Velardi v. Countrywide Bank, FSB et al

Filing 15

MEMORANDUM (Order to follow as separate docket entry).Signed by Honorable Malachy E Mannion on 5/3/17. (bs)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
TERESA VELARDI,

:

Appellant,

: CIVIL ACTION NO. 3:16-1120

v.

:

(JUDGE MANNION)

COUNTRYWIDE BANK, FSB, et al., :
Appellees.

:
MEMORANDUM

Pending before the court is pro se appellant Teresa Velardi’s
bankruptcy appeal. (Doc. 1). Ms. Velardi seeks the reversal of two judgment
orders of the Bankruptcy Court in the Middle District of Pennsylvania granting
a motion to dismiss filed by appellees Countrywide Bank, FSB
(“Countrywide”), Mortgage Electronic Registrations Systems, Inc. ("MERS”),
Bank of America, N.A. (“BANA”), and Phelan Hallinan Diamond & Jones, LLP
(“Phelan”), (collectively, the “Countrywide appellees”), and a second motion
to dismiss filed by appellees Rushmore Loan Management Services, LLC
(“Rushmore”) and Wilmington Savings Fund Society, FSB (“Wilmington”),
(collectively, the “Rushmore appellees”). (See Doc. 3 at 116–117, 147). The
above motions sought dismissal of Ms. Velardi’s adversary complaint in her
underlying Chapter 7 bankruptcy case.1 Based on the foregoing, the orders
1

Ms. Velardi’s Chapter 7 bankruptcy case filed pursuant to 11 U.S.C.
§707(a) is docketed under case number 5-15-bk-02449-RNO. Her adversary
complaint is docketed under adversary number 5-15-bk-ap-00126-RNO. Both
cases are assigned to Bankruptcy Judge Robert N. Opel, II.

of the bankruptcy court will be affirmed and Ms. Velardi’s appeal will be
dismissed.

I.

BACKGROUND
On January 8, 2008, Ms. Velardi executed a mortgage and promissory

note with Countrywide, with MERS acting as nominee, in the principle amount
of $176,750.00 for property located at 612 Sunset Street, Clarks Summit,
Pennsylvania. (See Doc. 3 at 38, 46). On September 28, 2011, MERS
assigned the mortgage to BANA, successor by merger to BAC Home Loans
Servicing, LP, f/k/a Countrywide Home Loans Servicing, LP. (See id. at
35–37). In 2012, BANA filed a foreclosure complaint against Ms. Velardi in the
Court of Common Pleas of Lackawanna County. (See id. at 10; Doc. 4 at 16).
On May 8, 2014, the county court entered summary judgment in favor of
BANA. (Doc. 4 at 40). On May 15, 2015, Ms. Velardi mailed a “Notice of
Rescission/Cancellation” letter to all of the appellees proclaiming the letter to
be an exercise of her right to rescind the loan pursuant to the Truth in Lending
Act (TILA), 15 U.S.C. §1601 et seq., as amended. (Doc. 3 at 69–71). On May
20, 2015, the county court’s entry of judgment in the foreclosure action was
affirmed on appeal. (Doc. 4 at 40).
On June 8, 2015, Ms. Velardi filed a voluntary petition under Chapter 7
of the United States Bankruptcy Code without legal counsel, therein staying
the foreclosure action. On August 13, 2015, Ms. Velardi initiated an adversary
2

action by complaint against the appellees, proceeding pro se.2 (See Doc. 3
at 9–33). In her adversary complaint, Ms. Velardi alleged that the appellees
violated the TILA by failing to disclose who the “true lender” was at the closing
of the property. (Id. at 17, ¶2). She sought enforcement of the May 15, 2015
rescission letter because the appellees did not respond to it. She described
her complaint as a suit to “enforce” the rescission and not to “make the
rescission effective by operation of law.” (Id. at 11, ¶2). While seeking to
“enforce rescission” of the loan transaction, she also argued that the loan
transaction was never consummated. Lastly, she attempted to bring a criminal
action against appellees Phelan and Rushmore. She sought various forms of
relief in her complaint including, but not limited to, an extension of the stay,
an injunction enjoining the continuation of the state foreclosure action, a
return of the promissory note marked cancelled, a return and satisfaction of
the mortgage, the return of previous payments, actual damages, and statutory
damages.
On September 14, 2015, the Countrywide appellees filed a motion to
dismiss the adversary complaint. On September 29, 2015, the Rushmore
appellees also filed a motion to dismiss. The bankruptcy court held a hearing
on the motions on January 28, 2016. (See Doc. 10). On February 24, 2016,

