 22
Issue 5: Application of 1640(e) to Action for Rescission ............................ 22
Issue 6: Form of the Notices of Right to Cancel ............................................. 24
CONCLUSION ........................................................................................................ 25
STATEMENT OF RELATED CASES ................................................................... 26

iii
TABLE OF AUTHORITIES
Page(s)
Cases
Botosan v. Paul McNally Realty,

216 F.3d 827 (9th Cir. 2000) ................................................................................ 7
Corley v. U.S.,
556 U.S. 303, 19 S.Ct. 1558 .........................................................................15, 16
Large v. Conseco Finance Servicing Corporation,

292 F.3d 49 (1st Cir. 2002) ................................................................................. 10
McOmie-Gray v. Bank of America Home Loans,

667 F.3d 1325 (9th Cir. 2012) .....................................................................passim
Miguel v. Country Funding Corp.,

309 F.3d 1161 (9th Cir. 2002) .....................................................................passim
Peterson v. Reliance Ins. Co.,

5 F. App'x 687 (9th Cir. 2001) .............................................................................. 7
Thayer v. American Residential Mortgage, L.P. (In re Thayer),

360 B.R. 912 (D. Minn. 2007) ......................................................................13, 14
Yamamoto v. Bank of New York,

329 F.3d 1167 (9th Cir. 2003) ...................................................................... 10, 11
Statutes
15 U.S.C. 1540(e) ................................................................................................. 21
15 U.S.C. 1635 ......................................................................................6, 10, 11, 23
15 U.S.C. 1635(a) ...........................................................................................11, 16
15 U.S.C. 1635(b) ...........................................................................................10, 11
15 U.S.C. 1635(f) ........................................................................................6, 22, 23
15 U.S.C. 1640 ......................................................................................6, 11, 22, 23

iv
15 U.S.C. 1640(e) ................................................................................................. 22
15 U.S.C. 1641(f)(1) .......................................................................................18, 20
15 U.S.C. 1641(f)(2) ............................................................................................. 20
28 U.S.C. 1291 ........................................................................................................ 1
28 U.S.C. 1331 ........................................................................................................ 1
28 U.S.C. 1367 ........................................................................................................ 1
Rules and Regulations

12 C.F.R. 226 ............................................................................................................. 4
12 C.F.R. 226.23(a)(2) ....................................................................................14, 15
12 C.F.R. 226.23(d) .............................................................................................. 18
12 C.F.R. 226.23(d)(2) ..............................................................................14, 15, 16
Fed. R. Civ. P. 56 ....................................................................................................... 7
http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&rgn=div5&view=text&node=
12:3.0.1.1.7&idno=12#12:3.0.1.1.7.3.8.7 ................................................................ 14
Reg. Z 226.2(a)(17)............................................................................................... 12
Reg. Z, 226.23 ....................................................................................................... 14
Reg. Z 226.23(a)(2)............................................................................................... 15
Reg. Z 226.23(a)(2)-1 ........................................................................................... 17
Reg. Z 226.23(b) ................................................................................................... 18
Reg. Z 226.23(d)(2) ............................................................................................... 16
Reg. Z 226.26(d)(2) .............................................................................................. 15
Reg. Z 226.23 ........................................................................................................ 10

1
JURISDICTIONAL STATEMENT
Defendant-Appellees accept Plaintiff-Appellant Timothy Barness
(Barnes) statement concerning the timeliness of this appeal. The District Court
had subject-matter jurisdiction over Barness federal statutory claims pursuant to
28 U.S.C. 1331, and had subject-matter jurisdiction over his remaining claims
pursuant to 28 U.S.C. 1367. This appeal is from a final judgment disposing of all
parties claims, and this Court therefore has jurisdiction pursuant to 28 U.S.C.
1291.
ISSUES PRESENTED
The issues presented for review are: (1) whether Barnes timely commenced
his lawsuit for rescission under the Truth in Lending Act (TILA), and (2)
whether he is otherwise entitled to any relief under TILA against Defendant-
Appellees.
STATEMENT OF THE CASE
Barnes entered into a loan agreement secured by a trust deed on certain real
property. He defaulted on the loan and then brought this lawsuit, alleging a federal
claim under TILA for rescission of the loan and statutory damages, and a claim for
declaratory relief against Chase Home Finance, LLC (CHF), Chase Bank USA,
N.A. (CBUSA), IBM Lender Business Process Services, Inc., now known as
Seterus, Inc. (IBM LBPS), and Federal National Mortgage Association (Fannie
2
Mae) (collectively Defendant-Appellees), relating to the origination of the loan
and Barness subsequent efforts to rescind the loan.
Defendant-Appellees each moved for summary judgment on the bases that
(1) Barness claim for TILA rescission was untimely and, (2) Barness claim for
statutory damages failed as a matter of law because the evidence on record showed
that neither of Barness creditors ever received his purported notice of intent to
rescind the subject mortgage loan. (ER 14); (ER 20); (ER 23); (ER 194-200)
(SUPP. ER 26-27). The District Court granted those motions (ER 5) and this
appeal followed.
SUPPLEMENTAL STATEMENT OF FACTS
Defendant-Appellees reject Barness Statement of Facts at pages 7 to 11
of the Opening Brief as argumentative, excessive, and largely irrelevant. The facts
are set forth in the District Courts Findings and Recommendations (ER 12-14) and
summarized as follows.
Barnes is the owner and resident of a residential property located at 590
South Greenwood Road in Independence, Oregon (the property). (ER 12). On
or around November 15, 2007, Barnes took out a loan with CBUSA to refinance
the property. Id. The loan was memorialized in a Note dated November 14, 2007,
in the amount of $378,250. (ER 12); (SUPP. ER 3-7). CBUSA was named as the
lender on the Note at issue in this action and, thus, was the original creditor of
3
Barness mortgage loan. Id. Barnes also signed a Deed of Trust dated November
15, 2007, for CBUSAs benefit to secure the Note. (ER 12); (SUPP. ER 8-22).
CHF was the original servicer of Barness note on CBUSA's behalf. (ER 12).
At closing, CBUSAs closing agent First American Title Company of
Oregon (First American) provided Barnes with two unsigned copies of a Notice
of Right to Cancel. (ER 12-13). The two unsigned copies of the Notice of Right to
Cancel stated that the loan closed on November 14, 2007. (ER 13). Specifically,
each copy Barnes received at closing stated as follows:
You have a legal right under federal law to cancel this

