Keiran et al v. Home Capital Inc. et al
Filing
90
Order Granting 59 Defendants' Motion for Summary Judgment; Denying 71 Plaintiffs' Motion for Summary Judgment; Denying 79 Plaintiffs' Motion for Summary Judgment. Signed by Senior Judge David S. Doty on 9/1/2015. (DLO)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 10-4418(DSD/JSM)
Alan G. Keiran and Mary J. Keiran,
Plaintiffs,
ORDER
v.
Home Capital, Inc., BAC Home Loans
Servicing L.P., a subsidiary of Bank
of America, N.A. f/k/a Countrywide
Home Loans Servicing L.P., Bank of
New York Melon, as Trustee for the
Holders of CWABS, Inc., Asset-backet
Certificate Series 2007-6,
Defendants.
LuAnn M. Petricka, Esq., 150 South Fifth Street, Suite 3100,
Minneapolis, MN 55402, counsel for plaintiffs.
D. Charles Macdonald, Esq. and Michelle E. Weinberg, Esq.,
Faegre Baker Daniels, LLP, 2200 Wells Fargo Center, 90 South
Seventh Street, Minneapolis, MN 55402, counsel for defendants.
This matter is before the court upon the cross-motions for
summary judgment by plaintiffs Alan and Mary Keiran and defendants
BAC Home Loans Servicing LP (BAC) and Bank of New York Mellon (Bank
of New York).1
Based on a review of the file, record, and
proceedings herein, and for the following reasons, the court grants
defendants’ motion and denies plaintiffs’ motion.
1
The Keirans also named Home Capital Inc. and John and Jane
Does 1-10, but never served those defendants.
BACKGROUND
The background of this matter is fully set forth in the
court’s November 30, 2011, order granting summary judgment in favor
of defendants, and the court recites only those facts necessary to
resolve the instant motions.
This mortgage dispute arises out of
a mortgage loan from Home Capital Inc. to the Keirans.
5-6.
Compl. ¶¶
On December 30, 2006, Mr. Keiran and Home Capital executed a
$404,000 promissory note (Note) in exchange for a mortgage of real
property located at 7820 200th Street West, Lakeville, Minnesota.
Id. ¶¶
15,
17;
Keiran
Aff.
¶¶
2,
13.2
Mortgage
Registration System (MERS) was the nominal mortgagee.
Aff.
¶
4.
On
February
1,
2007,
the
Note
Countrywide Home Loans, Inc. (Countrywide).
1, at 22.
was
Electronic
Alvarado
assigned
to
Compl. ¶ 30; id. Ex.
The Note was later assigned to, and is now held by, Bank
of New York.
BAC is the servicer of the Note.3
Alvarado Aff. ¶ 6.
Id.
The Keirans stopped making payments on the Note in November
2008.
Id. ¶ 7.
On October 8, 2009, the Keirans sent rescission
notices to Bank of New York and BAC alleging that they did not
2
The affidavits separately submitted by Alan and Mary Keiran
in response to these motions are identical in all material
respects, and as a result, the court refers to them collectively.
3
BAC is a subsidiary of Bank of America N.A. Bank of America
became the successor in interest after its merger with Countrywide.
2
receive a sufficient number of disclosure statements required by
the Truth in Lending Act (TILA).
See Compl. ¶ 36; id. Ex. 3, at
46-53. BAC responded to the notice via letter on October 27, 2009.
See ECF No. 70, Ex. 1.
The letter stated that the alleged
violations were “very vague” and that further clarification would
be needed to address them.
Id. at 2.
BAC also provided the
Keirans with the loan documents that the bank had on file, noting
that “[t]he signatures on these documents confirm the borrowers
received, read, understood, and agreed to the terms and conditions
contained within each document.”
Id.
BAC sent a second letter to the Keirans on January 7, 2010,
informing them that no basis for rescission existed. Compl. Ex. 6.
The letter formally denied the request for rescission and enclosed
a copy of the Keirans’ signed TILA disclosure statement. Id. at 4.
The disclosure statement included the signatures of both of the
Keirans, and provided that “[e]ach of the undersigned acknowledge
receipt of a complete copy of this disclosure.”
Id.
