Sall v. Buonassissi et al
Filing
44
MEMORANDUM OPINION (c/s to Benjamin Kahrl 7/13/11 sat). Signed by Chief Judge Deborah K. Chasanow on 7/13/11. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
MOHAMMED A. SALL
:
v.
:
Civil Action No. DKC 10-2245
:
JOSEPH V. BOUNASSISSI, II,
et al.
:
MEMORANDUM OPINION
In
May
2010,
Plaintiff
Mohammed
A.
Sall
sued
certain
lenders, a trustee, a servicer, and several attorneys involved
in the refinancing and subsequent foreclosure of his home.
originally
alleged
violations
of
various
consumer
Sall
protection
statutes and asserted a number of common law tort claims.
Now,
in the face of motions for judgment from all of the defendants,
Sall has sought leave to amend his complaint to pare it to just
two claims, both relating to the Truth in Lending Act (“TILA”).
Thus, presently pending are (1) a motion for judgment on
the pleadings (ECF No. 23) filed by Defendant Fremont Investment
and Loan (“Fremont”); (2) a motion for summary judgment (ECF No.
29) filed by the remaining defendants; (3) and a motion for
leave to amend (ECF No. 41) filed by Sall.
briefed
and
necessary.
the
court
now
rules,
See Local Rule 105.6.
no
The issues have been
hearing
being
deemed
For the reasons that follow,
Defendants’ motions will be denied as moot, while Sall’s motion
will be granted in part and denied in part.
I.
Background
A.
Factual Background
As framed in Sall’s original complaint, this case concerned
two principal events:
(1) Sall’s decision to refinance the
mortgage on his home in 2006 and (2) the subsequent default and
foreclose of that home a few years later.
1.
Sall’s 2006 Refinance
The complaint explains that this case began in August 2006,
when
Sall
went
to
Fremont
to
discuss
refinancing
his
home.
Fremont approved Sall for a 30-year mortgage with a 50-year
amortization schedule.
Sall’s initial monthly payments were set
at roughly $2850.
Sall says Fremont misrepresented the nature of the loan the
company gave him.
For one, Fremont purportedly told him that he
had received a 30-year fixed rate mortgage.
In reality, the
mortgage was a hybrid adjustable rate mortgage:
Sall would pay
a fixed payment for the first two years, but then pay a variable
rate of interest over the remaining term.
As
part
of
its
misrepresentation,
Fremont
allegedly
misstated some required disclosures and entirely failed to make
others.
Sall says, for instance, that he did not receive a copy
2
of his initial application.
Nor did he receive a copy of his
settlement statement before closing.
Nor did he get a “CHARM”
book – a handbook given to consumers who obtain an adjustable
rate mortgage.
He also alleges that he was not given a copy of
the appraisal report on his home or any information about his
credit score.
And perhaps most importantly, Sall maintains that
his Truth in Lending disclosure statement did not accurately
disclose his payment schedule.
2.
Foreclosure
At some time not indicated in the complaint, Sall’s lender
initiated foreclosure proceedings against him.
action
was
Buonassissi,
filed
by
Henning
several
&
members
Lash,
P.C.
of
the
The foreclosure
law
firm
(collectively,
of
“the
Buonassissi Defendants”),1 who allegedly acted at the behest of
Defendant Wells Fargo.2
The Buonassissi Defendants purportedly
served as substitute trustees for Deutsche Bank National Trust
1
In particular, the lawyers involved in this case are
Joseph V. Buonassissi, II; Richard Henning, Jr.; Richard A.
Lash; Keith M. Yacko; Brian S. McNair; James J. Inabinett, Jr.;
and David A. Rosen.
2
The body of Sall’s complaint merely refers to “Wells
Fargo,” but the caption includes three defendants related to
Wells Fargo: Wells Fargo & Company; Wells Fargo Bank, N.A.; and
Wells Fargo Home Mortgage.
3
Company (“Deutsche Bank”), who Fremont appointed as trustee for
Sall’s loan.
