ÿWPCØ/ ŸõáÏÅŒ;¥lp<„(®¥ÿ`)Œ¤;ßµéãmÔå6˜yþrch½ºô`ˆ¶bQì2âT{N7æ©ñõ®Í›v|XW¡„PÊïàŒ) ¨l åšYæµ(;KCzBãœßíÙµÍ4å{Ȫh×H6ˆDâãba<̦£žkx† I"õMê:mBWYýÐËBìé…ÙŽ® CäÐ2²Ëö«]¬“a‡ìÞ%nÈ2r-BˆB¸“…¢î'–ò¯$§„£6ì>€[üB³¾ÝLußrm+ýO\ô_¤6–4s C œ•ÚªN„w ”å¢tîÚ¡ïY6Z†U)îñÅÓAº‚ö_fõpÍߨ[~ñZý•Î'ÿeKóºb½»™½¢Ç]mg8?÷85©¨‰´Y„žEÚõ£7 Žð’ƒ,²Êªæòc@¢‡üìzª®èê~TÝ; þ>‚ÆÉÿR×Uƒ=Dt…l>s=Ùyòúо£}yß1h‚DËèdÓ =a¶s‰ÈU&ä|Õöprxe+0o‡QÀ"Íg€âhëÒ—@"«@ÞýïµPrŽúÑgÛžœ!zEkÊêÙ,¡-ÜÅfÇ •¹¢¾£ìCW®gb¹Ûn{?#ÁrUN3 % 0G‡U:Î 0 D 0 ¨LnTôNH U8J nT‚ ^ Ö wâ 4æ ú  N UF ES mU fl Nn ;p N« a­ NÁ ñà ^´UBUTTs©Š5¦^Û"^9#—#b¯# B·#U>Ô#Ô#Ô#¸$ïÊ(ë¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*¹*4¤-˜HP LaserJet 5/5M - StandardÈÈ,,,,ÈÈ0vÖr Z‹6Times New Roman RegularX($¡¡Ô€ Xœ·XXXÔ<þ6X9`("Courier NewTT(#Ã$òòÚ  Ú0Ú  Úóó(F:2¤-$¤¤Ý ƒ!ÝÔ€ XALXXXÔÝ  ÝÓ  Óà  àÓÓòòÚ  Ú0Ú  Úóó«<þ6X9`("Courier NewTTXXxþ6X@ÉDQX@<þ6X9`(CourierTTXXwþ6X@ÉüQX@<4šÛ 9Z+‹ Courier New «<þ6X9`("Courier NewTTXXxþ6X@ÉDQX@<þ6X9`(CourierTTXXwþ6X@ÉüQX@°¡Ï2s 6xª26X?,}›backup3|x< ° 9Z+‹.Courier New RegularÿU‹ÿÀÀÀøÀ 1Ñ#€Xÿÿd#ÑØØTABLE A çÝ ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_ÔThis€statutory€penalty€is€unavailable€for€certain€violationsÐ ° Ðof€more€minor€requirements€of€Ô_ÔTILAÔ_Ô€Chapter€2,€although€actualÐ †Ö Ðdamages€and€attorney's€fees€are€still€available€even€for€violationsÐ \¬ Ðof€these€requirements.€€òòSeeóó€15€U.S.C.€ðð€1640(a).€€The€language€ofÐ 2‚ Ðthe€Act€allows€a€statutory€penalty€to€be€assessed€for€a€creditor'sÐ X Ðfailure€to€take€adequate€steps€to€respond,€within€twenty€days,€toÐ Þ. Ða€debtor's€rightful€notice€of€rescission.€€€€€€€L:\JUDGES\Boudin\TEMPLATE\OPINIONS\ALDRICH.WPT<þ6X9`(*Courier 12pt10cpi KÝ ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_ÔAfter€the€creditor€has€carried€out€these€obligations,€theÐ ° Ðdebtor€has€her€own€obligations.€€"Upon€performance€of€theÐ †Ö  Ðcreditor's€obligations€under€this€section,€the€[debtor]€shallÐ ° Ðtender€the€property€to€the€creditor€.€.€.€."€€15€U.S.C.€ðð€1635.€€AsÐ †Ö Ðwe€noted€in€òòLargeóó€v.€òòÔ_ÔConsecoÔ_Ô€Fin.€Servicing€Corp.óó,€292€F.3d€49,€55„Ð \¬ Ð56€(1st€Cir.€2002),€Ô_ÔTILAÔ_Ô€alters€common€law€rescission€by€forcingÐ 2‚ Ðthe€creditor€to€tender€before€the€debtor,€although€the€court€hasÐ X Ðthe€power€under€section€1635(b)€to€change€these€procedures€whereÐ Þ. Ðappropriate.€€The€creditor€cannot€use€section€1640€to€obtainÐ ´  Ðdamages€in€instances€where€the€debtor€fails€to€tender,€becauseÐ Š Ú Ðsection€1640€only€imposes€liability€on€creditors.Ð ` ° Ðà  àIn€òòLargeóó,€we€held€that€rescission€of€a€mortgage€governed€byÐ 6 †  ÐÔ_ÔTILAÔ_Ô€does€not€automatically€occur€at€the€time€a€debtor€sends€theÐ  \  Ðcreditor€a€notice€of€rescission.€€òòSeeóó€òòid.óó€at€54„56.€€RescissionÐ â 2  Ðonly€occurs€when€the€parties€agree€to€rescind€or€when€a€court€(orÐ ¸  Ðarbitrator)€orders€the€remedy.€€òòSeeóó€òòid.óó€€òòLargeóó€is€not€in€conflictÐ ŽÞ  Ðwith€our€holding€here:€rescission€is€not€automatic€when€a€notice€ofÐ d´  Ðrescission€is€sent,€but€a€creditor€can€still€be€held€liable€forÐ :Š  Ðwrongfully€refusing€to€rescind€when€asked€to€do€so€by€a€debtor.€ iÝ ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú7Ú  ÚóóÝ  ÝÔ_ÔWashington€Mutual€was€not€the€Ô_ÔBelinisÔ_Ô'€initial€creditor,€butÐ ° Ðrather€an€assignee€of€their€initial€creditor.€€òòSeeóó€15€U.S.C.€ðð€1641€Ð †Ö Ð(stating€when€Ô_ÔTILAÔ_Ô€causes€of€action€may€be€brought€againstÐ \¬ Ðassignees).€€Washington€Mutual€does€not€claim€that€its€status€as€anÐ 2‚ Ðassignee€is€relevant€to€the€questions€presented€in€this€appeal. €Ý ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú4Ú  ÚóóÝ  ÝÔ_ÔA€few€lower€courts€have€hinted€that€it€may€be€inappropriateÐ ° Ðto€impose€liability€under€section€1640€for€a€creditor's€failure€toÐ †Ö Ðrespond€to€a€rescission€notice€even€in€certain€circumstances€whereÐ \¬ Ðthe€debtor€is€entitled€to€rescind,€such€as€where€the€creditor€failsÐ 2‚ Ðto€tender€within€twenty€days€but€instead€seeks€immediate€equitableÐ X Ðrelief€before€a€court€to€change€the€order€of€tender€under€sectionÐ Þ. Ð1635(b).€€òòSee,€e.g.óó,€òòAbelóó€v.€òòKnickerbocker€Realty€Co.óó,€846€F.€Supp.Ð ´  Ð445,€450€(D.€Md.€1994).€€€No€such€argument€has€been€raised€in€thisÐ Š Ú Ðcase,€at€least€not€at€this€early€stage.€€€€€ +Ý ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú8Ú  ÚóóÝ  ÝÔ_ÔThe€one€difference€that€we€see€is€that€under€Ô_ÔTILAÔ_Ô,€"[aÐ ° Ðdebtor's]€right€of€rescission€shall€expire€òòthree€yearsóó€after€theÐ †Ö Ðdate€of€consummation€of€the€transaction€or€upon€the€sale€of€theÐ \¬ Ðproperty,€whichever€occurs€first,"€15€U.S.C.€ðð€1635(f)€(emphasisÐ 2‚ Ðadded);€while€under€Massachusetts€law,€"[a€debtor's]€right€ofÐ X Ðrescission€shall€expire€òòfour€yearsóó€after€the€date€of€consummationÐ Þ. Ðof€the€transaction€or€upon€the€sale€of€the€property,€whicheverÐ ´  Ðoccurs€first,"€Mass.€Gen.€Laws€ch.€140D,€ðð€10(f)€(emphasis€added).€Ð Š Ú ÐWashington€Mutual€has€not€argued€to€the€district€court€or€on€appealÐ ` ° Ðthat€the€rescission€claim€in€either€of€the€Ô_ÔBelinisÔ_Ô'€two€actions€wasÐ 6 †  Ðbarred€by€a€statute€of€limitations,€and€it€filed€no€answer€orÐ  \  Ðmotions€at€all€in€response€to€the€Ô_ÔBelinisÔ_Ô'€second€action,€so€anyÐ â 2  Ðsuch€statute€of€limitations€argument€has€been€waived.€L:\JUDGES\Boudin\TEMPLATE\OPINIONS\ALDRICH.WPTL:\JUDGES\Boudin\TEMPLATE\OPINIONS\ALDRICH.WPT ØØ- ù- d´è\( 9Z+&Courier Regular ®Ý ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú5Ú  ÚóóÝ  ÝÔ_ÔThe€Federal€Reserve€uses€the€term€"disclosure"€here,€ratherÐ ° Ðthan€the€broader€term€"requirement,"€but€we€think€this€choice€ofÐ †Ö Ðlanguage€makes€no€difference.€€The€remedial€system€in€exempt€statesÐ \¬ Ðwould€become€hopelessly€confused€if€some€requirements€(those€thatÐ 2‚ Ðconstituted€"disclosures")€were€actionable€under€section€1640,Ð X Ðwhile€others€were€not.