United States District Court, E.D. North Carolina, Eastern Division
REX T. GILBERT, JR., and DANIELA L. GILBERT, Plaintiffs,
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee for RESIDENTIAL ACCREDIT LOANS, INC., DAVE A. SIMPSON, P.C., Substitute Trustee, RESIDENTIAL FUNDING, LLC, GMAC MORTGAGE, LLC, and OCWEN LOAN SERVICING, LLC, Defendants.
C. DEVER, III CHIEF UNITED STATES DISTRICT JUDGE
factual background of this case is familiar. See Gilbert
v. Residential Funding LLC. 678 F.3d 271, 274-75 (4th
Cir. 2012). Defendants Deutsche Bank Trust Company
("Deutsche Bank") and Ocwen Loan Servicing,
LLC's ("Ocwen") seek partial summary judgment
[D.E. 100], and plaintiffs seek partial summary judgment
[D.E. 104]. Plaintiffs also filed a motion in limine
regarding the admission of a deposition transcript as
evidence [D.E. 90]. As explained below, the court grants
defendants' motion for partial summary judgment, denies
plaintiffs' motion for partial summary judgment, and
denies without prejudice plaintiffs' motion in limine.
judgment is appropriate if the moving party demonstrates
"that there is no genuine dispute as to any material
fact" and the moving party "is entitled to judgment
as a matter of law." Fed.R.Civ.P. 56(a). The party
seeking summary judgment must initially show an absence of a
genuine dispute of material fact or the absence of evidence
to support the nonmoving party's case. Celotex Corp.
v. Catrett, 477 U.S. 317, 325 (1986). If a moving party
meets its burden, the nonmoving party must "come forward
with specific facts showing that there is a genuine issue for
trial." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986) (quotation and emphasis
omitted). A genuine issue for trial exists if there is
sufficient evidence favoring the nonmoving party for a jury
to return a verdict for that party. Anderson v. Liberty
Lobby. Inc., 477 U.S. 242, 249 (1986). "The mere
existence of a scintilla of evidence in support of the
plaintiffs position [is] insufficient" Id. at
252; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.
1985) ("The nonmoving party, however, cannot create a
genuine issue of material fact through mere speculation or
the building of one inference upon another."). Only
factual disputes that might affect the outcome under
substantive law preclude summary judgment. Anderson.
477 U.S. at 248. In reviewing the factual record, the court
views the facts in the light most favorable to the nonmoving
party and draws reasonable inferences in that party's
favor. Matsushita, 475 U.S. at 587-88.
13, 2016, Deutsche Bank and Ocwen moved for summary judgment
on plaintiffs' first claim for relief, which alleges
violations of the Truth in Lending Act ("TILA"), 15
U.S.C. §§ 1601, et seq.. and fifth claim
for relief, which alleges violations of the North Carolina
Debt Collection Act ("NCDCA"), N.C. Gen. Stat.
§§ 75-50, et seq, [D.E. 100]. On June 15, 2016,
plaintiffs responded in opposition [D.E. 113]. On June 29,
2016, defendants replied [D.E. 116].
claim they are entitled to rescind the loan transaction
because Deutsche Bank allegedly violated TTLA's
disclosure requirements. Am. Compl. [D.E. 74] ¶¶
112-23. TILA grants borrowers the right to rescind a mortgage
loan "until midnight of the third business day following
the consummation of the transaction or the delivery of the
[disclosures required by the Act], whichever is later, by
notifying the creditor... of his intention to do so." 15
U.S.C. § 1635(a). "This regime grants borrowers an
unconditional right to rescind for three days, after which
they may rescind only if the lender failed to satisfy the
Act's disclosure requirements." Jesinoski v.
Countrywide Home Loans. Inc., 135 S.Ct. 790, 792 (2015).
The borrower can exercise the conditional right of rescission
within "three years after the date of consummation of
the transaction or upon the sale of the property, whichever
comes first." 15 U.S.C. § 1635(f); see 12 C.F.R.
§ 226.23(a)(3) ("Regulation Z");
Jesinoski. 135 S.Ct. at 792. Among other things,
lenders must disclose "the annual percentage rate, the
finance charge, the amount financed, the total of payments,
[and] the payment schedule." 12 C.F.R. §
226.23(a)(3) n.48; see generally 15 U.S.C. §
allege that Deutsche Bank violated TILA's disclosure
requirements by failing to timely deliver to plaintiffs two
copies of the notice of the right to rescind that clearly and
conspicuously disclosed the date the rescission period
expired, and by failing to deliver all "material"
disclosures required by TELA and its implementing regulation.
