Opinion
Civ. No. 08-339 (RHK/AJB).
September 17, 2008
ORDER
This matter is before the Court on the September 16, 2008 letter request (attached) of Defendant Homecomings Financial, LLC ("Homecomings") to file a Motion for Reconsideration of this Court's May 30, 2008 Order granting in part and denying in part its Motion to Dismiss. For the reasons set forth below, Homecomings' request will be denied.
The plaintiffs in this putative class action are mortgagors whose mortgages were (or are) serviced by Homecomings. Plaintiffs allege that Homecomings has imposed improper fees, costs, and charges on their mortgage accounts and, as a result, that it has violated several federal statutes, including the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"). Homecomings moved to dismiss Plaintiffs' claims, arguing inter alia that Plaintiffs lacked standing to pursue their TILA claim because they had not suffered any actual damages. Plaintiffs, in response, contended that this argument failed because they had also requested statutory damages under TILA. In its Reply, Homecomings argued that statutory damages were unavailable for the violations alleged in the Complaint. The Court ultimately rejected Homecomings' argument based on its reading of 15 U.S.C. § 1640(a) and held that Plaintiffs could recover statutory damages if they were able to prove a TILA violation.
Pursuant to District of Minnesota Local Rule 7.1(g), Homecomings now requests leave to file a Motion for Reconsideration of the Court's May 30, 2008 Order, insofar as it declined to dismiss the TILA claim. Motions for reconsideration are to be granted "only upon a showing of compelling circumstances," D. Minn. L.R. 7.1(g) — namely, to correct "manifest errors of law or fact or to present newly discovered evidence." Mumid v. Abraham Lincoln High Sch., Civ. No. 05-2176, 2008 WL 2938159, at *3 (D. Minn. July 22, 2008) (Schiltz, J.). Homecomings argues that a recent decision from the Ninth Circuit Court of Appeals, McDonald v. Checks-N-Advance, Inc. (In re Ferrell), ___ F.3d ___, 2008 WL 3876602 (9th Cir. Aug. 22, 2008), suggests that this Court misconstrued TILA's statutory-damages section. In essence, Homecomings seeks to relitigate the statutory-damages issue, which is inappropriate in a motion to reconsider. E.g., Arends v. Extendicare Homes, Inc., Civ. No. 07-995, 2008 WL 1924172, at *1 (D. Minn. Apr. 28, 2008) (Doty, J.). Moreover, McDonald relied on Baker v. Sunny Chevrolet, Inc., 349 F.3d 862 (6th Cir. 2003), a case that was available to Homecomings when it filed its Reply, but which Homecomings did not cite. The Court will not permit Homecomings to use a motion for reconsideration as a vehicle to cite legal authority which it could have, and should have, cited to this Court before it ruled on the Motion to Dismiss.
The Court also notes that Homecomings' request is untimely. A motion for reconsideration under Local Rule 7.1(g) is the "functional equivalent" of a motion to alter or amend judgment under Federal Rule of Civil Procedure 59(e). DuBose v. Kelly, 187 F.3d 999, 1002 (8th Cir. 1999). Such motions must be filed within 10 days after entry of the challenged order (or, in the case of a judgment, within 10 days of the entry of judgment). Fed.R.Civ.P. 59(e). Here, Homecomings did not file its request for more than two months after the Court denied its Motion to Dismiss vis-à-vis the TILA claim.
Based on the foregoing, and all the files, records, and proceedings herein, IT IS ORDERED that Homecomings' letter request for leave to file a Motion for Reconsideration is DENIED. Severson Werson VIA FEDERAL EXPRESS Motley v. Homecomings Financial, LLC, Civ. No. 08-339 (RHK/AJB)
Jan T. Chilton One Embarcadero Center, Suite 2600 Attorney at Law San Francisco, CA 94111 Direct Line: (415) 677-5603 A Professional Corporation Telephone: (415) 398-3344 jtc@severson.com Facsimile: (415) 956-0439 September 16, 2008 The Honorable Richard H. Kyle United States District Judge 764 Federal Building 316 N. Robert Street St. Paul, MN 55101 Re: Dear Judge Kyle:Pursuant to Local Rule 7.1(g), Homecomings Financial, LLC writes to request leave to file a motion for reconsideration of one issue determined against Homecomings in the May 30, 2008 Memorandum and Order on Homecomings' motion to dismiss ("Order"). The issue is whether plaintiffs may recover statutory damages under 15 U.S.C. § 1640(a)(2) if they prove their claim that Homecomings violated 12 C.F.R. § 226.20(c)(4) by inaccurately disclosing the loan balance when the interest rate changed on variable rate loans.