2

Ms. Velardi appears to have anticipated that the appellees, particularly
BANA, would at some point file a motion to vacate the automatic stay in the
bankruptcy action. (See Doc. 3 at 16, ¶21).
3

the bankruptcy court issued an opinion and entered judgment in favor of the
Countrywide appellees, dismissing Ms. Velardi’s adversary complaint against
the Countrywide appellees with prejudice. (Doc. 3 at 99–114, 116). The
Rushmore appellees’ motion to dismiss was denied without prejudice because
they failed to properly serve the motion. (Id. at 105). The bankruptcy court
also granted leave to the Rushmore appellees to file a renewed dispositive
motion or an answer to Ms. Velardi’s complaint within thirty (30) days of the
decision and order. (Id. at 116–117). On March 22, 2016, the Rushmore
appellees filed a second motion to dismiss.
On March 17, 2017, Ms. Velardi appealed the bankruptcy court’s entry
of judgment in favor of the Countrywide appellees to this court.3 Following an
initial decision and reconsideration, the court determined that the bankruptcy
court’s February 24, 2016 order was not a final order for purposes of appeal,
particularly because the order did not terminate all claims with respect to all
parties. The court, therefore, dismissed her appeal without prejudice. (See
id.).
On June 2, 2016, the bankruptcy court granted the Rushmore
appellees’ second motion to dismiss in open court and entered judgment in
their favor. (See Doc. 3 at 147; Doc. 11). This concluded the entire adversary
proceeding. The bankruptcy court did not issue another formal opinion.
3

See Velardi v. Countrywide, Civil Docket. No. 3:16-cv-00470-MEM
(Doc. 1), (M.D. Pa.).
4

Instead, the bankruptcy court incorporated by reference its prior decision with
respect to the Countrywide appellees, relying on those findings and
conclusions in open court. (See Doc. 11). Judgment was then entered in favor
of the Rushmore appellees. (Doc. 3 at 147).
On June 10, 2016, Ms. Velardi filed the current appeal. (Doc. 1). On
July 15, 2016, she filed her opening brief. (Doc. 7). On August 3, 2016, the
Rushmore appellees filed an opposition brief. (Doc. 12). On August 18, 2016,
the Countrywide appellees filed an opposition brief. (Doc. 13). Mr. Velardi filed
a reply to the appellees’ briefs on September 2, 2016. (Doc. 14). Ms. Velardi’s
appeal is now ripe for review.

II.

THE BANKRUPTCY COURT’S DECISION
Ms. Velardi’s appeal only challenges the dismissal of the various TILA

claims in her adversary complaint. In the underlying adversary proceeding, the
appellees sought dismissal of Ms. Velardi’s TILA claims on various grounds,
including: (1) the timeliness of Ms. Velardi’s May 15, 2015 notice of rescission
under the TILA; (2) the doctrines of res judicata and claim-splitting; and (3)
the Rooker-Feldman doctrine. (See Doc. 4 at 14–15; Doc. 6 at 10–14).
Exercising judicial restraint, the bankruptcy court did not address the
appellees’ arguments regarding the doctrine of res judicata and the RookerFeldman doctrine. (Doc. 3 at 113–14). Nor did the bankruptcy court address
the arguments regarding claim-splitting. Instead, the bankruptcy court’s
5

decision rested solely on the timeliness of Ms. Velardi’s notice of rescission.
(See id. at 109–111; Doc. 11 at 10–11).
Construing Ms. Velardi’s pro se complaint liberally, the bankruptcy court
determined that Ms. Velardi’s TILA claims and the right to rescission were
barred by the TILA’s three-year statute of repose, 15 U.S.C. §1635(f). (Doc.
3 at 103, 109–111). The bankruptcy court determined that the limitations
period began on January 8, 2008 because the loan transaction was
consummated on that date, making Ms. Velardi’s May 15, 2015 notice of
rescission untimely. (Id. at 109–110). The bankruptcy court also determined
that any amendment to the adversary complaint would have been futile. (Id.
at 111; Doc. 11 at 12). Prior to reaching this determination, the bankruptcy
court concluded that it could reach the limitations arguments on a motion to
dismiss based on the “Third Circuit Rule.” (Id. at 108). This rule, as explained
by the bankruptcy court, allows limitations defenses to be raised in a motion
to dismiss where the complaint and/or attached exhibits indicate that the claim
has not been brought within the requisite time period. (Id.).
The bankruptcy court also addressed Ms. Velardi’s argument that the
appellees waived their defenses to the adversary complaint because their
motions were late. (Id. at 104). The Countrywide appellees’ motion was one
day late and the Rushmore appellees’ motion was over two weeks late. (See
id.). The bankruptcy court concluded that no defenses were waived due to the

6

untimely filings, partly because no explicit deadlines for dispositive motion had
been set by the court. (Id.).

