HOLMES, Circuit Judge.
Plaintiff-Appellant Jean Rosenfield appeals from the district court's order granting a motion to dismiss filed by Defendant-Appellee HSBC Bank, USA ("HSBC"). Ms. Rosenfield brought claims seeking declaratory and injunctive relief, and damages against HSBC for alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f, averring that her lender failed to make required disclosures in a residential loan refinancing agreement executed by the parties, and that, as a result, she is entitled to a rescission of her loan agreement. Ms. Rosenfield argues that the district court erred in dismissing her claims and holding that she failed to timely exercise her right of rescission within the applicable three-year time bar specified by TILA. For the reasons that follow, we affirm the district court's order dismissing Ms. Rosenfield's complaint.
I. Background and Procedural History
In 1998, Ms. Rosenfield and her husband purchased a home in Denver, Colorado. On October 10, 2006, she applied to Ownit Mortgage Solutions, Inc. ("Ownit") to refinance an existing loan on the home. Mr. Rosenfield was not a party to the refinancing. He quitclaimed all of his right, title, and interest in the property to Ms. Rosenfield. The loan was closed by a designated title company on November 3, 2006.
Presumably because Ms. Rosenfield failed to continue meeting her obligations under the loan agreement, HSBC instituted foreclosure proceedings on July 9, 2009, by filing a Motion for Order Authorizing Sale in the District Court for the City and County of Denver "under the expedited procedure" set forth in Rule 120 of the Colorado Rules of Civil Procedure (the "Rule 120 proceeding"). Id. In Ms. Rosenfield's response to the foreclosure action, she asserted a "defense of rescission," Aplt. Opening Br. at 5, averring that she "sent a Notice of Rescission to HSBC ... [and she] received no response," Dist. Ct. Doc. 55, Attach. 25, at 4 (Resp. to Verified Mot., filed Apr. 1, 2010). The District Court for the City and County of Denver, however, held that she could not assert this defense under the "pared-down procedure" provided by Rule 120. Aplt.App. at 38 (Pl.'s Resp. to Def.'s Mot. to Dismiss, filed Feb. 22, 2010). HSBC scheduled a foreclosure sale for December 31, 2009 with the office of Defendant-Appellee Stephanie O'Malley, the city's public trustee.
On December 21, 2009, Ms. Rosenfield commenced this action in the District Court for the City and County of Denver. As relevant here, Ms. Rosenfield's complaint asserted two claims for relief against HSBC based upon her alleged right to rescind the loan in light of various disclosure violations under TILA and its implementing regulations, 12 C.F.R. §§ 226.1.59 ("Regulation Z").
Shortly thereafter, on January 27, 2010, HSBC filed a motion to dismiss Ms. Rosenfield's complaint pursuant to Rule 12(b)(6), arguing that the complaint failed to state a claim upon which relief may be granted both on the merits of the inadequate disclosure allegations and because the claims were procedurally barred under TILA. On August 31, 2010, the district court granted HSBC's motion and dismissed the complaint in its entirety. The district court noted that "TILA sets an absolute three-year limitation on the borrower's right of [r]escission, measured from the closing of the transaction." Aplt. App. at 61 (Dist. Ct. Op. & Order Granting Mot. to Dismiss, filed Aug. 31, 2010) (citing 15 U.S.C. § 1635(f)). It dismissed Ms. Rosenfield's claims for declaratory and injunctive relief because she filed the instant action outside of the three-year statutory period provided in § 1635(f).
Although Ms. Rosenfield alleged in her complaint that she provided her lender with written notice of rescission within the three-year period under TILA, the district court determined that the Supreme Court's decision in Beach v. Ocwen Federal Bank, 523 U.S. 410, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998), establishes that § 1635(f) is a statute of repose that extinguishes a claim for rescission, unless it is both noticed and sued upon within three years. As the district court explained, "[t]o hold otherwise introduces a lacuna between the expiration of the right to rescind and the time in which the lender might learn of a purportedly timely [r]escission that it does not recall receiving, with foreclosure (and perhaps even subsequent sale) falling within that temporal no-man's-land." Aplt.App. at 63. In other words, banks must be protected from the possibility that a foreclosed home could have a "cloudy title" because of a delayed rescission claim by a borrower.