In the Order (pp. 7-10), the Court concluded that § 1640 allows statutory damages in all cases, except those specifically exempted by the limitations set forth in the hanging paragraph following § 1640(a)(4). The Court reasoned that since plaintiffs allege a violation of Regulation Z, not 15 U.S.C. § 1638 (as shown by the fact that variable rate disclosures must be made after loan closing, whereas § 1638 disclosures must be made at or before loan closing), the specific hanging paragraph exemption that Homecomings cited did not apply. (Order, 9-10.) Notably, the above reasoning offered by the Court was different from the reasoning urged by plaintiffs, and thus was not specifically addressed by Homecoming in its reply arguments. Moreover, in a footnote, the Court mentioned that it was unclear whether statutory damages were available for a violation of Regulation Z that was not also a violation of TILA itself, but did not resolve that issue because Homecomings had not raised it. (Order, 10 n. 5.)
Reconsideration of this issue is appropriate in light of a recent Ninth Circuit decision which joins the Sixth Circuit in rejecting the Order's interpretation of § 1640(a). See McDonald v. Checks-N-Advance, Inc. (In re Ferrell), ___ F.3d ___, 2008 WL 3876602 (9th Cir. Aug. 20, 2008) (copy enclosed). McDonald follows Baker v. Sunny Chevrolet, 349 F.3d 862 (6th Cir. 2003) in rejecting Lozada v. Dale Baker Oldsmobile, Inc., 145 F.Supp.2d 878, 885-890 (W.D. Mich. 2001), a leading opinion among the minority of district court decisions that have adopted the Order's reading of § 1640(a).
As the McDonald and Baker decisions explain, the hanging paragraph's limitation sentence encompasses more than just the disclosure rules of section 1638. Beginning with "in connection with the disclosures referred to in section 1638," the limitation sentence applies broadly to any claim for a TILA violation in connection with a closed-end loan, allowing statutory damages only for violations of § 1638(a)(2)-(6) or (9) and § 1635. McDonald, 2008 WL 3876602 at *3-4, slip opn. at 11386-88 (statutory damages not permitted for violations of § 1632 (clear and conspicuous disclosure) or § 1638(b)(1) (timing)); Baker, 349 F.3d at 866-69 (statutory damages not permitted for violation of § 1638(b)(1) (timing)); Brown v. Payday Check Advance, Inc., 202 F.3d 987, 900-92 (7th Cir. 2000) (statutory damages not permitted for violation of § 1632 (grouping and labeling of disclosures)); accord: Stevens v. Brookdale Dodge, Inc., 2002 WL 31941158 at *3-5 (D. Minn. 2002) (Lancaster, J.); Malchow v. GMI Acquisition, Inc., 2002 WL 31185865, at *3-5 (D. Minn. 2002) (Rosenbaum, C.J.); Peter v. Village Imports Co., 2001 WL 1640130, at *3 (D. Minn. 2001) (Doty, J.).
Congress did not narrowly restrict statutory damages for violation of the TILA itself, only to allow statutory damages for any violation of TILA's implementing regulation. The "clear and conspicuous disclosure" requirements illustrate the point. First codified as part of § 1632(a) in 1980, see Brown, 202 F.3d at 991, these requirements began and remain as part of Regulation Z. 12 C.F.R. § 226.17(a). Section 1640(a)'s limitation sentence clearly disallows statutory damages for violation of these requirements as codified in § 1632(a). Congress could not have intended to nevertheless allow statutory damages for violation of 12 C.F.R. § 226.17(a)'s restatement of the same requirements.
Indeed, as the Order's footnote suggests, statutory damages are not permissible for violations of Regulation Z that do not also violate TILA. Compare 15 U.S.C. § 1640(a) (granting cause of action against person "who fails to comply with any requirement under this part") with 15 U.S.C. § 4010(a) (granting claim against institution "which fails to comply with any requirement imposed under this chapter or any regulation prescribed under this chapter").
The Ninth Circuit's recent decision casts new light on this important issue of first impression that received less attention than it deserved in the briefing on the multi-issue motion to dismiss. Such circumstances warrant allowing a motion for reconsideration of the issue by the Court.