Rider v. HSBC Mortgage Corporation (USA) et al

Filing 22

ORDER denying 5 Motion to Dismiss for Failure to State a Claim as Moot; granting 17 Motion for Order to Stay Discovery; granting in part and denying in part 9 Motion to Dismiss but reserving final ruling on Ct. 2 claim for statutory damages pending additional briefing. Signed by Judge James L Graham on 3/13/2013. (ds)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Linda Rider,
Plaintiff,
v.

Case No. 2:12-cv-925

HSBC Mortgage Corporation
(USA), et al.,
Defendants.
OPINION AND ORDER
This is an action brought by plaintiff Linda Rider against
defendants HSBC Mortgage Corporation (USA) (“HSBC Mortgage”) and
HSBC Bank USA, N.A. (“HSBC Bank”), alleging violations of the Real
Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending
Act (“TILA”).

This matter is before the court on the defendant’s

motion pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss plaintiff’s
first amended complaint for failure to state a claim for which
relief may be granted.
I. Rule 12(b)(6) Standards
In ruling on a motion to dismiss under Rule 12(b)(6), the
court must construe the complaint in a light most favorable to the
plaintiff, accept all well-pleaded allegations in the complaint as
true, and determine whether plaintiff undoubtedly can prove no set
of facts in support of those allegations that would entitle him to
relief.

Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v.

Lucent Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008);
Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005).

To

survive a motion to dismiss, the “complaint must contain either
direct or inferential allegations with respect to all material

elements necessary to sustain a recovery under some viable legal
theory.”

Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005).

Conclusory allegations or legal conclusions masquerading as factual
allegations will not suffice.
While

the

complaint

Id.

need

not

contain

detailed

factual

allegations, the “[f]actual allegations must be enough to raise the
claimed right to relief above the speculative level,” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007), and must create a
reasonable expectation that discovery will reveal evidence to
support the claim. Campbell v. PMI Food Equipment Group, Inc., 509
F.3d 776, 780 (6th Cir. 2007).

A complaint must contain facts

sufficient to “state a claim to relief that is plausible on its
Twombly, 550 U.S. at 570.

face.”

“The plausibility standard is

not akin to a ‘probability requirement,’ but it asks for more than
a sheer possibility that a defendant has acted unlawfully.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
pleads

facts

that

are

merely

consistent

Where a complaint

with

a

defendant’s

liability, it stops short of the line between possibility and
plausibility of entitlement to relief.

Id.

Determining whether a

complaint states a plausible claim for relief is “a contextspecific task that requires the reviewing court to draw on its
judicial experience and common sense.”

Id. at 679.

Where the

facts pleaded do not permit the court to infer more than the mere
possibility of misconduct, the complaint has not shown that the
pleader is entitled to relief as required under Fed.R.Civ.P.
8(a)(2).

Id.

Plaintiff must provide “more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will

2

not do.”

Twombly, 550 U.S. at 555; see also Ashcroft, 129 S.Ct. at

1949 (“Threadbare recitals of the elements of a cause of action,
supported

by

mere

conclusory

statements,

do

not

suffice.”);

Association of Cleveland Fire Fighters v. City of Cleveland, Ohio,
502 F.3d 545, 548 (6th Cir. 2007).
“When a court is presented with a Rule 12(b)(6) motion, it may
consider the Complaint and any exhibits attached thereto, public
records, items appearing in the record of the case and exhibits
attached to defendant’s motion to dismiss so long as they are
referred

to

in

the

contained therein.”

Complaint

and

are

central

to

the

claims

Bassett v. National Collegiate Athletic Ass’n

528 F.3d 426, 430 (6th Cir. 2008); see also Nixon v. Wilmington
Trust Co., 543 F.3d 354, 357 (6th Cir. 2008)(a court may consider
a document not formally incorporated by reference in a complaint
when the complaint refers to the document and the document is
central to the claims).
II. History of the Case
On or about September 27, 2002, plaintiff and her then
husband, John Rider, executed a promissory note and mortgage in
favor of Homestead Mortgage Company.
the

mortgage

and

Complaint, Ex. B.

note

were

See Doc. 9-5.

assigned

to

HSBC

On that date,

Mortgage.