transaction, without cost, within three (3) business days from
whichever of the following events occurs last:
(1) The date of the transaction, which is November 14, 2007; or

(2) The date you received your Truth-In-Lending disclosures; or
(3) The date you received this notice of your right to cancel.
***
You may use any written statement that is signed and dated by
you and states your intention to cancel, or you may use this notice by
dating and signing belowIf you cancel by mail or telegram, you
must send the notice no later than midnight of November 17, 2007 (or
midnight of the third business day following the latest of the events
listed above). If you send or deliver your written notice to cancel
some other way, it must be delivered ... no later than that time.
(ER 13) (underlining original); (ER 191).
Other than the specifically recited dates appearing in the two underlined
sections, the language of this notice was in all material respects identical to the
4
model form notice of the right to rescission provided by the Federal Reserve
Board. (ER 13) citing to 12 C.F.R. 226, Appx. H-8.
In June 2010, Barnes requested copies of all his loan documents from First
American. Id. In response to Barness request, First American provided Barnes
with copies of the same Notice of Right to Cancel, which were provided to him at
closing, but bearing interlineations with initials and signatures purporting to be his.
(ER 13-14); (ER 193). The interlineations are as follows:
(1) Next to the printed date November 14, 2007 (the purported date of
the mortgage loan transaction) the date 11-15-07 and the initials
TB are handwritten; and
(2) The printed date November 17, 2007 is lined through, with the
handwritten number 18 appearing above the printed number 17.
The handwritten number 18 is also lined through. The handwritten
date 11-19-07 and the handwritten initials TB appear next to the
lined through dates. (ER 14); (ER 193).
On August 4, 2010, Barnes mailed copies of an Actual Notice to Rescind
the loan transaction of November 15, 2007, to CHF and to CBUSA, at those
entities addresses of record. (ER 14); (ER 194-200). It is undisputed that the
copy of the notice sent to CHF was received by CHF, and that the copy of the
notice sent to CBUSA was returned to Barnes un-delivered to CBUSA. Id. Barnes
5
never received any response from either CHF or CBUSA regarding his notice of
intent to rescind. (ER 14). Barnes never re-sent his Actual Notice to Rescind to
CBUSA and took no further steps to effect delivery or make inquiry as to why his
mailing had not been received by CBUSA. (ER 23) (SUPP. ER 26-27).
In September 2010, Barnes received notice from CHF that the right to
service the loan was being transferred from CHF to IBM LBPS effective October
1, 2010 (ER 12); (ER 201), and on or about October 1, 2010, IBM LBPS became
the servicer of Barness note, replacing CHF. (ER 14); (ER 203-204). Fannie
Mae then became the creditor of Barness note by way of assignment of the note
from CBUSA, effective November 16, 2010. (ER 12). Barnes sent a notice of
intent to rescind to his new servicer IBM LBPS on October 23, 2010. (ER 14);
(ER 211-212).
On January 21, 2011, LBPS wrote to Barnes to advise him of IBM LBPS
position that his right to rescission had expired, and to invite him to clarify his
concerns with particularity. (ER 14) (ER 209-210). IBM LBPS letter also
advised Barnes that [t]he owner of [his] loan [wa]s [at that time] Federal National
Mortgage Association (Fannie Mae), and that [IBM LBPS] [wa]s servicing [his]
loan on behalf of Fannie Mae. Id. Barnes never sent a notice of intent to rescind
to his new creditor Fannie Mae or otherwise made any effort to notify Fannie
Mae of his intention to rescind the mortgage transaction. (ER 20).

