Middleton et al v. Guaranteed Rate, Inc. et al

Filing 32

ORDER DENYING 25 Motion to Set Aside Judgment and Grant Judgment. Signed by Judge Robert C. Jones on 11/9/15. (Copies have been distributed pursuant to the NEF - PS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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______________________________________
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ERVIN MIDDLETON et al.,
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Plaintiffs,
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vs.
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GUARANTEED RATE, INC. et al.,
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Defendants.
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2:15-cv-00943-RCJ-GWF
ORDER

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This is an action to rescind a loan under the Truth in Lending Act (“TILA”). Pending

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before the Court is a Motion to Reconsider (ECF No. 25). For the reasons given herein, the

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Court denies the motion.

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I.

FACTS AND PROCEDURAL HISTORY

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On March 9, 2012, Plaintiff Ann Middleton (formerly Ann Gates) and her ex-husband

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Raymond Gates gave Defendant Guaranteed Rate, Inc. (“GRI”) a promissory note in order to

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purchase real property at 7754 Pink Ginger Street, Las Vegas, Nevada 89123 (the “Property”),

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secured by a deed of trust against the Property. (See Compl., ECF No. 1; Deed of Trust, ECF No.

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7-2). The loan was a Veterans Administration (“VA”) loan. (See VA Assumption Policy Rider,

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ECF No. 7-2, at 22). GRI assigned the loan to Defendant Wells Fargo Bank, N.A. (“Wells

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Fargo”) on Jan. 27, 2015. (See Assignment, ECF No. 7-4).

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Ann Middleton and Ervin Middleton (presumably her new husband) sued GRI and Wells

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Fargo in this Court for rescission and restitution under the Truth in Lending Act (“TILA”).

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Wells Fargo moved to dismiss, and GRI joined the motion. Plaintiffs opposed the motion and

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moved to strike it. The Court refused to strike the motion to dismiss and granted it, ruling that

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although the suit was not on its face time-barred, that Plaintiffs needn’t allege willingness and

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ability to retender the loan proceeds, and that Plaintiffs had sufficiently alleged a failure to make

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the required TILA notifications, TILA simply did not apply to the loan at issue in this case.

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Plaintiffs have asked the Court to reconsider.

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II.

LEGAL STANDARDS
Motions to reconsider made too late to be considered as motions to alter or amend a

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judgment, i.e., more than 28 days after the challenged order is entered, Fed. R. Civ. P. 59(e), are

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treated as motions for relief from judgment under Rule 60(b), Am. Ironworks & Erectors, Inc. v.

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N. Am. Constr. Corp., 248 F.3d 892, 898–99 (9th Cir. 2001). Because Plaintiffs filed the present

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motion to reconsider several months after the Court entered its dismissal order and judgment,

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Rule 60(b) applies.

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III.

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ANALYSIS
The Court declines to reconsider. First, Plaintiffs do not address the basis for the Court’s

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dismissal, i.e., that TILA simply does not apply to the purchase money mortgage in this case,

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other than to state that they disagree.

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Second, the Court rejects Plaintiffs’ argument that they should prevail on their TILA

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claim because once the rescission was made the note and mortgage were voided by operation of

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law. That argument puts the cart before the horse. As in any case, under Rule 8(a) Plaintiffs

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must show that the law they have invoked applies to the facts of their case. If, as the Court ruled,

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TILA does not apply to the loan at issue, then TILA provides no remedy in this case, regardless

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of issues of justiciability, burdens of proof, etc. Jesinoski v. Countrywide Home Loans, Inc., 135

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S. Ct. 790 (2015) stands for the proposition that TILA rescissions, unlike traditional common

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law rescissions, do not require retender of the loan proceeds or an affirmative declaration by a

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court but only written notice to the lender. The case does not stand for the proposition that the

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facts of whether a rescission occurred or whether a loan is subject to the purchase-money-

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mortgage exclusion are non-justiciable.

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Third, the Court rejects Plaintiffs’ argument that because the note and mortgage were
voided once the rescission was made, and because Defendants failed to file their own lawsuit for

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declaratory judgment as to the ineffectiveness of the rescission, Defendants either waived any

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defense to a TILA claim or have no standing to defend against one. Plaintiffs cite no authority

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for the proposition that one may waive a defense by electing not to affirmatively seek a

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declaratory judgment affirming the defense. And it is not Defendants who must have standing in

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the present case, it is Plaintiffs. Plaintiffs filed this suit. If the Court were to agree with

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Plaintiffs that there was no case or controversy under Article III—and there plainly is—it would

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dismiss for lack of jurisdiction, and Plaintiffs would lose their case, not win it.
CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Reconsider (ECF No. 25) is DENIED.

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IT IS SO ORDERED.

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Dated this 9th day of November, 2015.
Dated this 28th day of October, 2015.

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_____________________________________
ROBERT C. JONES
United States District Judge

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