III.

LEGAL STANDARDS
This court has appellate jurisdiction over the bankruptcy court’s

February 24, 2015 order and entry of judgment in favor of the Countrywide
appellees and June 2, 2016 entry of judgment in favor of the Rushmore
appellees.4 28 U.S.C. §158(a)(1) (The district court has “jurisdiction to hear
appeals from final judgments, orders, and decrees” of a bankruptcy court).
When a district courts sits as an appellate court over a final order of a
bankruptcy court, it reviews the bankruptcy court’s legal determinations de
novo, its findings of fact for clear error, and its exercise of discretion for abuse
of discretion. In re Trans World Airlines, Inc., 145 F.3d 124, 131 (3d Cir.
1998). The court’s review of the granting of a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6)5 is plenary or de novo. See Black v.
Montgomery Cty., 835 F.3d 358, 364 (3d Cir. 2009).

4

The bankruptcy court correctly concluded that the adversary
proceeding was a core proceeding pursuant to 28 U.S.C. §157(b)(2)(K)
because Ms. Velardi’s adversary complaint attempted to avoid a
mortgage—i.e., a lien—on her property. (See Doc. 3 at 101). Thus, the
bankruptcy court’s judgment is final even though the parties did not consent.
See 28 U.S.C. §157(b)(1).
5

See FED. R. BANKR. P. 7012(b) (applying Federal Rule of Civil
Procedure 12(b)(6) to adversary proceedings).
7

A.

Motions to Dismiss

Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in
part, if the plaintiff fails to state a claim upon which relief can be granted. FED.
R. CIV. P. 12(b)(6). In reviewing such a motion, the court must “accept all
factual allegations as true, construe the [c]omplaint in the light most favorable
to the plaintiff, and determine whether, under any reasonable reading of the
[c]omplaint, the plaintiff may be entitled to relief.” Fleisher v. Standard Ins.
Co., 679 F.3d 116, 120 (3d Cir. 2012) (internal quotation marks and citation
omitted). It is the moving party that bears the burden of showing that no claim
has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005).
Dismissal is appropriate only if, accepting all of the facts alleged in the
complaint as true, the plaintiff has failed to plead “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 547 (2007). This “plausibility” determination is a “context-specific
task that requires the reviewing court to draw on its judicial experience and
common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Ultimately, the
plaintiff must be able to “provide the grounds of his entitlement to relief,”
requiring more than bold-faced labels and conclusions. Phillips v. County of
Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (brackets and internal quotation
marks omitted) (quoting Twombly, 550 U.S. at 555). “[A] formulaic recitation
of the elements of a cause of action will not do.” Id.

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In considering a motion to dismiss, the court generally relies on the
complaint, attached exhibits, and matters of public record. See Sands v.
McCormick, 502 F.3d 263, 268 (3d Cir. 2007). The court may, however,
consider "undisputedly authentic document[s] that a defendant attaches as
an exhibit to a motion to dismiss if the plaintiff's claims are based on the
[attached] documents." Pension Benefit Guar. Corp. v. White Consol. Indus.,
998 F.2d 1192, 1196 (3d Cir. 1993). Moreover, "documents whose contents
are alleged in the complaint and whose authenticity no party questions, but
which are not physically attached to the pleading, may be considered." Pryor
v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002).
B.

Leave to Amend

Generally, the court should grant leave to amend a complaint before
dismissing it as merely deficient, in the spirit of Federal Rule of Civil
Procedure 15.6 See Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.,
482 F.3d 247, 252 (3d Cir. 2007); Grayson v. Mayview State Hosp., 293 F.3d
103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir.
2000). “The court should freely give leave [to amend a pleading] when justice
so requires.” FED. R. CIV. P. 15(a)(2). "Dismissal without leave to amend is
justified only on the grounds of bad faith, undue delay, prejudice, or futility."