6
SUMMARY OF ARGUMENT
The District Court did not err in granting summary judgment to the
Defendant-Appellees. In the District Court, Barnes sought rescission of his
residential mortgage loan pursuant to Section 1635 of TILA on the grounds that the
statutory Notices of Right to Cancel he received at closing listed an inaccurate
closing date. Additionally, Barnes sought statutory damages under Section 1640 of
TILA, on the grounds that the various named Defendant-Appellees failed to timely
respond to his requests for rescission. The District Court correctly granted
summary judgment against each of Barness claims.
First, Barness claim for rescission of his mortgage loan is untimely.
Barness suit was filed more than three years from the date that his loan closed.
This Court has uniformly held that TILAs statute of ultimate repose 15 U.S.C.
1635(f) bars any claim for rescission brought more than three years from the date
of the mortgage transaction. See e.g. McOmie-Gray v. Bank of America Home
Loans, 667 F.3d 1325 (9th Cir. 2012); Miguel v. Country Funding Corp., 309 F.3d
1161 (9th Cir. 2002).
Second, Barness claim for statutory damages under 15 U.S.C. 1640 fails
because he did not serve his notice of rescission on the creditor of his loan,
CBUSA, as required by TILA. Therefore, CBUSA had no duty to respond to
Barness notice of rescission. Instead, Barnes served the notice of rescission on

7
CHF, the servicer of his loan at the time. Ninth Circuit precedent is clear that
service of a notice of rescission must be made upon the creditor of a mortgage
loan and that service upon a creditors agent or mortgage servicer is insufficient
to give rise to the creditors duty to respond to the rescission request. Miguel,
supra, at 1165.
Moreover, Barness claims for statutory damages against CHF and IBM
LBPS fail because those entities only acted as servicers of Barness loan. Loan
servicers cannot violate TILA by failing to rescind a loan transaction because that
duty and authority lies solely with the creditor. Finally, although Fannie Mae
did become a creditor of Barness loan under assignment from CBUSA, it is
undisputed that Barnes never made any effort to serve Fannie Mae with notice of
his intent to rescind.
STANDARD OF REVIEW
Barnes appeals from the District Courts order granting summary judgment
in favor of Defendant-Appellees and accompanying judgment dismissing his
claims. See Fed. R. Civ. P. 56. The standard of review on an appeal from a grant
of summary judgment is de novo. Peterson v. Reliance Ins. Co., 5 F. App'x 687,
688 (9th Cir. 2001), citing Botosan v. Paul McNally Realty, 216 F.3d 827, 830 (9th
Cir. 2000).
8
ARGUMENT
Barness Opening Brief is divided into six Issues for review by the Court.
Many of the issues overlap and require determination of the same questions of law.
However, in the interest of clarity, this brief will address each Issue in turn.
Issue 1: The Courts Procedure for Interpreting Federal Statutes.
Barness first issue concerns the Courts authority to interpret federal
statutes like TILA. Barnes alleges as follows: The Ninth Circuit is required to
apply TILA as implemented by Reg. Z according to its plain language, and defer
its analysis to the Official Staff Commentary interpretation. (Opening Brief, p.
16). To the extent that Barness comments are meant to suggest that the Court is
bound by the mandates of the legislature, Defendant-Appellees offer no argument
to the contrary. It hardly bears mentioning that federal courts must faithfully
interpret and apply federal statutory law, so long as it is constitutional. However,
Barnes offers no suggestion as to how the District Court failed to faithfully apply
TILA in this case. Furthermore, while it is true that Federal Courts typically defer
to agency interpretations of the regulations those agencies enact, Barnes fails to
discuss how the District Court or the Ninth Circuits interpretations of TILA have
deviated from the Official Staff Commentary in any way.
Rather, it appears that Barnes believes the District Court erred in applying
clear Ninth Circuit precedent merely because this Courts opinions are in direct
9
conflict with Barness subjective understanding of TILA. His argument seems to
boil down to this thesis: The Ninth Circuits jurisprudence on TILA differs from
my interpretation of that statute, ergo, the Ninth Circuit must have failed to
properly apply TILA in those cases. It is clear that the District Court properly
applied this Courts opinions and that this Court has not disregarded its
constitutional obligations or congressional intent in its TILA jurisprudence.
Issue 2: Barness Claim for Rescission.
Barness claim for TILA rescission was properly dismissed on summary
judgment by the District Court because it is untimely. Although not a model of
clarity, it appears that Barness second issue for review concerns the dismissal of
his TILA rescission claim on timeliness grounds. Barnes argues that, pursuant to
TILA, he achieved rescission merely by notifying the creditor of the rescission
in writing, and nothing more! (Opening Brief, p. 20). According to Barnes,
[o]nce [he] achieved timely contractual and statutory notice requirements, it
became irrelevant whether the rescission right had expired. Id. (emphasis
original). Barnes appears to argue that upon exercising his right to rescission by
sending notice, he was not required to pursue any further action to effectuate the
rescission. Thus, he argues, his claim is not barred on timeliness grounds because
it was conclusively determined in his favor the moment he exercised his right of
rescission.
10
Barness argument is directly at odds with each of this Courts opinions on
the issue of so-called automatic TILA rescission. In Yamamoto v. Bank of New
York, 329 F.3d 1167, 1172 (9th Cir. 2003), the Court held that in contested
rescission cases it cannot be that the security interest vanishes immediately upon
the giving of notice.Rather, under the statute and the regulation, the security
interest becomes void only when the right to rescind is determined in the
borrowers favor. Any contrary determination would allow a borrower to
rescind his mortgage simply by claiming TILA violations, regardless of whether
any such violations actually existed. Id. Citing with approval to the First Circuits
opinion in Large v. Conseco Finance Servicing Corporation, 292 F.3d 49, 54-55
(1st Cir. 2002) the Yamamoto court reasoned:
[n]either the statute [15 U.S.C. 1635] nor the regulation

