NOT RECOMMENDED FOR PUBLICATION File Name: 19a0599n.06
No. 19-5153
UNITED STATES COURT OF APPEALS FILED FOR THE SIXTH CIRCUIT Dec 06, 2019 DEBORAH S. HUNT, Clerk TOBIN SEGRIST et al., ) ) Plaintiffs-Appellants, ) ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR THE v. ) MIDDLE DISTRICT OF TENNESSEE ) THE BANK OF NEW YORK MELLON ) OPINION et al., ) ) Defendants-Appellees. )
Before: GILMAN, KETHLEDGE, and READLER, Circuit Judges.
RONALD LEE GILMAN, Circuit Judge. Tobin and Amy Segrist (the Segrists) appeal
the district court’s refusal to set aside its previous dismissal of the Segrists’ action to rescind their
Loan Modification Agreement. According to the Segrists, a recent change in decisional law
enunciated by one of our sister circuits warrants setting aside the dismissal. The district court
denied the Segrists’ motion. For the reasons set forth below, we AFFIRM the judgment of the
district court.
I. BACKGROUND
A. Factual background
In April 2003, the Segrists purchased a home in Sumner County, Tennessee. They obtained
a residential mortgage loan from Full Spectrum Lending, Inc., to finance their purchase, which
was secured by a Deed of Trust on the property. In October 2011, the Deed of Trust was assigned
to the Bank of New York Mellon (BNY). 19-5153, Segrist et al. v. Bank of New York Mellon et al.
After suffering financial difficulties, the Segrists entered into a Loan Modification
Agreement in April 2013 with Bank of America, which had become the loan servicer. That
agreement amended and supplemented the original loan, lowered the Segrists’ monthly payment,
modified the interest rate from variable to fixed, and forgave a significant portion of the loan’s
past-due balance.
In 2015, following the Segrists’ default on their modified loan, BNY began foreclosure
proceedings against the property. The Segrists recorded a purported Notice of Rescission of the
loan in August 2015, one month before the date of the foreclosure sale. BNY bought the property
at the foreclosure sale and filed a detainer action in state court. After the state court entered an
order granting BNY possession of the property, BNY sold the property to a bona fide purchaser.
B. Procedural history
In January 2016, the Segrists filed suit in federal court. Their second amended complaint,
which is the operative complaint in this case, alleged three causes of action: Count I was an action
for declaratory relief to enforce rescission rights under the Truth in Lending Act (TILA), 15 U.S.C.
§ 1635; Count II was a claim for declaratory relief, seeking an order that BNY lacked the authority
to foreclose on, and sell, the property; and Count III alleged that Bank of America had fraudulently
induced the Segrists to enter into the Loan Modification Agreement. The Segrists argued that they
were entitled to rescind both the original loan and the Loan Modification Agreement because they
never received disclosures about the terms of their loans, as mandated by TILA.
In August 2017, the district court granted BNY’s motion to dismiss the second amended
complaint. Segrist v. Bank of N.Y. Mellon, No. 3:16-cv-00063, 2017 WL 3674841, at *4 (M.D.
Tenn. 2017). It held that (1) neither the original loan nor the Loan Modification Agreement gave
rise to rescission rights under TILA, (2) the Segrists’ allegations regarding BNY’s authority to
2 19-5153, Segrist et al. v. Bank of New York Mellon et al.
foreclose failed to state a claim for relief, and (3) the Segrists’ allegations regarding fraud were
conclusory and lacked any factual basis. Id. at *2–4. The Segrists appealed.
In August 2018, this court affirmed the district court on all counts. Segrist v. Bank of N.Y.
Mellon, 744 F. App’x 932, 936–41 (6th Cir. 2018) (Segrist I). It held that (1) the Loan
Modification Agreement did not give rise to rescission rights under TILA because the agreement
was not a refinancing (the Segrists conceded on appeal that the original loan did not give rise to
rescission rights), (2) BNY had the authority to foreclose, and (3) the Segrists did not plead fraud
with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. Id.
But the Segrists persisted. In January 2019, they filed a motion under Rule 60(b)(6) of the
Federal Rules of Civil Procedure to vacate the dismissal of their action. Their motion was based
solely on the Ninth Circuit’s supervening opinion in Hoang v. Bank of America, 910 F.3d 1096
(9th Cir. 2018). Hoang dealt with the statute-of-limitation period to be applied to a TILA action.
The district court denied the Segrists’ motion.
