Rinegard-Guirma v. Bank of America et al
Filing
215
OPINION & ORDER: Bank of America's motion to dismiss 186 is Granted. In light of the disposition of this case, I also Grant Bank of America's motion for leave to file a motion to designate plaintiff as a vexatious litigant [212 ] and will consider the merits of such motion when and if it is filed. If Bank of America wishes to file such a motion, it must do so within fourteen (14) days of the date of this opinion and order. If Bank of America does not file such a motion, or after resolution of such motion, the clerk of court is directed to dismiss this case with prejudice and without leave to amend. Signed on 11/1/13 by Magistrate Judge Paul Papak. (gm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
NATACHE D. RINEGARD-GUIRtviA,
Plaintiff,
3:10-cv-01 065-PK
OPINION AND ORDER
v.
BANK OF AMERICA, NA,
Defendant.
PAPAK, Magistrate Judge:
PlaintiffNatache D. Rinegard-Guirma filed this action against defendant Bank of
America, NA ("Bank of America") alleging a violation of the Truth in Lending Act ("TILA").
Now before the court are Bank of America's motion to dismiss (#186) and motion for leave to
file a motion to designate plaintiff as a vexatious litigant ("motion for leave") (#212). As
discussed below, the motion to dismiss and motion for leave are granted.
Page 1 - OPINION AND ORDER
BACKGROUND
The parties are familiar with the facts of this case, and I need not repeat them in detail.
At issue in the present motion is plaintiffs allegation that Litton Loan Servicing LP ("Litton"),
the servicer for her Joan, failed to properly respond to her June 10, 2010 request for the name,
address, and telephone number of the owner of her Joan. Fifth Amend. Compl., #I 79,
~~
47-48.
Plaintiff alleges that Litton was the agent of Bank of America when it failed to properly respond
and that Bank of America is liable for Litton's alleged violation of TILA. !d.
~~
50, 56.
On October 10, 2012, Bank of America filed the motion to dismiss, arguing that
plaintiffs claim is "precluded by a recent opinion of the Ninth Circuit Court of Appeals"-Ga/e
v. First Franklin Loan Services, 701 F.3d 1240 (9th Cir. 2012). Br. in Support of Motion to
Dismiss, #187, at 2. On November 16,2012, p1aintifffiled a resistance (#196). On November
29,2012, Bank of America filed a reply (#197). On December 20, 2012, the court stayed the
motion to dismiss while the pmiies engaged in settlement negotiations. Minutes of Proceedings,
#200. On September 3, 2013, Bank of America filed a motion, ale1iing the court that settlement
negotiations were unsuccessful, requesting that the comi rule on the pending motion to dismiss,
and further requesting that, in the event the court grants the motion to dismiss, the court permit
Bank of America to file a motion to designate plaintiff as a vexatious litigant before the court
directs the clerk to enter judgment. On that same date, plaintiff filed a status report, confi1ming
that the parties' settlement negotiations were unproductive and joining Bank of America's request
that the comi lift the stay. On September 6, 2013, the cou1i lifted the stay. The motions are fully
submitted and ready for decision.
Page 2 - OPINION AND ORDER
LEGAL STANDARD
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim, a complaint must co_ntain factual allegations sufficient to "raise a right to relief
above the speculative level." Bell All. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To raise a
right to relief above the speculative level, '"[t]he pleading must contain something more ... than
... a statement of facts that merely creates a suspicion [of! a legally cognizable right of action."'
Id. (alterations in original) (citation omitted). Instead, "for a complaint to survive a motion to
dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must
be plausibly suggestive of a claim entitling the plaintiff to relief." }vioss v. US. Secret Serv., 572
F.3d 962, 969 (9th Cir. 2009), citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In ruling on a
Rule 12(b)(6) motion to dismiss, a com1 must take the complaint's allegations of material fact as
true and construe them in the light most favorable to the nonmoving party. Keams v. Tempe
Tech. Inst., Inc., 39 F.3d 222,224 (9th Cir. 1994). Moreover, the "com1 may generally consider
only allegations contained in the pleadings, exhibits attached to the complaint, and matters
properly subject to judicial notice." Swartz v. KPJ'viG LLP, 476 F.3d 756, 763 (9th Cir. 2007).
