Diamond v. Chase Bank et al

Filing 6

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 8/19/2011. (kns, Deputy Clerk)(c/m 8/19/11)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
DION T. DIAMOND
:
v.

:

Civil Action No. DKC 11-0907

:
CHASE BANK, et al.
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this consumer
lending case is a motion to dismiss filed by Defendants JPMorgan
Chase

Bank,

N.A.,

(ECF No. 4).

and

Deutsche

Bank

National

Trust

Company.

The relevant issues have been briefed and the

court now rules pursuant to Local Rule 105.6, no hearing being
deemed

necessary.

For

the

reasons

that

follow,

Defendants’

motion will be granted in part.
I.

Background
Plaintiff

Dion

T.

Diamond,

proceeding

pro

se,

commenced

this action on April 7, 2011, by filing a complaint seeking
declaratory relief related to Defendants’ alleged violations of
the Truth in Lending Act (“TILA”), the Real Estate Settlement
and Procedures Act (“RESPA”), and/or the Fair Debt Collection
Practices Act (“FDCPA”).

(ECF No. 1).

Although the complaint

is lacking in detail – Plaintiff asserts that it is “sufficient
to plead that TILA has been violated” and “[s]pecific violations

1

do not necessarily have to be alleged with particularity” (id.
at ¶ 6) – it appears to relate to a deed of trust executed by
Plaintiff and his spouse, Sharon L. Diamond, on September 21,
2005, which secured a mortgage in the amount of $183,000 related
to their purchase of a home in Riverdale, Maryland.

(ECF No. 4-

2).1
The

complaint

recites

that,

at

some

unspecified

time,

Plaintiff learned through “news reports” that “large financial
institutions were blatantly breaking the law” by “not giving
proper

disclosures,

forging

document[s],

creating

false

documents for submission to the courts and falsifying incomes
and other information from applicants.”

(ECF No. 1 ¶¶ 8, 9).

These reports “triggered” Plaintiff “to investigate to be sure
that [he] was not a victim of such practices.”

(Id. at ¶ 9).

He subsequently “found through review of a preliminary forensic
audit . . . of the loan documents that various violations of the
Truth [i]n Lending Act exist.”

(Id. at ¶ 5).

On October 23, 2010, upon learning of the alleged TILA
violations,

Plaintiff

sent

Defendants

1

–

who

are

apparently

“[C]ourts may consider a document that a defendant
attaches to its motion to dismiss if the document ‘was integral
to and explicitly relied on in the complaint and if the
plaintiffs do not challenge its authenticity.’”
CACI Int’l,
Inc. v. St. Paul Fire and Marine Ins. Co., 566 F.3d 150, 154 (4th
Cir. 2009) (internal marks omitted) (quoting Am. Chiropractic
Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 214 (4th Cir.
2004)).
2

either

lenders

or

servicers

of

the

underlying

loan

–

a

“Qualified Written Request, Demand for Validation of the alleged
debt (per FDCPA) and Demand for audits of the entire account.”
(Id. at ¶ 11).

Approximately one month later, he sent a “Notice

. . . of Right [t]o Cancel,” and, on April 2, 2011, he sent a
“Qualified

Written

Request

with

Right

to

Cancel

to

defendants[’] Resident Agents in the state of Maryland.”

the

(Id.).

Defendant Chase Bank allegedly responded by sending Plaintiff “a
packet with copies of all [his] closing documents,” stating that
“any information not included in [the packet] is unavailable or
considered proprietary, and will not be provided.”

(Id. at ¶

13).
Plaintiff alleges that Defendants’ response to his various
requests
(Id.).
with

was

“deficient”

and

violated

RESPA

and/or

FDCPA.

He further contends that Defendants have not complied

their

obligations

under

TILA,

specifically

15

U.S.C.

§

1635(b), and its implementing regulations, 12 C.F.R. § 226.1, et
seq. (“Regulation Z”), upon receipt of his notice attempting to
exercise

his

right

of

rescission.