See

On or about March 8, 2010, HSBC Mortgage filed

a forfeiture action against the Riders in the Common Pleas Court of
Franklin County, Ohio, seeking to recover $141,548.61 plus interest
on the note.

See Docs. 9-1, 9-4.

On October 19, 2010, HSBC

Mortgage filed a motion for summary judgment in the forfeiture
action.
mediation.

See

Doc.

9-2.

See Doc. 9-1.

The

matter

was

referred

twice

for

On August 12, 2011, during the pendency

3

of the forfeiture action, the Riders’ mortgage was assigned to HSBC
Bank by a corporate assignment of mortgage which was recorded on
August 17, 2011.

See Complaint, Ex. B.

However, HSBC Bank was not

made a party to the forfeiture action.

After mediation proved to

be unsuccessful, HSBC Mortgage asked the court to return the case
to the active docket because “there are no retention options
available for the homeowner.”

See Doc. 9-4.

The court granted

HSBC Mortgage’s motion for summary judgment and entered a decree of
foreclosure in favor of HSBC Mortgage on January 3, 2012.

The

Riders pursued an appeal from that judgment, and in a decision
rendered on August 2, 2012, the Court of Appeals for the Ohio Tenth
Appellate District affirmed the judgment of the lower court.

See

Doc. 9-4.
On August 30, 2012, plaintiff filed a complaint in the Court
of Common Pleas of Franklin County, Ohio, asserting claims for
violations of RESPA and TILA and for breach of contract under Ohio
law.

On October 8, 2012, defendants filed a notice of removal of

the action to this court based on diversity and federal question
jurisdiction.

On October 15, 2012, defendants filed a motion

pursuant to Rule 12(b)(6) to dismiss the complaint. On November 6,
2012,

plaintiff

submitted

an

unopposed

motion

for

a

21-day

extension of time in which to respond to the motion to dismiss.

On

November 26, 2012, plaintiff filed her first amended complaint.
In Count I of the first amended complaint, plaintiff asserted
a RESPA violation under 12 U.S.C. §2605(c) against HSBC Bank.
Section 2605(c) requires a “transferee servicer” of a mortgage loan
to notify the borrower of the assignment, sale, or transfer of the
loan within 15 days of the effective date of the transfer.

4

In Count II, plaintiff alleged a TILA violation under 15
U.S.C. §1641(g) against HSBC Bank.

Section 1641(g) requires that

no later than 30 days after a mortgage loan is sold, transferred or
assigned, the “creditor that is the new owner or assignee of the
debt” must notify the borrower in writing of the transfer or
assignment, provide contact information for the new owner, and
provide the date of the transfer or assignment and the location
where the debt is recorded.
In Count III, plaintiff alleged a RESPA violation under 12
U.S.C. §2605(b) against HSBC Mortgage.

Section 2605(b) requires

the servicer of a mortgage loan to notify the borrower in writing
of any assignment, sale or transfer of the servicing of the loan to
another

person

within

15

days

of

the

effective

date

of

the

transfer.1
On December 7, 2012, defendants filed a motion pursuant to
Rule 12(b)(6) to dismiss the first amended complaint.
III. Request to Strike the First Amended Complaint
In their reply memorandum, defendants request that the first
amended complaint be stricken as untimely.

Plaintiff argues in

response that under Fed. R. Civ. P. 15, she was permitted to amend
her complaint as a matter of course before service of a responsive
pleading, and cites cases for the proposition that a motion to
dismiss under Rule 12(b)(6) is not a responsive pleading. However,
Rule 15 was amended in 2009, and now provides:
(a)
(1)

Amendments Before Trial.
Amending as a Matter of Course.

1

A party may amend

Plaintiff did not re-assert the breach of contract claim in her amended
complaint. Because an amended complaint supersedes all prior complaints, see B
& H Medical, L.L.C. v. ABP Administration, Inc., 526 F.3d 257, 267 n. 8 (6th Cir.
2008), the breach of contract claim is no longer before the court.