€€As€well,€the€purpose€of€preserving€theÐ Þ. Ðfederal€civil€liability€provisions€is€to€ensure€that€"consumersÐ ´  Ðretain€access€to€both€federal€and€state€courts€in€seeking€damagesÐ Š Ú Ðor€civil€penalties€for€violations,€while€creditors€retain€theÐ ` ° Ðdefenses€specified€in€those€sections."€€12€Ô_ÔC.F.R.Ô_Ô€Pt.€226,€Supp.€I.€Ð 6 †  ÐThis€purpose€would€not€be€well€served€by€a€rule€that€preservedÐ  \  Ðfederal€court€jurisdiction€for€only€some€section€1640€damagesÐ â 2  Ðactions.€€€ åÝ ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú9Ú  ÚóóÝ  ÝÔ_ÔIn€the€event€that€anything€in€this€case€should€end€up€turningÐ ° Ðon€whether€the€rescission€remedy€is€pursued€as€a€state€or€federalÐ †Ö Ðclaim€„„€or€under€supplemental,€federal€question,€or€diversityÐ \¬ Ðjurisdiction€„„€these€issues€can€be€considered€if€and€when€theyÐ 2‚ Ðarise. áÝ ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú6Ú  ÚóóÝ  ÝÔ_ÔAlthough€we€can€conceive€of€a€situation€where€the€creditorÐ ° Ðmight€be€prejudiced€by€a€letter€of€rescission€that€failed€to€stateÐ †Ö Ðthe€proper€statutory€bases€on€which€the€request€for€rescission€wasÐ \¬ Ðfounded,€Washington€Mutual€has€made€no€such€claim€here.€€Although€Ð 2‚ Ðit€is€free€to€raise€such€a€claim€on€remand,€we€are€dubious€of€suchÐ X Ðan€argument€where,€as€here,€the€disclosure€and€rescissionÐ Þ. Ðprovisions€of€the€state€and€federal€statutes€appear€to€beÐ ´  Ðidentical. *Ý ƒ¤-$ÝÔ€ XZXXXÔÓ  Óà  àÓÓòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_ÔThe€district€court€did€not€specifically€discuss€the€Ô_ÔBelinisÔ_Ô'Ð ° Ðdamages€claim€based€on€Washington€Mutual's€failure€to€respond€toÐ †Ö Ðthe€Ô_ÔBelinisÔ_Ô'€allegedly€valid€notice€of€rescission,€but€the€claimÐ \¬ Ðwas€adequately€raised€below€both€by€the€complaint€and€by€otherÐ 2‚  Ðfilings.Ý ƒ!ÝÔ€ XZXXXÔÝ  ÝÔ_ÔÑTRY,3Ø'Xà3Ø' Letter 3Ø' Letterÿ3Ø'TÑÑe°ÑÑ ? ÑÙ*ƒ !ÙÔ€X%ÜXX XZÔÔ€°ü(°XX%ÜÔò òÓ  ÓÑ€`žÑÑ€%7+ÑÓ  ÓUnited€States€Court€of€AppealsÔ€„_9„°°ü(ÔÐ ° ÐFor€the€First€Circuitó óÔ€„óL„„„_9ÔÔ€XZX„„óLÔÐ „Ô ÐÓFÓÌÌßA€') °°` dE< ` AßÐ  à ÐÌà  àà ` àà ¸ àà  àà h àÌNos.€04„2532Ð K › Ðà  à04„2533Ð ! q ÐÌà@È È ìàRICHARD€Ô_ÔBELINIÔ_Ô;€THERESA€Ô_ÔLUSCIERÔ_Ô„Ô_ÔBELINIÔ_Ô,ˆÐ Í   ÐÌà@ˆˆìàPlaintiffs,€Appellants,ˆÐ yÉ  ÐÌà@tt)ìàv.ˆÐ %u  ÐÌà@˜ ˜ ìàWASHINGTON€MUTUAL€BANK,€FA,ˆÐ Ñ! ÐÌà@<< ìàDefendant,€Appellee.ˆÐ }Í ÐÌßA€') °°` dE<(` AßÐ )y ÐÌà@` ` ìàAPPEALS€FROM€THE€UNITED€STATES€DISTRICT€COURTˆÐ ^ ÐÓ  ÓFOR€THE€DISTRICT€OF€MASSACHUSETTSÐ ä4 ÐÓGÓÌà@$ $ ìà[Hon.€Michael€A.€Ô_ÔPonsorÔ_Ô,€€òòU.S.€District€Judgeóó]ˆÐ à ÐÌßA€') °°` dE<;` AßÐ <Œ ÐÌà@„„'ìàBeforeˆÐ !q ÐÌÓ  ÓBoudin,€òòChief€Judgeóó,Ð Í ÐLynch€and€Lipez,€òòCircuit€Judgesóó.Ð £ó  ÐÌßA€') °°` dE<N ` AßÐ O Ÿ" ÐÌÓ  ÓÓ  Óà  àòòChristopher€M.€Ô_ÔLefebvreÔ_Ôóó,€with€whom€òòFamily€and€Consumer€LawÐ 4!„$ ÐCenteróó€was€on€brief,€for€appellant.Ð  "Z% Ðà  àòòKevin€C.€Maynardóó,€with€whom€òòÔ_ÔBulkleyÔ_Ô,€Richardson€and€Ô_ÔGelinasÔ_Ô,Ð à"0& ÐÔ_ÔLLPÔ_Ôóó€was€on€brief,€for€appellee.€€Ð ¶#' ÐÌÌÔ*‹ƒ'ddd Xdd Xdd X°(#°(#‹ÔÔ,( dd ÔÔ,( dd ÔÔ,( dd ÔÔ+  ÔÐ 8&ˆ!*8&ˆ! ‹‹ÐÓwÓÐ SIœ&ì!+  Îâ@38517„„‰ Îâ@‰‹‹SÐÌJune€15,€2005Ð r'Â"- ÐÐ RHCH(˜#."  Îâ@38517  Îâ@ ‹‹RÐÐ(œ&ì!/  (ÐÓ  ÓÙ* !ÙÌÌÓ  ÓÌÌÌÌÐ R.¢)5? ÐÑ`žÑâ âÑ8€ZXXdÖdÈ8ÑØØâ âÑ  ÑÔ_ÔÓÓò òÔ‡ XZXXXZÔÑ  ÑÑ8€ZXXdÖXXdÖ8ÑÑ€&ÑÓ*°,X°` ¨ ƒX°œX*ÓÓ=€(Z(XÐXdÐd=Óà ` àòŒòòòóóLYNCH,€òòCircuit€JudgeóŒóóó.€€ó óThis€Truth€in€Lending€Act€(TILA)Ð ° Ðcase€raises€difficult€and€rarely€seen€issues€that€arise€whenÐ xÈ Ðtransactions€regulated€by€a€given€state€„„€here,€Massachusetts€„„Ð $t Ðhave€been€exempted€by€the€Federal€Reserve€from€most€of€the€Act'sÐ Ð  Ðrequirements.€€òòSeeóó€15€U.S.C.€ðð€1633;€òòsee€alsoóó€òòBizieróó€v.€òòGlobe€Fin.€Ð | Ì ÐServs.,€Inc.óó,€654€F.2d€1,€2€(1st€Cir.€1981).€€Only€five€states€haveÐ ( x  Ðreceived€such€exemptions.€€òòSeeóó€12€C.F.R.€Pt.€226,€Supp.€I.€€In€theÐ Ô$  Ðend,€however,€this€case€turns€on€a€narrower€issue,€one€of€firstÐ €Ð  Ðimpression€for€this€court€under€TILA.€€The€question€is€whether€TILAÐ ,|  Ðpermits€a€damages€claim€to€be€stated€by€the€debtor€under€15€U.S.C.Ð Ø( Ððð€1640€based€on€the€creditor's€alleged€failure€to€respond€properlyÐ „Ô Ðto€the€debtor's€notice€of€rescission.€€We€hold€that€it€does.€€InÐ 0€ Ðdoing€so,€we€join€the€approach€of€four€other€circuits,€and€we€knowÐ Ü, Ðof€no€circuit€which€has€held€to€the€contrary.€Ð ˆØ Ðà ` àThe€plaintiffs,€Richard€and€Theresa€Belini,€€alleged€thatÐ 4„ Ðthe€defendant,€Washington€Mutual€Bank,€sold€them€a€high„costÐ à0 Ðmortgage€without€making€disclosures€required€by€TILA€and€equivalentÐ ŒÜ  ÐMassachusetts€law.€€They€sued€in€federal€court,€asserting€claimsÐ 8!ˆ" Ðfor€damages€for€failure€to€make€these€disclosures,€for€rescission,Ð ä"4$ Ðand€for€damages€for€Washington€Mutual's€alleged€failure€to€respondÐ $à& Ðproperly€to€their€notice€of€rescission,€under€both€TILA€and€similarÐ <&Œ!( ÐMassachusetts€law.€€The€district€court€held€that€all€of€theÐ è'8#* ÐBelinis'€damages€claims€were€time€barred,€without€discussingÐ ”)ä$, Ðseparately€their€claim€for€Washington€Mutual's€alleged€failure€toÐ @+&. ÐÑ%7+Ñâ %âØØâ %âÑ  Ñrespond€to€their€notice€of€rescission.€€This€left€the€rescissionÐ ° Ðclaim€itself€and€the€question€of€whether€there€was€either€federalÐ \¬ Ðquestion€jurisdiction€or€diversity€jurisdiction.€€The€court€foundÐ X Ðthat€the€amount„in„controversy€requirement€was€not€met,€so€thereÐ ´  Ðwas€no€diversity€jurisdiction,€and€that€there€was€no€federalÐ ` ° Ðquestion€jurisdiction€over€a€claim€for€rescission€(as€opposed€to€aÐ  \  Ðclaim€for€damages)€because€of€the€Massachusetts€exemption€fromÐ ¸  Ðcertain€TILA€requirements.Ð d´  Ðà ` àAlthough€it€is€clear€from€the€Federal€Reserve€regulationsÐ `  Ðthat€a€debtor's€ability€to€bring€a€federal€damages€action€under€15Ð ¼  ÐU.S.C.€ðð€1640€is€preserved€despite€the€Massachusetts€exemption,€òòseeóóÐ h¸ Ð12€C.F.R.€ðð€226.29(b),€it€is€much€murkier,€given€the€currentÐ d Ðdrafting€of€these€regulations,€whether€a€debtor's€right€to€sue€forÐ À Ðrescission€under€federal€law€is€preserved.€€Similarly,€the€questionÐ l¼ Ðof€how€to€measure€the€amount€in€controversy€in€an€action€forÐ h Ðrescission€is€difficult.