[Reg. Z 226.23] establishes that a borrower's mere assertion of
the right of rescission has the automatic effect of voiding the
contract. Id. Instead, the natural reading of the language of
1635(b) is that the security interest becomes void when the
obligor exercises a right to rescind that is available in the particular
case, either because the creditor acknowledges that the right of
rescission is available, or because the appropriate decision maker
has so determined.... Until such decision is made, the [borrowers]
have only advanced a claim seeking rescission.
Id.
Similarly, in the recent case of McOmie-Gray, supra, this Court held that
[r]escission is not automatic upon a borrowers mere notice of rescission.

11
Instead, where a lender fails to comply with 1635(b), the statute and regulations
contemplate that a borrowerwill seek a determination that rescission is proper.
McOmie-Gray, 667 F.3d at 1327. Because Barness notice of rescission merely
advanced a claim seeking rescission, he was required to pursue that claim in a
timely fashion. Yamamoto, 329 F.3d at 1172. He did not. As was clearly
explained by the Court in McOmie, rescission suits must be brought within three
years from the consummation of the loan, regardless whether notice of rescission is
delivered within that three-year period. 667 F.3d at 1328. In this case, Barness
suit was filed more than three years from the date that his loan was consummated
and, thus, his claim for rescission is barred by TILAs three-year statute of ultimate
repose. 15 U.S.C. 1635.
Issue 3A: Barness Claim for Statutory Damages against CHF and CBUSA.
The District Court properly dismissed Barness claims for statutory damages
under 15 U.S.C. 1640 because the evidence on the record clearly showed that the
creditor of his mortgage, CBUSA, never received notice of his intent to rescind.
Instead, Barnes only successfully notified the servicer of his loan, CHF, of his
intention to rescind the loan.
15 U.S.C. 1635(a) specifies that the obligor shall have the right to rescind
the transactionby notifying the creditor, in accordance with the regulations of
the Board, of his intention to do so. (Emphasis added). In the context of a TILA
12
claim, a creditor is a person who regularly extends consumer creditand to
whom the obligation is initially payable, either on the face of the note or
contract. Reg. Z 226.2(a)(17). In this case, the recorded documents before
the Court conclusively establish that CBUSA was the creditor to whom Barness
notice of rescission should have been provided. CBUSA was listed as the lender
on both the Note and Deed of Trust and was the party to whom the obligation
[was] initially payable. (SUPP. ER 3-22). Moreover, CBUSA was listed as the
lender on the Notice of Right to Cancel which was provided to Barnes and
CBUSAs address is identified as the place any notice of rescission should be
mailed. (ER 193).
Barness Opening Brief suggests that his notice of intent to rescind was
proper for three reasons. First Barnes argues that he did, in fact, send notice to
CBUSA although the notice was never received and that by sending the notice
he satisfied his obligations under TILA, regardless of whether CBUSA received it.
Second, Barnes argues that providing notice to his mortgage servicer, CHF, was
sufficient to constitute notice to CBUSA because CHF was operating as CBUSAs
agent. Finally, Barnes argues that CHF was, in fact, a creditor of his loan because
CHF was listed as the assignee in an allonge attached to his note. Each of these
arguments was properly rejected by the District Court.