5

(A)
(B)

(2)

its pleading once as a matter of course within:
21 days after serving it, or
if the pleading is one to which a responsive
pleading is required, 21 days after service of a
responsive pleading or 21 days after service of a
motion under Rule 12(b), (e) or (f), whichever is
earlier.
Other Amendments. In all other cases, a party may
amend its pleading only with the opposing party’s
written consent or the court’s leave. The court
should freely give leave when justice so requires.

The current version of Rule 15(a)(1)(B) clearly requires that an
amended complaint be filed within 21 days of the filing of a motion
under Rule 12(b)(6), and that an amended complaint filed outside
that time frame requires leave of court. In her motion of November
6, 2012, plaintiff only sought an extension of time to respond to
the motion to dismiss, and did not request an extension of time in
which to file an amended complaint.

Nonetheless, the court will

treat that motion as a motion to extend the time to file an amended
complaint, and will grant leave to file the amended complaint.
IV. Res Judicata
Defendants argue that plaintiff’s claims are barred by the
doctrine of res judicata. State-court judgments are given the same
preclusive effect under the doctrine of res judicata as they would
receive in courts of the rendering state. Ohio ex rel. Susan Boggs
v. City of Cleveland, 655 F.3d 516, 519 (6th Cir. 2011).

Under

Ohio law, a valid final judgment rendered on the merits bars all
subsequent

actions

based

upon

any

claim

arising

out

of

the

transaction or occurrence that was the subject matter of the
previous action.

Grava v. Parkman Township, 73 Ohio St.3d 379,

382, 653 N.E.2d 226 (1995).

An existing final judgment or decree

between the parties to litigation is conclusive as to all claims

6

which were or might have been litigated in the first lawsuit.

Id.

“For the purpose of a res judicata analysis, a ‘transaction’ is
defined as a ‘common nucleus of operative facts.’” U.S. Bank Nat’l
Ass’n v. Gullotta, 120 Ohio St.3d 399, 899 N.E. 2d 987, 991 (2008).
Ohio’s doctrine of claim preclusion has four elements:
(1) a prior final, valid decision on the merits by a
court of competent jurisdiction; (2) a second action
involving the same parties, or their privies, as the
first; (3) a second action raising claims that were or
could have been litigated in the first action; and (4) a
second action arising out of the transaction or
occurrence that was the subject matter of the previous
action.
Hapgood v. City of Warren, 127 F.3d 490, 493 (6th Cir. 1997).

The

burden of proving these elements is on the parties – here, the
defendants – asserting the defense of res judicata.

Keymarket of

Ohio, LLC v. Keller, 483 F.App’x 967, 971 (6th Cir. 2012).
The first element is satisfied in this case, as a final
judgment was entered in the state court action, and that judgment
was affirmed on appeal and has not otherwise been set aside.

The

second element is also satisfied, as the state court action and the
instant action involve the same parties, namely, plaintiff and HSBC
Mortgage, and HSBC Bank, a privy of HSBC Mortgage by reason of the
assignment of the mortgage. See O’Nesti v. DeBartolo Realty Corp.,
113 Ohio St.3d 59, 61, 862 N.E.2d 803 (2007)(privity exists when a
person succeeds to the interest of a party, or has a mutuality of
interest, including an identity of desired result).
The fourth element is also met, as the RESPA and TILA claims
arise out of the transaction or occurrence that was the subject
matter of the previous action, specifically, the note and mortgage.
Res judicata has been found to bar federal claims asserted in a
7

second action where the state court had concurrent jurisdiction
over the federal claims. See Wunderle v. Central Trust Co. of N.E.
Ohio, N.A., No. 85-3700 (unreported), 1987 WL 44885 at *2 (6th Cir.
Sept. 25, 1987); O’Neal v. Nationstar Mortgage, No. 1:07-cv-505,
2008 WL 3007834 at *5 (S.D.Ohio Aug. 1, 2008)(finding that TILA and
RESPA claims could have been brought in prior action because state
and

federal

courts

claims)(citing

12

have

concurrent

U.S.C.

§2614

jurisdiction
(RESPA)

and

over
15

those
U.S.C.