For
various
reasons,
Sall
contends
that
neither
the
Buonassissi Defendants nor Wells Fargo had standing to pursue
the foreclosure action.
According to Sall, the lawyers cannot
act as substitute trustees because (a) “[a] corporation can only
bring
suit
through
an
attorney,
not
through
an
officer
or
appointed agent,” and (b) the attorneys “have no standing . . .
because they are neither owners nor holders in due course of the
note.”
(ECF No. 3 ¶¶ 10, 11).
As for Wells Fargo, Sall insists
the bank does not have any right to enforce his note because
“there is no evidence . . . showing how Wells Fargo obtained
legal possession of the note.”
(Id. ¶ 12).
The original complaint also indicates that a foreclosure
sale was held on January 22, 2010.
B.
Procedural Background
Sall filed his first complaint in the Circuit Court for
Prince George’s County on May 6, 2010.
The complaint contains
eleven counts under federal and state law brought against at
least eleven defendants:
(“ASC”)
(a
Buonassissi
seeks
supposed
successor-in-interest
Defendants;
damages
Fremont; America’s Servicing Company
Wells
(including
Fargo;
punitive
4
and
to
Fremont);
Deutsche
damages
of
$5
Bank.
the
It
million),
several declaratory judgments, and various forms of injunctive
relief - including an order rescinding the foreclosure sale.
On August 16, 2010, Wells Fargo and Deutsche Bank removed
the complaint to this court with the consent of all of the other
defendants.
(ECF
Nos.
1,
2,
18).
After
Defendants
filed
answers in the fall of 2010 (ECF Nos. 15, 19), the court entered
a
scheduling
subsequently
order.
moved
(ECF
for
No.
20).
judgment
in
All
their
of
the
favor.
defendants
First,
on
November 30, 2010, Fremont filed for a motion for judgment on
the pleadings.
(ECF No. 23).
Then, on March 7, 2011, the
remaining Defendants moved for summary judgment.
(ECF No. 29).
For several months, these potentially dispositive motions
sat unanswered – even though Sall was represented by counsel.
In April 2011, the court learned that Sall’s counsel had left
his
prior
firm
and
could
not
be
located.
Before
his
disappearance, counsel did not move to withdraw from the case or
otherwise provide any indication that he was no longer counsel
of record.
In light of the unique circumstances created by the
constructive withdrawal of Sall’s counsel, the court notified
Sall that he would receive 21 additional days to answer the
pending motions.
(ECF No. 30).
New counsel for Sall then
entered the case and requested additional time to respond to the
motions.
(ECF No. 33).
The court granted him that extension
5
and one additional extension a few weeks later.
(ECF Nos. 34,
36).
Finally, on June 7, 2011, new counsel for Sall filed two
oppositions.
(ECF Nos. 39, 40).
The day before, Sall’s new
counsel also filed a motion for leave to amend the complaint.
(ECF No. 37).
The proposed amended complaint trims the number
of defendants to four (Wells Fargo, Fremont, ASC, and Deutsche
Bank) and the number of claims to two (both relating to TILA).
(ECF No. 37-2).
It also focuses solely on Defendants’ purported
failure to make proper disclosures and appropriately respond to
a
rescission
notice,
while
excising
related to the foreclosure.
amendment.
II.
(ECF Nos. 42, 43).
(Id.).
the
“standing”
arguments
All Defendants oppose this
Sall has not filed a reply.
Leave to Amend
Sall wishes to amend his complaint more than a year after
he first filed it.
He lacks written consent to amend from
Defendants, and Defendants filed their answers several months
ago.
Thus, Sall needs leave of court to file his proposed
amended complaint.
The parties focus most of their attention on Federal Rule
of Civil Procedure 15(a)(2).
That rule provides that the court
should “freely give leave” to amend “when justice so requires.”
6
Defendants suggest that, despite this liberal standard, Sall’s
proposed amendment should be denied as futile.