13
A. Barness Attempt to Mail His Notice of Rescission to CBUSA

Was Insufficient to Trigger CBUSAs Duty to Respond Because
CBUSA Never Received the Purported Notice.
Barnes alleges in his Opening Brief that he did, in fact, send proper notice of
his intent to rescind to CBUSA. (Opening Brief, p. 21). He bases this allegation
on a notice purportedly sent to CBUSA, which was attached to his motion for
summary judgment. (ER 194-199).
However, the purported notice to CBUSA contains a certified mail receipt
which shows that CBUSA did not receive the notice. (ER 200). In his deposition,
Barnes confirmed that he was aware that CBUSA did not receive the notice of
intent to rescind and that, after he became aware that CBUSA did not receive the
notice, he took no further steps to ensure that CBUSA was ever notified of his
intent to rescind. (SUPP. ER 26-27). Notwithstanding these admissions, Barnes
argues that his obligation to provide CBUSA notice of his intent to rescind was
satisfied merely by his mailing the notice, and that CBUSA need not actually
receive it. Barnes cites to Thayer v. American Residential Mortgage, L.P. (In re
Thayer), 360 B.R. 912, 920 (D. Minn. 2007) (Opening Brief, p. 22) for the
proposition that a debtor need only place the rescission notice in the mail by the
required deadline to satisfy the notice requirement. However, Thayer does not
stand for that proposition. In fact, the Thayer opinion supports Defendant-
Appellees position. In Thayer, the court held that the debtors notice requirement
14
was satisfied when he sent his rescission documents to the creditor and when an
employee of the creditor signed the return-receipt form for the certified mailing
and when [t]hat form was duly returned to the Debtors by the [USPS]. Id. at
917. The court did not determine whether mailing alone was sufficient to
constitute notice because [neither party] has made an issue of this. Id. at 921, n.
13.
Barnes cites to no other authority to support his position because no
authority supports it. On the contrary, the Commentary to Reg. Z 226.23(a)(2)
specifies that mailing the rescission notice alone is insufficient to trigger the
creditors duty to respond. Whatever the means of sending the notification of
rescission mail, telegram or other written means the time period for the
creditors performance under 226.23(d)(2) does not begin to run until the
notification has been received. Official Staff Commentary to Reg. Z, 226.23,
Comment 23(a)(2) (emphasis added).1 The evidence on the record clearly shows
that the creditor of Barness mortgage loan, CBUSA, never received notice of
Barness notice of intent to rescind. Therefore, CBUSAs duty to respond to that
notice was never triggered. Id.
1
Accessible at http://www.ecfr.gov/cgi-bin/text-
idx?c=ecfr&rgn=div5&view=text&node=12:3.0.1.1.7&idno=12#12:3.0.1.1.7.3.8.7
15
Although not mentioned in Barness Opening Brief, the District Court noted
a tension between the provisions of 12 C.F.R. 226.23(a)(2), pursuant to which
a consumers notice of intent to rescind is considered given when mailed and 12
C.F.R. 226.23(d)(2), pursuant to which the twenty-day period within which a
creditor must effect the noticed intent to rescind does not begin to run until after
receipt of [the consumers] notice of rescission. (ER 22-23). The District Court
described this issue as one of first impression for this Court. Id.
It is a fundamental canon of statutory interpretation that a statute should be
construed to give effect to all its provisions, so that no part will be inoperative or
superfluous, void or insignificant. Corley v. U.S., 556 U.S. 303, 304, 129 S.Ct.
1558 (citations omitted). In this case, only one interpretation of the two
seemingly-conflicting commentary sections gives effect to all aspects of the
statute: The legislature intended 226.23(a)(2) to govern the timing of a
rescission notice for purposes of determining whether the borrower met the strict
TILA time limitations for providing such notice, while 226.26(d)(2) is intended
to govern the timing for a creditor to respond once it has actually received a timely
notice.
For example, 226.23(a)(2) would come into play when a borrower submits
a notice of rescission one day before the deadline to rescind but the notice is not
16
received by the creditor until two days after the deadline.2 In that case, the statute
would consider [the notice] given on the date it was mailed, despite the fact that
it was not received until after the deadline had expired. That provision cannot
reasonably be construed, however, to deem that a notice which has never been
received by the creditor is sufficient to give rise to a duty on the part of the creditor
to respond, when the statute also clearly provides that the creditors duties only
arise after receipt of [the consumers] notice of rescission. 12 C.F.R.
226.23(d)(2). Such an interpretation would impermissibly render 226.23(d)(2)
superfluous. Corley, 556 U.S. at 304.3
B. Barness Notice to CHF was Insufficient to Constitute

Constructive Notice to CBUSA, Regardless of CHFs Status
as an Agent of CBUSA.
Barness Opening Brief contends that his notice to CHF was sufficient to
apprise CBUSA of his intent to rescind because CHF was operating as the servicer
of his Note on behalf of CBUSA. This argument is directly addressed and
foreclosed by the Ninth Circuits opinion in Miguel v. Country Funding Corp., 309
2
Under normal circumstances, the deadline to file a TILA notice of rescission
in only three days from the date the loan closes, so this provision would necessarily
apply to the vast majority of rescission cases. 15 U.S.C. 1635(a).
3
The District Court also noted the lack of compelling grounds to construe
226.23(d)(2) as imposing any greater burden than is suggested by its plain
language because Barnes admitted that he had actual notice that his written
notice had not been delivered to CBUSA and had subsequently fail[ed] to take
any steps to effect delivery or to make inquiry as to why his mailing had not been
received. (ER 22-23).
17
F.3d 1161, 1164-1165 (9th Cir. 2002), which holds that notification to the loan
servicer of an intention to rescind does not suffice as notice to the creditor. Barnes
suggests that the holding of Miguel does not apply in this case because CHF
operated as an agent of CBUSA; however, that was the precise factual
circumstance addressed in Miguel. 309 F.3d at 1165. In Miguel this Court found
that a notice of intent to rescind mailed to the creditors servicing agent was
inadequate to effect the borrowers rescission right, reasoning as follows:
[The borrower] argues that she should have been allotted an