§1640(e)(TILA)).
Another judge of this court has held that a TILA claim
concerning lack of notice could have been asserted in the state
court foreclosure action as a matter of defense by recoupment or
set-off, and therefore the later federal action arose from the same
transaction or occurrence as the state court action. See Miller v.
Countrywide Home Loans, 747 F.Supp.2d 947, 961-62 (S.D.Ohio 2010).
Under Ohio law, in an action upon a note secured by a mortgage, the
defendant is entitled to interpose all counterclaims and defenses
he may have against the creditor.

Marion Production Credit Ass’n

v. Cochran, 40 Ohio St.3d 265, 533 N.E.2d 325 (1988).

TILA and

RESPA

in

claims

are

frequently

foreclosure actions.

raised

as

counterclaims

See Flagstar Bank, FSB v. Cintron,

Ohio

N.E.2d

, 2012 WL 6554723 (Ohio App. 2012)(TILA counterclaims asserted
in foreclosure action); CitiMortgage, Inc. v. Hoge, 196 Ohio App.3d
40, 49, 962 N.E.2d 327 (2011)(TILA and RESPA counterclaims were
asserted as recoupment as they arose out of the same transaction
(the loan agreement) as the lender’s claim); Residential Funding
Co., L.L.C. v. Thorne, No. L-09-1324 (6th App. Dist. unreported),
2010 WL 3516785 at *4-6 (Ohio App. Sept. 10, 2010)(TILA lack of

8

notice claim was a recoupment “because it arises out of the same
transaction as Residential’s claim, i.e. the promissory note”); BCA
Home Loans Servicing, L.P. v. Hall, No. CA2009-10-135 (12th App.
Dist. unreported), 2010 WL 2891780 at *3-4 (July 26, 2010)(RESPA
violation should be pleaded as a counterclaim); Akron National Bank
& Trust Co. v. Roundtree, 60 Ohio App.2d 13, 17-19, 395 N.E.2d 525
(1978)(TILA counterclaim asserted as recoupment where lender’s
breach of contract claim on note and borrower’s claim that lender
violated a duty imposed by TILA on the note arose from same loan
transaction).2
Also instructive is the “logical relation test” applied by
Ohio courts to determine whether claims arise out of the same
transaction or occurrence for purposes of determining whether a
claim is a compulsory counterclaim under Ohio R. Civ. P. 13(A).
Under

this

test,

a

compulsory

counterclaim

is

one

which

is

logically related to the opposing party’s claim where separate
trials

on

each

of

their

respective

claims

would

involve

a

substantial duplication of effort and time by the parties and the
courts.

Rettig Enterprises, Inc. v. Koehler, 68 Ohio St.3d 274,

278, 626 N.E.2d 99 (1994). Claims are logically related where they
involve many of the same factual issues, or the same factual and
legal issues, or where they are offshoots of the same basic
Id. at 279.

controversy between the parties.

In the instant case, plaintiff alleges that due to the
defendants’ alleged failure to notify her of the assignment of the

2
Plaintiff relies on Hohenstein v. MGC Mortgage, Inc., No. 2:12-cv-46, 2012
WL 1580973 (S.D.Ohio May 4, 2012)(finding that TILA and RESPA claims of lack of
notice did not arise out of plaintiff’s failure to pay his mortgage). In light
of the Ohio authorities cited above, this court agrees with the reasoning in
Miller.

9

mortgage, she was divested of her right to reinstate her mortgage
during the foreclosure action and prior to the entry of the
foreclosure judgment.

Therefore, her lack of notice claims are

related to the foreclosure action, and litigation of her right to
reinstate would involve a duplication of the efforts of the parties
in the state foreclosure action.

Her TILA and RESPA claims arise

from the same transaction or occurrence that was the subject of the
state court foreclosure action.
The remaining element is whether plaintiff could have asserted
her TILA and RESPA claims in the state court action.

Because

plaintiff’s TILA and RESPA claims did not accrue until after the
filing of her answer in the foreclosure action, they were not
compulsory counterclaims under Rule 13(A). If plaintiff knew about
the assignment while the action was pending, Ohio procedure would
have permitted her to seek leave of court to supplement her answer
with those claims pursuant to Ohio R. Civ. P. 13(E), and to seek to
join HSBC Bank as an additional party pursuant to Ohio R. Civ. P.
13(H).