Both parties, however, overlook an important complication:
the scheduling order in this case set a deadline of November 8,
2010 for the amendment of pleadings; that deadline has long
since passed.
(ECF No. 20, at 2).
In consequence, Sall must do
more than satisfy Rule 15(a)’s liberal standard; he must first
meet the mandates of Rule 16(b)(4), which calls for “good cause”
to
change
a
scheduling
order.
See
Nourison
Rug
Corp.
v.
Parvizian, 535 F.3d 295, 298-99 (4th Cir. 2008); see also Wilson
v. Appalachian Power Co., No. 3:10-0445, 2011 WL 221656, at *1
(S.D.W.Va.
Jan.
24,
2011)
(applying
two-step
test
employing
Rules 16(b) and 15(a) in analyzing untimely motion for leave to
amend); Rassoull v. Maximus, Inc., 209 F.R.D. 372, 373 (D.Md.
2002) (same).
1.
Rule 16(b): The “Good Cause” Standard
Rule 16(b) focuses on the proposed amendment’s timeliness
and the reasons behind its tardy submission.
F.R.D. at 374.
In particular, Rule 16(b) requires the movant to
show that he acted diligently.
the
non-moving
Rassoull, 209
party
could
The court also considers whether
be
prejudiced
by
the
delay,
the
length of the delay, and whether the movant acted in good faith.
7
Tawwaab v. Va. Linen Serv., Inc., 729 F.Supp.2d 757, 768-69
(D.Md. 2010).
The parties offer no discussion of “good cause,” but a
review of the record suggests it may be appropriately found
here.
it
Sall’s original counsel filed nothing in this case once
was
removed.
Instead,
he
entirely
failed
to
respond
to
communications from the court and ignored the pending motions
that could end Sall’s case.
Because communications from this
court were directed to original counsel, it is not even clear
that Sall received word that his case was progressing and faced
dismissal.
As soon as the court wrote him directly, he took
diligent steps to advance his case.
counsel.
He promptly obtained new
That counsel entered an appearance and properly moved
for extensions of time.
Now, as promised, he has in fact filed
an amended complaint.
Of course, the ordinary rule is that simple carelessness,
inadvertence, or attorney error does not amount to good cause
justifying a modification of the scheduling order.3
Nor does the
entry of new counsel, standing alone, justify a finding of good
3
See, e.g., O’Connell v. Hyatt Hotels of P.R., 357 F.3d
152, 155 (1st Cir. 2004); Graham v. Progressive Direct Ins. Co.,
271 F.R.D. 112, 121 (W.D.Pa. 2010); Mann v. Fernandez, 615
F.Supp.2d 1277, 1285 (D.N.M. 2009).
8
cause.4
These related concepts are based on the same underlying
idea:
“a
party
voluntarily
chooses
his
attorney
as
his
representative in the action, and, thus, he cannot later avoid
the
consequences
of
selected agent.”
the
acts
or
omissions
of
this
Robinson v. Wix Filtration Corp. LLC, 599 F.3d
403, 409 (4th Cir. 2010) (quotation marks omitted).
fundamental
circuit’s
principle
general
disadvantaged
by
freely
must
preference
the
also
that
procedural
Yet that
be
balanced
against
a
blameless
party
errors
or
neglect
“this
not
of
be
her
attorney.”
Harris v. U.S. R.R. Ret. Bd., 198 F.3d 139, 141 (4th
Cir. 1999).
And where an attorney entirely abandons his client,
that presents a different situation than a mere mistake or a
strategic misjudgment.
In the exceptional circumstance where an
attorney completely abdicates his responsibilities, good cause
can be found.