The Keirans filed a complaint on October 29, 2010, seeking
rescission of their mortgage loan, a declaratory judgment voiding
defendants’ security interest in the loan, and money damages.
The
court granted summary judgment in favor of defendants on November
30, 2011.
ECF No. 39.
The court denied the claims for monetary
damages because (1) the suit was commenced more than one year after
defendants allegedly failed to provide a sufficient number of TILA
3
disclosure statements to the Keirans, and (2) the alleged TILA
violations were not present on the face of the loan documents.
at 5, 8.
Id.
The court also held that the rescission claim was
untimely because the Keirans did not file suit within three years
of the December 2006 closing.
Id. at 12.
The Keirans appealed, and the Eighth Circuit affirmed.
See
Keiran v. Home Capital, Inc., 720 F.3d 721 (8th Cir. 2013).
The
Keirans then petitioned the United States Supreme Court for a writ
of certiorari.
See Keiran v. Home Capital, Inc., No. 13-705, 2013
WL 6513778 (Dec. 9, 2013).
The petition addressed only the
timeliness of the rescission claim, and did not appeal the denial
of the claims for monetary damages.
Id. at *i.
The Supreme Court
reversed, finding that a consumer may exercise a right to rescind
simply by providing written notice to the lender, rather than file
suit, within three years of the loan transaction. See Jesinoski v.
Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015).
The Eighth
Circuit remanded to this court, and the parties now cross-move for
summary judgment.
DISCUSSION
I.
Standard of Review
“The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
4
Fed. R. Civ.
P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
the case.
(1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.
Id.
at 252.
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.
The nonmoving party, however, may not rest upon mere
denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
U.S. at 324.
Celotex, 477
A party asserting that a genuine dispute exists - or
cannot exist - about a material fact must cite “particular parts of
materials in the record.”
Fed R. Civ. P. 56(c)(1)(A).
If a
plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
facts immaterial.
II.
Celotex, 477 U.S. at 322-23.
TILA
Congress enacted the TILA “to assure a meaningful disclosure
of credit terms so that the consumer will be able to compare more
readily the various credit terms available to him and avoid the
uninformed use of credit....”
15 U.S.C. § 1601(a).
broadly construes the TILA in favor of consumers.
5
The court
Rand Corp. v.
Yer Song Moua, 559 F.3d 842, 847-48 (8th Cir. 2009).
On remand,
the Keirans argue that they are entitled to rescission4 because (1)
defendants
did
not
provide
them
with
the
required
amount
of
disclosure statements, (2) the disclosure statements contained
material inaccuracies regarding finance charges associated with the
loan, and (3) defendants did not timely and adequately respond to
their October 8, 2009 notice of rescission.
In transactions secured by a principal dwelling, the TILA
gives borrowers an unconditional three-day right to rescind.
15
U.S.C. § 1635(a); see also id. § 1641(c) (extending rescission to
assignees).
The three-day rescission period begins upon the
consummation of the transaction or the delivery of the required
rescission notices and disclosures, whichever occurs last.
§ 1635(a).
Id.
Required disclosures must be made to “each consumer
whose ownership interest is or will be subject to the security
interest” and must include two copies of a notice of the right to
rescind, see 12 C.F.R. § 226.23(a)-(b)(1), and a TILA disclosure
statement, outlining:
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 [and] the due
4
As previously stated, the Keirans did not appeal the Eighth
Circuit’s denial of their claims for money damages. Although the
Keirans maintain that they are entitled to money damages, the court
will not consider this argument on remand.
6
dates or periods of payments
repay the indebtedness....
15 U.S.C. § 1602(v).
scheduled
to
These disclosures must be made “clearly and
conspicuously in writing, in a form that the consumer may keep.”
12 C.F.R. § 226.17(a)(1).
If the creditor fails to make the
required disclosures or rescission notices, the borrower’s “right
of
rescission
shall
expire
three
consummation of the transaction.”
C.F.R. § 226.23(a)(3).
years
after
the
date
of
15 U.S.C. § 1635(f); see 12
If no disclosure violation occurs, “the
right to rescind is not extended for three years and instead ends
at the close of the three-day window following consummation of the
loan transaction.”
A.
Keiran, 720 F.3d at 730 n.8.