DISCUSSION
In support of its motion to dismiss, Bank of America argues that the court must dismiss
plaintiffs TILA claim for two reasons: (1) under the Ninth Circuit's deCision in Gale, 15 U.S.C. §
1641 (f)(2) only imposes a duty to respond on servicers who are also assignees of the loan, not on
servicers like Litton who are not assignees; and (2) since Litton did not violate§ 1641(:!)(2),
Bank of America cannot be held vicariously liable for Litton's conduct under 15 U.S.C. §
1640(a). Plaintiffs three-page response brief argues that Gale is distinguishable and, in any case,
Page 3 - OPINION AND ORDER
policy concerns warrant holding Bank of America liable for Litton's failure to respond fully and
accurately to plaintiffs inquiry.
While the Ninth Circuit in Gale provided the construction of 15 U.S. C.§ 164l(f)(2)
advanced here by Bank of America, I am concemed that Gale's ultimate conclusion appears to
undermine the purposes of TILA as a consumer-protection statute, negate part of Congress's 2009
amendments to TILA that were intended to provide a private right of action against lenders for all
servicers' failure to respond to bonowers' inquiries about the owners of their loans, and create a
gaping loophole allowing lenders to hide their identities from consumers. However, since Gale
is cunently the law of this circuit, this comi must apply it and dismiss plaintiffs claim.
I do, however, briefly review the court's prior discussion of this TILA issue. In the April
2, 2012 opinion and order, the couti addressed at length Bank of America's arguments that,
because it was not a loan servicer, it had no obligation under § 1641 (f)(2) and that it could not be
held vicariously liable for a servicer's failure to adhere to § 1641 (f)(2V Opinion and Order,
#159, at 15-21. This comi implicitly accepted that Bank of America was not a servicer but
disagreed that Bank of America could not be held vicariously liable for its servicer's violation of
§ 1641 (f)(2). The comi explained:
The most miiculate decision suppmiing [plaintiffs position that
vicarious liability exists] is Davis v. Greenpoint 1\;fortg. Funding,
Inc., No. 1:09-CV-2719-CC-LTW, 2011 WL 7070221, (N.D. Ga.
Mar. 1, 2011), adopted in part, rejected in part on other grounds,
2011 WL 7070222 (N.D. Ga. Sept. 19, 2011). There, the court
observed that Congress amended TILA in 2009 to create a private
1
It is interesting to note that Bank of lvnerica never previously advanced the argument
made possible by Gale-that a non-assignee servicer has no reporting obligation under §
1641(f)(2). Indeed, I have not found any court adopting that position before Gale, likely because
of the consequences of that interpretation discussed above.
Page 4 - OPINION A1'lD ORDER
right of action against creditors for a violation of Section
1641(f)(2). See 15 U.S.C. § 1640(a) (establishing liability of "any
creditor who fails to comply with any requirement imposed under
this part, including any requirement under ... [Section 1641 (f) or
1641(g)]"). This amendment was motivated both by Congress'
general desire to provide a private right of action enforcing §
1641 (f)(2) to "protect homeowners from harms associated with
nondisclosures" and to allay concems raised by an emblematic
TILA case where a servicer's failure to reveal the identity of the
current holder of a borrower's loan prevented the borrower from
bringing a timely TILA rescission claim. Davis, 20 11 WL
7070221, at *3. Because TILA does not contain any provisions
allowing a consumer to bring a civil action against a servicer for a
violation of Section 164l(f)(2), the Davis court observed "the
private right of action that Section 1640(a) creates [against a
creditor] would be meaningless, unless agency principles pennit a
creditor to be held liable for Section 1641 (f)(2) violations
committed by its servicer." Jd at *4. Thus, "to avoid rendering
Section 1640(a) superfluous," the Davis court concluded that
"agency principles apply, and creditors may be held vicariously
liable for the Section 1641(f)(2) violations of their servicers." Id
(citing a similar holding in Consumer Solutions Reo, LLC v.
