## Facts

- In 1985, David and Linda Beach obtained a mortgage loan to finance construction of their home.
- In August 1986, the Beaches refinanced with Great Western Bank and used the proceeds to pay off the earlier loan.
- Great Western provided Truth in Lending Act (TILA) disclosure documents and notice of the three-business-day right to rescind.
- The Beaches defaulted on December 1, 1991, more than five years after the 1986 closing.
- Great Western filed a foreclosure action in June 1992.
- The Beaches asserted affirmative defenses and counterclaims, including (1) a right to rescind under TILA § 1635 and (2) TILA damages based on disclosure overstatements.
- The trial court found minor disclosure overstatements (including a $0.58 monthly payment overstatement and a $7.24 finance-charge overstatement), awarded statutory/actual TILA damages as an offset, but rejected rescission as untimely because the three-year period had expired.
- The district court affirmed and certified a question of great public importance to the Florida Supreme Court regarding whether an expired TILA rescission right can be asserted defensively in recoupment.

## Issues

1. Whether a borrower may assert TILA’s statutory rescission right under 15 U.S.C. § 1635 as a defense in recoupment in foreclosure after the three-year period in § 1635(f) has run.

## Decision

- The Florida Supreme Court answered the certified question in the negative and approved the district court’s decision.
- The court held that the § 1635(f) three-year period terminates the rescission right itself; therefore, rescission cannot be revived defensively in recoupment after expiration.
- The case proceeded with foreclosure unaffected by any rescission remedy, while the trial court’s TILA damages offset for disclosure errors remained available.

## Legal Principles

- The three-year period in 15 U.S.C. § 1635(f) is an expiration provision that extinguishes the statutory right of rescission, rather than a limitations period governing only when suit may be filed.
- Recoupment may preserve certain otherwise time-barred claims when a statute of limitations has run, but it does not preserve a claim where the underlying substantive right no longer exists due to statutory expiration.
- TILA’s inclusion of express recoupment language for damages actions (15 U.S.C. § 1640(e)) and the absence of comparable language for rescission supports treating rescission as unavailable after § 1635(f)’s expiration.

## Conclusion

The Florida Supreme Court held that TILA’s three-year rescission provision in § 1635(f) extinguishes the rescission right and cannot be circumvented by asserting rescission as a defense in recoupment in a foreclosure action filed after the three-year period.


Beach v. Great W. Bank, 692 So. 2d 146 (Fla. 1997)