Additionally, the district court rejected Ms. Rosenfield's argument that her assertion of the defense of rescission in her answer to the Rule 120 proceeding properly preserved her rights in the instant action. The court reasoned that "simply asserting the `defense' of [r]escission in a Rule 120 proceeding is ... not the equivalent of [asserting the right in general] civil lawsuit[s]," id. at 65-66, because of the limited purpose and effect of Rule 120 proceedings, and the limited procedures made available for litigants. In this connection, the court noted that Ms. Rosenfield had not relied in her complaint on the date of her assertion of the rescission defense in the Rule 120 proceeding to support her contention that her rescission right was still viable, but rather the date of written notice to the lender. And the court declined "to re-draft the Complaint in order to rescue the Plaintiff from the untimeliness of the claims as actually pled," id. at 66-67, and refused Ms. Rosenfield's request to permit amendment of her complaint.
Finally, the district court concluded in the alternative that even if Ms. Rosenfield's rescission claims were viable under TILA's statute of repose, they would still be barred by application of TILA's one-year statutory limitations provision in § 1640(a), (e), inasmuch as her right to "commence suit [i.e., after obtaining notice of the lender's violation] to enforce her attempted [r]escission" expired "on or about September 29, 2009, approximately two months before [the instant] suit was commenced." Aplt.App. at 65. Ms. Rosenfield subsequently filed a timely notice of appeal.
II. Standard of Review
We review a district court's dismissal of a complaint under Rule 12(b)(6) de novo, and apply "the same legal standard as the district court." Jordan-Arapahoe, LLP v. Bd. of Cnty. Comm'rs, 633 F.3d 1022, 1025 (10th Cir.2011). We must accept as true "all well-pleaded factual allegations in a complaint and view these allegations in the light most favorable to the plaintiff." Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.2009); see Morris v. City of Colorado Springs, 666 F.3d 654, 660 (10th Cir.2012). In order to survive a motion to dismiss brought under Rule 12(b)(6), the plaintiff must allege sufficient facts to make her claim to relief plausible on its face. See Jordan-Arapahoe, 633 F.3d at 1025; Kerber v. Qwest Grp. Life Ins. Plan, 647 F.3d 950, 959 (10th Cir.2011). "[A] plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do...." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (alteration in original) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "A claim has facial plausibility when the [pleaded] factual content... allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Jordan-Arapahoe, 633 F.3d at 1025 (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)) (internal quotation marks omitted). In addition to the allegations contained in the complaint, the court may consider attached exhibits and documents incorporated into the complaint, so long as the parties do not dispute the documents' authenticity. See Smith, 561 F.3d at 1098.
Ms. Rosenfield presents three separate issues for review in her opening brief. First, she argues that the district court erred in holding that she failed to exercise her right of rescission under TILA within the three-year time period set forth in 15 U.S.C. § 1635(f). Second, and largely related to her first claim, she argues that, by raising a TILA rescission defense in her Colorado foreclosure action, she properly exercised her rescission rights under TILA. Third, assuming that she did properly exercise her rescission rights under § 1635(f), Ms. Rosenfield argues that the district court erred in holding that her TILA claims to enforce rescission are subject to the one-year statutory limitations period under § 1640.
We conclude that the district court properly dismissed Ms. Rosenfield's complaint on the ground that she failed to exercise her rescission rights within the three-year repose period under § 1635(f) and, therefore, her rescission rights expired. Relatedly, we hold that her rescission argument based upon her defensive actions in Colorado's Rule 120 proceeding is unavailing, and the district court did not abuse its discretion in declining to allow Ms. Rosenfield to amend her complaint to incorporate facts related to it. In light of these two rulings, which establish that Ms. Rosenfield's TILA rescission rights were extinguished, we do not reach Ms. Rosenfield's third argument relating to whether the limitations period of § 1640 barred her TILA claims.
