Jeffrey Hoffman v. Thomas Lloyd

Jeffrey E. Hoffman and related plaintiff-creditors challenged Chapter 11 debtor Thomas R. Lloyd’s exercise of his right to rescind the sale of his foreclosed home under California’s Home Equity Sales Contract Act, known as “HESCA.” See Cal. Civ.Code § 1695, et seq. The district court affirmed the bankruptcy court’s summary judgment in favor of the debtor, Lloyd, because Hoffman never provided Lloyd with notice of his HESCA rights, as required by California law. The district court ruled that a general release Lloyd ■signed during the course of settling an unlawful detainer action by Hoffman against Lloyd did not relinquish Lloyd’s HESCA rights, because Lloyd, at the time of the settlement, had no notice or knowledge of such rights. The underlying facts are more fully set forth in the bankruptcy court’s opinion, which is published at Hoffman v. Lloyd (In re Thomas Lloyd), 369 B.R. 549 (Bankr.N.D.Cal.2007).

Lloyd owned and resided in a single-family home in San Francisco, California. In May 2003, he was in default on his mortgage payments. That month, seeking relief, Lloyd entered into a sale and leaseback transaction with Hoffman whereby Hoffman purchased Lloyd’s residence…