Peyton et al v. Option One Mortgage Corporation et al

Filing 64

ORDER GRANTING MOTIONS FOR SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS ON ALL REMAINING CLAIMS 51 ; 53 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 8/3/11. ("For the reasons stated above, the court grants summary judgment in favor o f Defendants on all remaining claims. This grant of summary judgment makes it unnecessary to reach all of the arguments raised by Defendants in their motions. The Clerk of Court is directed to enter judgment in favor of Defendants and to close this case.") (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ROBERT V. PEYTON and MARIE T. )
PEYTON,
)
)
Plaintiffs,
)
)
vs.
)
)
OPTION ONE MORTGAGE
)
CORPORATION, a California
)
Corporation, n/k/a SAND
)
CANYON CORPORATION; and
)
DEUTSCHE BANK NATIONAL TRUST )
COMPANY, AS TRUSTEE FOR HSI
)
ASSET SECURITIZATION
)
CORPORATION TRUST 2006-OPT3, )
MORTGAGE PASS-THROUGH
)
CERTIFICATES, SERIES 2006)
OPT3,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 10-00186 SOM/KSC
ORDER GRANTING MOTIONS FOR
SUMMARY JUDGMENT IN FAVOR OF
DEFENDANTS ON ALL REMAINING
CLAIMS

ORDER GRANTING MOTIONS FOR SUMMARY JUDGMENT
IN FAVOR OF DEFENDANTS ON ALL REMAINING CLAIMS
I.

INTRODUCTION.
This case arises out of an October 2005 residential

mortgage loan by Defendant Option One Mortgage Corporation to
Robert and Marie Peyton.

Option One, now known as Sand Canyon

Corporation, subsequently assigned the loan to Deutsche Bank
National Trust Company, as Trustee for HSI Asset Securitization
Corporation Trust 2006-Opt3, Mortgage Pass-Through Certificates,
Series 2006-Opt3.
As discussed in this court’s order of March 31, 2011,
the First Amended Complaint alleges that Sand Canyon and Deutsche
Bank violated the Truth in Lending Act (“TILA”), 15 U.S.C.

§§ 1601-1667, by failing to provide the Peytons with sufficient
disclosures when they obtained their mortgage loan in 2005 and by
failing to honor an October 11, 2008, rescission notice.

The

First Amended Complaint seeks damages and rescission of the loan.
This court previously granted in part and denied in
part a motion for summary judgment filed by Sand Canyon.
No. 42, March 31, 2011.

See ECF

In that order, the court held that Sand

Canyon could not be sued for rescission or cancellation of the
loan, as it no longer owned the loan and therefore lacked the
authority to effectuate either rescission or cancellation of the
loan.

Id.

Although TILA damage claims against Sand Canyon based

on alleged failures to properly disclose information concerning
the loan were time-barred, the court ruled that Sand Canyon had
not demonstrated entitlement to summary judgment on the different
TILA damage claims against Sand Canyon based on an alleged
failure to honor the Peyton’s request for rescission.

Id.

On June 15, 2011, Sand Canyon again moved for summary
judgment on the remaining claims asserted against it.
No. 51.

See ECF

That same day, Deutsche Bank moved for summary judgment

on all claims asserted against it.

See ECF No. 53.

Those

motions are granted without a hearing pursuant to Local Rule
7.2(d).

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II.

BACKGROUND.
The factual background and procedural history of this

case were set forth in this court’s March 31, 2011, order.
ECF No. 42.

See

That factual background and procedural history are

incorporated herein by reference and supplemented as necessary
below.
III.

STANDARD.
The standard governing summary judgment motions was

also set for in this court’s March 31, 2011, order.
42.

See ECF No.

That standard is incorporated herein by reference.

IV.

ANALYSIS.
Defendants seek summary judgment on the remaining

claims asserted against them.

They identify these claims as

seeking rescission and damages under TILA based on Defendants’
alleged failure to provide proper initial disclosures and
Defendants’ alleged failure to honor an October 2008 rescission
letter.

Plaintiffs’ Oppositions to the motions fail to identify

any other claim they are pursuing in this action.

Accordingly,

to the extent the First Amended Complaint may have asserted other
claims, those claims are deemed waived.
A.

The TILA Claims for Alleged Violations of Initial
Disclosures Are Time-Barred.