However, there is no information in the record as to when

plaintiff learned about the assignment of the mortgage to HSBC Bank
on August 12, 2011, or whether plaintiff knew about this assignment
and the alleged failure to notify her of the assignment prior to
the entry of the foreclosure judgment on January 3, 2012.

In its

decision of August 2, 2012, the state court of appeals noted that
plaintiff had attached a copy of the assignment to her brief and
argued that HSBC Mortgage should have moved to substitute HSBC Bank
as the real party in interest in the state court action.

However,

the court of appeals declined to address plaintiff’s arguments
regarding the assignment on the merits because this exhibit was not

10

a part of the record.
Although res judicata will bar a later action where the
plaintiff became aware of the facts and circumstances supporting
the claim during the first action, see State ex rel. Hartman v.
Tetrault, No. CA2012-03-021 (12th App. Dist. unreported), 2012 WL
4762015 at *5 (Ohio App. Oct. 8, 2012), there is no indication in
the record that this occurred in the instant case. Under Ohio law,
res judicata will not apply when fairness and justice would not
support it.

State ex rel. Estate of Miles v. Village of Piketon,

121 Ohio St.3d 231, 237, 903 N.E.2d 311 (2009)(citing Davis v. WalMart Stores, Inc., 93 Ohio St.3d 488, 491, 756 N.E.2d 657 (2001)).
Here, the gist of plaintiff’s TILA and RESPA claims concern the
alleged failure to notify her of the assignment of the mortgage.
Her claims cannot be barred by res judicata absent evidence that
she was aware of the alleged violations in time to seek to assert
them as counterclaims in the state court action.

This element of

the res judicata defense is not established by the record presently
before the court, and thus dismissal is not warranted on claim
preclusion grounds.
V. RESPA Claims
Defendants argue that the complaint fails to state claims
against them under RESPA because plaintiff has failed to allege
actual damages.
and

2605(c).

Plaintiff asserts RESPA claims under §§ 2605(b)
The

provision

relating

to

damages

caused

by

violations of §2605 provides that “[w]hoever fails to comply with
any provision of this section shall be liable to the borrower for
each such failure” in any action by an individual in an amount
equal to the sum of “any actual damages to the borrower as a result

11

of the failure[.]”

12 U.S.C. §2605(f)(1)(A).

Statutory damages

are only available under §2605(f), at the discretion of the court,
where a pattern or practice of noncompliance is shown.
U.S.C. §2605(f)(1)(B).

See 12

No pattern or practice allegations are

included in plaintiff’s complaint.
In light of the language of §2605(f)(1)(A), courts have
consistently held that actual pecuniary damages must be pleaded to
recover damages for a violation of §2605.

See Hintz v. JPMorgan

Chase Bank, N.A., 686 F.3d 505, 510-11 (8th Cir. 2012)(RESPA limits
individual damages to actual damages); Sitanggang v. Countrywide
Home Loans, Inc., 419 F.App’x 756 (9th Cir. 2011)(RESPA claim
properly dismissed where plaintiff did not allege facts suggesting
that she suffered actual damages); Catalan v. GMAC Mortgage Corp.,
629 F.3d 676, 694 (7th Cir. 2011)(RESPA claim required proof of
actual damages); Ford v. New Century Mortgage Corp., 797 F.Supp2d
862, 870 (S.D.Ohio 2011).

Plaintiff must plead actual damages as

well as a causal link between the alleged RESPA violation and her
injuries. Marais v. Chase Home Finance, LLC, No. 2:11-cv-314, 2012
WL

4475766

at

*5-7

(S.D.Ohio

Sept.

26,

2012).

allegations of actual damages are not sufficient.

Conclusory
Amaral v.

