Opinion
Civil Action No. 05-1912.
February 7, 2006
MEMORANDUM AND ORDER
The Defendant has filed a motion for summary judgment in this action in which the Plaintiffs allege violations of the Truth in Lending Act, ("TILA"), and the Unfair Trade Practices and Consumer Protection Law, ("UTPCPL"). After the court granted numerous extensions to file a response, Plaintiffs have failed to oppose the motion. After considering the motion and the accompanying exhibits, we will grant the Defendant's motion and enter judgment in the Defendant's favor.
In addition, because the Plaintiffs have failed to respond to the counterclaim, we have considered the counterclaim, utilizing the summary judgment standard. We conclude that there are no outstanding issues of material fact and the Defendant is entitled to judgment as a matter of law on the counterclaim. Therefore, we will enter judgment in the Defendant's favor on the counterclaim, as well.
Legal Standard
Summary judgment is warranted where the pleadings and discovery, as well as any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.Pr. 56. The moving party has the burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
When ruling on a summary judgment motion, the court must construe the evidence and any reasonable inferences drawn from it in favor of the non-moving party. Anderson v. Liberty Lobby, supra at 255; Tiggs Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). Nevertheless, Rule 56 "mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, supra, at 323.
Facts
This seems to be a case of borrower's remorse. Mr. and Mrs. Lautenbacher decided to take out a loan on their home, taking money from the proceeds to consolidate various debts and do some home improvement projects. (F. Lautenbacher Dep., at 30-44; M. Lautenbacher Dep., at 14). Mr. Lautenbacher had some experience with the consumer lending industry, having previously worked as an office manager for a consumer lender and having secured prior loans secured by his home. (F. Lautenbacher Dep., at 12-13, 82). Mr. Lautenbacher shopped around for the best rate on the Internet and contacted First Horizon. (F. Lautenbacher Dep., at 45). Prior to the loan closing, Mr. Lautenbacher was told by First Horizon that the interest rate would be 7.09% (F. Lautenbacher Dep., at 116). However, at the loan closing, all of the paperwork read, 7.9%. (F. Lautenbacher Dep., at 117).
It is undisputed that all of the paperwork relating to the loan, executed at the closing, states an interest rate of 7.9%.
The loan closing occurred at the Lautenbachers' home at 78 Winding Lane in Feasterville, on Friday, April 23, 2004. Bryan Wilson of Omni Land Settlement Corporation acted as the loan closing agent, referred to in some of the documents as the closer. (Affidavit of Wilson). According to Mr. Lautenbacher, he was not given copies of the documentation he signed either prior to or at the time of the closing. Rather, he received unsigned copies on April 24 and signed copies on the 27th. However, Mr. Lautenbacher stated that he knew that he had 72 hours from the time of the closing to cancel the loan. (F. Lautenbacher Dep., at 62-63, 126-127). Although Mr. Lautenbacher claims to have made telephone inquiries concerning the loan after the closing, he admitted at his deposition that he did not send any written correspondence requesting to cancel the loan during the 72-hour period. (F. Lautenbacher Dep., at 74-75, 143). When Mr. Lautenbacher received a $58,000 check from Omni for the cash he was taking out of the loan, on either April 28 or 29, rather than contacting First Horizon to cancel the loan, he deposited the check and used the money for home improvements. (F. Lautenbacher Dep., at 91-99, 124, 127-28). The Lautenbachers began making the loan payments in June of 2004, and have continued making the payments on a timely basis. (F. Lautenbacher Dep., at 128-29).
Mr. Lautenbacher first claimed to have received the envelope from First Horizon on April 26. (F. Lautenbacher Dep., at 67, 83). However, when confronted with a notation on the envelope in his own writing that he had received it on April 24, 2004, Mr. Lautenbacher conceded the point. (F. Lautenbacher Dep., at 83, 139).
In the Complaint, Plaintiffs claim to have written to First Horizon on May 5, 2004, seeking rescission of the loan.
On April 26, 2005, the Lautenbachers filed this suit, complaining that the Defendant failed to properly disclose the finance charge, the annual percentage rate, failed to give proper and adequate disclosures, failed to disclose the amounts paid to others, and failed to give disclosures pursuant to the Home Ownership Equity Protection Act. (Complaint, Count I). Based on these failures, the Plaintiffs allege violations of TILA and UTPCPL. The Plaintiffs seek rescission of the loan and treble and punitive damages.