To the extent the Peytons have any claims remaining
based on alleged failures to comply with TILA’s initial
disclosure requirements, summary judgment is granted in favor of
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Defendants on those claims.

The Peytons were required to file

those claims “within one year from the date of the occurrence of
the violation.”

15 U.S.C. § 1640(e).

When a TILA violation is

based on an insufficient disclosure, the limitation period
generally “starts at the consummation of the [loan] transaction.”
King v. Cal., 784 F.2d 910, 915 (9th Cir. 1986); see also Hubbard
v. Fidelity Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996) (holding
that when a lender fails to comply with TILA’s initial disclosure
requirements, a borrower has one year from obtaining the loan to
file suit).
or 14, 2005.

The loan in this case was consummated on October 13
See ECF Nos. 54-3 to 54-9.

file this action until October 9, 2009.

The Peytons did not
See ECF No. 1-2.

The Peytons did not oppose the summary judgment motions
that were based on the untimeliness of the improper disclosure
TILA claims.

Accordingly, the court grants summary judgment

against the Peytons on those claims.
B.

The TILA Claims for Alleged Improper Refusals to
Honor Rescission Letter of October 11, 2008,
Are Time-Barred.

Sand Canyon and Deutsche Bank seek summary judgment,
arguing that the Peytons’ October 11, 2008, letter to rescind
their loan was untimely and therefore any claim based on an
alleged improper refusal to honor that rescission letter is
flawed.

Sand Canyon argues that no damage claim may be

maintained against it; Deutsche Bank also argues that neither a

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damage claim nor a rescission claim may be asserted against it
arising out of any alleged failure to honor the rescission
request.
Under 15 U.S.C. § 1635(a), a borrower has a right to
rescind a consumer credit transaction that provides for a
security interest in any property used as the borrower’s
principal dwelling.

The borrower has “until midnight of the

third business day following consummation of the transaction or
the delivery of the information and rescission forms” to exercise
that right.

Id.

However, when a lender fails to disclose to a

borrower his or her right to rescind, or fails to provide
material disclosures,1 the duration of the borrower’s right to
rescind extends for three years from the date the transaction was
consummated.

12 C.F.R. § 226.23(a)(3); Jackson v. Grant, 890

F.2d 118, 120 (9th Cir. 1989).

Even a purely technical violation

of TILA’s disclosure provisions, including the failure to provide
a borrower with two copies of the notice that include the correct
date the rescission period expires, extends the duration of the

1

TILA defines “material disclosures” as disclosures
of the annual percentage rate, the method of
determining the finance charge and the balance upon
which a finance charge will be imposed, the amount of
the finance charge, the amount to be financed, the
total of payments, the number and amount of payments,
the due dates or periods of payments scheduled to repay
the indebtedness, and the disclosures required by
section 1639(a) of this title.
15 U.S.C. § 1602(u).
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right to rescind for three years.

See Semar v. Platte Valley

Fed. Sav. & Loan Ass’n, 791 F.2d 699, 703-05 (9th Cir. 1986).
The Peytons do not identify any “material disclosure”
not made or incorrectly made that would extend the limitation
period to three years.

Instead, the Peytons argue that they did

not receive at closing two accurate and complete TILA notices of
the right to cancel.

The Peytons allege that they only received

one copy of the blank notice attached as Exhibit 3 to the First
Amended Complaint.

See First Amended Complaint ¶ 8.

In

connection with its motion for summary judgment, Sand Canyon
submitted a Notice of Right to Cancel dated October 14, 2005.
See ECF No. 54-9.

There is no dispute that the Peytons signed

that document below language stating, “ON THE DATE LISTED ABOVE
I/WE THE UNDERSIGNED EACH RECEIVED TWO (2) COMPLETED COPIES OF
THE NOTICE OF RIGHT TO CANCEL IN THE FORM PRESCRIBED BY LAW
ADVISING ME/US OF MY/OUR RIGHT TO CANCEL THIS TRANSACTION.”

Id.

The signed acknowledgment of receipt of two copies of
the TILA disclosures creates a “rebuttable presumption” that the
disclosures were made to the Peytons.