See, e.g., Matrix Motor Co., Inc. v. Toyota
Jidosha Kabushiki Kaisha, 218 F.R.D. 667, 674 (C.D.Cal. 2003);
(explaining that good cause could be found if a party’s “lawyers
were guilty of gross negligence or abandonment”); cf. Cunningham
v. New Jersey, 230 F.R.D. 391, 394 (D.N.J. 2005) (holding, in
4
See, e.g., Buchanan Cnty., Va. v. Blankenship, 545
F.Supp.2d 553, 555 n.2 (W.D.Va. 2008); Johns v. AutoNation USA
Corp., 246 F.R.D. 608, 610 (D.Ariz. 2006); Marcin Eng’g, LLC v.
Founders at Grizzly Ranch, LLC, 219 F.R.D. 516, 521 (D.Colo.
2003).
9
service of process context, that good cause was shown where
counsel “abandoned his representation”).
This is especially so
where, as here, a client acts with apparent diligence once his
counsel’s abandonment becomes clear.
Other
considerations
relevant
also imply it exists here.
to
the
good
cause
inquiry
There is no hint of bad faith.
delay is not prohibitively long.
The
Nor have Defendants suggested
that they will suffer any prejudice from Sall’s delay in seeking
to amend.
Prejudice is unlikely in a circumstance such as this
one, where the chief aim of the amendment is to strike several
claims and some defendants.
F.R.D.
80,
82
(S.D.W.Va.
See McCoy v. Erie Ins. Co., 204
2001)
(explaining
that
deletion
of
claims is not as problematic under Rule 16(b), as the rule is
“practically” intended to prevent a party from “decimating” a
scheduling order with “late attempts to complicate or change the
nature
of
presented
discovery.”
the
case”).
In
would
not
“require
much,
Inc.
Sugarloaf
Safeway,
addition,
v.
the
if
new
allegations
any,
additional
P’ship,
LLC,
423
F.Supp.2d 531, 539 (D.Md. 2006).
In sum, there is good cause for Sall’s implicit request to
modify the scheduling order.
10
B.
Rule 15(a): Prejudice, Bad Faith, and Futility
Having
established
good
cause,
Sall
must
also
meet
the
requirements of Rule 15(a), which explains that leave should be
“freely given.”
leave
does
The principle that a court should freely give
not
circumstance.
require
The
the
court
court
obviously
to
give
“retain[s]
it
in
every
the
power
to
ensure that pleadings perform their proper function of framing
the issues and facilitating the fair conduct of litigation.”
Deasy v. Hill, 833 F.2d 38, 42 (4th Cir. 1987); see also Simmons
v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 769 (4th Cir.
2011) (“[A] district court has discretion to deny a motion to
amend a complaint, so long as it does not outright refuse to
grant
the
leave
without
any
justifying
reason.”).
A
court
should exercise this power and deny leave when (1) the proposed
amendment would prejudice the opposing party, (2) the movant has
acted
in
futile.
bad
faith,
or
(3)
the
proposed
amendment
would
be
Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th
Cir. 1986).
As noted, Defendants do not argue that Sall’s decision to
drop his original claims would prejudice them.
They do not
point to any indication of bad faith, and the court can discern
none on its own.
And futility is obviously not a relevant
consideration when claims are being dropped.
11
Accordingly, there
is no reason to deny Sall leave to amend his complaint to drop
counts three through eleven and certain defendants (i.e., the
Buonassissi Defendants, Wells Fargo & Company, and Wells Fargo
Bank, N.A.).
That part of Sall’s motion will be granted.
Defendants do argue, however, that the remaining, reshaped
claims contained within the proposed amendment are futile.
An
amendment is futile if it would not survive a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6).
See Perkins v.
United States, 55 F.3d 910, 917 (4th Cir. 1995); accord Cuffee v.
Verizon Commc’ns, Inc., 755 F.Supp.2d 672, 677 (D.Md. 2010).
Consequently,
leave
to
amend
should
be
denied
if
the
well-
pleaded facts underlying the proposed new claims do not amount
to a “showing” that the plaintiff is entitled to relief.
Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007); see also
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) (explaining that
a “showing” is more than the “mere possibility of misconduct”).
In
the
same
way,
if
the
amended
pleading
contains
facts
sufficient to rule on an affirmative defense, the court may
consider that defense on a motion for leave to amend.