6

See FED. R. BANKR. P. 7015 (applying Federal Rule of Civil Procedure
15 to adversary proceedings).
9

Alston v. Parker, 363 F.3d 229, 236 (3d Cir. 2004). Here, the bankruptcy
court’s denial of leave was premised on futility.
Futility means that the complaint, as amended, would
fail to state a claim upon which relief could be
granted. The standard for assessing futility is the
same standard of legal sufficiency as applied under
Federal Rule of Civil Procedure 12(b)(6). In other
words, the District Court determines futility by taking
all pleaded allegations as true and viewing then in the
light most favorable to the plaintiff.
Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159,
175 (3d Cir. 2010) (internal quotation marks, citations, and original alterations
omitted).
When a bankruptcy court grants a motion to dismiss without leave to
amend on the basis of futility the district court reviews the denial of leave for
abuse of discretion. See id. Where the bankruptcy court failed to consider a
proposed amendment the district court’s review will be de novo to determine
if a plausible claim has been stated. See id. There will be no abuse of
discretion “where pleading deficiencies would not have been remedied by
proposed amendments.” Id. (quoting Kanter v. Barella, 489 F.3d 170, 181 (3d
Cir. 2007)).

C.

Liberal Pleading Standard

Pro se pleadings must be “construed liberally.” Alston, 363 F.3d at 234.
The policy requiring courts to construe pro se pleadings liberally is “driven by
10

the understanding that [i]mplicit in the right of self-representation is an
obligation on the part of the court to make reasonable allowances to protect
pro se litigants from inadvertent forfeiture of important rights because of their
lack of legal training.” Higgs v. Att’y Gen., 655 F.3d 333, 339 (3d Cir. 2011)
(quoting Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 475 (2d Cir.
2006)) (alteration in original). As the bankruptcy court correctly noted,
pleadings by pro se litigants will be “held to [a] less stringent standard than
formal pleadings drafted by lawyers.” Haines v. Kerner, 404 U.S. 519, 520
(1972).

III.

DISCUSSION
Ms. Velardi presents two specific issues for the court’s appellate review:

(1) whether the bankruptcy court erred or abused its discretion in granting the
appellees’ motions to dismiss without granting leave to amend the adversary
complaint and (2) whether the bankruptcy court erred or abused its discretion
by allowing a “waived affirmative defense” to be considered.7 (Doc. 7 at 6). In
addition, though not stated in her statement of issues, Ms. Velardi argues that
the bankruptcy court erred in concluding that the loan was ever consummated
for purposes of the three-year limitations period. She alleges that this was

7

The Countrywide appellees presented a counter-statement of issues,
again raising the issue of res judicata. (Doc. 13 at 10). The bankruptcy court
did not address the issue of res judicata, nor will this court.
11

error because the lender was never identified and the loan was never funded.
Ms. Velardi’s arguments are without merit and the bankruptcy court correctly
concluding that she had not pled any plausible TILA claims and that
amendment would have been futile. Accordingly, the decision of the
bankruptcy court will be affirmed.
“Congress enacted [the] TILA in 1968 to promote the ‘informed use of
credit.’” Sherzer v. Homestar Mortg. Servs., 707 F.3d 255 (3d Cir. 2013)
(quoting 15 U.S.C. §1601(a)). The law requires lenders to make certain
disclosures to consumers regarding loan terms and arrangements.
McCutcheon v. America’s Servicing Co., 560 F.3d 143, 147 (3d Cir. 2009). It
is a remedial consumer protection statute that is construed strictly against the
creditor and liberally in favor of the consumer. Roberts v. Fleet Bank (R.I.),
342 F.3d 260, 266 (3d Cir. 2003).
Pursuant to the TILA, “[c]onsumers have an absolute right to rescind
[their loan] for three business days after closing on the loan.” Sherzer, 707
F.3d at 256 (citing 15 U.S.C. §1635(a)). If a consumer does not receive all of
the disclosures required by the TILA the three day limitation does not apply.
Id. But the right to rescission does not last forever. Jesinoski v. Countrywide
Home Loans, Inc., 135 S. Ct. 790, 792 (2015). “Even if a lender never makes
the required disclosures, the ‘right of rescission shall expire three years after
the date of consummation of the transaction or upon the sale of the property,
whichever occurs first.’” Id. (quoting 15 U.S.C. §1635(f)) (emphasis in
12