Am. Compl. ¶¶ 114-15. Deutsche Bank allegedly
violated TILA's disclosure requirements by: (1) failing
to clearly and accurately disclose the loan's
"annual percentage rate" in violation of 15 U.S.C.
§ 1638(a)(4) and 12 C.F.R. § 226.18(e); (2) failing
to properly disclose the number, amounts, and timing of
payments scheduled to repay the obligation in violation of 15
U.S.C. § 1638(a)(6) and 12 C.F.R. § 226.18(g); and
(3) failing to clearly and accurately disclose the
"total of payments" in violation of 15 U.S.C.
§ 1638(a)(5) and 12 C.F.R. § 226.18(h). See Am.
Compl. ¶ 115.
Bank moves for summary judgment on plaintiffs' TILA claim
on two grounds: that plaintiffs fail to identify a TELA
violation entitling them to rescission and, that even if
plaintiffs could prove a TELA violation, plaintiffs have not
alleged or demonstrated that they could tender the loan
proceeds should the court order rescission.
disclosure violation by itself does not entitle a borrower to
rescission. See Powers v. Sims & Levin, 542 F.2d
1216, 1220-22 (4th Cir. 1976); Haas v. Falmouth Fin.,
LLC, 783 F.Supp.2d 801, 805-08 (E.D. Va. 2011). To
obtain rescission, the borrower must show he will be able to
tender the borrowed funds back to the lender should the court
order rescission. Am. Mortg. Network. Inc. v.
Shelton, 486 F.3d 815, 820-22 (4th Cir. 2007);
Powers, 542 F.2d at 1220-22; Haas. 783
F.Supp.2d at 806; 15 U.S.C. § 1635(b). "District
courts in the Fourth Circuit following Shelton have
routinely dismissed plaintiffs' rescission claims, both
at the Rule 12(b)(6) stage and at summary judgment, where
plaintiffs fail to allege or demonstrate they would be able
to meet their tender obligation if rescission were
ordered." Haas, 783 F.Supp.2d at
Here, plaintiffs have failed to meet their burden on summary
judgment to demonstrate at least a genuine issue of material
fact as to their ability to meet their tender obligation
should the court order rescission.
opposition, plaintiffs cite Jesinoski v. Countrywide Home
Loans. Inc.. 135 S.Ct. 790 (2015), and argue that they
need not demonstrate an ability to tender for their recission
claim to survive summary judgment. Plaintiffs, however,
"conflate the issue of whether a borrower has exercised
her right to rescind with the issue of whether the rescission
has, in fact, been completed and the contract voided."
Gilbert, 678 F.3d at 277. In Jesinoski, the
Court examined the requirements for exercising the right to
rescind, holding that to do so the borrower need only notify
the lender of his intention to rescind the loan within the
conditional three-year rescission period, rather than file a
lawsuit within that three-year time. Jesinoski. 135
S.Ct. at 793. As for the ability to tender the loan proceeds,
Jesinoski recognizes that a borrower need not tender
the proceeds to effectively exercise the right to rescind.
See Id. In Jesinoski. however, the Court
did not hold that a borrower need not have the ability to
tender before a court can order rescission. See Jesinoski
v. Countrywide Home Loans. Inc., No. 11-474 (DWF/FLN),
2016 WL 3962865, at *4-5 (D. Minn. July 21, 2016)
(unpublished); Brown. 2016 WL 3702974, at *3-4.
Thus, Jesinoski did not invalidate Fourth Circuit
precedent holding that the ability to tender is a necessary
predicate before a court may order rescission. Accordingly,
the court grants summary judgment to defendants on
plaintiffs' TILA claim.
allege that Ocwen violated the NCDCA by: (1) communicating
with plaintiffs after plaintiffs' attorney notified Ocwen
that plaintiffs were represented by counsel; (2) falsely
representing the character, extent, or amount of debt against
a consumer by attempting to collect money from plaintiffs
after plaintiffs forwarded the notice of rescission to the
noteholder; and (3) falsely representing to be the servicer
of plaintiffs' promissory note. See Am. Compl. ¶
149. Ocwen asserts that it is entitled to summary ...