Hille~y, 2010 U.S. Dist. LEXIS 37857, at *9-17 (N.D. Cal. Mar.
24, 2010) where the district court applied agency principles to §
1641 (f)(2), extrapolating from the decisions of other courts that
have assumed TILA incorporated common law agency theory to
effectuate its purpose as a remedial consumer protection statute).
On the other hand, the best example of a decision endorsing
Bank of America's position is Holcomb v. Fed Home Loan lvlortg.
CoJ]J., 2011 WL 5080324, at *6-7 (S.D. Fla. Oct. 26, 2011), which
criticized the approach taken by Consumer Solutions because it
conflicted with TILA's imposition of the separate duty on new
creditor assignees of a loan to notifY borrowers in writing of the
loan's transfer. See 15 U.S. C.§ 164l(g). The Holcomb court
acknowledged the "disastrous effects" of a servicer's failure to
disclose on a borrower's TILA rights and the "alarming" difficulties
in enforcing§ 1641(f)(2) without accompanying vicarious liability
of creditors. !d. Nevertheless, the court concluded that it "cannot
say that Congress intended to make creditors and assignees liable
under§ 164l(f)(2)" and expressed concerns that expanding liability
to creditors would encourage borrowers to make "improperly
motivated requests for information" and thereby "convert TILA
Page 5 - OPINION AND ORDER
from a shield protecting consumers into a sword allowing them to
strike lenders who have followed the statute and its regulations as
closely as logic permits." Id. (internal quotations and citations
omitted).
I find the Davis court's approach more persuasive. First,
Holcomb is suspect because it completely ignores the language and
effect of the 2009 TILA amendments, which bear directly on a
creditor's liability under Section 1641 (f). [Moreover], although
only a handful of courts have addressed this issue, the trend is
towards recognizing creditor liability for servicer's violations of§
1641 (f). Just a few weeks ago, a soon-to-be-published Florida
district court opinion grappling with this precise topic extensively
examined both Davis and Holcomb, eventually following the
approach taken by. Davis. Khan v. Bank ofN.Y lviellon, No. 1260128-CIV-DIMITROULEAS, -F. Supp. 2d-, 2012 WL
1003509, at *2-6 (S.D. Fla. Mar. 19, 2012) ("the Court is
persuaded that Congress meant to extend agency principles to
creditors or make creditors liable under § 1641 (f)(2) by
intentionally insetiing the private right of action for violations of§
164l(f)(2) into § 1640(a), a remedy section that provides for civil
liability against creditors.").[2 ) Although the Florida court
acknowledged the difficulties of the statutmy language and the
deatih of interpretive authority, it emphasized the impotiance of
construing TILA so as not to render§ 164l(f)(2) "essentially
without effect" as well as the remedial nature of TILA as a
consumer protection statute. /d. at *5. Likewise, I reject Bank of
America's contention that a creditor cannot be liable for [its)
servicer's § 1641 (f)(2) violation.
Opinion and Order, #159, at 15-18.
Given this discussion, Bank of America wisely chose not to argue in the current motion
that no vicarious liability can ever attach to a creditor for a servicer's violation of§ 1641 (f)(2).
Instead, based on Gale, Bank of America argues that vicarious liability is inappropriate for
certain servicers-that is, those who are not assignees. To understand this argument, I must
2
Following the comi's April2, 2012 opinion and order, Khan was published at 849 F.
Supp. 2d 1377.
Page 6 - OPINION AND ORDER
examine Gale in some detail.