See 15 U.S.C. § 1635(c)

(“Notwithstanding any rule of evidence, written acknowledgment of
receipt of any disclosures required under this subchapter by a
person to whom information, forms, and a statement is required to
be given pursuant to this section does no more than create a
rebuttable presumption of delivery thereof.”); Cavaco v. Mortgage

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Elec. Registration Sys., Inc., 2011 WL 1565979, *4 (D. Haw. Apr.
25, 2011) (“Cavaco’s signed acknowledgment of receipt of two
copies of the TILA disclosures creates a ‘rebuttable presumption’
that the disclosures were made to her.”); Rowland v. Novus Fin.
Corp., 949 F. Supp. 1447, 1460 (D. Haw. 1996) (same).

This

rebuttable presumption satisfied the lenders’ initial burden on
this motion of demonstrating entitlement to summary judgment, as
the claim of improper failure to rescind would be time-barred if
the limitation period were not extended to three years.
Because the lenders met their initial burden for
purposes of their summary judgment motions, the burden shifted to
the Peytons “to establish, beyond the pleadings, that there is a
genuine issue for trial.”

Miller, 454 F.3d at 987.

The Peytons

did not do so, submitting no evidence supporting the bare
allegations made in the First Amended Complaint or the arguments
of counsel made in their Oppositions.

See Fed. R. Civ. P. 56(c);

Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir.
2003) (stating that, when the moving party carries its initial
burden on a motion for summary judgment, the nonmoving party
“cannot defeat summary judgment with allegations in the
complaint, or with unsupported conjecture or conclusory
statements”); accord Lane v. Dep’t of Interior, 523 F.3d 1128,
1140 (9th Cir. 2008) (“Lane’s allegations in her complaint and
her attorney’s statements at oral argument are insufficient to

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defeat a summary judgment motion.”); Aguilera v. Pirelli
Armstrong Tire Corp., 223 F.3d 1010, 1019 (9th Cir. 2000) (“On a
motion for summary judgment, the non-moving party cannot simply
rest on its allegations without any significant probative
evidence tending to support the complaint.”).
For example, the Peytons did not rebut the presumption
by submitting their own declarations indicating that they did not
receive two copies of the TILA disclosures.

See, e.g., Rodrigues

v. Newport Lending Corp., 2010 WL 4960065, *6 (D. Haw. Nov. 29,
2010) (holding that plaintiff’s declaration denying receipt of
TILA disclosures was sufficient to create a genuine issue of fact
concerning such receipt despite the rebuttable presumption of
delivery based on plaintiffs’ signed acknowledgment of receipt).
In fact, neither Peyton submitted a declaration or affidavit at
all in connection with opposing the present motions.
Peytons submit a verified First Amended Complaint.

Nor did the
See ECF No.

22.
The Peytons’ Opposition appears to dispute the lenders’
contention that the Peytons had received two copies of the TILA
disclosures.

See Plaintiffs’ Separate and Concise Counter-

Statement of Material Facts in Opposition ¶ 7, ECF No. 58, July
11, 2011.

However, in violation of Local Rule 56.1(c), the

Peytons failed to provide any citation to evidence supporting
that dispute.

Pursuant to Local Rule 56.1(f), this court has no

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independent duty to search for or consider any part of the record
not so identified.

Because the Peytons rely entirely on the

allegations in the First Amended Complaint and argument of
counsel in their Opposition, none of which is admissible
evidence.

They thus fail to raise a genuine issue of material

fact as to whether they properly received two copies of the TILA
disclosures.

In short, they cite no evidence supporting the

extension of the limitation period from three days to three
years.

The admissible evidence therefore renders untimely their

rescission letter of October 11, 2008, ECF No. 38-4.

On the

present record, Sand Canyon’s and/or Deutsche Bank’s alleged
failure to honor the rescission request cannot be said to have
been improper, and they are entitled to summary judgment.
V.

CONCLUSION.
For the reasons stated above, the court grants summary

judgment in favor of Defendants on all remaining claims.

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This

grant of summary judgment makes it unnecessary to reach all of
the arguments raised by Defendants in their motions.
The Clerk of Court is directed to enter judgment in
favor of Defendants and to close this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, August 3, 2011.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

Peyton v. Option One Mortgage Corp.; Civil No. 10-00186 SOM/KSC; ORDER GRANTING
MOTIONS FOR SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS ON ALL REMAINING CLAIMS

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