€€€€Ð Ä Ðà ` àWe€reverse.€€We€find€it€unnecessary€to€resolve€theÐ pÀ  Ðdifficult€question€of€whether€the€federal€court€had€either€federalÐ !l" Ðquestion€jurisdiction€or€diversity€jurisdiction€over€the€rescissionÐ È"$ Ðclaim,€because€we€find€that€the€Belinis€have€a€viable,€non„time„Ð t$Ä& Ðbarred€federal€damages€claim€under€TILA€based€on€the€defendant'sÐ  &p!( Ðalleged€failure€to€respond€properly€to€the€Belinis'€notice€ofÐ Ì'#* Ðrescission.€€This€òòdamagesóó€claim€provides€a€basis€for€federalÐ x)È$, Ðquestion€jurisdiction.€€That€means€that€the€Belinis'€claim€forÐ $+t&. Ðòòrescissionóó,€which€has€virtually€identical€elements€under€TILA€andÐ ° ÐMassachusetts€law,€is€within€the€court's€supplemental€jurisdiction.€Ð \¬ ÐThis€case€does€not€fall€into€a€category€that€would€render€theÐ X Ðdistrict€court's€exercise€of€supplemental€jurisdictionÐ ´  Ðdiscretionary.€€Ð ` ° ÐÓ  Óò òI.ó óà @` àÐ  \  ÐÓÆÓà ` àWe€begin€with€a€brief€overview€of€the€relevant€provisionsÐ Ô$  Ðof€TILA,€which€was€passed€in€1968.€€The€purpose€of€TILA€is€toÐ €Ð  Ð"assure€a€meaningful€disclosure€of€credit€terms€so€that€theÐ ,|  Ðconsumer€will€be€able€to€compare€more€readily€the€various€creditÐ Ø( Ðterms€available€to€him€and€avoid€the€uninformed€use€of€credit,€andÐ „Ô Ðto€protect€the€consumer€against€inaccurate€and€unfair€creditÐ 0€ Ðbilling€and€credit€card€practices."€€15€U.S.C.€ðð€1601(a).€€The€ActÐ Ü, Ðrequires€creditors€to€make€"clear€and€accurate€disclosures€of€termsÐ ˆØ Ðdealing€with€things€like€finance€charges,€annual€percentage€ratesÐ 4„ Ðof€interest,€and€the€borrower's€rights."€€òòBeachóó€v.€òòOcwen€Fed.€Bankóó,Ð à0 Ð523€U.S.€410,€412€(1998).€€Ð ŒÜ  Ðà ` àIf€the€creditor€fails€to€do€so,€it€can€be€held€liable€forÐ 8!ˆ" Ðcriminal€penalties,€òòseeóó€15€U.S.C.€ðð€1611,€and€a€debtor€can€sue€forÐ ä"4$ Ðdamages€(including€a€statutory€penalty€of€twice€the€financeÐ $à& Ðcharge),€òòseeóó€15€U.S.C.€ðð€1640(a).€€òòBeachóó,€523€U.S.€at€412.€Ð <&Œ!( ÐFurther,€for€certain€loan€transactions€„„€those€involving€securityÐ è'8#* Ðinterests€in€a€debtor's€primary€residence€„„€the€debtor€can€demandÐ ”)ä$, Ðthat€the€creditor€rescind€the€mortgage€if€certain€materialÐ @+&. Ðdisclosures€are€not€made.€€òòSeeóó€15€U.S.C.€ðð€1635(a).€€If€theÐ ° Ðcreditor€does€not€take€steps€to€do€so€within€twenty€days,€theÐ \¬ Ðdebtor€can€bring€suit€in€federal€court€to€enforce€her€right€ofÐ X Ðrescission.€€òòId.óó€ðð€1635(b).€€Several€agencies€have€administrativeÐ ´  Ðauthority€under€TILA,€but€the€relevant€implementing€agency€for€ourÐ ` ° Ðpurposes€is€the€Federal€Reserve,€which€has€promulgated€a€set€ofÐ  \  Ðregulations€("Regulation€Z")€in€this€area.€€òòSeeóó€12€C.F.R.€Pt.€226.€Ð ¸  Ðà ` àThe€Federal€Reserve€can€allow€exemptions€from€someÐ d´  Ðfederal€requirements€if€it€finds€that€a€state€has€adequatelyÐ `  Ðregulated€in€the€area:Ð ¼  ÐÓÓà8 ` àThe€[Federal€Reserve]€shall€by€regulationÐ h¸ Ðexempt€from€the€requirements€of€this€part€anyÐ >Ž Ðclass€of€credit€transactions€within€any€StateÐ d Ðif€it€determines€that€under€the€law€of€thatÐ ê: ÐState€that€class€of€transactions€is€subject€toÐ À Ðrequirements€substantially€similar€to€thoseÐ –æ Ðimposed€under€this€part,€and€that€there€isÐ l¼ Ðadequate€provision€for€enforcement.€Ó;)ÓÐB’` x` x Ð15€U.S.C.€ðð€1633.€€The€Federal€Reserve€has€granted€exemptions€underÐ î> Ðsection€1633€to€certain€classes€of€credit€transactions€in€Maine,Ð šê ÐMassachusetts,€Connecticut,€Wyoming,€and€Oklahoma.€€12€C.F.R.€Pt.Ð F –! Ð226,€Supp.€I.€€In€these€few€states,€as€to€certain€TILA€requirementsÐ ò!B# Ðthe€federal€provisions€have€no€force€and€creditors€are€subject€toÐ ž#î% Ðstate€requirements€that€are€generally€quite€similar€and€oftenÐ J%š ' Ðidentical€to€the€federal€requirements.€€òòSeeóó€òòIvesóó€v.€òòW.€T.€GrantÐ ö&F") ÐCo.óó,€522€F.2d€749,€755€(2d€Cir.€1975).€€Ð ¢(ò#+ Ðà ` àHowever,€according€to€the€Federal€Reserve's€regulations,Ð N*ž%- Ðthe€exemption's€displacement€of€federal€law€in€favor€of€state€lawÐ ú+J'/ Ðis€not€absolute.€€òòSeeóó€12€C.F.R.€ðð€226.29(b).€€It€is€wellÐ ° Ðestablished€that€debtors€retain€at€least€the€ability€to€fileÐ \¬ Ðfederal€suits€for€damages€in€federal€court€under€15€U.S.C.€ðð€1640,Ð X Ðregardless€of€the€exemption.€€òòSeeóó€òòid.óó;€òòIvesóó,€522€F.2d€at€752„56.€Ð ´  ÐÓ  Óò òII.ó óÐ ` ° ÐÓ70Óà ` àThe€Belinis€reside€in€a€home€in€North€Adams,Ð ( x  ÐMassachusetts,€which€they€have€owned€since€before€the€transactionÐ Ô$  Ðat€issue€here.€€ò òó óOn€December€29,€2000,€plaintiffs€obtained€aÐ €Ð  Ð$102,750€loan€from€a€now€defunct€company,€Foundation€Funding€Group,Ð ,|  ÐInc.,€secured€by€this€home.€€ò òó óDefendant€Washington€Mutual€Bank€is,Ð Ø( Ðaccording€to€the€complaint,€the€assignee€and€current€owner€of€theÐ „Ô Ðmortgage€obtained€by€the€Belinis€from€Foundation€Funding€Group,Ð 0€ ÐInc.€ò òó óÐ Ü, Ðà ` àThe€Belinis€allege€that€they€were€not€provided€withÐ ˆØ Ðvarious€disclosures€prior€to€closing€this€mortgage€transaction,Ð 4„ Ðwhich€are€required€under€both€TILA€and€its€MassachusettsÐ à0 Ðequivalent.€€In€particular,€they€allege€that€the€mortgage€was€aÐ ŒÜ  Ðhigh„cost€mortgage€under€both€TILA€(as€amended€by€the€HomeÐ 8!ˆ" ÐOwnership€Equity€Protection€Act€of€1994€(HOEPA))€and€itsÐ ä"4$ Ðimplementing€regulations,€òòseeóó€15€U.S.C.€ðð€1602(aa);€12€C.F.R.€ððÐ $à& Ð226.32,€as€well€as€the€relevant€Massachusetts€regulations,€òòseeóóÐ <&Œ!( ÐMass.€Regs.€Code€tit.€209,€ðð€32.32(1).€€They€further€allege€thatÐ è'8#* Ðâ âFoundation€Funding€did€not€furnish€the€Belinis€with€all€theÐ ”)ä$, Ðrequired€disclosures€for€such€high„cost€mortgages,€including€theÐ ° Ðfollowing€required€disclosure:€Ð \¬ Ðâ âÓÓà8 ` àYou€are€not€required€to€complete€thisÐ X Ðagreement€merely€because€you€have€receivedÐ Þ. Ðthese€disclosures€or€have€signed€a€loanÐ ´  Ðapplication.€€If€you€obtain€this€loan,€theÐ Š Ú Ðlender€will€have€a€mortgage€on€your€home.