See
Pressley v. Tupperware Long Term Disability Plan, 553 F.3d 334,
336 (4th Cir. 2009) (explaining that a statute of limitations
defense may sometimes be considered on a motion to dismiss).
12
The amended complaint contains two counts.
Sall
seeks
a
declaratory
judgment
related
to
rescission he mailed to one of the defendants.
In one count,
a
notice
of
In the other
count, Sall seeks damages stemming from Defendants’ allegedly
wrongful denial of his TILA-based claim for rescission.
The
court addresses each count in turn.
1.
Declaratory Judgment and the Validity of the
Rescission
One count of Sall’s complaint is styled as a request for
“declaratory judgment.”
elements
of
particular,
violations
both
Sall
The count, however, actually contains
declaratory
alleges
committed
by
and
that,
Defendants,
right to rescind” on July 22, 2009.
injunctive
spurred
he
by
“timely
relief.
In
certain
TILA
exercised
his
(ECF No. 41-2 ¶ 28).
He
purportedly exercised this right by sending a letter to ASC.
(Id.).
Among other things, he now asks for a declaration that
his rescission was “timely and lawful,” a declaration that the
foreclosure proceedings were null and void, and an order to
Defendants to release the lien on his home.
(Id. at 10).
Sall’s claim rests on the notion that the lien on his home
“instantly became void” when he sent that letter (id. ¶ 36), but
that notion is incorrect.
remedy.
TILA does create a limited rescission
When rescission is validly initiated, “the creditor
terminates its security interest and returns any payments made
13
by the debtor in exchange for the debtor’s return of all funds
or
property
2008).
rescission,
from
the
creditor
(usually,
the
loan
Andrews v. Chevy Chase Bank, 545 F.3d 570, 573 (7th
proceeds).”
Cir.
received
When
the
a
lender
lender
receives
a
valid
should
initiate
a
winding
security interest within 20 days.
request
up
of
15 U.S.C. § 1635(b).
for
its
The
goal of this process is to restore the parties to the “status
quo ante.”
Am. Mortg. Network, Inc. v. Shelton, 486 F.3d 815,
820 (4th Cir. 2007).
A borrower may rescind in two principal situations.
For
one, a borrower may rescind anytime within three days of the
loan closing.
See 15 U.S.C. § 1635(a).
More importantly (at
least in this case), a borrower may also rescind if the lender
fails to provide the borrower with certain required disclosures.
If
that
happens,
the
borrower
may
rescind
the
transaction
anytime within three days of the time when the disclosures are
finally made.
finally
Id.
extinguished
In most cases, the right to rescind is
after
three
years.5
See
15
U.S.C.
§
1635(f).
The borrower initiates the rescission process by sending a
notice
to
his
lender,
15
U.S.C.
5
§
1635(b),
but
“unilateral
There are limited exceptions to this three-year bar,
but they are not relevant here.
14
notification
loan
of
cancellation
contract.”
Citifinancial,
Shelton,
Inc.,
228
does
486
not
F.3d
F.Supp.2d
automatically
at
821;
664,
void
accord
667
Ray
(D.Md.
the
v.
2002)
(“Within the meaning of [TILA], ‘rescission’ does not mean an
annulment
that
is
pronouncement.”).
definitively
accomplished
by
unilateral
Were that the case, borrowers could reduce
their lenders to unsecured creditor status by asserting even
baseless TILA violations.
the
security
“acknowledges
interest
that
the
Shelton, 486 F.3d at 821.
is
right
voided
of
only
rescission
when
is
Instead,
the
lender
available,
because the appropriate decision maker has so determined.”
(quotation marks omitted).
or
Id.
Absent one of those two events, “the
right of rescission lies dormant.”
DeCosta v. U.S. Bancorp, No.
DKC 10-0301, 2010 WL 3824224, at *5 (D.Md. Sept. 27, 2010).