We briefly discuss the structure of TILA in order to provide context to the questions presented in this dispute. TILA was enacted in 1968 to improve lending practices. See Truth in Lending Act, Pub.L. No. 90-321, 82 Stat. 146, 146 (1968) (codified at 15 U.S.C. §§ 1601-1665 (Supp. IV 1964)); see Chase Bank USA, NA v. McCoy, ___ U.S. ___, 131 S.Ct. 871, 874-75, 178 L.Ed.2d 716 (2011) ("Congress passed TILA to promote consumers' `informed use of credit' by requiring `meaningful disclosure of credit terms'...." (quoting 15 U.S.C. § 1601(a))); Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 235, 124 S.Ct. 1741, 158 L.Ed.2d 450 (2004) ("Congress enacted [TILA] ... in order to promote the `informed use of credit' by consumers." (quoting 15 U.S.C. § 1601(a))); Cetto v. LaSalle Bank Nat'l Ass'n, 518 F.3d 263, 265 n. 1 (4th Cir.2008) ("The purpose for enacting TILA ... was to provide economic stabilization in consumer credit lending by assuring meaningful disclosure of credit terms and thus permitting consumers to make an informed use of credit."); see also Elwin Griffith, Searching for the Truth in Lending: Identifying Some Problems in the Truth in Lending Act and Regulation Z, 52 Baylor L.Rev. 265, 266-67 (2000) ("When Congress passed [TILA] in 1968, it set new disclosure standards for creditors that also improved conditions for consumers." (footnotes omitted)).
TILA's stated purpose is "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, and to protect the consumer against inaccurate and unfair credit billing and credit card practices." 15 U.S.C. § 1601(a). To fulfill that purpose, TILA requires lenders to provide borrowers with certain clear and accurate disclosures, and lenders face criminal penalties and damages for noncompliance. See, e.g., id. §§ 1604, 1611, 1631-32, 1635, 1637-38, 1640; see also Beach, 523 U.S. at 412, 118 S.Ct. 1408 ("[T]he Act 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."). These provisions evidence what amounts to the statute's core, remedial purpose. See Littlefield v. Walt Flanagan & Co., 498 F.2d 1133, 1136 (10th Cir.1974) ("The Act is designed to prevent `unscrupulous and predatory creditor practices' [and] is remedial...." (quoting N.C. Freed Co. v. Bd. of Governors of Fed. Reserve Sys., 473 F.2d 1210, 1214 (2d Cir.1973))).
One of the "remedial" rights that TILA accords to consumers is the right to obtain rescission of a loan in equity. See 15 U.S.C. § 1635(a). Specifically, TILA authorizes a borrower whose loan is secured with her "principal dwelling" to rescind the loan transaction entirely "until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required ... together with a statement containing [certain] material disclosures..., whichever is later." Id. If the required TILA disclosures are never made, then the borrower's right of rescission under § 1635(f) "shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first." Id. § 1635(f); see also Beach, 523 U.S. at 411, 415, 118 S.Ct. 1408 ("[W]hen a loan made in a consumer credit transaction is secured by the borrower's principal dwelling, the borrower may rescind the loan agreement if the lender fails to deliver certain forms or to disclose important terms accurately."); Jones v. Saxon Mortg., Inc., 537 F.3d 320, 324-25 (4th Cir.1998) ("If the required notice or material disclosures are not delivered, then § 1635(f) provides a [three-year] time limit for the exercise of the right."). A borrower who rescinds "is not liable for any finance or other charge, and any security interest given by [her], including any such interest arising by operation of law, becomes void" upon a rescission. 15 U.S.C. § 1635(b); see also Saxon Mortg., 537 F.3d at 324-25 (providing an extensive discussion of the statutory rescission procedures under TILA).