€€YouÐ ` ° Ðcould€lose€your€home,€and€any€money€you€haveÐ 6 †  Ðput€into€it,€if€you€do€not€meet€yourÐ  \  Ðobligations€under€the€loan.€€€€€€€€€€€€€€€€ÓÓÐâ 2 ` x` x Ð15€U.S.C.€ðð€1639(a)(1)(A),(B);€12€C.F.R.€ðð€226.32(c)(1);€Mass.Ð ŽÞ  ÐRegs.€Code€tit.€209,€ðð€32.32(3)(a).ò òó óÐ :Š  Ðà ` àThe€Belinis€allege€that€under€both€federal€andÐ æ6 ÐMassachusetts€law,€the€failure€by€Foundation€to€make€the€requiredÐ ’â Ðdisclosures,€which€„„€they€allege€„„€were€"material,"€gave€theÐ >Ž ÐBelinis€the€right€to€rescind€the€mortgage€until€such€time€as€theÐ ê: Ðdisclosures€were€actually€delivered.€€òòSeeóó€15€U.S.C.€ðð€1635(a);Ð –æ ÐMass.€Gen.€Laws€ch.€140D,€ðð€10(a).€€United€States€Code€sectionÐ B’ Ð1635(a)€and€Massachusetts€General€Laws€section€10(a),€which€containÐ î> Ðessentially€identical€language,€provide€that€in€any€consumer€creditÐ šê Ðtransaction€Ð F –! ÐÓÓà8 ` àin€which€a€security€interest€.€.€.€is€or€willÐ ò!B# Ðbe€retained€or€acquired€in€any€property€whichÐ È"$ Ðis€used€as€the€principal€dwelling€of€theÐ ž#î% Ðperson€to€whom€credit€is€extended,€theÐ t$Ä& Ð[debtor]€shall€have€the€right€to€rescind€theÐ J%š ' Ðtransaction€until€midnight€of€the€thirdÐ  &p!( Ðbusiness€day€following€the€consummation€of€theÐ ö&F") Ðtransaction€or€the€delivery€of€the€informationÐ Ì'#* Ðand€rescission€forms€required€under€thisÐ ¢(ò#+ Ðsection€together€with€a€statement€containingÐ x)È$, Ðthe€material€disclosures€required€by€thisÐ N*ž%- Ðsubchapter,€whichever€is€later€.€.€.€.Ó`<ÓÐ$+t&.` x` x Ð15€U.S.C.€ðð€1635(a).à  àÐ ° Ðà ` àOn€May€9,€2003,€counsel€for€the€Belinis€sent€a€letter€toÐ \¬ ÐWashington€Mutual€Bank,€giving€it€notice€that€the€Belinis€wereÐ X Ðasserting€their€right€to€rescind€the€mortgage€transaction.€€ThisÐ ´  Ðrescission€notice€read€in€part:Ð ` ° ÐÓÓà8 ` àPlease€be€advised€that€I€have€been€authorizedÐ  \  Ðby€my€clients€to€rescind€[the€mortgage]Ð â 2  Ðtransaction€and€hereby€exercise€that€rightÐ ¸  Ðpursuant€to€[TILA],€15€U.S.C.€Section€1635€andÐ ŽÞ  ÐRegulation€Z,€[15€C.F.R.]€Section€226.23.Ðd´ ` x` x Ðà8 ` àThe€primary€basis€for€the€rescission€is€thatÐ :Š  ÐMr.€and€Mrs.€Belini€were€not€provided€with€aÐ `  Ðcompleted€copy€of€the€notice€of€their€right€toÐ æ6 Ðrescind€the€above€consumer€credit€transaction,Ð ¼  Ðin€violation€of€15€U.S.C.€Section€1635(a)€andÐ ’â ÐRegulation€Z,€[15€C.F.R.]€Sections€226.17€andÐ h¸ Ð226.23,€and€the€advanced€[HOEPA]€disclosuresÐ >Ž Ðrequired€by€15€U.S.C.€ðð€1639(b)(1).ÓAÓÐd` x` x ÐThe€notice€did€not€mention€any€provisions€of€Massachusetts€stateÐ À Ðlaw.€€Ð l¼ Ðà ` àThe€rescission€notice€from€the€Belinis€concluded€byÐ h Ðinstructing€Washington€Mutual€that€"[p]ursuant€to€Regulation€Z,€youÐ Ä Ðhave€twenty€days€after€receipt€of€this€Notice€of€Rescission€toÐ pÀ  Ðreturn€to€my€clients€all€monies€paid€and€to€take€action€necessaryÐ !l" Ðand€appropriate€to€terminate€the€security€interest."€€TheÐ È"$ Ðrequirement€that€creditors€return€a€debtor's€money€and€take€actionÐ t$Ä& Ðto€terminate€their€security€interest€in€the€debtor's€propertyÐ  &p!( Ðwithin€twenty€days€of€receiving€a€rightful€notice€of€rescission€is,Ð Ì'#* Ðagain,€the€same€under€both€federal€and€Massachusetts€law.€€òòSeeóó€15Ð x)È$, ÐU.S.C.€ðð€1635(b);€Mass.€Gen.€Laws€ch.€140D,€ðð€10(b).€€The€BelinisÐ $+t&. Ðallege€that€the€notice€was€received€by€Washington€Mutual€Bank€(andÐ ° Ðthey€present€a€signed€return€receipt€to€prove€this),€ò òó óand€yet,Ð \¬ ÐWashington€Mutual€did€not€return€the€payments€and€fees€that€theÐ X ÐBelinis€had€paid€on€the€mortgage,€nor€did€it€take€any€steps€toÐ ´  Ðterminate€its€security€interest€on€the€property.€€There€is€noÐ ` ° Ðallegation€concerning€whether€Washington€Mutual€replied€to€theÐ  \  Ðnotice€in€any€way.€Ð ¸  Ðò òÓ  ÓIII.ó óÐ d´  ÐÓJÓà ` àThe€Belinis€sued€Washington€Mutual€Bank€in€MassachusettsÐ ,|  Ðfederal€district€court€on€July€11,€2003,€Civil€Action€No.€03„30175,Ð Ø( Ðand€a€first€amended€complaint€was€filed€on€November€17,€2003.ò ò€€ó óTheÐ „Ô Ðfirst€amended€complaint€alleged€that€the€court€had€federal€questionÐ Lœ Ðjurisdiction,€premised€on€TILA,€andò òó ó€alleged€that€FoundationÐ øH ÐFunding,€at€the€time€the€loan€was€closed,€failed€to€provide€theÐ ¤ô ÐBelinis€with€required€disclosures€under€both€state€and€federal€law.€Ð P  ÐThe€first€amended€complaint€sought€rescission€of€the€loan€underÐ üL Ðboth€federal€and€state€law,€damages€under€both€federal€and€stateÐ ¨ø  Ðlaw,€and€costs€and€attorney's€fees.ò òó óÐ T!¤" Ðà ` àWashington€Mutual€moved€to€dismiss€the€complaint€underÐ #P$ ÐFed.€R.€Civ.€P.€12(b)(1)€and€12(b)(6).€€Washington€Mutual€arguedÐ ¬$ü& Ðfirst€that€the€exemption€granted€by€the€Federal€Reserve€toÐ X&¨!( ÐMassachusetts€from€the€requirements€of€TILA€extended€to€a€claim€forÐ (T#* Ðrescission;€such€a€claim€therefore€had€to€be€brought€underÐ °)%, ÐMassachusetts€state€law€and€not€federal€law.€€Washington€MutualÐ \+¬&. Ðnoted€that,€according€to€the€Federal€Reserve,€the€MassachusettsÐ ° Ðexemption€extended€to€"chapters€2€and€4"€of€TILA,€although€it€didÐ \¬ Ðnot€extend€"to€the€civil€liability€provisions€of€[15€U.S.C.€ðððð]Ð X Ð1640€and€1641."€€12€C.F.R.€ðð€226.29;€12€C.F.R.€Pt.€226,€Supp.€I.€Ð ´  ÐWashington€Mutual€argued€that€since€the€right€to€rescind€was€rootedÐ ` ° Ðin€15€U.S.C.€ðð€1635,€which€was€part€of€Chapter€2€but€not€found€inÐ  \  Ðsections€1640€or€1641€(which,€they€argue,€provided€only€forÐ ¸  Ðdamages),€any€right€to€sue€for€rescission€fell€under€the€exemption.€Ð d´  Ðà ` àAs€to€the€Belinis'€suit€for€damages€under€TILA,€òòseeóó€15Ð `  ÐU.S.C.€ðð€1640,€Washington€Mutual€conceded€that€the€plain€languageÐ ¼  Ðof€the€Federal€Reserve's€regulation€allowed€such€an€action€to€beÐ h¸ Ðbrought€in€federal€court€under€section€1640€despite€theÐ d ÐMassachusetts€exemption,€òòseeóó€12€C.F.R.€ðð€226.29(b),€and€WashingtonÐ À ÐMutual€did€not€challenge€this€regulation.