Last week, the U.S. Supreme Court heard argument in an appeal from the U.S. Court of Appeals for the Eighth Circuit that involves an interpretation of a provision under the Truth-in-Lending Act that has caused a split among the lower courts. The Supreme Court has to determine whether a borrower exercises his right to rescind a transaction in satisfaction of the requirements of Section 1635 of TILA by “notifying the creditor” in writing within three years of the consummation of the transaction (as the Third, Fourth, and Eleventh Circuits have held) or by filing a lawsuit within three years of the consummation of the transaction (as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held).
To the extent that the justices’ questions can be interpreted to reveal their positions on the issues, the questioning at oral argument suggests that the lender’s interpretation of the statute – that a borrower must file a rescission lawsuit within three years – is not endorsed by the Supreme Court. One Supreme Court watcher noted: “If we want to assume that [the lender’s counsel] in fact is not Houdini, then we have to find it pretty hard to think he will get past the blizzard of Justices who found his statutory reading so unacceptable. I would mark this down as one of the easiest opinions of the November argument session.”
Both the audio and transcript of the hearing are available on the Supreme Court’s website. A decision is expected early next summer, and we will provide analysis of the ruling when it is handed down.