Number of Disclosure Statements
The Keirans first argue that they are entitled to rescission
because they did not each receive a copy of a TILA disclosure
statement.
See 12 C.F.R. § 226.17(a)(1), (d).
acknowledges
in
writing
that
he
or
she
If a consumer
received
a
required
disclosure, this creates “a rebuttable presumption of delivery
thereof.”
15 U.S.C. § 1635(c).
It is undisputed that the Keirans
signed an acknowledgment stating that they each received a copy of
the disclosure statement.
In affidavits submitted in response to
these cross-motions, however, the Keirans state that they received
only one copy.
See Keiran Aff. ¶¶ 17(h), 20.
They also state that
they were not provided with adequate time to review the documents
7
that they signed, and that they have kept the documents secure and
in their same condition since closing.
Id. ¶¶ 14-19.
Moreover,
the Keirans have produced the file maintained by defendants’ title
company, which includes identical copies of the documents that were
in BAC’s possession.
See Petricka Reply Aff. Ex. B.
The court finds that the Keirans have failed to rebut the
presumption in favor of proper delivery under § 1635(c).
This
court has consistently held that statements merely contradicting a
prior signature are insufficient to overcome the presumption.
See
Gomez v. Marketplace Home Mortg. LLC, No. 12-153, 2012 WL 1517260,
at *3 (agreeing with “the majority of courts that mere testimony to
the contrary is insufficient to rebut the statutory presumption of
proper delivery”); Sobienak v. BAC Home Loans Servicing, LP, 835 F.
Supp. 2d 705, 710 (D. Minn. 2011); Golden v. Town & Country Credit,
No. 02-3627, 2004 WL 229078, at *2 (D. Minn. Feb. 3, 2004) (finding
deposition testimony insufficient to overcome presumption).
The
documents procured from defendants’ title company also do nothing
to contradict the Keirans’ signed acknowledgment, because they
simply mirror the documents already on file with BAC.
Under these
circumstances, the court finds the presumption of proper delivery
has not been overcome.
The Keirans argue that Bank of America v. Peterson, 746 F.3d
357 (8th Cir. 2014), is dispositive as to whether they have
rebutted the presumption under § 1635(c). The court disagrees. In
8
Peterson, the plaintiffs submitted affidavit testimony that they
had
not
received
their
necessary
TILA
disclosure
statements.
Citing to a case from the Third Circuit, the Peterson court
determined that this was sufficient to overcome the presumption of
proper delivery.
Id. (quoting Cappuccio v. Prime Capital Funding
LLC, 649 F.3d 180, 189-90 (3d Cir. 2011) (“[T]he testimony of a
borrower alone is sufficient to overcome TILA’s presumption of
receipt.”)). The Peterson court also noted, however, that the bank
admitted to
a
transaction.
number
of
other
Id. at 358-59.
TILA
violations
regarding the
Construing the evidence in a light
most favorable to the plaintiffs, the Eighth Circuit found that the
presumption had been overcome.
In contrast to Peterson, the record here is devoid of any
evidence - apart from self-serving affidavit testimony - that the
defendants failed to provide the required number of disclosure
statements
or
otherwise
comply
with
TILA.
Peterson
did
not
directly hold that, in all situations, mere affidavit testimony
rebuts the statutory presumption of proper delivery.
Indeed, when
considering a motion for summary judgment, the court must reject
all conclusory and self-serving testimony unsupported by additional
facts.
See Ballard v. Heineman, 548 F.3d 1132, 1136 (8th Cir.
2008) (citing Allen v. Entergy Corp., 181 F.3d 902, 906 (8th Cir.
1999)
(“[C]onclusory
affidavits
devoid
of
specific
factual
allegations rebutting the moving party’s evidence cannot defeat a
9
summary judgment motion.”).
Given the conclusory nature of the
Keirans’ statements, the court cannot find that they have rebutted
the presumption in favor of proper delivery.
Summary judgment is
therefore warranted in favor of defendants.
B.
Accuracy of the Disclosure Statements
The Keirans next argue that they are entitled to rescission
because
certain
finance
charges
included
statements are materially inaccurate.
in
the
disclosure
A finance charge is treated
as accurate if “the amount disclosed as the finance charge does not
vary from the actual finance charge by more than an amount equal to
one-half of one percent of the total amount of credit extended.”