Discussion
In its summary judgment motion, the Defendant claims that the TILA claim is barred by the statute of limitations and, in any event, that it is entitled to judgment on both the TILA and UTPCPL claims, based on the facts adduced at the depositions.
Unfortunately, the Plaintiffs' failure to respond to the summary judgment motion puts the court at a disadvantage. From our review of the loan documentation attached to the motion, we find no deficiencies in the paperwork, a fact conceded by both the Lautenbachers at their depositions.
During the deposition, defense counsel reviewed the loan documentation with Mr. Lautenbacher and he admitted that the documentation clearly noted that the interest rate was 7.9% and the monthly payment was $1,044.88. (F. Lautenbacher Dep., at 112, 113, 117-118, 121-23). Similarly, when asked if there was anything unclear about the interest rate in the documents they signed, Mrs. Lautenbacher said, "[i]t's pretty self-explanatory." (M. Lautenbacher Dep., at 23). Specifically, with respect to the note, Mrs. Lautenbacher stated that the interest rate was "very clear." (M. Lautenbacher Dep., at 25). She also stated that there was nothing misleading about the documents. (M. Lautenbacher Dep., at 26).
Although Mr. Lautenbacher first claimed that he did not notice the discrepancy in the interest rate, he stated that the closing agent gave him an opportunity to read and review each of the documents. (F. Lautenbacher Dep., 119-20). (Mr. Lautenbacher claims that he was quoted a rate of 7.09% on the telephone. F. Lautenbacher Dep., at 118). Moreover, later in his deposition, Mr. Lautenbacher admitted that he did see the 7.9% interest rate on the note and even thought about the 7.09% he had been quoted earlier. (Lautenbacher Dep., at 123). Thus, the court does not understand the basis for the claim that the interest rate and finance charges were not disclosed.
Based on a question posed by defense counsel at the deposition, it appears that the defense is as perplexed about the Plaintiffs' complaints as is the court. After Mr. Lautenbacher conceded that the documentation clearly stated the interest rate of the loan, defense counsel asked Mr. Lautenbacher what the basis of his lawsuit was. Mr. Lautenbacher responded, "Not receiving the documentation prior to the loan." (F. Lautenbacher Dep., at 77-78).
With respect to this argument we first note that there is a dispute regarding whether, at the time of the closing, the Lautenbachers received copies of the documentation. The closing agent, Mr. Wilson, stated that he left copies of all of the documentation with the Plaintiffs after the closing. (Wilson Affidavit, at ¶ 4). The Plaintiffs deny that they received copies of any paperwork prior to or at the time of closing.
We find, however, that this disputed fact does not bar summary judgment. It is undisputed that First Horizon sent copies of the unsigned paperwork, postmarked April 16, 2004, from Kansas. (F. Lautenbacher Dep., at 65). After acknowledging his own handwriting on the envelope, Mr. Lautenbacher admitted that he received unsigned copies of all of the paperwork on April 24, the day following the closing. (F. Lautenbacher Dep., at 86). However, during Mrs. Lautenbacher's deposition, she explained that their mail was not delivered to their house. Rather, the mail went to their post office box at the post office. (M. Lautenbacher Dep., at 37). Mrs. Lautenbacher also admitted that neither she nor her husband went to the post office to check the mail on the day of closing. (M. Lautenbacher Dep., at 39). Therefore, the unsigned copies could have been in the post office box at the time of the closing, but just weren't picked up until the next day. (M. Lautenbacher Dep., at 40). Thus, to the extent the Plaintiff's base their complaints on the theory that they did not receive copies of the documentation at or prior to closing, they cannot sustain their burden.
Considering the copies of the loan documentation attached to the motion for summary judgment and the deposition testimony of the Lautenbachers, we find no basis in the record for either the TILA claim or the UTPCPL claim. The Lautenbachers signed documentation that clearly stated the interest rate and the monthly payments. They admitted there was nothing misleading about the documents. Their only complaint was that they did not receive copies of the documentation at the time of closing. However, First Horizon mailed them copies a week prior to the closing and the documents may very well have been in their post office box on the day of closing. Thus, we will grant the Defendant's motion.