€€However,€WashingtonÐ l¼ ÐMutual€contended€that€any€action€under€section€1640€was€time„Ð h Ðbarred,€because€the€section€contained€a€one„year€statute€ofÐ Ä Ðlimitations,€òòseeóó€15€U.S.C.€ðð€1640(e),€and€suit€was€brought€moreÐ pÀ  Ðthan€one€year€after€the€closing€of€the€loan,€when€the€requiredÐ !l" Ðdisclosures€were€allegedly€not€furnished€to€the€Belinis.€€Since€theÐ È"$ Ðonly€federal€claim€in€the€case€was€time€barred,€Washington€MutualÐ t$Ä& Ðargued,€the€court€should€dismiss€the€state€law€rescission€andÐ  &p!( Ðdamages€claims.€€Finally,€Washington€Mutual€argued€that€theÐ Ì'#* Ðâ âcomplaint€should€be€dismissed€as€well€for€a€wholly€independentÐ x)È$, Ðreason:€service€was€not€made€upon€Washington€Mutual€within€120€daysÐ ° Ðof€the€filing€of€the€action,€as€required€by€Fed.€R.€Civ.€P.€4(m).€Ð \¬ Ðâ âà ` àThe€Belinis€argued€in€opposition€to€this€motion€that€theÐ X ÐFederal€Reserve€regulations€in€effect€interpreted€TILA's€exemptionÐ ´  Ðprovision,€15€U.S.C.€ðð€1633,€to€say€that€any€federal€private€rightÐ ` ° Ðof€action,€whether€for€damages€òòor€rescissionóó,€was€preserved€fromÐ  \  Ðthe€exemption.€€The€exemption€in€the€Belinis'€view€extended€only€toÐ ¸  Ðsubstantive€requirements€and€public,€agency„based€enforcement,€butÐ d´  Ðnot€to€the€jurisdiction€of€the€federal€court.€€The€Belinis€arguedÐ `  Ðas€well€that€the€right€to€sue€to€enforce€the€right€of€rescissionÐ ¼  Ðwas€properly€located€under€section€1640€(which€was€expresslyÐ h¸ Ðpreserved€from€the€exemption),€and€not€section€1635€(which€wasÐ d Ðnot).€€On€the€damages€claim,€the€Belinis€argued€that€WashingtonÐ À ÐMutual€misunderstood€the€nature€of€their€claim:€they€were€suing€forÐ l¼ Ðdamages€not€based€on€the€initial€failure€to€make€the€requiredÐ h Ðdisclosures€(although€this€also€violated€the€statute),€but€ratherÐ Ä Ðfor€Washington€Mutual's€improper€failure€to€take€the€required€stepsÐ pÀ  Ðto€return€the€Belinis'€money€and€void€their€security€interest€uponÐ !l" Ðreceipt€of€their€rescission€notice.€€The€latter€event€occurredÐ È"$ Ðwithin€one€year€of€the€filing€of€the€complaint.Ð t$Ä& Ðà ` àIn€addition€to€filing€an€opposition,€the€Belinis€took€twoÐ  &p!( Ðprophylactic€steps€in€response€to€Washington€Mutual's€motion€toÐ Ì'#* Ðdismiss.€€First,€they€moved€to€file€a€second€amended€complaint:Ð x)È$, Ðthis€second€amended€complaint€differed€from€the€first€amendedÐ $+t&. Ðcomplaint€chiefly€in€that€it€alleged€diversity€as€an€alternateÐ ° Ðbasis€for€jurisdiction,€should€the€court€find€no€basis€for€federalÐ \¬ Ðquestion€jurisdiction.€€The€Belinis€alleged€that€the€amount€inÐ X Ðcontroversy€requirement€was€met€because€the€face€value€of€theÐ ´  Ðmortgage€that€they€sought€to€rescind€was€$102,750,€which€exceededÐ ` ° Ð$75,000.€€Second,€the€Belinis€on€May€4,€2004,€filed€an€altogetherÐ  \  Ðnew,€second€action,€No.€04„30083,€with€an€identical€complaint;€theÐ ¸  Ðpurpose€of€filing€this€second€action€was€to€protect€against€adverseÐ d´  Ðstatute€of€limitations€consequences€in€case€the€first€action€wasÐ `  Ðdismissed€for€lack€of€timely€service.ò òó óÐ ¼  Ðà ` àOn€October€26,€2004,€the€district€court€grantedÐ h¸ ÐWashington€Mutual's€motion€to€dismiss€the€first€action,€No.€03„Ð d Ð30175.€€It€cited€two€bankruptcy€court€cases,€òòIn€re€Fidleróó,€226€B.R.Ð À Ð734,€736€(Bankr.€D.€Mass.€1998),€and€òòIn€re€Desrosiersóó,€212€B.R.Ð l¼ Ð716,€722€n.6€(Bankr.€D.€Mass.€1997),€as€support€for€its€conclusionÐ h Ðthat€the€Belinis'€right€to€sue€for€rescission€existed€solely€underÐ Ä Ðstate€law,€and€not€under€federal€law,€given€the€MassachusettsÐ pÀ  Ðexemption.€€It€further€held€that€the€correct€starting€date€for€allÐ !l" Ðof€plaintiffs'€damages€claims€was€the€time€the€loan€wasÐ È"$ Ðconsummated,€and€that€date€was€well€more€than€one€year€before€thisÐ t$Ä& Ðaction€was€filed,€so€any€damages€claims€under€TILA€were€time„Ð  &p!( Ðbarred.׃>×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€The€court€then€dismissed€the€Belinis'€remaining€state€lawÐ Ì'#* Ðclaims,€noting€the€principle€that€the€unfavorable€disposition€ofÐ ° Ðall€a€plaintiff's€federal€claims€at€an€early€date€usually€willÐ \¬ Ðtrigger€the€dismissal€without€prejudice€of€any€supplemental€stateÐ X Ðlaw€claims.òòóóò òó óÐ ´  Ðà ` àThe€court€also€disallowed€the€Belinis'€motion€to€amendÐ ` ° Ðtheir€complaint€and€add€diversity€as€a€basis€for€jurisdiction.€€TheÐ  \  Ðcourt€held€that€the€amount€in€controversy€requirement€was€not€met,Ð ¸  Ðsince€the€proper€value€of€rescission€for€these€purposes€was€not€theÐ d´  Ðtotal€face€value€of€the€mortgage,€$102,750,€but€instead€only€theÐ `  Ðtotal€of€the€down€payment,€closing€fees,€and€past€payments€thatÐ ¼  ÐWashington€Mutual€would€be€obligated€to€return€to€the€Belinis€ifÐ h¸ Ðrescission€were€effected,€which€was€far€less€than€$75,000.€Ð d ÐFinally,€as€an€independent€basis€for€dismissal€of€this€firstÐ À Ðaction,€the€court€cited€the€Belinis'€failure€to€effect€timelyÐ l¼ Ðservice.ò òó óÐ h Ðà ` àThe€district€court€dismissed€the€Belinis'€second€action,Ð Ä ÐNo.€04„30083,€on€November€2,€2004,€adopting€the€same€reasons€thatÐ pÀ  Ðit€used€to€dismiss€the€first€action€except€for€the€failure€toÐ !l" Ðeffect€timely€service.€€The€Belinis€filed€a€timely€appeal€of€theÐ È"$ Ðdismissal€of€both€actions.€€However,€the€Belinis€have€notÐ t$Ä& Ðchallenged€the€dismissal€because€of€untimely€service€on€appeal.€Ð  &p!( ÐThus,€they€cannot€prevail€on€the€appeal€of€their€first€action,€No.Ð Ì'#* Ð03„30175,€and€we€will€affirm€the€dismissal€of€this€action.€€ThatÐ x)È$, Ðground,€however,€does€not€apply€to€the€dismissal€of€their€secondÐ ° Ðaction,€No.€04„30083.Ð \¬ Ðà ` àOn€appeal,€the€Belinis€advance€three€contentions:€(1)€theÐ X ÐMassachusetts€exemption€under€15€U.S.C.€ðð€1633€and€12€C.F.R.€ððÐ ´  Ð226.29€does€not€eclipse€the€federal€cause€of€action€to€enforce€theÐ ` ° Ðright€of€rescission;€(2)€although€the€Belinis€concede€on€appealÐ  \  Ðthat€the€statute€of€limitations€under€15€U.S.C.