B. Invoking § 1635(f)'s Right of Rescission
In this appeal, we are presented with two related questions: specifically, whether Ms. Rosenfield properly exercised her statutory right to rescind within § 1635(f)'s three-year statutory time bar either by (1) sending written notice to HSBC
Before reaching the substance of Ms. Rosenfield's argument, it is helpful to examine Beach v. Ocwen Federal Bank, the Supreme Court's most recent decision on a consumer's right to rescission under TILA. In Beach, the petitioners were financial consumers who secured an $85,000 loan on their home. 523 U.S. at 413, 118 S.Ct. 1408. They refinanced their home shortly thereafter, and, a few years later, stopped making their mortgage payments. Id. The bank began foreclosure proceedings. Id. The petitioners "acknowledged their default," but raised as an "affirmative defense" what amounted to an assertion of the TILA rescission right — viz., they "alleg[ed] that the bank's failure to make disclosures required by the Act gave them rights under  § 1635 ... to rescind the mortgage agreement and to reduce the bank's claim by the amount of their actual and statutory damages." Id. at 413-14, 118 S.Ct. 1408 (footnote omitted). As it happens, however, the Beach petitioners asserted the defense more than three years after closing on the loan. Id. at 415, 118 S.Ct. 1408. Nevertheless, they argued that the time restriction in § 1635(f) was, in effect, a statute of limitations, and construed it as limiting their right to "institute an independent proceeding for rescission under § 1635," but not as barring their "right of rescission [asserted] as a `defense in recoupment' to a collection action." Id.
Relying on the plain language of § 1635(f), the Court rejected this argument and held that this provision "govern[s] the life of the underlying right [of rescission]," and is therefore not a statute of limitations, but one of repose:
Id. at 417, 118 S.Ct. 1408 (alteration in original) (quoting 15 U.S.C. § 1635(f)); see Doss v. Clearwater Title Co., 551 F.3d 634, 638 (7th Cir.2008) (noting that the Court in Beach "characterized § 1635(f) as a statute of repose, holding there that borrowers had no right to assert a right to rescind as an affirmative defense in an action to collect brought by a lender more than three years after the consummation of the transaction"). In other words, the Court held that § 1635(f) completely extinguishes the right of rescission under TILA at the end of the specified three-year period. See Beach, 523 U.S. at 419, 118 S.Ct. 1408 ("Congress's manifest intent ... [was] that the Act permits no federal right to rescind, defensively or otherwise, after the 3-year period of § 1635(f) has run.").
And the Court suggested that there was good reason to adopt this reading of the statutory scheme: a perpetual statutory right of rescission could work to "cloud a bank's title on foreclosure" and "Congress may well have chosen to circumscribe that risk" while — consistent with TILA's remedial goals — "permitting recoupment damages regardless of the date a collection action may be brought." Id. at 418-19, 118 S.Ct. 1408 (emphasis added); see Saxon Mortg., 537 F.3d at 327 ("[A]llowing tolling under § 1635(f) and permitting a party to rescind after a foreclosure sale would create uncertainty in any chain of title of real estate purchased from a foreclosure sale."). With this understanding of
Ms. Rosenfield first argues — and avers in her complaint — that she sent a written notice of rescission to HSBC on September 9, 2008. She contends that HSBC never responded. Ms. Rosenfield reasons that this is all she was required to do under § 1635(a), (f), and Regulation Z, in order to invoke her right to rescission under TILA. See Aplt. Opening Br. at 13 (noting that she "exercised her statutory right to rescind by notifying the creditor of her intent to rescind in writing within the prescribed time limit" (capitalization altered)). HSBC responds that the Supreme Court has definitively foreclosed — through the implicit instruction of Beach — any argument that a consumer may exercise her right to rescind in this way. HSBC contends that when a borrower gives written notice before the three-year time bar lapses and the creditor does not respond, the borrower must then file her own action for rescission within the three years.
More specifically, we believe that Beach is dispositive of the instant question. There, as discussed, the Supreme Court held that § 1635(f) "govern[s] the life of the underlying right [of rescission under TILA]." 523 U.S. at 417, 118 S.Ct. 1408. Because of "Congress's manifest intent ... that the Act permit no federal right to rescind, defensively or otherwise, after the 3-year period of § 1635(f) has run," id. at 419, 118 S.Ct. 1408 (emphasis added), we must hold that the mere invocation of the right to rescission via a written letter, without more, is not enough to preserve a court's ability to effectuate (or recognize) a rescission claim after the three-year period has run.