original). The TILA provision extinguishing the right to rescission after three
years is a statute of repose, not a statute of limitations. See Beach v. Ocwen
Fed. Bank, 523 U.S. 410, 417 (1998). There is no federal right to rescind after
the three-year period has run.
The borrower is not required to file suit within the three-year period in
order to exercise the right to rescission. Jesinoski, 135 S. Ct. at 792. The right
may be exercised by the borrower’s notification to the creditor of the intention
to rescind. Id. (citing 15 U.S.C. §1635(a)) (A borrower “shall have the right to
rescind . . . by notifying the creditor . . . of his intention to do so”)). “[S]o long
as the borrower notifies within three years after the transaction is
consummated, his [or her] rescission is timely.” Id. It follows that if a borrower
does not notify the creditor of the intent to rescind within three years, the
rescission in untimely and ineffective as the right has expired and, thus, does
not exist.
The three-year limitations period starts at either “the consummation of
the transaction or upon the sale of the property, whichever occurs first.” 15
U.S.C. §1635(f). In accordance with the Federal Reserve Board (“Board”)
regulation implementing the TILA, Regulation Z, “[c]onsummation means the
time that a consumer becomes contractually obligated on a credit
transaction.” 12 C.F.R. §226.2(13). According to the Board’s Official Staff
Interpretations, state law governs when a contractual obligation is created. 12
C.F.R. Pt. 226 Supp. I; see also In re McNinch, 250 B.R. 848, 857–58 (W.D.
13

Pa. 2000) (applying state law to the parties’ loan agreement). These Official
Staff Interpretations are given great deference unless “demonstrably
irrational.” Rossman v. Fleet Bank (R.I.) Nat’l Ass’n, 280 F.3d 384, 389 (3d
Cir. 2002) (quoting Ford Meter Credit Co. v. Milhollin, 444 U.S. 555, 565
(1980)).
In Pennsylvania, a note secured by a mortgage is a negotiable
instrument governed by Pennsylvania’s Uniform Commercial Code, Article 3,
Negotiable Instruments (“PUCC Art. 3”), 13 PA. CONS. STAT. §3101 et seq.
See CitiMortgage, Inc. v. Barbezat, 131 A.3d 65, 69 (Pa. Super. Ct. 2016).
The mortgage is an “accessory” to the note allowing the holder of the note to
proceed in an action on the note or an action in foreclosure to recover the
secured property. Id. at 68. In its entirety, this loan transaction involves a
promise to pay (the note) and security of the debt (the mortgage). It is
consummated when the proceeds of the loan are issued to the borrower and
the note and mortgage documents are fully executed and delivered, which
would occur at the closing of the loan. Baribault v. Peoples Bank of Oxford,
714 A.2d 1040, 1043 (Pa. Super. Ct. 1998).
The bankruptcy court concluded that Ms. Velardi’s loan transaction was
consummated on January 8, 2008. Ms. Velardi’s note and mortgage are, in
fact, dated January 8, 2008. (See Doc. 3 at 38, 46, 60). This date is clear from
the documents attached to the adversary complaint. (See id.). In addition, Ms.
Velardi’s explicitly states in her adversary complaint that she “executed a
14

promissory note and security agreement” on January 8, 2008. (Doc. 3 at 17).
Based on this, the court agrees with the bankruptcy court’s conclusion that
Ms. Velardi’s loan was consummated on January 8, 2008. This would make
her May 15, 2015 rescission letter untimely. Ms. Velardi’s right to rescind
under the TILA expired three years after the loan consummation, in January
of 2011. 15 U.S.C. §1635(f); Jesinoski, 135 S. Ct. at 792. The letter she sent
in 2015 was over four years too late. Because her right to rescind had
expired, the letter Ms. Velardi sent to the appellees had no legal effect.
Ms. Velardi attempts to avoid the clear application of the three-year
statute of repose based on various arguments. The court will address them
here.
Ms. Velardi first insists that the appellees’ defense was barred by what
she calls a “strict 20 day [s]tatute of [l]imitation.” (Doc. 7 at 11). Ms. Velardi
cites to Regulation Z for this proposition, particularly 12 C.F.R. §226.23(d).
This provision is not a statute that could impose a bar on the appellees. Even
construing Ms. Velardi’s argument as that of waiver and not as an argument
premised on a statute of limitations, her argument is without merit.
Nothing in the regulatory provision Ms. Velardi cites to bars the
appellees’ arguments with respect to the statute of repose. The provision
presumes that the rescission sent by the borrower is effective and goes on to
state the resulting effects. See 12 C.F.R. §226.23(d) (titled “Effects of
rescission”). As explained above, the right to rescission expires three years
15