€ðð€1640(e)€has€runÐ ¸  Ðfor€any€federal€damages€claims€based€on€the€creditor's€failure€toÐ d´  Ðmake€disclosures€at€the€time€of€the€mortgage€closing,€they€properlyÐ `  Ðstate€a€separate€damages€claim€based€on€Washington€Mutual's€failureÐ ¼  Ðto€respond€to€their€notice€of€rescission;€and€(3)€jurisdiction€alsoÐ h¸ Ðlies€based€on€diversity€because€the€district€court€improperlyÐ d Ðundervalued€the€rescission€remedy.€€Below,€the€Belinis€assertedÐ À Ðstate€law€damages€claims€under€Mass.€Gen.€Laws€ch.€140D,€ðð€32,€theÐ l¼ ÐMassachusetts€counterpart€to€15€U.S.C.€ðð€1640,€but€the€Belinis€haveÐ h Ðnot€challenged€the€dismissal€of€these€claims€on€appeal€and€thusÐ Ä Ðthese€claims€are€waived.€€Ð pÀ  Ðà ` àWe€reverse€based€on€the€Belinis'€second€contention,Ð !l" Ðthereby€rendering€consideration€of€the€more€difficult€issues€inÐ È"$ Ðthis€case€„„€whether€the€exemption€eclipses€any€federal€action€toÐ t$Ä& Ðenforce€the€right€of€rescission€and€how€to€value€the€remedy€ofÐ  &p!( Ðrescission€for€diversity€purposes€„„€unnecessary.Ð Ì'#* ÐÌÐ $+t&. Ðò òÓ  ÓIV.ó ó€€Ð ° ÐÓÉuÓà ` àWashington€Mutual€does€not€dispute€that€the€FederalÐ xÈ ÐReserve€regulations€expressly€allow€a€damages€action€to€be€broughtÐ $t Ðunder€15€U.S.C.€ðð€1640€despite€the€Massachusetts€exemption€fromÐ Ð  Ðmost€of€the€requirements€of€TILA's€Chapter€2.€€òòSeeóó€12€C.F.R.€ððÐ | Ì Ð226.29(b)(1)€("No€exemptions€granted€under€this€section€shallÐ ( x  Ðextend€to€the€civil€liability€provisions€of€sections€[1640€andÐ Ô$  Ð1641]€of€the€act.").€€Nor€does€Washington€Mutual€challenge€theÐ €Ð  Ðregulations€themselves,€as€inconsistent€with€the€statute€allowingÐ ,|  Ðthe€Board€to€grant€these€exemptions,€15€U.S.C.€ðð€1633,€or€for€anyÐ Ø( Ðother€reason.€€òòSeeóó€òòIvesóó€v.€òòW.€T.€Grant€Co.óó,€522€F.2d€749,€753„56Ð „Ô Ð(2d€Cir.€1975)€(upholding€these€regulations€from€statutoryÐ 0€ Ðchallenge)òòóó.€€à ¨ àÐ Ü, Ðà ` àSection€1640€allows€damages€actions€to€be€brought€againstÐ ˆØ Ð"any€creditor€who€fails€to€comply€with€any€requirement€imposedÐ 4„ Ðunder€this€part,€including€any€requirement€under€section€1635€ofÐ à0 Ðthis€title€.€.€.€."€€15€U.S.C.€ðð€1640(a).€€Such€a€creditor€canÐ ŒÜ  Ðgenerally€be€held€liable€for€actual€damages€suffered,€a€statutoryÐ 8!ˆ" Ðpenalty€equal€to€twice€the€finance€charge€(with€a€minimum€penaltyÐ ä"4$ Ðof€$200€and€a€maximum€penalty€of€$2,000),׃×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€and€attorney's€fees€andÐ $à& Ðcosts.€€òòSeeóó€òòid.óó€€Rescission€is€not€a€remedy€for€such€a€violation,Ð ° Ðalthough€it€can€be€sought€in€the€same€action€along€with€actualÐ \¬ Ðdamages€and€the€statutory€penalty.€€òòSeeóó€òòid.óó€ðð€1635(g).€€BeforeÐ X Ð1974,€liability€under€section€1640(a)€was€imposed€only€for€failureÐ ´  Ðto€"disclose€to€any€person€any€information€required€.€.€.€to€beÐ ` ° Ðdisclosed€to€that€person";€in€1974,€however,€this€language€wasÐ  \  Ðchanged€to€refer€to€failure€to€"comply€with€any€requirement."€€òòSeeóóÐ ¸  Ðòòid.óó€ðð€1640,€Historical€and€Statutory€Notes;€òòsee€alsoóó€òòGerastaóó€v.Ð d´  ÐòòHibernia€Nat'l€Bankóó,€575€F.2d€580,€583„84€(5th€Cir.€1978).€€InÐ `  Ð1980,€Congress€added€the€specific€reference€to€section€1635.€€òòSeeóóÐ ¼  Ð15€U.S.C.€ðð€1640(a),€Historical€and€Statutory€Notes.€€Most€of€theÐ h¸ Ðrequirements€under€TILA€are€disclosure€requirements,€but€CongressÐ d Ðclearly€did€not€limit€liability€to€disclosure€requirements€alone.€Ð À Ðà ` àSection€1635,€in€relevant€part,€provides€that€"[w]ithinÐ l¼ Ð20€days€after€receipt€of€a€notice€of€rescission€[from€a€debtor],Ð h Ðthe€creditor€shall€return€to€the€[debtor]€any€money€or€propertyÐ Ä Ðgiven€as€earnest€money,€down€payment,€or€otherwise,€and€shall€takeÐ pÀ  Ðany€action€necessary€or€appropriate€to€reflect€the€termination€ofÐ !l" Ðany€security€interest€created€upon€the€transaction."€€15€U.S.C.€ððÐ È"$ Ð1635(b).€€Thus,€section€1635(b)€places€certain€requirements€upon€aÐ t$Ä& Ðcreditor:€upon€receiving€a€debtor's€valid€notice€of€rescission,€theÐ  &p!( Ðcreditor€must,€within€twenty€days,€return€all€money€paid€by€theÐ Ì'#* Ðdebtor€and€must€void€the€security€interest.׃×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€Should€the€creditorÐ x)È$, Ðnot€take€these€steps€within€twenty€days,€then€the€debtor€hasÐ ° Ðgenerally€violated€a€"requirement"€of€section€1635€and€can€be€heldÐ \¬ Ðliable€for€damages€under€section€1640.€€òòSee,€e.g.óó,€òòMijoóó€v.€òòAvcoÐ X ÐFin.€Servs.€of€Haw.,€Inc.óó,€1991€WL€126660,€at€*1€(9th€Cir.€July€1,Ð ´  Ð1991)€(unpublished);€òòSmithóó€v.€òòFid.€Consumer€Disc.€Co.óó,€898€F.2dÐ ` ° Ð896,€903€(3d€Cir.€1990);€òòSmithóó€v.€òòAm.€Fin.€Sys.,€Inc.óó,€737€F.2dÐ  \  Ð1549,€1552€(11th€Cir.€1984);€òòArnoldóó€v.€òòW.D.L.€Invs.,€Inc.óó,€703€F.2dÐ ¸  Ð848,€850€(5th€Cir.€1983);€òòGerastaóó,€575€F.2d€at€584;€òòRowlandóó€v.Ð d´  ÐòòNovus€Fin.€Corp.óó,€949€F.€Supp.€1447,€1455€(D.€Haw.€1996);€òòsee€alsoóóÐ `  ÐRalph€C.€Clontz,€Jr.,€2€òòTruth€in€Lending€Manualóó€ðð€10.03[4],€at€10„4Ð ¼  Ð(2000).€Ð h¸ Ðà ` àWe€know€of€no€court€that€has€come€to€the€contraryÐ d Ðposition.€€Further,€this€result€is€sensible:€section€1635€isÐ À Ðwritten€with€the€goal€of€making€the€rescission€process€a€privateÐ l¼ Ðone,€worked€out€between€creditor€and€debtor€without€theÐ h Ðintervention€of€the€courts.€€The€potential€for€damages€(includingÐ ° Ðpenalties€and€attorney's€fees)€creates€incentives€for€creditors€toÐ \¬ Ðrescind€mortgages€when€faced€with€valid€requests€without€forcingÐ X Ðdebtors€to€resort€to€the€courts,€for€such€resort€causes€substantialÐ ´  Ðdelay€and€expense€to€debtors.€€Of€course,€where€the€debtor's€noticeÐ ` ° Ðof€rescission€is€invalid€„„€for€example,€where€the€creditor€has€notÐ  \  Ðactually€failed€to€satisfy€a€material€disclosure€requirement€thatÐ ¸  Ðwould€entitle€the€debtor€to€rescind€„„€then€no€damages€can€beÐ d´  Ðassessed€against€the€creditor€for€failing€to€respond€to€theÐ `  Ðnotice.׃!×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€€òòSeeóó€òòFid.