Ms. Rosenfield's position is not consistent with the effect of a strict repose period — which Beach held that § 1635(f) establishes in this context — one that operates to completely extinguish the right being claimed after it lapses. Cf., e.g., Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 363, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991) ("The 3-year limit is a period of repose inconsistent with tolling."), superseded by statute as stated in Murphy v. FDIC, 208 F.3d 959, 965 n. 4 (11th Cir.2000); McCann v. Hy-Vee, Inc., 663 F.3d 926, 930 (7th Cir. 2011) (noting that a statute of repose "serves as an unyielding and absolute barrier to a cause of action, regardless of whether that cause has accrued" (quoting Klein v. DePuy, Inc., 506 F.3d 553, 557 (7th Cir.2007)) (internal quotation marks omitted)); McDonald v. Sun Oil Co., 548 F.3d 774, 779-80 (9th Cir.2008) ("A statute of repose ... can bar a suit even before the cause of action could have accrued, or, for that matter, retroactively after the cause of action has accrued.... It is not
Importantly, consistent with Beach, TILA establishes a right of action that is generally redressable only when a party seeks recognition of it by invoking the power of the courts.
Moreover, an examination of the structure of the right conferred in this case — that is, rescission — supports our conclusion. Rescission in its most basic form is an equitable remedy designed to return the parties to the status quo prevailing before the existence of an underlying contract. See Saxon Mortg., 537 F.3d at 326 ("The effect of a rescission of an agreement is to put the parties back in the same position they were in prior to the making of the contract."); see also Nichols v. Greenpoint Mortg. Funding, Inc., No. SA CV 08-750 DOC (MLGx), 2008 WL 3891126, at *5 (C.D.Cal. Aug. 19, 2008) (noting that rescission "is a means to return
TILA seeks "to assure a meaningful disclosure of credit terms" and to "protect the consumer against inaccurate and unfair credit billing and credit card practices." 15 U.S.C. § 1601(a). It provides a federally recognized basis for a party to rescind her loan agreement where she has not been provided the required statutory disclosures. Thus, we ascertain no basis for concluding that the TILA rescission remedy differs in any material respect from the general form of rescission available in the aforementioned, analogous contexts. See Saxon Mortg., 537 F.3d at 326-27 (discussing the general "effect of a [common law] rescission" in assessing a TILA claim). And to effectuate a rescission in the general remedial sense means that "each party [must] return to the other what he has received from the other by way of contractual performance." Andrew Kull, Rescission and Restitution, 61 Bus. Law. 569, 577 (2006); see Watkins v. SunTrust Mortg., Inc., 663 F.3d 232, 238 (4th Cir.2011) (noting that the effect of a TILA rescission, "as with any rescission, ... is to return the parties to the same position they were in before the rescinded transaction was consummated" (emphasis added)); see also In re SeaQuest Diving, LP, 579 F.3d 411, 419 (5th Cir.2009) ("The purpose of rescission is to place the parties in the position that they would have occupied if no such contract had ever been made.").
The primary justification of rescission, however, is "remedial economy," not, for instance, the compensatory goal of a damages award. See Kull, supra, at 577. Consequently, it is not an appropriate remedy in circumstances where its application would lead to prohibitively difficult (or impossible) enforcement. See id. ("[Rescission] is the intuitive choice of remedy in those cases, relatively few in number, in which ... it is easier, or at least no more costly, to unwind the contractual exchange than to enforce it."); see also Saxon Mortg., 537 F.3d at 326 ("Rescission ... would have returned the parties to their pre-contractual state."); Am. Mortg. Network, Inc. v. Shelton, 486 F.3d 815, 820 (4th Cir.2007) ("The equitable goal of rescission
With this understanding of the nature of the rescission remedy, we conclude that Ms. Rosenfield's reading of § 1635(f) is not congruent with it. It may be, strictly speaking, that "by notifying the creditor, in accordance with [Regulation Z]," 15 U.S.C. § 1635(a), a borrower may properly alert the creditor of her intent to rescind the underlying transaction. However, as Ms. Rosenfield would have it, transmission of such notice would be all that is required to exercise the right of rescission. The problem with this argument is that, in a significant number of instances, the remedial economy of the remedy would be jeopardized. See Kull, supra, at 577. Specifically, it is self-evident that when a borrower who has provided notice to a creditor decides later — at some unknown, and perhaps distant, point in the future — to effectuate the rescission right through judicial process, the underlying circumstances in no small number of cases are likely to have changed significantly. Just to provide one example: new actors may have come onto the field post-transaction and obtained some interest in the loan or the underlying property. Cf. Beach, 523 U.S. at 418-19, 118 S.Ct. 1408 (recognizing that TILA's statute of repose acts to limit the clouding of a property's title). And, as a consequence of this reality, enforcement would likely be costly and difficult. In short, such an outcome is not consistent with the general goal and application of a rescission remedy.
