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
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