€Cons.€Disc.€Co.óó,€737€F.2d€at€903.€Ð ¼  Ðà ` àThe€statute€of€limitations€for€bringing€an€action€underÐ h¸ Ðsection€1640€is€"one€year€from€the€date€of€the€occurrence€of€theÐ d Ðviolation."€€15€U.S.C.€ðð€1640(e).€€The€"date€of€the€occurrence€ofÐ À Ðthe€violation,"€here,€is€at€the€earliest€the€date€that€WashingtonÐ l¼ ÐMutual€received€the€Belinis'€notice€of€rescission;€in€truth,€theÐ h Ðdate€of€the€occurrence€is€likely€twenty€days€later,€when€WashingtonÐ Ä ÐMutual's€time€for€responding€to€that€notice€expired.€€òòSeeóó€òòFid.Ð pÀ  ÐConsumer€Disc.€Co.óó,€898€F.2d€at€903.€€The€Belinis'€notice€was€notÐ !l" Ðmailed€until€May€9,€2003.€€The€"date€of€the€occurrence€of€theÐ È"$ Ðviolation"€cannot€be€the€date€the€loan€was€closed;€the€closing€isÐ ° Ðnot€the€source€of€the€debtor's€complaint,€and€such€a€rule€wouldÐ \¬ Ðcreate€nonsensical€results.€€15€U.S.C.€ðð€1635(f)€states€that€"[aÐ X Ðdebtor's]€right€of€rescission€shall€expire€three€years€after€theÐ ´  Ðdate€of€consummation€of€the€transaction€or€upon€the€sale€of€theÐ ` ° Ðproperty,€whichever€occurs€first,"€notwithstanding€that€theÐ  \  Ðnecessary€material€disclosures€or€forms€have€not€been€received.€€ItÐ ¸  Ðcannot€be€that€the€one„year€statute€of€limitations€under€sectionÐ d´  Ð1640€for€a€creditor's€failing€to€respond€properly€to€a€debtor'sÐ `  Ðnotice€of€rescission€expires€before€the€debtor€is€required€to€sendÐ ¼  Ðthat€notice€in€the€first€place.€€Since€the€Belinis'€second€actionÐ h¸ Ðwas€filed€on€May€4,€2004,€the€action€was€obviously€filed€within€oneÐ d Ðyear€of€the€"occurrence€of€the€violation."€€€€€€€€€€€€€€€€€€€€€Ð À Ðà ` àWashington€Mutual€does€not€contest€the€correctness€ofÐ l¼ Ðthis€analysis.€€It€argues,€however,€that€the€Belinis'€notice€ofÐ h Ðrescission€did€not€require€any€response€because€it€failed€to€stateÐ Ä Ða€claim€and€so€was€invalid.€€This€argument€has€no€force.€€Ð pÀ  Ðà ` àIn€an€exempt€state,€the€Federal€Reserve€has€constructedÐ !l" Ða€system€whereby€a€creditor€can€be€held€liable€under€15€U.S.C.€ððÐ È"$ Ð1640€for€failing€to€comply€with€any€òòstateóó€law€requirement€that€isÐ t$Ä& Ðequivalent€to€an€actionable€requirement€under€TILA€(however,Ð  &p!( Ðviolations€of€state€law€requirements€that€go€beyond€TILA€areÐ Ì'#* Ðgenerally€not€actionable€under€section€1640€in€an€exempt€state).€Ð x)È$, ÐòòSeeóó€12€C.F.R.€ðð€226.29(b)(2)€("If€an€exemption€has€been€granted,Ð $+t&. Ðthe€disclosures€required€by€the€applicable€state€law€(except€anyÐ ° Ðadditional€requirements€not€imposed€by€federal€law)€shallÐ \¬ Ðconstitute€the€disclosures€required€by€this€act€[for€purposes€ofÐ X Ðsection€1640].");׃+×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×Ô#†XZXX XZ= #ÔÔ‡ XZXXXZÔ€òòIvesóó,€522€F.2d€at€753„54.€€Otherwise,€sectionÐ ´  Ð1640€would€be€a€nullity€in€an€exempt€state,€since€the€substantiveÐ ` ° Ðòòfederalóó€requirements€have€been€superceded€by€the€exemption.€€òòóóÐ  \  Ðà ` àBecause€of€the€Massachusetts€exemption,€the€substantiveÐ ¸  Ðrequirements€of€state€law€are€the€requirements€that€creditors€mustÐ d´  Ðfollow.€€This€includes€any€disclosure€requirements.€€ò òó óThe€federalÐ `  Ðrequirements€on€the€mechanics€of€rescission,€found€in€15€U.S.C.€ððÐ ¼  Ð1635,€are€also€superceded€by€state€requirements:€these€include€howÐ h¸ Ða€creditor€must€notify€a€debtor€of€the€right€to€rescind,€how€aÐ d Ðdebtor€should€notify€a€creditor€if€he€is€taking€advantage€of€hisÐ À Ðright€to€rescind,€and€how€long€and€what€steps€a€creditor€must€takeÐ l¼ Ðto€respond€to€that€request.€€The€Belinis'€complaint€alleges€aÐ h Ðfailure€by€the€creditor€to€comply€with€certain€state€law€disclosureÐ Ä Ðrequirements€applicable€to€high„cost€mortgages,€òòseeóó€Mass.€Regs.Ð pÀ  ÐCode€tit.€209,€ðð€32.32,€which€are€identical€to€the€federalÐ ° Ðrequirements€embodied€in€the€HOEPA€amendments€to€TILA,€òòseeóó€15Ð \¬ ÐU.S.C.€ðð€1639.€€The€complaint€also€alleges€that€Washington€MutualÐ X Ðviolated€state€law€rescission€procedures€by€failing€to€respond€toÐ ´  Ðthe€Belinis'€allegedly€meritorious€rescission€notice€(which€wasÐ ` ° Ðpremised€on€the€creditor's€failure€to€provide€these€disclosures)€byÐ  \  Ðreturning€the€Belinis'€money€and€voiding€their€security€interestÐ ¸  Ðwithin€twenty€days.€€The€relevant€state€law€rescission€proceduresÐ d´  Ðare€also€substantively€identical€to€the€federal€rescissionÐ `  Ðprocedures€under€TILA.€€òòCompareóó€15€U.S.C.€ðð€1635(b),€òòandóó€12€C.F.R.Ð ¼  Ððð€226.23,€òòwithóó€Mass.€Gen.€Laws€ch.€140D,€ðð€10(b),€òòandóó€Mass.€Regs.Ð h¸ ÐCode€tit.€209,€ðð€32.15.€€Because€the€Belinis€allege€that€WashingtonÐ d ÐMutual€failed€to€comply€with€an€applicable€state€law€requirement€onÐ À Ðthe€mechanics€of€rescission€that€is€also€imposed€by€TILA€„„€theÐ l¼ Ðrequirement€that€a€creditor€return€a€debtor's€money€and€take€stepsÐ h Ðto€void€its€security€interest€within€twenty€days€of€receiving€theÐ Ä Ðvalid€notice€of€rescission€„„€they€have€stated€a€damages€claimÐ pÀ  Ðunder€section€1640.€Ð !l" Ðà ` àThe€Belinis'€rescission€notice€did€not€explicitly€mentionÐ È"$ ÐMassachusetts€state€law:€it€instead€relied€entirely€on€theÐ t$Ä& Ðdisclosure€requirements€and€rescission€procedures€found€in€TILA€(asÐ  &p!( Ðamended€by€HOEPA)€and€its€implementing€regulation,€Regulation€Z.€Ð Ì'#* ÐBut€this€cannot€relieve€Washington€Mutual€of€potential€liability.€Ð x)È$, ÐThe€relevant€substantive€disclosure€requirements€under€federal€andÐ $+t&. Ðstate€law€are€generally€the€same€and€the€precise€disclosures€thatÐ ° Ðthe€Belinis€allege€the€creditor€did€not€make€are€found€both€inÐ \¬ ÐMassachusetts€and€federal€law.€€Moreover,€the€creditor's€dutiesÐ X Ðupon€receiving€a€valid€notice€of€rescission€are€identical€underÐ ´  Ðfederal€and€state€law.€€Washington€Mutual€was€on€notice€from€theÐ ` ° ÐBelinis'€letter€of€exactly€which€disclosure€requirements€itÐ  \  Ðallegedly€violated€and€how€it€ought€to€respond€to€the€notice.