Ms. Rosenfield responds that the plain text of TILA and Regulation Z provides all that is necessary for her in this case. More specifically, as she points out, TILA provides that the borrower must "notify the creditor, in accordance with regulations of the Bureau, of [her] intention to [rescind]." 15 U.S.C. § 1635(a). Concomitantly, Regulation Z states, in pertinent part, that "[t]o exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication." 12 C.F.R. § 226.23(a)(2). According to Ms. Rosenfield, neither TILA nor Regulation Z appears to explicitly require the consumer to take any other action to exercise the right to rescind. We do not, however, read these provisions as establishing that notice is a sufficient condition for the exercise of the TILA rescission right. Read plainly, see Beach, 523 U.S. at 416, 118 S.Ct. 1408 ("[I]n this instance, the answer is apparent from the plain language of § 1635(f)."); see also United States v. Lamirand, 669 F.3d 1091, 1094 (10th Cir.2012) ("[W]e begin with the text of [the statute]."); Copar Pumice Co. v. Tidwell, 603 F.3d 780, 794 (10th Cir.2010) (suggesting that deference must be given to an agency's interpretation of a regulation, unless the plain language counsels otherwise), these provisions suggest only that the giving of notice is a necessary predicate act to the ultimate exercise of the right, see 12 C.F.R. § 226.23(a)(2) (suggesting that "the consumer shall notify the creditor of the rescission" in order to "exercise the right to rescind") — not that it is sufficient for such exercise.
In that vein, we cannot ignore the mandatory language of § 1635(f), which pertinently provides that the "obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon ... sale of the property." 15 U.S.C. § 1635(f) (emphasis added). When the mandatory directive of that language is understood in the light of the fundamental concerns of the statute, as explained by the Court in Beach, it is clear that we cannot endorse Ms. Rosenfield's reading of the statutory scheme. Contrary to the statute's concerns, as expressed in its language, Ms. Rosenfield's reading would allow the right of rescission to operate broadly to "cloud a bank's title on foreclosure," 523 U.S. at 418-19, 118 S.Ct. 1408, and, relatedly, would permit the time period for solidifying the legal relationship between lenders and borrowers to be effectively enlarged, thus "upset[ting] the economic best interests of the public as a whole,"
As the Beach Court suggested, a rescission has the capacity to negatively affect
While TILA must be construed liberally in favor of the consumer, see Littlefield, 498 F.2d at 1136, ultimately, we cannot accept Ms. Rosenfield's view of the statute. And we are not alone in our holding. See, e.g., McOmie-Gray v. Bank of Am., 667 F.3d 1325, 1328 (9th Cir.2012) ("[U]nder the case law of this court and the Supreme Court, 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."); Williams v. Wells Fargo Home Mortg., Inc., 410 Fed.Appx. 495, 498-99 (3d Cir.2011) ("It may be that an obligor may invoke the right to rescission by mere notice. Mere invocation without
Accordingly, we agree with the district court's decision that notice, by itself, is not sufficient to exercise (or preserve) a consumer's right of rescission under TILA. The commencement of a lawsuit within the three-year TILA repose period was required. Because it is undisputed that Ms. Rosenfield filed the instant lawsuit after the three-year repose period expired, the district court correctly dismissed her complaint. Ms. Rosenfield was not entitled to the effectuation of a rescission remedy.