With respect to the Defendant's statute of limitations argument, we suspect, as does the Defendant, see Memorandum of Law in Support of Summary Judgment, at 6 n. 10, that the Plaintiffs would argue that the statute of limitations did not begin to run until the Plaintiffs sought to rescind the loan on May 5, 2004. We find no need to address this argument. The facts before the court do not support either of the Plaintiffs' underlying theories of liability.
We are left with the Defendant's counterclaim, seeking a declaration that the Plaintiffs have no right to rescind the loan at issue. The court's consideration of the counterclaim is hampered in the same way our consideration of the summary judgment motion was impeded — no responsive pleading from the Plaintiffs. Although this court granted Plaintiffs' motion to strike the default that had previously been entered by the Clerk of Court, the Plaintiffs have failed to file any answer to the counterclaim.
Originally, on October 6, 2005, pursuant to Federal Rule of Civil Procedure 55(a), the Clerk of Court entered a default against the Plaintiffs for failing to plead, defend, or respond to the counterclaim. On November 29, 2005, the case was referred to the undersigned for disposition. Shortly after the case's referral to the undersigned, the Defendant sought judgment based on the default, pursuant to Federal Rule of Civil Procedure 55(b), and sought summary judgment on the Plaintiffs' claims. After holding a telephonic scheduling conference, I entered an Order, requiring the Plaintiffs to respond to both the default and summary judgment motions on or before January 3, 2006. On January 9, the Plaintiffs filed a Motion to Strike the Default and sought yet another extension to respond to the Defendant's summary judgment motion. Based on the representations in the Motion to Strike — that counsel had not been notified of the counterclaim due to an administrative error involving the electronic notification program — I granted the Motion to Strike the Default. I also granted one final extension to respond to the Defendant's summary judgment motion. As previously mentioned, counsel failed to file any response to the summary judgment motion. Similarly, counsel has failed to answer the counterclaim.
The counterclaim is based on 15 U.S.C. § 1635(b), which sets forth the procedure to be followed after a borrower exercises a right to rescind the transaction. It appears, from the Motion to Strike the Default, that any response the Plaintiffs could offer to the counterclaim would again be based on the failure of the Defendant to give them a copy of the loan documentation prior to or at the time of closing. See Motion to Strike, at ¶ 11.
After reviewing copies of the loan documentation attached to the motion for summary judgment and the deposition testimony of the Lautenbachers, we believe judgment is properly entered in the Defendant's favor on the counterclaim, as well. First, as we noted earlier in this Memorandum, the court is not impressed with the Lautenbachers' claim that they didn't receive the loan documentation prior to or at the time of closing, as the paperwork may have been languishing in the Plaintiffs' post office box at the time of closing.
In addition, the deposition testimony and filings in this case establish that the Plaintiffs are not entitled to rescind the transaction. Section 1635 states that "the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or delivery of the information and rescission forms required under this section . . . whichever is later." 15 U.S.C. § 1635(a). During his deposition, Mr. Lautenbacher admitted that he received copies of the paperwork on April 24, 2004. (F. Lautenbacher Dep., at 86, 139). He also admitted that he did not seek to rescind the transaction within 72-hours of the loan closing or his receipt of the documentation. (F. Lautenbacher Dep., at 74-75). In the Complaint, the Plaintiffs claim to have sent a letter of rescission on May 5, 2004. (Complaint, at ¶ 17). Such letter is not in compliance with § 1635(a)'s three business day rule. Thus, the Plaintiffs' statements establish that they have no right to rescind this loan transaction.
We note that although the Complaint indicates that a copy of the rescission letter was attached to the Complaint, there were no attachments to the Complaint.
An appropriate Order follows.
ORDER
AND NOW, this day of, 2006, upon consideration of the Defendant's unopposed motion for summary judgment, the Plaintiffs' failure to respond to the counterclaim, and for the reasons set forth in the accompanying Memorandum, IT IS HEREBY ORDERED that the Defendant's Motion for Summary Judgment is GRANTED. Judgment is entered in favor of the Defendant on the Plaintiff's claims.IT IS FURTHER ORDERED that SUMMARY JUDGMENT is GRANTED on the Defendant's counterclaim. Barring a response to the counterclaim from the Plaintiff, the Court considered the counterclaim utilizing the summary judgment standard. We find that no material issues of fact exist and the Defendant is entitled to judgment as a matter of law. Therefore, judgment is entered in favor of the Defendant on the counterclaim.