A recent decision by the Eleventh Circuit Court of Appeals holds that the statute of limitations for a missing disclosure claim under the Truth-In-Lending Act (“TILA”), 15 U.S.C. §1601, et seq., begins to run on the date the lender distributed its loan application to the prospective borrower.  Further, in holding that the borrower “knew or should have known” of the alleged missing disclosures when she received her application, the court’s holding suggests that, at least in the Eleventh Circuit, equitable tolling will not apply to such claims as a matter of law.

In Barnes v. Compass Bank, No. 13-15918 (11th Cir. June 9, 2014), see attached opinion, the borrower claimed that her lender had omitted several of the required TILA disclosures when it provided her with an application for a home equity loan.   The borrower brought suit within twelve months of closing on her home equity loan, but thirteen months after the lender had distributed the application.  The trial court dismissed the borrower’s claim as time-barred on the face of the complaint, holding that TILA’s one year statute of limitations began to run on the date of distribution.

The borrower appealed.  She argued that the statute of limitations should begin to run “from the date of the imposition of the first finance charge.”   She also argued that fact issues regarding equitable tolling precluded dismissal.  The borrower’s argument relied on Goldman v. First National Bank of Chicago, 532 F.2d 10 (7th Cir. 1976), where the Seventh Circuit held that the statute of limitations on a TILA claim involving an open-ended credit plan and “incomplete, inaccurate, or misleading disclosures” should begin to run on the date of the first finance charge.

The Eleventh Circuit rejected the borrower’s comparison to Goldman because she claimed missing disclosures, not misleading or inaccurate disclosures.  The Court found that there was no information concerning the borrower’s claim that she could not have discovered when she received the application; instead, she “was aware, or should have been aware of the missing disclosures at the time” the application was handed to her.  Barnes, at p. 5.

The Eleventh Circuit has long held that TILA claims are subject to equitable tolling in the appropriate circumstances.  See Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 708 (11th Cir. 1998).  Those circumstances usually require that the defendant do something to prevent the plaintiff from discovering the wrongful conduct.  Id.   In holding that a borrower either knows or should know of missing disclosures at the time of the loan application, Barnes suggests omitting the disclosures is insufficient to prevent discovery and that equitable tolling will rarely, if ever, apply in such cases.

The prevailing party in this matter was represented by Balch & Bingham, LLP.