II. ANALYSIS
A. Standard of review
We apply the abuse-of-discretion standard in reviewing a district court’s denial of a Rule
60(b) motion. In re Ferro Corp. Derivative Litig., 511 F.3d 611, 623 (6th Cir. 2008). “A court
abuses its discretion when it commits a clear error of judgment, such as applying the incorrect
legal standard, misapplying the correct legal standard, or relying upon clearly erroneous findings
of fact.” Id.
B. The district court properly denied the Segrists’ motion.
Rule 60(b)(6) of the Federal Rules of Civil Procedure allows a court to vacate a final
judgment for “any [] reason that justifies relief.” But “relief under Rule 60(b) is ‘circumscribed
3 19-5153, Segrist et al. v. Bank of New York Mellon et al.
by public policy favoring finality of judgments and termination of litigation.’” Blue Diamond
Coal Co. v. Trs. of UMWA Combined Benefit Fund, 249 F.3d 519, 524 (6th Cir. 2001) (quoting
Waifersong, Ltd. Inc. v. Classic Music Vending, 976 F.2d 290, 292 (6th Cir. 1992)). Quoting
Agostini v. Felton, 521 U.S. 203, 239 (1997), the district court correctly explained that
“[i]ntervening developments in the law by themselves rarely constitute the extraordinary
circumstances required for relief under Rule 60(b)(6).” In order for a court to grant Rule 60(b)(6)
relief based “on an applicable change in decisional law,” the change in law must be “coupled with
some other special circumstance.” Blue Diamond, 249 F.3d at 524. The Segrists have presented
no such “extraordinary” or “special” circumstance.
And even if a change in decisional law were sufficient to warrant Rule 60(b)(6) relief, the
Ninth Circuit decision in Hoang is wholly inapplicable to the dipositive issue in the case before
us. Hoang addressed the question of what statute-of-limitation period it should apply to a validly
executed notice of rescission. 910 F.3d at 1100. It held that the court should apply the six-year
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NOT RECOMMENDED FOR PUBLICATION File Name: 19a0599n.06
No. 19-5153
UNITED STATES COURT OF APPEALS FILED FOR THE SIXTH CIRCUIT Dec 06, 2019 DEBORAH S. HUNT, Clerk TOBIN SEGRIST et al., ) ) Plaintiffs-Appellants, ) ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR THE v. ) MIDDLE DISTRICT OF TENNESSEE ) THE BANK OF NEW YORK MELLON ) OPINION et al., ) ) Defendants-Appellees. )
Before: GILMAN, KETHLEDGE, and READLER, Circuit Judges.
RONALD LEE GILMAN, Circuit Judge. Tobin and Amy Segrist (the Segrists) appeal
the district court’s refusal to set aside its previous dismissal of the Segrists’ action to rescind their
Loan Modification Agreement. According to the Segrists, a recent change in decisional law
enunciated by one of our sister circuits warrants setting aside the dismissal. The district court
denied the Segrists’ motion. For the reasons set forth below, we AFFIRM the judgment of the
district court.
I. BACKGROUND
A. Factual background
In April 2003, the Segrists purchased a home in Sumner County, Tennessee. They obtained
a residential mortgage loan from Full Spectrum Lending, Inc., to finance their purchase, which
was secured by a Deed of Trust on the property. In October 2011, the Deed of Trust was assigned
to the Bank of New York Mellon (BNY). 19-5153, Segrist et al. v. Bank of New York Mellon et al.
After suffering financial difficulties, the Segrists entered into a Loan Modification
Agreement in April 2013 with Bank of America, which had become the loan servicer. That
agreement amended and supplemented the original loan, lowered the Segrists’ monthly payment,
modified the interest rate from variable to fixed, and forgave a significant portion of the loan’s
past-due balance.
In 2015, following the Segrists’ default on their modified loan, BNY began foreclosure
proceedings against the property. The Segrists recorded a purported Notice of Rescission of the
loan in August 2015, one month before the date of the foreclosure sale. BNY bought the property
at the foreclosure sale and filed a detainer action in state court. After the state court entered an
order granting BNY possession of the property, BNY sold the property to a bona fide purchaser.
B. Procedural history
In January 2016, the Segrists filed suit in federal court. Their second amended complaint,
which is the operative complaint in this case, alleged three causes of action: Count I was an action
for declaratory relief to enforce rescission rights under the Truth in Lending Act (TILA), 15 U.S.C.
§ 1635; Count II was a claim for declaratory relief, seeking an order that BNY lacked the authority
to foreclose on, and sell, the property; and Count III alleged that Bank of America had fraudulently
induced the Segrists to enter into the Loan Modification Agreement. The Segrists argued that they
were entitled to rescind both the original loan and the Loan Modification Agreement because they
never received disclosures about the terms of their loans, as mandated by TILA.