Thus, the court cannot declare, as Sall requests, that the
lien on his home was voided and that the foreclosure proceeding
was a nullity at the moment Sall sent his notice.
But Sall’s
claim is not futile, as Defendants apparently suggest, merely
because
his
position
is
mistaken.
Sall
has
presented
appropriate request to determine the rights of the parties.
fact that Sall will ultimately be unsuccessful is irrelevant:
Where a bill of complaint shows a subject
matter that is within the contemplation of
the relief afforded by the declaratory
decree statute, and it states sufficient
15
an
The
facts to show the existence of the subject
matter
and
the
dispute
with
reference
thereto, upon which the court may exercise
its declaratory power, it is immaterial that
the ultimate ruling may be unfavorable to
the plaintiff.
The test of the sufficiency
of the bill is not whether it shows that the
plaintiff is entitled to the declaration of
rights or interest in accordance with his
theory, but whether he is entitled to a
declaration at all; so, even though the
plaintiff may be on the losing side of the
dispute, if he states the existence of a
controversy which should be settled, he
states a cause of suit for a declaratory
decree.
Charter Oak Fire Ins. Co. v. Am. Capital, Ltd., No. DKC 09-0100,
2011 WL 856374, at *18 (D.Md. Mar. 9, 2011) (quotation marks
omitted); see also, e.g., 22A Am.Jur.2d Declaratory Judgments
§ 232 (2011 supp.) (explaining in analogous context of motion to
dismiss a declaratory judgment that it is irrelevant “whether
the plaintiff is entitled to a favorable declaration” and that
motions
to
dismiss
are
not
permitted
plaintiff may not be able to prevail”).
“simply
because
the
Sall will be granted
leave to amend his complaint to pursue a declaratory judgment
action
against
the
four
defendants
named
in
his
amended
complaint, should he still wish to pursue one despite the likely
unfavorable
outcome.
He
should
file
an
amended
complaint
reflecting any such claim within 21 days.
It
would
“declaratory
appear,
judgment”
however,
also
that
contains
16
Sall’s
elements
request
of
for
a
injunctive
relief.
If
Sall’s
request
for
a
declaratory
judgment
is
actually an attempt to rescind his mortgage through this action,
then he is simply too late.
As this court explained just last
year in DeCosta, an action for rescission is untimely when it is
brought
more
than
three
years
after
consummation
of
the
transaction, even if the borrower mails the lender a notice of
rescission within the three-year period.
*5.
2010 WL 3824224, at
This is so because, again, the notice only expresses a
claimed entitlement to right of rescission; it does not actually
exercise
the
right.
Id.
Moreover,
if
timely
notice
were
enough, borrowers would be able to cloud title on their home for
years to come merely by mailing a letter.
Id.
And, practically
speaking, letters of notice – unlike lawsuits - are sometimes
lost.
Finding
such
notice
sufficient
would
“introduce[]
a
lacuna between the expiration of the right to rescind and the
time in which the lender might learn of a purportedly timely
Rescission that it does not recall receiving, with foreclosure
(and perhaps even subsequent sale) falling within that temporal
no-man’s-land.”
Rosenfield v. HSBC Bank, USA, No. 10-cv-00085-
MSK-MEH, 2010 WL 3489926, at *5 (D.Colo. Aug. 31, 2010).
What is more, filing a notice within the three-year period
is not enough because § 1635(f) is a statute of repose, not a
statute of limitations.
Jones v. Saxon Mortg., Inc., 537 F.3d
17
320, 326-27 (4th Cir. 1998) (explaining that § 1635(f) is an
“absolute time limit”); see also Beach v. Ocwen Fed. Bank, 523
U.S. 410, 412 (1998).
Statutes of repose bar lawsuits initiated
after the end of the period of repose in every circumstance, as
the statute extinguishes the substantive right - not merely the
right’s enforcement and remedy.
Tidewater Fin. Co. v. Williams,
341
2006).
B.R.