In 2006, plaintiff Richard Gale refinanced his home mortgage with First Franklin Loan
Services. Gale, 701 F.3d at 1243. Franklin served as both the creditor and servicer of Gale's
loan. Id. In June 2008, Gale hoped to renegotiate the loan after defaulting and contacted
Franklin, asking for the name and address of the holder of his loan pursuant to§ 1641(1)(2). Id.
Franklin did not respond and, in August 2008, the trust beneficiary made various transfers setting
the stage for a nonjudicial foreclosure. Id. at 1243-44. Gale argued that Franklin violated §
1641 (t)(2), which provides in relevant part: '"Upon written request by the obligor, the servicer
shall provide the obligor, to the best knowledge of the servicer, with the name, address, and
telephone number of the owner of the obligation or the master servicer of the obligation."' Id. at
1244, quoting 15 U.S.C. § 1641(1)(2).
The Ninth Circuit admitted that Gale's construction "has smface appeal" but ultimately
found that, in the context of the statute's overall scheme, it was incorrect. !d. Instead, the Court
construed§ 1641(1)(2) to impose liability for failing to respond to a bonower's inquiry "only [on]
those servicers who are also assignees of the loan." Id. First, the Court noted that § 1641 as a
whole addresses the liability of purchasers or assignees of mortgages, not creditors generally. I d.
at 1244-45 (noting that each subsection of§ 1641 addresses purchasers or assignees of
mortgages). Moreover, the Comi observed that since§ 164l(l) petiains only to loan servicers
who are also assignees of the loan obligation, the obligation in § 1641 (l)(2) cannot apply to
servicers generally. 3 !d. at 1245-46. Further, the Comt carefully parsed the phrasing of§
3
Section 1641 (l), which was unchanged by the 2009 amendments to TILA, is entitled
"Treatment of servicer" and provides:
Page 7 - OPINION AND ORDER
1641 (f)(2), recognizing that the shift from the indefinite article-" A servicer"-in the first
sentence to the definite article -"the servicer"-in the second sentence signals that the
obligation contained in the second sentence applies only to the category of servicers described in
the first sentence, i.e., a servicer who is the nominal owner of the loan "'on the basis of an
assignment of the obligation"' for "'administrative convenience."' ld. at 1246, quoting 15 U.S. C.
§ 1641 (f)(2) (emphasis omitted). If Congress had meant for that obligation to be applied to
servicers generally, it would have used a different article, such as "a" or "any." Id. The Ninth
Circuit therefore concluded that a servicer assigned a loan only for administrative purposes
"escapes liability because it is only a nominal owner of the note, but must still respond to an
obligor seeking information as to the true owner of the note." I d. Because Franklin was the
(1) In general
A servicer of a consumer obligation arising from a consumer credit
transaction shall not be treated as an assignee of such obligation for
purposes of this section unless the servicer is or was the owner of
the obligation.
(2) Servicer not treated as owner on basis of assignment for
administrative convenience
A servicer of a consumer obligation arising from a consumer credit
transaction shall not be treated as the owner of the obligation for
purposes of this section on the basis of an assignment of the
obligation from the creditor or another assignee to the servicer
solely for the administrative convenience of the servicer in
servicing the obligation. Upon written request by the obligor, the
servicer shall provide the obligor, to the best knowledge of the
servicer, with the name, address, and telephone number of the
owner of the obligation or the master servicer of the obligation.
15 U.S.C. § 164l(f) (emphasis omitted).
Page 8 - OPINION AND ORDER
original creditor, not an assignee, the Ninth Circuit held that it had no obligation to provide
notice under§ 1641(±)(2). Id
The Ninth Circuit's construction of§ 1641 (f) in Gale effectively creates three categories
of servicers. First, there are the servicer-assignees who own the loan obligation. Such servicers
are obligated to respond under § 1641 (f)(2) and can be held liable for failure to do so. Second,
there are the servicer-assignees who are only nominal owners of the obligation for administrative
convenience. These servicers have a duty to respond under § 1641 (f)(2) but there exists no right
of action to enforce that obligation. Third, there are servicers who are not assignees, either
substantively or nominally. These servicers have no duty under § 1641 (f)(2) to respond to a
bonower's request for information, nor can they be held liable for failing to respond.