As

declaratory

relief,

Plaintiff seeks a judgment that “any claims/security interest .
.

.

the

Defendants

.

.

.

purport[]

to

hold

.

.

.

is

void/extinguished as a result of violations in TILA/RESPA/REG Z
and rescission is therefore enforced.”

(Id. at 8).

He also

seeks “a declaration that the title to the subject property is
3

vested in Plaintiff alone and that Defendant(s) herein . . . be
declared to have no estate, right, title or interest in the
subject property and that . . . [they] be forever enjoined from
asserting any estate, right, title or interest in the subject
property.”

(Id. at 10).

On May 23, 2011, Defendants jointly moved to dismiss for
failure

to

state

a

claim,

arguing

that

“whatever

right

of

rescission Plaintiff may have had expired on September 21, 2008,
and the instant lawsuit is time-barred.”

(ECF No. 4-1, at 1).

The following day, the Clerk sent a letter to Plaintiff advising
that

a

potentially

required

his

dispositive

response

within

motion

seventeen

had

been

days.

filed
(ECF

which

No.

5).

Despite the Clerk’s warning that his failure to respond could
result

in

dismissal

of

the

case

motion

to

without

further

notice,

Plaintiff failed to respond.
II.

Standard of Review
The

purpose

of

a

dismiss

pursuant

12(b)(6) is to test the sufficiency of the complaint.

to

Rule

Presley

v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).
At

this

stage,

the

court

must

consider

all

well-pleaded

allegations in a complaint as true, Albright v. Oliver, 510 U.S.
266, 268 (1994), and must construe all factual allegations in
the

light

most

favorable

to

the

plaintiff,

see

Harrison

v.

Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir.
4

1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134
(4th Cir. 1993)).

In evaluating the complaint, the court need

not accept unsupported legal allegations.

Revene v. Charles

County Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989).
agree

with

legal

conclusions

couched

as

Nor must it

factual

allegations,

Ashcroft v. Iqbal, ––– U.S. ––––, ––––, 129 S.Ct. 1937, 1950
(2009),

or

conclusory

factual

allegations

devoid

of

any

reference to actual events, United Black Firefighters v. Hirst,
604

F.2d

844,

(4th

847

Cir.

1979);

see

also

Francis

v.

Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).
Defendants have moved to dismiss on limitations grounds.
The statute of limitations is an affirmative defense that a
party typically must raise in a pleading under Fed.R.Civ.P. 8(c)
and is not usually an appropriate ground for dismissal.

See

Eniola v. Leasecomm Corp., 214 F.Supp.2d 520, 525 (D.Md. 2002);
Gray

v.

Metts,

Nevertheless,
complaint

203

F.Supp.2d

dismissal

clearly

is

reveals

affirmative defense.”

426,

proper
the

428

“when

existence

the
of

(D.Md.
face
a

2002).
of

the

meritorious

Brooks v. City of Winston-Salem, N.C., 85

F.3d 178, 181 (4th Cir. 1996); see also Rice v. PNC Bank, N.A.,
No. PJM 10-07, 2010 WL 1711496, at *3 (D.Md. Apr. 26, 2010)
(dismissing

TILA

claims

on

motion

to

dismiss

as

untimely).

Here, the deed of trust is integral to Plaintiff’s complaint –
indeed,

he

seeks

rescission

of
5

it

–

and

Plaintiff

has

not

challenged

the

authenticity

Defendants’ motion papers.

of

the

instrument

attached

to

Thus, the court may consider the

deed of trust, without converting Defendants’ motion to one for
summary

judgment,

even

though

specifically mention it.

the

complaint

itself

does

not

See generally Fare Deals Ltd. v. World

Choice Travel.Com, Inc., 180 F.Supp.2d 678, 683 (D.Md. 2001) (if
the “bare allegations of the complaint” conflict with exhibits
or other properly considered documents, then “the exhibits or
documents prevail”); see also RaceRedi Motorsports, LLC v. Dart
Mach.,

Ltd.,

640

F.Supp.2d

660,

664

(D.Md.