additional year in which to file suit after the expiration of the three-
year period afforded by the statute. While [the borrower] is correct
that 15 U.S.C. 1640(e) provides the borrower one year from the
refusal of cancellation to file suit, that is not the issue before us.
Rather, the issue is whether her cancellation was effective even
though it was not received by the Bankthe creditorwithin the
three-year statute of repose. We hold that it was not. While the
Bank's servicing agent, Countrywide, received notice of
cancellation within the relevant three-year period, no authority
supports the proposition that notice to Countrywide should suffice
for notice to the Bank. Therefore, her right to cancellation was
extinguished as against the Bank.
Id. (emphasis added).
Barness Opening Brief further argues that a 2004 amendment to the
Commentary to Reg. Z 226.23(a)(2)-1 renders Miguel inapplicable. (Opening
Brief, p. 23). That Commentary provides that a creditor may designate an agent
to receive the notification so long as the agent's name and address appear on the
18
notice provided to the consumer under 226.23(b). The Commentary further
provides that [w]here the creditor fails to provide the consumer with a designated
address for sending the notification of rescission, delivering notification to the
person or address to which the consumer has been directed to send payments
constitutes delivery to the creditor or assignee. Neither of those Commentary
sections supports Barnes in this case. CBUSA did not nominate CHF as its agent
for rescission notification by including CHFs name and address on the Notice of
Right to Cancel it provided to Barnes. Instead, CBUSA listed its own name and
address on the Notice of Right to Cancel. (ER 193). Thus, Barness second
argument necessarily fails as well because CBUSA did provide a designated
address (i.e. its own) for sending a notice of rescission.
C. CHF Was Not Barness Creditor Despite the fact that CHF
May Have Been a Nominal Assignee of Barness Note as a Matter
of Administrative Convenience.
As a servicer CHF cannot be liable for an alleged failure to effect
rescission of Barness mortgage loan because that duty and authority lies solely
with the creditor. See 12 C.F.R. 226.23(d). TILA provides that [a] servicer
of a consumer obligation arising from a consumer credit transaction shall not be
treated as an assignee of such obligation for purposes of this section unless the
servicer is or was the owner of the obligation. 15 U.S.C. 1641(f)(1). Barnes

19
argues that CHF was, in fact, the owner of his loan however briefly by virtue of
appearing as an assignee of Barness Note on an allonge to the Note.
Barnes cites to an allonge which he claims was attached the declaration of
Fannie Mae declarant, Clay Brangham as Exhibit 1. (Opening Brief, p 21); (ER
7). However, the allonge which is included in Barness Excerpt of Record was
not attached to the Brangham Declaration as Exhibit 1, nor as any other exhibit,
and does not appear to be a part of Barness Note.4
Even assuming the validity of the allonge, such a document does not
indicate that CHF was the creditor of Barness Note at the time he attempted to
rescind the loan. The allonge simply states that CBUSA assigned the Note to
CHF on November 14, 2007, and that CHF immediately re-assigned the Note in
blank presumably back to CBUSA as is reflected in the recorded chain of title
documents. This is a common transaction between lenders, the purpose of which is
for the original creditor to retain the note after it has been endorsed in blank. A
note endorsed in blank provides certain administrative conveniences in the
servicing of the loan and allows for easier assignments of the beneficial interest in
the note.
4
In fact, Defendant-Appellees reviewed their records and could find no
reference to the allonge anywhere in any declaration or in any of the documents
Defendant-Appellees produced to Barnes.
20
Under such circumstances, CHFs brief ownership of Barness Note is
properly treated as a matter of administrative convenience and CBUSA remained
the true creditor of Barness loan. In fact, TILA envisions this very
circumstance and provides that:
A servicer of a consumer obligation arising from a consumer

credit transaction shall not be treated as the owner of the obligation
for purposes of this section on the basis of an assignment of the
obligation from the creditor or another assignee to the servicer
solely for the administrative convenience of the servicer in
servicing the obligation.
15 U.S.C. 1641(f)(2). Thus, even if CHF was briefly assigned Barness
Note, such assignment was for purposes of administrative convenience and did
not result in CHF assuming the responsibilities of a creditor at the time Barnes
attempted to rescind his loan.
Issue 3B: Barness Claim for Statutory Damages

Against IBM LBPS and Fannie Mae.
Similarly, there is no dispute that Barnes never attempted to serve notice of
rescission on Fannie Mae, the assignee-creditor. Furthermore, TILA specifically
states that servicers, such as IBM LBPS, are not to be treated as assignees, and
therefore are not liable for damages. 15 U.S.C. 1641(f)(1). Barness Opening
Brief wrongly contends that IBM LBPS acknowledged that it was acting as the
agent for Fannie Mae (Opening Brief, pp. 9, 19, and 28); however, there is no such
acknowledgement or finding anywhere in the record whatsoever; and, in fact,

21
Fannie Mae denies that IBM LBPS was acting as its agent. Regardless, Loan
servicers cannot be held liable under TILA unless they owned the loan obligation
at some point in time. Id. Thus, based on the law discussed supra, the District
Court correctly determined that neither IBM LBPS nor Fannie Mae is liable to
Barnes for statutory damages.
Issue 3C: Defendant-Appellees Alleged Failure to

Respond to Barness Notice of Rescission.
Issue 3C of Barness Opening Brief consists largely of restatements of
arguments raised in earlier sections. In the interest of brevity, Defendant-
Appellees adopt their earlier responses to the Opening Brief wherever applicable to
Issue 3C.
In essence, Barnes appears to correctly argue that the remedies of rescission
and statutory damages are independent, that the one-year statute of limitations in
15 U.S.C. 1540(e) applies to his claim for statutory damages, and that the statute
runs from the date that his notice of rescission was allegedly received but
wrongfully ignored. Defendant-Appellees agree with those propositions; however,
Barnes misses the point. His claim for statutory damages is not barred because it is
untimely. It is facially invalid because he failed to properly notify the creditor of
his mortgage loan of his intention to rescind.