The Ninth Circuit made clear that it reached its decision in Gale only on the basis of the
pre-amendment statute, since Gale submitted his request for information (and therefore his action
accrued) in mid-2008, prior to the 2009 amendments. I d. at 1247. Neve1iheless, in dicta, the
Ninth Circuit briefly observed that the 2009 amendments also supported its construction of§
1641(±)(2). 4 Id. The 2009 amendments made two changes to TILA relevant to this issue. See
Pub. L. No. 111-22, 123 Stat. 1632, 1658 (2009). Congress changed 15 U.S.C. § 1640(a) to
create a private right of action against any creditor "who fails to comply with ... subsection (f) or
(g)" of§ 1641-the provisions requiring servicers to respond to requests for the identity of the
loan holder and requiring new creditors to notify borrowers of loan transfers or assignments. Id.
Congress also added§ 164l(g), requiring a creditor that is the "new owner or assignee of the
4
The Ninth Circuit's original opinion in the case, 686 F.3d 1055, omitted this discussion
of the 2009 amendments. The Court later withdrew that opinion and replaced it with the
amended version, 701 F.3d 1240, which is the focus of the present motion.
Page 9 - OPINION AND ORDER
debt" to notifY the borrower of the transfer and provide the creditor's contact infmmation and
other details of the transfer. I d.
As the Ninth Circuit recognized in Gale, § 1641 (g) conflicted with TILA's existing
definition of "creditor," which was limited to the entity to whom the debt was originally payable,
leading the Ninth Circuit to observe that the existing definition "is no longer valid" even though
it was never amended or removed. Gale, 701 F.3d at 1246-47. Reflecting on these changes, the
Ninth Circuit stated: "Given this broader definition [of creditor] which includes assignees, it
makes perfect sense for Congress to refer in§ 1640(a) to§ 1641 provisions whose effect is
limited to assignees." Id. at 1247. It is not entirely clear what the Ninth Circuit meant by this,
but one could read that sentence to reveal the Ninth Circuit's belief that the 2009 amendment to §
1640(a) creates a private right of action for a violation of§ 1641(f)(2) only against assignee
creditors who are also servicers. But that would mean the amendment to § 1640(a) has no
practical effect. An assignee creditor that also services its own loan would be required to notifY
the borrower of its identity upon receiving assignment of the loan under § 1641 (g), presumably
eliminating the need for the borrower to later request the identity of the creditor/servicer at some
later date.
The Ninth Circuit's reasoning in Gale concerning § 1641 (f)(2) is plausible in the context
of the pre-amendment statute. If Congress had intended to create an obligation for all servicers
to respond to borrower inquiries, it should have placed that obligation outside of§ 1641, which
expressly concems "Liability of assignees." See 15 U.S. C. § 1641. The context of§ 1641(f)(2)
and its language indicate an intent to limit the reporting obligation to servicer-assignees. But the
Ninth Circuit's construction conflicts with Congress's understanding of the effect of pre-
Page 10 - OPINION AND ORDER
amendment § 1641 (f)(2) and with Congress's intent concerning the purpose and impact of the
2009 amendments. And the impact of Gale has disastrous consequences for the enforcement of
the § 1641 (f)(2) repmiing obligation-the very problem Congress attempted to fix.
As courts have recognized, Congress amended TILA in 2009 as "a reaction to the
continuing concem that, Jacking a private right of action, Section 1641 (f)(2) had failed to protect
homeowners from harms associated with nondisclosures." Davis, 2011 WL 7070221, at *3.
The sponsor of the 2009 amendments, Senator Barbara Boxer of California, introduced the need
for the amendment creating a private right of action to enforce § 1641 (f)(2) this way:
It seems like common sense if you have a mortgage on your
home, you ought to kuow who holds the mmigage. But in today's
real estate market, where the original lender often sells the Joan to
another entity, you can lose track and not know who actually owns
your mo1igage ....