2009).

In

considering the deed of trust along with the allegations in
Plaintiff’s complaint, the merit of the defense is apparent.
III. Analysis
While

Plaintiff

alludes

to

violations

of

RESPA

and/or

FDCPA, he does not seek relief with respect to those alleged
violations, nor could he state a claim for the relief sought
under those provisions.

See Barret v. Am. Partners Bank, No.

AW-08-0319, 2009 WL 2366282, at *6 (D.Md. July 28, 2009) (no
right to rescission under RESPA);

Scott v. Wells Fargo Home

Mortg., Inc., 326 F.Supp.2d 709, 718 (E.D.Va. 2003) (“the law is
well-settled

.

.

.

that

creditors,

mortgagors,

and

mortgage

servicing companies are not debt collectors and are statutorily
exempt from liability under the FDCPA”) (emphasis removed).

6

The

crux

violations,

of

the

complaint

particularly,

relates

Defendants’

to

alleged

alleged

TILA

failure

to

recognize Plaintiff’s right of rescission, which he purportedly
exercised in or around November 2010 by sending Defendants a
“Notice

.

declaration
result,

.

.

of

that

that

Right

his

[t]o

Cancel.”

rescission

Defendants’

was

He

now

effective

“claims/security

asks

–

for

a

as

a

and,

interest”

in

the

property is “void/extinguished” – and that “the title to the
subject property is vested in Plaintiff alone.”
Plaintiff’s

underlying

claim

rests

upon

the

notion

that

“the security interest, promissory note or lien . . . on the
property becomes automatically void upon mailing of the Notice
of the Right to Cancel.”

(ECF No. 1 ¶ 19).

incorrect.

that

It

is

true

the

borrower

This notion is
initiates

the

rescission process by sending a notice to his lender, 15 U.S.C.
§ 1635(b), but “unilaterial notification of cancellation does
not automatically void the loan contract.”

Am. Mortg. Network,

Inc. v. Shelton, 486 F.3d 815, 821 (4th Cir. 2007); accord Ray v.
Citifinancial,

Inc.,

228

F.Supp.2d

664,

667

(D.Md.

2002)

(“Within the meaning of [TILA], ‘rescission’ does not mean an
annulment

that

pronouncement.”).

is

definitively

accomplished

by

unilateral

If that were the case, borrowers could reduce

their lenders to unsecured creditor status by asserting even
baseless TILA violations.

Shelton, 486 F.3d at 821.
7

Instead,

the

security

“acknowledges

interest
that

the

is

voided

right

of

only

rescission

when
is

the

lender

available,

because the appropriate decision maker has so determined.”
(quotation marks omitted).

or
Id.

Absent one of these two events, “the

right of rescission lies dormant.”

DeCosta v. U.S. Bancorp.,

No. DKC 10-0301, 2010 WL 3824334, at *5 (D.Md. Sept. 27, 2010).
Moreover, a borrower’s right of rescission is subject to
certain

limitations.

A

borrower

three days of the loan closing.

may

rescind

anytime

within

See 15 U.S.C. § 1635(a).

A

borrower may also rescind if the lender fails to provide him or
her with certain required disclosures.

If that happens, the

borrower may rescind the transaction anytime within three days
of the date the disclosures are finally made.

Id.

If the

required disclosures are never made, or if they are deficient in
some respect, the right of rescission “expire[s] three years
after the date of consummation of the transaction or upon the
sale of the property, whichever occurs first,” absent certain
exceptions not applicable here.

15 U.S.C. § 1635(f); see also

12 C.F.R. § 226.23(a)(3).
Because

Plaintiff

has

not

specified

the

nature

of

Defendants’ alleged TILA violations, it is unknown whether his
right of rescission expired within three days or three years of
consummation of the underlying loan.