In August 2017, the district court granted BNY’s motion to dismiss the second amended
complaint. Segrist v. Bank of N.Y. Mellon, No. 3:16-cv-00063, 2017 WL 3674841, at *4 (M.D.
Tenn. 2017). It held that (1) neither the original loan nor the Loan Modification Agreement gave
rise to rescission rights under TILA, (2) the Segrists’ allegations regarding BNY’s authority to
2 19-5153, Segrist et al. v. Bank of New York Mellon et al.
foreclose failed to state a claim for relief, and (3) the Segrists’ allegations regarding fraud were
conclusory and lacked any factual basis. Id. at *2–4. The Segrists appealed.
In August 2018, this court affirmed the district court on all counts. Segrist v. Bank of N.Y.
Mellon, 744 F. App’x 932, 936–41 (6th Cir. 2018) (Segrist I). It held that (1) the Loan
Modification Agreement did not give rise to rescission rights under TILA because the agreement
was not a refinancing (the Segrists conceded on appeal that the original loan did not give rise to
rescission rights), (2) BNY had the authority to foreclose, and (3) the Segrists did not plead fraud
with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. Id.
But the Segrists persisted. In January 2019, they filed a motion under Rule 60(b)(6) of the
Federal Rules of Civil Procedure to vacate the dismissal of their action. Their motion was based
solely on the Ninth Circuit’s supervening opinion in Hoang v. Bank of America, 910 F.3d 1096
(9th Cir. 2018). Hoang dealt with the statute-of-limitation period to be applied to a TILA action.
The district court denied the Segrists’ motion.
II. ANALYSIS
A. Standard of review
We apply the abuse-of-discretion standard in reviewing a district court’s denial of a Rule
60(b) motion. In re Ferro Corp. Derivative Litig., 511 F.3d 611, 623 (6th Cir. 2008). “A court
abuses its discretion when it commits a clear error of judgment, such as applying the incorrect
legal standard, misapplying the correct legal standard, or relying upon clearly erroneous findings
of fact.” Id.
B. The district court properly denied the Segrists’ motion.
Rule 60(b)(6) of the Federal Rules of Civil Procedure allows a court to vacate a final
judgment for “any [] reason that justifies relief.” But “relief under Rule 60(b) is ‘circumscribed
3 19-5153, Segrist et al. v. Bank of New York Mellon et al.
by public policy favoring finality of judgments and termination of litigation.’” Blue Diamond
Coal Co. v. Trs. of UMWA Combined Benefit Fund, 249 F.3d 519, 524 (6th Cir. 2001) (quoting
Waifersong, Ltd. Inc. v. Classic Music Vending, 976 F.2d 290, 292 (6th Cir. 1992)). Quoting
Agostini v. Felton, 521 U.S. 203, 239 (1997), the district court correctly explained that
“[i]ntervening developments in the law by themselves rarely constitute the extraordinary
circumstances required for relief under Rule 60(b)(6).” In order for a court to grant Rule 60(b)(6)
relief based “on an applicable change in decisional law,” the change in law must be “coupled with
some other special circumstance.” Blue Diamond, 249 F.3d at 524. The Segrists have presented
no such “extraordinary” or “special” circumstance.
And even if a change in decisional law were sufficient to warrant Rule 60(b)(6) relief, the
Ninth Circuit decision in Hoang is wholly inapplicable to the dipositive issue in the case before
us. Hoang addressed the question of what statute-of-limitation period it should apply to a validly
executed notice of rescission. 910 F.3d at 1100. It held that the court should apply the six-year
statute-of-limitation period set forth under the general contract law of Washington, the state in
which the relevant actions had taken place. Id. at 1102. The Segrists point to Hoang to argue that,
had the district court applied a six-year statute-of-limitation period to the Segrists’ rescission
claim, their claim would not have been dismissed.
But this court dismissed the Segrists’ lawsuit because it concluded that the Segrists never
had a right to rescission in the first place. Segrist I, 744 F. App’x at 939. It did not, as the Segrists
appear to suggest, dismiss their claim for rescission as time-barred. And although the district court
did dismiss the damages portion of the Segrists’ claims as time-barred, see Segrist, 2017 WL
3674841, at *3, the Segrists have made no argument on appeal that the court erred in doing so. In
sum, any claim that the Segrists might have had to TILA damages is premised on their first having
4 19-5153, Segrist et al. v. Bank of New York Mellon et al.
had a right to rescission; a right that, as this court previously held, they did not have. Hoang is
therefore irrelevant to the facts of this case.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the district court.