And Federal law does require that the servicer tell the homeowner
the [identity] of the person holding their mmigage.
But servicers routinely ignore requests from homeowners
for infmmation on the noteholder. ...
While servicers are required to disclose this information,
there are no penalties in the Jaw for noncompliance and no
remedies for a homeowner faced with a recalcitrant servicer.
155 Cong. Rec. S5098 (daily ed. May 5, 2009). Senator Boxer's comments indicate Congress's
and others' understanding that § 1641 (f)(2) already required all servicers to tell borrowers the
name of the loan holder, even if it did not create a right of action to challenge a servicer's failure
to adhere to that duty. See also !55 Cong. Rec. S5174 (daily ed. May 6, 2009) (letter to Senate
Banking Committee Chairman Christopher Dodd fi"om several consumer-advocacy groups
Page 11 - OPINION AND ORDER
recognizing that "federal law requires that servicers tell the homeowner the identity of the note
holder" but noting that "this provision-IS U.S.C. [§]164l(f)(2)---has completely failed to
protect homeowners because there is no private right of action"). Comis prior to Gale also
interpreted§ 1641(£)(2) similarly. See, e.g., Davis, 2011 WL 7070221, at *4 ("By its plain
language, 15 U.S.C. § 1641(£)(2) imposes a disclosure obligation that is directed to servicers
only."); Holcomb, 2011 WL 5080324, at *6 ("TILA presents an apparent conundrum by
imposing an obligation on servicers to provide infmmation on request but also absolving
servicers of any liability under TILA where the servicers are not also the owners of the
obligations."). Of course, Gale's holding contradicts that widely held understanding.
More significant is the impact of Gale on the efficacy of the 2009 amendments
themselves. The language of the 2009 amendment creating the private right of action is already
vague. Section 1640(a) now provides that a creditor "who fails to comply with ... subsection (f)
or (g)" of§ 1641 "is liable" for actual damages and other statutory damages. How, then, does a
creditor "fail to comply" with§ 1641(£)(2) if that obligation only applies to servicers? Courts
have suggested that the amendment to§ 1640(a) would be meaningless unless "agency principles
permit a creditor to be held liable for Section 1641 (f)(2) violations committed by its servicer."
Davis, 2011 WL 7070221, at *4; accord Khan, 849 F. Supp. 2d at 1382 ("[T]he Court is
persuaded that Congress meant to extend agency principles to creditors or make creditors liable
under § 1641 (f)(2) by intentionally inserting the private right of action for violations of§
1641 (f)(2) into § 1640(a), a remedy section that provides for civil liability against creditors.");
Kissinger v. Wells Fargo Bank, NA., 888 F. Supp. 2d 1309, 1315 (S.D. Fla. 2012) ("There is no
question that Congress created a cause of action as set forth in 15 U.S. C.§ 1640(a). At the same
Page 12- OPINION AND ORDER
time, Congress mandated that servicers would not be liable for a TILA violation. 15 U.S. C. §
1641 (f). As such, the Court concludes that Congress intended the servicer's agent to be liable;
otherwise, Congress created a cause of action with no one to sue for relief.").
But for that vicarious-liability theory to serve as the legal mechanism underlying the
private right of action Congress meant to create, a servicer must commit some underlying
violation ofTILA that may be imputed to its principal, the creditor. And under Gale, unless the
servicer is also an assignee (whether actually or only nominally for administrative purposes),
there is no obligation to respond under § 1641 (f)(2). Here, plaintiff does not allege that the
servicer, Litton, is an assignee of her loan obligation. Thus, as Bank of America points out in its
brief, "it is logically impossible for Bank of America ... to be held vicariously liable under TILA
for a violation ofTILA supposedly committed by Litton" because, according to Gale, §
1641(f)(2) placed no obligation on Litton to respond to plaintiff's request. Br. in Support of
Motion to Dismiss, #187, at 7 (citing Oregon and federal case law holding that a principal cannot
be vicariously liable if its agent committed no statutory violation). Therefore, the ultimate effect
of Gale is to create a wide loophole to escape the clear intent of Congress's amendment to §
1640(a). Creditors need only contract with servicers without assigning the underlying obligation
to the servicer. The servicer then will not be obligated to respond to the borrower's request for
infmmation, and no one-not even the creditor--can be held liable.