Assertion of a Defense in the Rule 120 Proceeding
Ms. Rosenfield also argues that, even if the rescission right is extinguished if one does not invoke the power of the courts to effectuate it within the three-year repose period, she sought to enforce and thereby properly preserved the right when she asserted a defense of rescission in the Colorado Rule 120 proceeding before the three-year period expired. As she sees it, "if [she] had prevailed in that action, she would have obtained a judicial determination of the effectiveness of the rescission, and HSBC would have been unable to proceed with the foreclosure." Aplt. Opening Br. at 24. The district court rejected this argument, finding that asserting a defense in a Colorado Rule 120 foreclosure proceeding is "[not] the equivalent of commencing suit seeking a declaration
As a threshold matter, Ms. Rosenfield did not allege in her complaint that she had raised a defense of rescission in the Rule 120 proceeding. Nor did she reference in her complaint any documents used at this proceeding that would evidence her assertion of the defense. This presents a significant barrier to consideration of her Rule 120 allegations in the context of a motion to dismiss. See, e.g., Alexander v. Oklahoma, 382 F.3d 1206, 1214 (10th Cir. 2004) (noting that "[w]here a party has moved to dismiss under Rule 12(b)(6) for failure to state a claim ... and matters outside of the pleadings have been presented to the court for consideration, the court must either exclude the material or treat the motion as one for summary judgment" (quoting Nichols v. United States, 796 F.2d 361, 364 (10th Cir.1986)) (internal quotation marks omitted)); cf. Smith, 561 F.3d at 1098 ("In evaluating a Rule 12(b)(6) motion to dismiss, courts may consider not only the complaint itself, but also attached exhibits and documents incorporated into the complaint by reference...." (citation omitted)); Archuleta v. Wagner, 523 F.3d 1278, 1281 (10th Cir.2008) (noting that, on a motion to dismiss, "[t]he court... is `limited to assessing the legal sufficiency of the allegations contained within the four corners of the complaint'" (quoting Jojola v. Chavez, 55 F.3d 488, 494 (10th Cir.1995))).
Ms. Rosenfield has requested that she be given an opportunity to amend if we find that her allegations were not properly presented, but nonetheless legally sufficient. And she made a similar request before the district court. However, despite the discretionary policy on freely permitting leave to amend, see Fed.R.Civ.P. 15(a)(2) ("The court should freely give leave when justice so requires."), a dismissal with prejudice is appropriate "where [the] complaint fails to state a claim ... and granting leave to amend would be futile," Brereton v. Bountiful City Corp., 434 F.3d 1213, 1219 (10th Cir. 2006); see Anderson v. Suiters, 499 F.3d 1228, 1238 (10th Cir.2007) ("A proposed amendment is futile if the complaint, as amended, would be subject to dismissal." (quoting Lind v. Aetna Health, Inc., 466 F.3d 1195, 1199 (10th Cir.2006)) (internal quotation marks omitted)).
While at first blush it might appear that the district court directly addressed Ms. Rosenfield's Rule 120 argument as if it had been properly presented, after carefully reviewing the court's order, we conclude that the district court's examination of the merits of her Rule 120 argument may be reasonably viewed as a predicate to its determination concerning the futility vel non of her motion to amend. More specifically, having assessed the merits of her Rule 120 argument, the district court refused to permit an amendment to the complaint "in order to rescue ... [Ms. Rosenfield] from the untimeliness of the claims as actually pled." Aplt.App. at 66-67 (emphasis added).