Nevertheless, it is clear

that Plaintiff failed to exercise that right within three years.
8

The deed of trust was executed on September 21, 2005.

According

to Plaintiff, he did not send his “Notice . . . of Right [t]o
Cancel” until November 2010, at the earliest.
Thus,

Plaintiff’s

attempted

rescission

(ECF No. 1 ¶ 11).

was

not

valid

and

Defendants’ obligations upon receipt of a valid request were
never triggered.
Indeed, Plaintiff appears to be aware of a potential issue
as to the timeliness of his exercise of the right insofar as he
argues that “[e]quitable tolling [applies] to the three year
period of rescission” because he “could not have discovered . .
. [Defendants’] concealed acts” before he did.
10).

(ECF No. 1 ¶

This argument fails to consider that § 1635(f), the TILA

section that prescribes the relevant time limit, “is a statute
of repose and not a statute of limitation.”

Jones v. Saxon

Mortg., Inc., 537 F.3d 320, 326 (4th Cir. 1998).

“[A] statute of

repose creates a substantive right in those protected to be free
from liability after a legislatively-determined period of time.”
Id. at 327 (citing First United Methodist Church of Hyattsville
v. U.S. Gypsum Co., 882 F.2d 862, 865 (4th Cir. 1989)).

Thus, §

1635(f) prescribes “an absolute time limit” and “the time period
stated therein is typically not tolled for any reason.”

Jones,

537 F.3d at 327; see also Beach v. Ocwen Federal Bank, 523 U.S.
410, 417 (1998) (§ 1635(f) “talks not of a suit’s commencement
but

of

a

right’s

duration,

which
9

it

addresses

in

terms

so

straightforward as to render any limitation on the time for
seeking a remedy superfluous”).
To

the

extent

Plaintiff’s

request

for

a

declaratory

judgment is actually an attempt to rescind his mortgage through
this action, he is simply too late.

In that regard, he has

failed to state a claim and his claim is subject to dismissal
under Rule 12(b)(6).
Insofar as this truly is a declaratory judgment action,
however,
because

Plaintiff
his

has

position

not
lacks

failed
merit.

to

state
He

a

has

claim

merely

presented

an

appropriate request to determine the rights of the parties, and
the fact that he 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
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.

10

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.)

declaratory

(in

judgment

the

context

action,

it

of
is

a

motion

irrelevant

to

dismiss

“whether

a

the

plaintiff is entitled to a favorable declaration”; a motion to
dismiss cannot be granted “simply because the plaintiff may not
be able to prevail”).
It may be proper, under these circumstances, for a court to
construe a motion to dismiss as a motion for a declaration in
favor of the non-moving party.

See McKinsey & Co., Inc. v.

Olympia & York 245 Park Ave. Co., 433 N.Y.S.2d 802, 802 (N.Y.
App. Div. 1980) (“In the absence of a holding that a dispute is
not

ripe

for

adjudication,

a

court

should

not

dismiss

the

complaint in a declaratory judgment action, but should declare
the parties’ rights.”).
Taking as true the well-pleaded allegations contained in
the complaint, and considering the deed of trust upon which the
complaint relies, it is apparent that (1) Plaintiff’s attempted
rescission in November 2010 was not valid because his right of
rescission expired no later than September 21, 2008, and (2) any
security interest held by Defendants in the subject property was
not affected by Plaintiff’s attempt to rescind and Defendants
are not enjoined from asserting any right, title, or interest
11

that

they

may

have

in

the

subject

property.

A

declaratory

judgment to that effect will be entered in favor of Defendants.
IV.

Conclusion
For the foregoing reasons, Defendants’ motion to dismiss

will

be

granted

in

part

and

entered in favor of Defendants.

a

declaratory

judgment

will

be

A separate order will follow.

____________/s/_____________
DEBORAH K. CHASANOW
United States District Judge

12