22
Issue 4: Barness Failure to Timely File His Lawsuit.
Issue 4 appears to be a restatement of the same arguments Barnes made in
Issue 2 regarding his obligation to timely file a suit for rescission. Again, he
argues that his rescission was automatic and, therefore, his claim for rescission is
not untimely. Defendant-Appellees adopt their earlier response to Issue 2 as if set
forth herein in its entirety. As described in greater detail in that section, this Court
has uniformly held that TILAs statute of ultimate repose 15 U.S.C. 1635(f)
bars any claim for rescission brought more than three years from the date of the
mortgage transaction. See e.g. McOmie-Gray 667 F.3d 1325; Miguel, 309 F.3d
1161 (9th Cir. 2002).
Issue 5: Application of 1640(e) to Action for Rescission.
The District Court did not err by holding that the one-year statute of
limitations for actions seeking statutory damages under 15 U.S.C. 1640 does not
apply to actions for rescission. Issue 5 of the Opening Brief like much of the
brief itself confuses TILAs independent remedies of rescission and statutory
damages.5
This Courts jurisprudence on this issue is well defined and reasoned. If a
borrower received allegedly defective TILA notices, he or she may bring an action
5
Although other parts of Barness Opening Brief appear to properly
understand and apply the separate and distinct remedies of rescission and statutory
damages. See e.g. Barness Issue 3C.
23
for rescission of the mortgage loan up to three years from the date the loan was
closed. After that time, 15 U.S.C. 1635(f) acts as a statute of ultimate repose and
bars any untimely claim for rescission. McOmie-Gray 667 F.3d 1325. On the
other hand, if a borrower notifies his or her creditor of an intent to rescind the
mortgage loan and the creditor fails to respond to such notice within 20 days, the
borrower may be entitled to statutory damages. 15 U.S.C. 1640. A borrower has
one year to bring a claim for statutory damages from the date of a creditors
alleged wrongful failure to respond after receiving a rescission notice. Id. The two
remedies are separate and distinct.
Barnes attempts to apply the one-year statute of limitations (which would
normally apply to an action for statutory damages under 1640) to an action for
rescission by adding an additional year to the end of the three-year limitations
period specified in 1635. This is the same tactic which was expressly rejected in
McOmie-Gray, supra. As noted in Barness Opening Brief, that case held,
adopting 1640s one-year statute of limitations to rescission actions contradicts
the plain language of the statute. Id. at 1329. Barnes now claims that the holding
of McOmie-Gray should be reexamined based on the above intervening
authorities, the plain meaning of the applicable language, and the issues herein,
(Opening Brief, p. 43) but he fails to identify any relevant intervening authorities
or explain why the issues herein differ in any material way from those addressed
24
by the holding of McOmie-Gray. This case is squarely on all-fours with the
Courts holding in McOmie-Gray and Barness claim for rescission is untimely.
Issue 6: Form of the Notices of Right to Cancel.
Barness final issue on appeal concerns the form of the Notices of Right to
Cancel he received when his loan was closed. This argument was immaterial to
the District Courts decision to grant summary judgment. In fact, the only
discussion on the record of the formal requirements of a Notice of Right to Cancel
appear in the Magistrate Judges Findings and Recommendation on various
Defendant-Appellees Motions to Dismiss from 2011. (ER 130-132).6 Although
the Magistrate Judge recommended granting all of the Motions to Dismiss, the
Article 3 Judge disagreed and denied the portion of the Motions which related to
issues concerning the formal requirements of Notice of Right to Cancel. In
essence, Barnes already won this argument in 2011.
In any event, the formal sufficiency of the Notices of Right to Cancel had no
bearing on the District Courts eventual decision to grant summary judgment. The
District Court granted summary judgment against Barness claims because: (1)
Barness rescission claim was untimely, and (2) the evidence on the record showed
that Barnes never served his creditor with his notice of intent to rescind as required
6
Incidentally these documents should not have been included in the Excerpts
of Record in the first place because they constitute briefs or memoranda which
are not necessary to the resolution of an issue on appeal. Circuit Rule 30.1.5.
25
to state a claim for statutory damages. The factual question regarding whether or
not the Notices of Right to Cancel were formally defective was entirely irrelevant
to the District Courts determination of the dispositive legal issues in this case.
CONCLUSION
For the foregoing reasons, the Court should affirm the district courts order
and judgment.

Portland, OR 97204
Telephone: 503-224-3113
Attorneys for Defendant-Appellees Chase
Home Finance, LLC and Chase Bank USA,
N.A.
RCO LEGAL PS

Portland, OR 97205
Telephone: 503-517-7180
26
STATEMENT OF RELATED CASES
Defendant-Appellees are aware of no other cases pending in this Court that
might be deemed related to this case within the meaning of Circuit Rule 28-2.6.