Beukes v. GMAC Home Mortg., LLC, 786 F.3d 649, 652 (8th Cir. 2015)
(quoting 15 U.S.C. § 1635(f)(2)).
$404,000
in
credit,
and
as
a
The Keirans were extended
result,
they
are
entitled
to
rescission if the finance charges included in the disclosure
statement varied by more than $2,020.
The Keirans allege that the disclosure statement understated
their finance charges by $2,172.40.
See Keiran Aff. ¶ 22.
In
part, they argue that a listed finance charge for their hazard
insurance premium should have been $1,025 rather than $1,955,
resulting in a understated charge of $750.
25; Keiran Aff. ¶ 22; id. Ex. 12A.
See Pl.’s Opp’n Mem. at
The disclosure statement,
however, expressly provided that the Keirans could obtain hazard
and flood insurance through a separate provider of their choice.
10
See Keiran Aff. Ex. 12A, at 2.
Premiums for property damage
insurance may be excluded from the total finance charge if the
lender (1)
provides
in
writing
that
the
borrower
may
obtain
insurance from a person of his or her choosing and (2) sets forth
in writing the cost of the insurance if obtained through the
lender. 15 U.S.C. § 1605(c); 12 C.F.R. § 226.4(d)(2). The Keirans
admit
that
they
were
provided
with
regarding the cost of their insurance.
the
required
information
Pl.’s Opp. Mem., at 25.
Therefore, when excluding this amount,5 the total finance charge is
reduced to $217.4.
This alleged understatement is well within the
accuracy threshold under § 1635(f)(2).
The Keirans argue in the alternative that the finance charges
were subject to an accuracy threshold of $35 because defendants
initiated foreclosure proceedings before the rescission notices
were sent.
where
See 15 U.S.C. § 1635(i)(2) (imposing a $35 threshold
borrower
exercises
“any
rescission
rights
after
the
initiation of any judicial or nonjudicial foreclosure process”).
Under Minnesota law, foreclosure by advertisement is commenced “on
5
The Keirans also argue that this amount can only be excluded
if it is “bona fide and reasonable.” Although certain real-estate
related fees may be excluded only if they are “bona fide and
reasonable,” see 12 C.F.R. § 226.4(c)(7), this condition does not
apply to
premiums
for
property
damage
insurance.
Id.
§ 226.4(d)(2). Nonetheless, the Keirans agree that $1,025 of the
listed hazard insurance premium was bona fide and reasonable. Even
when excluding this lesser amount, the total finance charge falls
well within the permitted accuracy threshold.
11
the date of the first publication of the notice of sale.”6
Stat. § 541.03, subd. 2.
Minn.
The Keirans do not allege that a notice
of sale was published before October 8, 2009, and summary judgment
in favor of defendants is therefore warranted.
C.
Response to the Notice of Rescission
Lastly, the Keirans argue that defendants’ security interest
is void because they failed to adequately and timely respond to
their notice of rescission.
When a borrower exercises a right to
rescind, the lender must return to the borrower “any money or
property given” to the lender within twenty days.
15 U.S.C.
§ 1635(c).
The Keirans argue that, because the defendants did not
adequately
respond
to
their
notice
within
twenty
days,
the
rescission took effect twenty days from defendants’ receipt of the
notice. As explained, however, the Keirans have not shown that the
defendants violated the TILA.
As a result, their right to rescind
did not extend beyond the three-day period under § 1635(a).7
The
defendants therefore did not have an obligation to rescind within
twenty days, let alone respond to the notice, and summary judgment
is warranted.
6
The Keirans do not allege that judicial foreclosure
proceedings had commenced before the rescission notice was sent.
Therefore, the court only considers whether defendants had
initiated nonjudicial proceedings.
7
Because the court finds that the Keirans do not have a valid
right of rescission, summary judgment is also warranted on their
declaratory judgment claim.
12
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.
Plaintiffs’ motion for summary judgment [ECF Nos. 71, 79]
is denied; and
2.
Defendants’ motion for summary judgment [ECF No. 59] is
granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: September 1, 2015
s/David S. Doty
David S. Doty, Judge
United States District Court
13
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