In order to avoid vitiating Congress's obvious intent in enacting the 2009 amendments, at
least two comis have limited the applicability of Gale to only pre-amendment cases. lvfontano v.
Wells Fargo BankNA., No. 12-80718-CIV, 2012 WL 5233653, at *3 (S.D. Fla. Oct. 23, 2012);
Galeano v. Fed. Home Loan i.Iortg. Corp., No. 12-61174-CIV., 2012 WL 3613890, at *4 (S.D.
Page 13- OPINION AND ORDER
Fla. Aug. 21, 2012). },;fontana featured facts very similar to this case. The plaintiff's home loan
was assigned to Wells Fargo, which employed Canington Mortgage Services, LLC to service the
loan. }vfontano, 2012 WL 5233653, at* I. The plaintiff requested that Carrington identifY the
owner or master servicer of his loan, and Carrington failed to provide the address or telephone
number of that entity, so the plaintiffbrought a claim under§ 1641(f)(2) and§ 1640(a) against
Wells Fargo. Jd Citing Gale, Wells Fargo argued that the duty to provide notice under§
1641 (f)(2) applies only to servicer-assignees and that the plaintiff did not allege that Carrington
was a servicer-assignee of the loan. Jd at *2. But, since the plaintiff made his TILA request
after the 2009 amendments, the comi ren1sed to apply Gale.' Jd. at *3 ("If Congress intended§
1641 (f)(2)'s disclosure obligation to apply only to assignee-servicers who were not 'creditors,'
which TILA defines in § 1602(f) as the original lenders only, Congress would not·have added in
2009 the specific statutory reference to a private right of action against creditors who violate §
1641 (f)(2).").
On the one hand, it is tempting to take the same approach as }vfontano, essentially
recognizing that Gale's holding was limited to pre-amendment cases and finding that its
discussion of the 2009 amendments was dicta. See United States v. l'vfatta-Ballesteros, 71 F.3d
754,772-73 (9th Cir. 1995) (stating that dicta is "not the holding ofthe cou1i ... [and] do[es] not
operate as binding decisional precedent"). At the same time, since only the context-but not the
actual language-of§ 1641(f)(2) was altered by the 2009 amendments, it is less defensible to
asse1i that the Ninth Circuit's construal of§ 1641 (f)(2) is nonbinding.
5
Of course, even if the ivfontano court determined that Gale's rational applied equally to
post-amendment cases, it was under no obligation to follow Gale, an out-ot:circuit decision.
Page 14- OPINION AND ORDER
Accordingly, in light of my finding that Gale applies to this case and because this court is
bound by Ninth Circuit precedent, I find that Litton, a non-assignee servicer, had no duty under §
1641 (f)(2) to respond to plaintiffs inquiry. Without an underlying violation, Bank of America
cannot be held liable and plaintiffs TILA claim cannot survive.
CONCLUSION
For the reasons discussed above, Bank of America's motion to dismiss (#186) is granted.
In light of the disposition ofthis case, I also grant Bank of America's motion for leave to file a
motion to designate plaintiff as a vexatious litigant (#212) and will consider the merits of such
motion when and if it is filed. If Bank of America wishes to file such a motion, it must do so
within fomieen days of the date of this opinion and order. If Bank of America does not file such
a motion, or after resolution of such motion, the clerk of comi is directed to dismiss this case
with prejudice and without leave to amend.
:5}'
Dated this_/_ day ofNovember, 201 .
Honorable Paul Papak
United States Magistrate Judge
Page 15- OPINION AND ORDER
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