Portland, OR 97204
Telephone: 503-224-3113
Attorneys for Defendant-Appellees Chase

Home Finance, LLC and Chase Bank USA,
N.A.
RCO LEGAL PS

Portland, OR 97205
Telephone: 503-517-7180

27
CERTIFICATION OF COMPLIANCE
PURSUANT TO FED. R. APP. P. 32(A)(7)(C) AND CIRCUIT RULE 32-1
I certify that pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule
32-1, the attached Defendant-Appellees Joint Answering Brief is proportionately
spaced, has a typeface of 14 points or more, and contains 7,214 words.
DATED: February 4, 2014.
RCO LEGAL PS

Portland, OR 97205
Telephone: 503-517-7180

28
CERTIFICATE OF FILING AND SERVICE
I hereby certify that I filed the foregoing Defendant-Appellees Joint
Answering Brief on February 4, 2014 by causing it to be filed electronically with
the Clerk of the United States Court of Appeals for the Ninth Circuit, and that I
served the same on February 4, 2014, by causing two copies thereof to be mailed
by first-class mail on that date as follows:
Timothy Barnes
590 South Greenwood Rd.
Independence, Oregon 97351
Telephone: 503.585.9517
Facsimile: N/A
Email: tim@westsidelandscape.com
Pro Se Plaintiff-Appellant
DATED: February 4, 2014.
RCO LEGAL PS

Portland, OR 97205
Telephone: 503-517-7180


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Case: 13-35716 02/04/2014 ID: 8965915 DktEntry: 13-1 Page: 1 of 36

IN THE UNITED STATES COURT OF APPEALS

On Appeal from the United States District Court

Honorable Anna J. Brown

JOINT ANSWERING BRIEF of DEFENDANT-APPELLEES CHASE

CORPORATE DISCLOSURE STATEMENT

Pursuant to Fed. R. App. P. 26.1 the following Defendant-Appellees hereby

Defendant-Appellee IBM Lender Business Process Services Inc. is now

known as Seterus, Inc., and it is a Delaware corporation which is wholly owned by

Pixel Acquisition Corporation, which is wholly owned by International Business

Machines Corporation, a publicly traded corporation.

Defendant-Appellee Federal National Mortgage Association is a government

sponsored enterprise and is publicly traded.

By: s/ John M. Thomas

Attorneys for Defendant-Appellees IBM

CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant-Appellee

Chase Home Finance LLC provides the following information:

1. PARENT CORPORATION: Chase Home Finance LLC merged into

JPMorgan Chase Bank, National Association. JPMorgan Chase Bank, National

Association, as successor by merger to Chase Home Finance LLC is 100% owned

by JPMorgan Chase & Co., which is a publicly traded corporation.

2. PUBLICLY HELD CORPORATIONS OWNING 10% OR MORE

OF STOCK: No publicly held corporation owns ten percent (10%) or more of

JPMorgan Chase & Co.s stock.

Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant-Appellee

Chase Bank USA, N.A. provides the following information:

1. PARENT CORPORATION: Chase Bank USA, N.A. is 100% owned

publicly traded corporation.

2. PUBLICLY HELD CORPORATIONS OWNING 10% OR MORE

OF STOCK: No publicly held corporation owns ten percent (10%) or more of

JPMorgan Chase & Co.s stock.

MARTIN, BISCHOFF, TEMPLETON,

By: s/ Michael J. Farrell

Attorneys for Defendant-Appellees

JURISDICTIONAL STATEMENT .......................................................................... 1

STATEMENT OF THE CASE .................................................................................. 1

SUPPLEMENTAL STATEMENT OF FACTS ........................................................ 2

SUMMARY OF ARGUMENT ................................................................................. 6

STANDARD OF REVIEW ....................................................................................... 7

Issue 1: The Courts Procedure for Interpreting Federal Statutes .................... 8

Issue 2: Barness Claim for Rescission. ............................................................ 9

Issue 3A: Barness Claim for Statutory Damages Against

A. Barness Attempt to Mail His Notice of Rescission to CBUSA

B. Barness Notice to CHF was Insufficient to Constitute

Issue 3C: Defendant-Appellees Alleged Failure to Respond to

Issue 4: Barness Failure to Timely File His Lawsuit .................................... 22

Issue 5: Application of 1640(e) to Action for Rescission ............................ 22

Issue 6: Form of the Notices of Right to Cancel ............................................. 24

STATEMENT OF RELATED CASES ................................................................... 26

Botosan v. Paul McNally Realty,

Large v. Conseco Finance Servicing Corporation,

McOmie-Gray v. Bank of America Home Loans,

Miguel v. Country Funding Corp.,

Peterson v. Reliance Ins. Co.,

Thayer v. American Residential Mortgage, L.P. (In re Thayer),

Yamamoto v. Bank of New York,

15 U.S.C. 1635 ......................................................................................6, 10, 11, 23

15 U.S.C. 1635(a) ...........................................................................................11, 16

15 U.S.C. 1635(b) ...........................................................................................10, 11

15 U.S.C. 1635(f) ........................................................................................6, 22, 23

15 U.S.C. 1640 ......................................................................................6, 11, 22, 23

15 U.S.C. 1640(e) ................................................................................................. 22