׃-×Ý ƒ#ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×€€Ð ¸  Ðà ` àWe€conclude€that€the€Belinis'€claim€that€they€areÐ d´  Ðentitled€to€damages€under€15€U.S.C.€ðð€1640€because€of€WashingtonÐ `  ÐMutual's€failure€to€return€their€money€and€void€the€securityÐ ¼  Ðinterest€on€their€home€within€twenty€days€of€receiving€their€noticeÐ h¸ Ðof€rescission€was€timely€and€therefore€survives€Washington€Mutual'sÐ d Ðmotion€to€dismiss.׃ @×Ý ƒ#ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×€€This€claim€furnishes€a€basis€for€federalÐ À Ðquestion€jurisdiction.€€Through€this€claim,€the€Belinis€can€seek€toÐ l¼ Ðprove€their€case€for€actual€damages€due€to€Washington€Mutual'sÐ h Ðâ âfailure€to€respond€to€their€notice,€the€statutory€penalty,€andÐ Ä Ðattorney's€fees.€€The€request€for€rescission,€however,€constitutesÐ ° Ða€separate€claim.€€€€€Ð \¬ Ðâ âà ` àThe€difficult€issue€of€whether€a€TILA€exemption,€under€15Ð X ÐU.S.C.€ðð€1633€and€the€Federal€Reserve€regulations,€preserves€aÐ ´  Ðfederal€rescission€claim€is€effectively€an€issue€of€whether€theÐ ` ° ÐBelinis€can€bring€their€separate€request€for€rescission€underÐ  \  Ðfederal€law,€or€instead€can€only€bring€such€a€claim€under€stateÐ ¸  Ðlaw.€€We€need€not€answer€this€question€now,€since€the€answer€has€noÐ d´  Ðpractical€effect€on€the€district€court's€jurisdiction€over€theÐ `  ÐBelinis'€rescission€claim.€€The€remedial€provisions€accompanyingÐ ¼  Ðsuits€for€rescission€under€TILA€are€essentially€identical€to€theÐ h¸ Ðremedial€provisions€accompanying€suits€for€rescission€underÐ d ÐMassachusetts€law.׃"×Ý ƒ#ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×€€Under€either,€the€victorious€debtor€can€obtainÐ À Ðboth€attorney's€fees€and€costs,€òòseeóó€15€U.S.C.€ðð€1640(a)(3);€Mass.Ð l¼ ÐGen.€Laws€ch.€140D,€ðð€32(a)(3);€a€debtor€can€seek€both€civilÐ h Ðdamages€and€rescission€in€the€same€action,€òòseeóó€15€U.S.C.€ððððÐ Ä Ð1635(g),€1640(g);€Mass.€Gen.€Laws€ch.€140D,€ðððð€10(g),€32(f);€and€aÐ pÀ  Ðdebtor€can€seek€rescission€against€an€assignee€as€though€thatÐ ° Ðassignee€were€the€original€creditor,€òòseeóó€15€U.S.C.€ðð€1641(c);€Mass.Ð \¬ ÐGen.€Laws€ch.€140D,€ðð€33(c).€€€€Ð X Ðà ` àEven€if€the€rescission€claim€could€only€be€brought€underÐ ´  Ðstate€law,€the€district€court€would€still€have€supplementalÐ ` ° Ðjurisdiction€over€this€claim€because€it€is€part€of€the€same€"caseÐ  \  Ðor€controversy"€as€the€section€1640€damages€claim.€€òòSeeóó€28€U.S.C.Ð ¸  Ððð€1367(a).€€The€district€court€has€discretion€to€decline€suchÐ d´  Ðjurisdiction€in€a€few€circumstances:€where€the€state€law€issues€areÐ `  Ðdifficult€or€novel,€where€the€state€law€claims€"substantiallyÐ ¼  Ðpredominate[]"€over€other€claims€in€the€action,€where€the€districtÐ h¸ Ðcourt€has€dismissed€all€claims€over€which€it€has€originalÐ d Ðjurisdiction,€and€in€other€"exceptional€circumstances"€raisingÐ À Ð"compelling€reasons€for€declining€jurisdiction."€€òòId.óó€ðð€1367(c).€€Ð l¼ Ðà ` àThe€district€court€correctly€stated€the€general€rule€thatÐ h Ðan€early€dismissal€of€all€federal€claims€will€generally€lead€to€theÐ Ä Ðdismissal€of€all€supplemental€state€law€claims,€òòseeóó€òòGonzalez„De„Ð pÀ  ÐBlasinióó€v.€òòFamily€Dep'tóó,€377€F.3d€81,€89€(1st€Cir.€2004),€but€weÐ !l" Ðhave€reversed€the€district€court's€holding€that€all€federal€damagesÐ È"$ Ðclaims€were€time€barred€and€found€that€a€viable€federal€damagesÐ t$Ä& Ðclaim€remains€in€the€case.€€Moreover,€application€of€the€relevantÐ  &p!( Ðstate€law€should€be€straightforward€and€this€application€implicatesÐ Ì'#* Ðimportant€federal€concerns,€since€the€Massachusetts€statute€isÐ x)È$, Ðusually€identical€to€TILA.€€State€law€applies€only€through€aÐ $+t&. Ðstatutory€exemption€from€TILA€for€transactions€subject€toÐ ° Ð"substantially€similar"€requirements€in€€a€given€state.€€15€U.S.C.Ð \¬ Ððð€1633.€€For€the€same€reason,€state€claims€do€not€predominate:€theÐ X Ðoverarching€structure€is€provided€by€TILA,€which€itself€creates€theÐ ´  Ðexemption€for€certain€state€requirements.€€The€implicit€suggestionÐ ` ° Ðin€the€district€court's€opinion€is€that€it€would€have€exercisedÐ  \  Ðsupplemental€jurisdiction€over€the€state€law€claims€if€it€had€foundÐ ¸  Ðany€viable€federal€claims€in€the€case,€and€now€that€we€have€heldÐ d´  Ðthat€there€is€a€viable€federal€claim€for€damages,€the€districtÐ `  Ðcourt€should€exercise€supplemental€jurisdiction€over€the€rescissionÐ ¼  Ðclaim.€Ð h¸ Ðà ` àFinally,€we€emphasize€that€the€question€of€whether€theÐ d Ðexemption€vitiates€the€possibility€of€bringing€a€federal€claim€toÐ À Ðenforce€the€right€of€rescission€raises€very€difficult€issues€ofÐ l¼ Ðregulatory€and€statutory€construction;€the€Federal€ReserveÐ h Ðregulations€lack€clarity€on€this€point.€€Further,€this€question€isÐ Ä Ðunlikely€to€be€litigated€often,€given€that€there€are€only€fiveÐ pÀ  Ðstates€that€have€exemptions€from€parts€of€TILA,€òòseeóó€12€C.F.R.€Pt.Ð !l" Ð226,€Supp.€I,€and€that€even€in€these€exempt€states,€an€alternativeÐ È"$ Ðground€for€federal€jurisdiction€will€usually€exist€because€of€theÐ t$Ä& Ðclear€preservation€of€damages€claims€under€section€1640.€€IssuesÐ  &p!( Ðregarding€the€scope€of€the€exemption€have€seldom€arisen€in€theÐ Ì'#* Ðâ âalmost€forty€years€since€TILA€was€passed.€€€€Ð x)È$, Ðà ` àIt€is€also€unnecessary€for€us€to€address€the€issue€ofÐ ° Ðâ âdiversity€jurisdiction,€which€involves€the€difficult€question€ofÐ \¬ Ðthe€proper€valuation€of€a€rescission€remedy,€since€we€have€heldÐ X Ðthat€the€district€court€has€federal€question€jurisdiction.׃,×Ý ƒ#ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ×€€Ð ´  ÐÓ  Óò òV.ó óÐ ` ° ÐÓ  Óà ` àThe€district€court's€dismissal€of€the€Belinis'€firstÐ ( x  Ðaction,€No.€03„30175,€is€òòò òaffirmedó óóó.€€The€district€court's€dismissalÐ Ô$  Ðof€the€Belinis'€second€action,€No.€04„30083,€is€òòò òreversedó óóó,€and€theÐ œì  Ðcase€is€remanded€for€proceedings€consistent€with€this€opinion.€Ô#†XZXX XZ3š#Ô