Wachovia Mortgage Corp., 692 F.Supp.2d 1226, 1232 (E.D.Cal. 2010);
Allen v. United Financial Mortgage Corp., No. 09-2507 SC, 2010 WL
1135787 at *5 (N.D.Cal. March 22, 2010).
In

this

case,

plaintiff

sustained actual damages.

has

summarily

alleged

that

she

She claims that due to the alleged lack

of notice of the mortgage assignment, she was “divested of her
right to reinstate prior to foreclosure judgment” and that she
“suffered actual damages by not having the opportunity to exercise

12

her statutory and/or common law right to reinstate her mortgage
prior to the foreclosure judgment being entered in the state
court.”

First Amended Complaint, ¶ 14.

However, under Ohio law,

plaintiff had no statutory or common law right to reinstate her
mortgage.

See Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 550-

51, 906 N.E.2d 396 (2009)(noting that defaulting borrower is not
entitled by law to have a mortgage loan reinstated, and that any
right to reinstatement arises solely from the terms of the mortgage
contract between the parties).
Plaintiff’s right to reinstate, set forth in ¶ 19 of the
mortgage, requires plaintiff to pay the lender all sums then due
under the note as if no acceleration had occurred, to cure any
other default, and to pay all expenses incurred by HSBC Mortgage in
enforcing the mortgage, including attorney’s fees.

The mortgage

itself advised plaintiff of her right to reinstate the mortgage.
Plaintiff does not allege that she was financially prepared to
tender the sums necessary to achieve reinstatement.

There are no

allegations, for example, that plaintiff attempted to tender funds
to HSBC Mortgage, the opposing party in the foreclosure action, but
was rebuffed or was unable to negotiate reinstatement due to her
lack of knowledge of the mortgage assignment to HSBC Bank.

The

allegations in the complaint are insufficient to allege actual
damages or a causal connection between any actual pecuniary damages
and the alleged RESPA violations.

Defendants’ motion to dismiss

the RESPA claims in Counts I and III is well taken.
VI. TILA Claim
Defendant HSBC Bank has moved to dismiss the TILA claim in
Count II, arguing that only actual damages may be recovered for a

13

TILA violation, and that plaintiff has failed to plead actual
damages.

Civil liability under TILA is governed by 15 U.S.C.

§1640. That section provides that any creditor who fails to comply
with § 1641(g) with respect to any person is liable to such person
in an amount equal to the sum of any actual damage sustained by
such person as a result of the failure.

15 U.S.C. §1640(a)(1).

Plaintiff has failed to allege any actual damages stemming from the
alleged failure of HSBC Bank to notify her of the assignment of the
mortgage.

Plaintiff has alleged no facts indicating how the

alleged failure of HSBC Bank to notify her of the assignment of the
mortgage
mortgage.

prevented

her

from

obtaining

reinstatement

of

her

Plaintiff has not stated a claim for actual damages

under §1640(a)(1).
Defendants cite cases in which courts have found that only
actual damages may be awarded under §1640.

However, the Sixth

Circuit has noted that §1640 “is a general ‘civil liability’
section which provides in subsection (a) “for either actual and/or
statutory damages for various TILA violations.”

Baker v. Sunny

Chevrolet, Inc., 349 F.3d 862, 870 (6th Cir. 2003).

Section 1640

provides that “in the case of an individual action relating to a
credit transaction not under an open end credit plan that is
secured by real property or a dwelling,” damages of “not less than
$400 or greater than $4,000" may be awarded by the court.
U.S.C. §1640(a)(2)(A).

15

Section 1640 also permits recovery of

reasonable attorney’s fees and costs.

See 15 U.S.C. §1640(a)(3).

“The purpose of the statutory recovery is ‘to encourage lawsuits by
individual consumers as a means of enforcing creditor compliance
with the Act.’”

Purtle v. Eldridge Auto Sales, Inc., 91 F.3d 797,

14

800 (6th Cir. 1996)(quoting Watkins v. Simmons & Clark, Inc., 618
F.2d 398, 399 (6th Cir. 1980)).
In Purtle, the Sixth Circuit held that once the district court
finds

a

TILA

violation,

no

matter

how

technical,

it

has

no

discretion with respect to the imposition of liability, and must
award

statutory

damages

unless

applicable to the transaction.

one

of

the

TILA

Id. at 801-802.

defenses

is

Although Purtle

concerned a type of TILA violation not alleged in the instant case,
§1640 specifically refers to the failure to comply with §1641(g) as
being a violation within the scope of §1640(a).