after loan consummation. Thus, an attempt to rescind after that time period
is ineffective. A lender need not respond to a legal nullity or be forever barred
from asserting the limitations period. The opposite is true, however. The
consumer must assert the right to rescission (via notice) within the three years
of consummation or be forever barred.
Next, Ms. Velardi argues that the defense was waived because it was
not pled in an answer and that the Third Circuit Rule should not have been
applied. It is very clear in this circuit that a limitations defense can be raised
in a Rule 12(b)(6) motion as opposed to an answer filed pursuant to Federal
Rule of Civil Procedure 8 where the statement of the claim shows that the
cause of action could not have been brought within the limitations period.
Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (citing Robinson v.
Johnson, 313 F.3d 128, 134–35 (3d Cir. 2005). The bankruptcy court’s
decision to reach the limitations argument was clearly proper. Ms. Velardi
expressly states in her adversary complaint that the note and security
agreement for the property were executed on January 8, 2008 and that the
rescission letter was sent on May 15, 2015. (Doc. 3 at 17–18). The
documents attached to the adversary complaint also confirm these dates. (Id.
at 38, 46, 60, 69). Based on these averments and attachments, the
bankruptcy court could properly dismiss Ms. Velardi’s TILA claims based on
the limitations period while staying within the bounds of Rule 12(b)(6).

16

Lastly, Ms. Velardi argues that the loan was never consummated
because the lender was never identified and therefore the loan was never
funded as required under Pennsylvania common law. First, if this were true
then Ms. Velardi would have nothing to rescind, making her TILA claims
implausible for that reason alone. Second, Ms. Velardi has misapplied the law
as the note is a negotiable instrument governed by the PUCC Art. 3, not
Pennsylvania common law. In the law governing negotiable instruments, a
holder of a note need not be named on the instrument in order to enforce the
obligations under that instrument. See 13 PA. CONS. STAT. §3301;
CitiMortgage, 131 A.3d at 69.
With respect to the funding of the loan, the adversary complaint admits
that the loan was a “funded loan.” (Doc. 3 at 30). Thus, Ms. Velardi’s
argument that the loan was never funded is without merit. The court must
accept the factual (not legal) allegations in the adversary complaint as true
and there is no allegation that the loan was never funded. Ms. Velardi’s true
argument appears to be that she did not know who funded the loan. (See id.
at 30). However, the legal determination regarding loan consummation
requires a finding that the loan proceeds were issued and that the documents
were executed and delivered. Baribault, 714 A.2d at 1043. Who issued the
proceeds is not relevant to this particular analysis. Accordingly, the court will
affirm the bankruptcy court’s conclusion that Ms. Velardi’s TILA claims were
time-barred.
17

Ms. Velardi’s second basis for appeal is the bankruptcy court’s grant of
the appellees’ motions to dismiss with prejudice and without leave to amend.
Ms. Velardi argues that the bankruptcy court abused its discretion in this
regard. Here, the bankruptcy court’s denial of leave was premised on futility.
The court must assess the absence or existence of futility under the same
pleading standard as that imposed by Rule 12(b)(6). Great Western Mining
& Mineral Co., 615 F.3d at 175. Further, there will be no abuse of discretion
“where pleading deficiencies would not have been remedied by proposed
amendments.”Id. (quoting Kanter, 489 F.3d at 181).
The court has carefully reviewed the various, sometimes contradictory,
allegations in Ms. Velardi’s adversary complaint. The court agrees with the
bankruptcy court that these allegations offer no plausible right to relief under
the TILA based on the three-year statute of repose. No amendment could
save these claims. Accordingly, the bankruptcy court’s denial of leave to
amend was not an abuse of discretion and will be affirmed.

IV.

CONCLUSION
Based on the above, the court finds that the bankruptcy court’s entry of

judgment in favor of the Countrywide appellees and the Rushmore appellees
was proper and should not be disturbed. Ms. Velardi did not state any
plausible TILA claims in her adversary complaint as her claims were barred
by the three-year statute of repose. Any amendment to the adversary
18

complaint would have been futile. Accordingly, the bankruptcy court’s
February 24, 2016 and June 2, 2016 orders granting the appellees’ motions
to dismiss, entering judgment in their favor, and dismissing Ms. Velardi’s
adversary complaint will be AFFIRMED. Ms. Velardi’s appeal, (Doc. 1), will be
DENIED. An appropriate order will follow.

s/ Malachy E. Mannion
MALACHY E. MANNION
United States District Judge
Date: May 3, 2017
O:\Mannion\shared\MEMORANDA - DJ\CIVIL MEMORANDA\2016 MEMORANDA\16-1120-01.wpd

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