530,
538
n.9
(D.Md.
obviously cannot support a suit.
F.2d 508, 511 (4th
An
extinguished
right
See Goad v. Celotex Corp., 831
Cir. 1987) (“Statutes of repose make the
filing of suit within a specified time a substantive part of
plaintiff’s cause of action.
In other words, where a statute of
repose has been enacted, the time for filing suit is engrafted
onto a substantive right created by law.” (citations omitted));
accord Caviness v. Derand Res. Corp., 983 F.2d 1295, 1300 n.7
(4th Cir. 1993); First United Methodist Church of Hyattsville v.
U.S. Gypsum Co., 882 F.2d 862, 866 (4th Cir. 1989); see also
Black’s
Law
(9th
Dictionary
ed.
2009)
(defining
“statute
of
repose” as “a statue barring any suit that is brought after a
specified
lifeless
time”).
right
The
alive
notion
that
indefinitely
a
borrower
merely
by
could
filing
keep
a
even
a
groundless rescission notice is offensive to the very idea of a
statute of repose.
Mortg.,
Inc.,
410
See, e.g., Williams v. Wells Fargo Home
F.App’x
495,
18
499
(3d
Cir.
2011)
(“Mere
invocation without more . . . will not preserve the right beyond
the three-year period.
Rather, consistent with § 1635(f), a
legal
the
action
to
enforce
right
must
be
filed
within
the
three-year period or the right will be completely extinguished.”
(quotation marks and brackets omitted)).
Thus,
any
claim
for
rescission
is
now
untimely.
Sall
indicates that he closed on this loan at some point in August
2006.
His right to rescind expired in August 2009.
file suit until May 2010, almost four years later.
his
suit
is
well
past
rescission under TILA.
the
three-year
period
of
He did not
As a result,
repose
for
The fact that he filed a notice with his
lender does not change these basic facts.6
2.
Statutory Damages for Wrongful Refusal to Rescind
Sall also seeks damages for Defendants’ allegedly wrongful
denial of his request for rescission.
claim
for
damages
limitations period.
is
barred
by
Defendants argue that any
TILA’s
one-year
statute
of
They further argue that Sall cannot collect
6
As if that were not enough, TILA also provides that a
borrower’s right to rescission “shall expire . . . upon the sale
of the property.” 15 U.S.C. § 1635(f). Sall’s home was sold in
a January 2010 foreclosure sale, apparently barring relief in a
second sense.
The Fourth Circuit has also cautioned that “to
permit tolling under § 1635(f) to allow a party to rescind after
a foreclosure sale would be unwise.” Jones, 537 F.3d at 327.
19
damages for wrongful rescission because “Sall has no right to
rescission.”
(ECF No. 42, at 5).
TILA does indeed contain a one-year statute of limitations
for damage awards.
Specifically, any claim for damages under
TILA must be brought “within one year from the date of the
occurrence of the violation.”
15 U.S.C. § 1640(e).
Defendants
seize on this provision and argue that Sall’s claims must be
barred, as the closing occurred in August 2006.
Yet Sall’s claims are not premised on anything happening in
August 2006.
Rather, he seeks damages related to his July 2009
attempt at rescission.
Such a claim is separate and distinct
from any now time-barred claims associated with disclosures at
the time of closing.
See 15 U.S.C. § 1640(a) (providing for
damages when a creditor fails to comply with § 1635); see also
Staley v. Americorp Credit Corp., 164 F.Supp.2d 578, 584 (D.Md.
2001); Abel v. Knickerbocker Realty Co., 846 F.Supp. 445, 449-50
(D.Md. 1994) (awarding damages for lender’s failure to honor
request for rescission, where borrower established that she made
valid rescission request).