This court

concludes that if plaintiff prevails on her TILA claim, she may
recover statutory damages under §1640(a)(2)(A) and attorney’s fees
under §1640(a)(3). Therefore, the motion to dismiss the TILA claim
will be granted as to the claim for actual damages, but denied as
to the claim for statutory damages.
This court’s research has revealed another issue not addressed
by

the

parties,

namely,

whether

the

first

amended

complaint

contains sufficient facts to allege that HSBC Bank is a “creditor”
within the meaning of 15 U.S.C. §1602(f).

See, e.g., Trinh v.

Citibank, NA, No. 5:12-cv-03902 EJD (unreported), 2012 WL 6574860
(N.D.Cal.

Dec.

17,

2012)(notice-upon-transfer

requirement

in

§1641(g) applies only to “creditors”); Dufour v. Home Show Mortgage
Inc.,

No.

CV-12-01736-PHX-GMS

(unreported),

2012

WL

6049683

(D.Ariz. Dec. 5, 2012)(dismissing §1641(g) claim where complaint
failed to allege sufficient facts to show that defendant, the
beneficiary under a deed of trust, was a TILA “creditor”).
There is authority for the proposition that the assignment of
a mortgage alone without transfer of the underlying note of

15

indebtedness is not sufficient to make the assignee of the mortgage
a TILA creditor.

See, e.g., Connell v. CitiMortgage, Inc., Civil

Action No. 11-0443-WS-C (unreported), 2012 WL 5511087 (S.D.Ala.
Nov. 13, 2012).

In the instant case, the complaint contains no

allegations that the promissory note signed by plaintiff was also
transferred to HSBC Bank.

The document attached to the complaint

entitled “Corporate Assignment of Mortgage” indicates that the
mortgage was assigned to HSBC Bank but makes no reference to the
note executed by plaintiff.

The court also notes authority under

Ohio law that a promissory note cannot be assigned, but rather must
be negotiated in accordance with the Ohio Uniform Commercial Code.
See

HSBC

Bank

unreported),

USA

2010

v.
WL

Thompson,
3451130

at

No.

23761

*7

(Ohio

(2nd
App.

App.

Dist.

Sept.

3,

2010)(promissory note is a negotiable instrument); Deutsche Bank
National

Trust

Co.

v.

Gardner,

No.

92916

(8th

App.

Dist.

unreported), 2010 WL 663969 at *3 (Ohio App. Feb. 25, 2010)(under
Ohio law, the right to enforce a note cannot be assigned; the note
must be negotiated in accordance with Ohio Rev. Code §1301.01 et
seq. and §1303.01 et seq.).

The complaint contains no factual

allegations indicating that the promissory note was transferred to
HSBC Bank by negotiation.
The court hereby gives notice to the parties of its intention
to consider these issues, and invites additional briefing from the
parties.

See Chase Bank USA, N.A. v. City of Cleveland, 695 F.3d

548, 558 (6th Cir. 2012).
VII. Conclusion
In accordance with the foregoing, the motion to dismiss (Doc.
9) is granted in part and denied in part.

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Counts I and III are

hereby dismissed for failure to state a claim, and defendant HSBC
Mortgage is dismissed as a party.
claim for actual damages.

Count II is dismissed as to the

As to the motion to dismiss the claim

for statutory damages and attorney’s fees in Count II, the court
will reserve final ruling pending receipt of additional briefing
from the parties.

The supplemental briefing on Count II requested

by the court is due from both parties on or before March 25, 2013,
and any memorandum contra the opposing party’s brief shall be filed
on or before March 29, 2013.

The previous motion to dismiss (Doc.

5) has been superseded by the renewed motion to dismiss, and it is
therefore denied as moot.

Defendants’ motion for a stay of

discovery and protective order (Doc. 17) is granted.

Discovery

will be stayed and defendants will not be required to respond to
plaintiff’s discovery requests until after the court has resolved
all issues relating to the motion to dismiss.

Date: March 13, 2013

s/James L. Graham
James L. Graham
United States District Judge

17