In other words, the court's rejection of Ms. Rosenfield's Rule 120 argument may be reasonably characterized as a determination that she should not be permitted to amend her complaint in order to plead an allegation that her assertion of a rescission defense in the Rule 120 proceeding constituted an exercise of her TILA rescission rights. This is because such an allegation would have been of no legal moment in curing the deficiency of her complaint, and thus an amendment would have been futile. See id. at 67 n. 6 ("Because the Court finds that the Plaintiff's claims are subject to dismissal as untimely, not as a result of some factual pleading deficiency, the Court denies the request for leave to replead."). We agree that amendment would be futile,
We have no basis to conclude that Rule 120 proceedings contemplate the recognition of a TILA rescission defense. Instead, "the Rule 120 hearing is designed to address, in summary fashion, issues related specifically to the existence of a default." Plymouth Capital Co. v. Dist. Court of Elbert Cnty., 955 P.2d 1014, 1016 (Colo.1998) (en banc) (emphasis added); see Dean v. JP Morgan Chase Bank, NA, No. 10-cv-00539-PAB-MJW, 2011 WL 782727, at *2 (D.Colo. Feb. 28, 2011) (noting that Rule 120 proceedings are "limited [in] scope" and "non-adversarial"); Lanier v. Sylvester, No. 08-cv-00386-CMA-MEH, 2008 WL 4830797, at *3 (D.Colo. Nov. 4, 2008) ("Rule 120 limits the scope of the hearing to issues regarding whether a default has occurred, making it permissible for the judge to refuse to hear matters outside of that scope."); 2 Colo. Prac. Series § 68.16 (5th ed. 2011) (noting that the Rule 120 court may pertinently consider, inter alia, "the existence of a default, [and] the existence of other facts and circumstances authorizing, under the terms of the deed of trust described in the Motion [for a foreclosure], the exercise of the power of sale contained therein" (footnotes omitted)).
The Rule 120 court is empowered, "[i]n making this determination," to consider "all relevant evidence," Premier Farm Credit, PCA v. W-Cattle, LLC, 155 P.3d 504, 512 (Colo.App.2006) (quoting Plymouth Capital, 955 P.2d at 1017) (internal quotation marks omitted), but a "Rule 120 hearing is not the proper forum for addressing the various and complex issues that can arise in some foreclosures," inasmuch as this "would defeat the purpose of the streamlined public trustee foreclosure and afford little advantage over a judicial foreclosure," Plymouth Capital, 955 P.2d at 1017. It is a "non-judicial foreclosure" hearing, the findings of which are not entitled to preclusive effect. Id. at 1016; see also Colo. R. Civ. P. 120(d) ("The granting of any such motion shall be without prejudice to the right of any person aggrieved to seek injunctive or other relief in any court of competent jurisdiction, and the denial of any such motion shall be without prejudice to any right or remedy of the moving party."). These proceedings, thus, do not appear to contemplate any adjudication of a TILA rescission claim. For that reason, we agree with the district court that Ms. Rosenfield would have gained no legal benefit from a proposed amendment averring her proper assertion of a rescission defense in the Rule 120 proceeding. In other words, amendment would have been futile.
For the foregoing reasons, we
These arguments have some superficial appeal, but we are constrained by the Beach Court's defining of the parameters of rescission under TILA. Specifically, while TILA rescission accomplishes, in the same practical, remedial sense, what is accomplished by common-law rescission, the Beach Court has framed the federal rescission right more narrowly to be congruent with its vision of repose under TILA. In that regard, as we read Beach, the Court conceived of repose under TILA as working to prevent the rescission right from acting to unduly "cloud a bank's title on foreclosure." 523 U.S. at 418-19, 118 S.Ct. 1408. It naturally follows that part and parcel of the Court's vision of repose was the manner in which a rescission claim must be asserted during the repose period — that is, by invoking the power of the courts through litigation. See Beach, 523 U.S. at 415-16, 118 S.Ct. 1408 ("The `ultimate question' is whether Congress intended that `the right shall be enforceable in any event after the prescribed time[.]'") (emphasis added) (quoting Midstate Horticultural Co. v. Penn. R.R., 320 U.S. 356, 360, 64 S.Ct. 128, 88 L.Ed. 96 (1943)). Were this not so, the rescission right could conflict with the Court's conception of repose under TILA, in that it would effectively create commercial uncertainty and enlarge the period before the relationship between borrowers and lenders is solidified. See also infra note 11. Thus, the fact that rescission may be exercised under other state-law statutes of repose within their specified time periods without use of the courts is irrelevant to the question of what is required to exercise the rescission right within the repose period of TILA.