Because Sall sued within a year of
his rescission notice (and its subsequent denial), his claim for
damages is timely.7
7
See, e.g., Belini v. Wash. Mut. Bank, FA,
This assumes, of course, that the amendment concerning
the wrongful refusal to rescind relates back to the filing of
20
412 F.3d 17, 25-26 (1st Cir. 2005) (holding that, where borrower
premises damages claim on wrongful refusal to rescind, one-year
limitations period begins either on date of rescission notice or
20 days later).8
Defendants
also
argue
that
they
cannot
face
damages
stemming from Sall’s July 2009 request for rescission, as Sall
has no present right to rescind.
They rely upon a series of
cases holding that “a borrower has no TILA claim for failing to
rescind after notice, if there is no right to rescind.”
No. 42, at 5).
(ECF
In each of those cases, however, the borrower
had no right to rescind at the time he sent the notice.
See,
e.g., Miguel v. Country Funding Corp., 309 F.3d 1161, 1165 (9th
Cir. 2002) (borrower notified bank after expiration of threeyear
statute
of
repose);
Rodenhurst
v.
Bank
of
Am.,
---
F.Supp.2d ----, No. 10–00167 LEK–BMK, 2011 WL 768674, at *8
original
complaint.
See
Fed.R.Civ.P.
15(c)(2).
“One
circumstance rendering [an] amendment futile is when the statute
of limitations has run and the amendment would not relate back
under Rule 15(c).”
Barnes v. Prince George’s Cnty., Md., 214
F.R.D. 379, 380 (D.Md. 2003).
Because Defendants did not
discuss this issue, it is not considered here.
8
The idea that a borrower may collect from a lender for
his wrongful refusal to rescind does not conflict with the
Fourth Circuit’s position that rescission does not automatically
occur upon notice. “[R]escission is not automatic when a notice
of rescission is sent, but a creditor can still be held liable
for wrongfully refusing to rescind when asked to do so by a
debtor.” Belini, 412 F.3d at 25 n.3.
21
(D.Haw. Feb. 23, 2011) (same); Caminero v. Wells Fargo Bank,
N.A., No. 1:07cv800, 2008 WL 640264, at *6 (E.D.Va. Mar. 5,
2008) (same).9
Thus, those cases merely stand for the common
sense proposition that a borrower may not collect damages for a
lender’s refusal to respect a notice claiming a right already
extinguished
at
the
time
notice
is
given.
In
this
case,
however, Sall still (allegedly) possessed a right to rescind at
the time he sent his notice to the lenders.
Consequently, even
though that right has now been extinguished, he may still pursue
a
damages
action
appropriately
to
for
what
the
was
–
lenders’
at
least
refusal
to
at
point
that
respond
–
an
allegedly valid request for rescission.
Yet Sall may not proceed with his claim for damages against
all Defendants.
The amended complaint indicates that Sall sent
his notice to only ASC.
imposes
“receipt
requirements
of
a
notice
In the context of rescission, TILA
to
act
only
of
rescission.”
9
upon
those
15
creditors
U.S.C.
§
in
1635(b).
The last case cited by Fremont, Nix v. Option One
Mortg. Corp., No. 05-03685, 2006 WL 166451, at *6 (D.N.J. Jan.
16, 2006), supports Sall’s position on the damages issue.
In
that case, the borrower filed a notice of rescission within the
repose period. Much like this case, he then waited too long to
file suit, rendering his claim for rescission untimely.
Nevertheless, the court separately analyzed the timeliness of
the borrower’s separate claim for damages stemming from lender’s
refusal to rescind, rather than relying on the fact that the
statute of repose for rescission had expired.
22
Hence, Sall’s claim for damages is futile as to all Defendants
save ASC.
Consequently, Sall will also be granted leave to amend his
complaint to state a claim for damages, but against only ASC.
He should file an amended complaint reflecting this claim within
21 days.
III. Remaining Motions
As noted, all Defendants filed motions seeking judgment in
their favor.
Defendants directed their motions at the prior,
superseded complaint.
The motions are now moot and will be
denied.
IV.
Conclusion
For the foregoing reasons, the motion for leave to amend
will be granted in part and denied in part.
will be denied as moot.
Defendants’ motions
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
23
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