Justin James and Nicole James, applicant,
v.
Bridge Capital Corporation, a California Corporation; Signature Group Holdings, Inc., f / k a / Fremont Reorganizing Corporation and Fremont Investment & Loan Company, and HSBC Bank USA NA, a national banking association, the defendant.
No. 08-CV-397-BR.
27. January 2011.
HOPE A. del Carlo, Oregon Law Center, Portland, OR.
Mark E. Griffin, Griffin & McCandlish, Portland, OR ANY Brinegar, Center for Responsible Lending, Washington, DC, attorneys for plaintiff MATTHEW.
DAVID S. AMAN, Tonkon Torp LLP, Portland, OR. Attorneys for Defendant Signature Group Holdings, Inc.
John M. Thomas, Lance E. Olsen, Routh Crabtree Olsen, PC Lake Oswego, OR, attorneys for defendant HSBC Bank USA NA.
OPINION AND ORDER
ANNA J. Brown, District Judge.
This question comes before the Court on Defendant HSBC Bank USA Motion (# 64) for Summary Judgement and Defendant Signature Group Holdings, Inc. 's Motion (# 65) for Summary Judgement. For the reasons that follow, the Court in part and denied in part, HSBC Motion for Summary Judgement and Motion for Summary Judgement SGH's.
PROCEDURAL BACKGROUND PAGE
On 27 March 2008, the applicant of its original complaint against the defendants Signature Group Holdings (formerly Fremont Reorganizing Corporation and Fremont Investment and Loan Company) and Bridge Capital Corporation. On 30 May 2008 raised the SGH a timely response, but not in Bridge to ensure timely publication of force. Accordingly, to 18 June 2008, the Court of the plaintiffs motion for default against Bridge.
On 13 March 2009 the applicant submitted a first amended complaint in which the applicant named SGH-bridge and as a defendant and, HSBC Bank USA as defendants. SGH filed a timely response, but not HSBC.
On 8 June 2009, the Court of the plaintiffs motion for entry of default against HSBC. On 17 July 2009 though HSBC sought exemption from the standard that the court on the 20th Granted in July 2009.
The plaintiffs claim that six claims in its complaint, as amended: (1) to bridge and SGH for actual damages, emotional distress, punitive damages and injunctive relief from common law fraud, (2) against Bridge for actual and punitive damages, injunctive relief,and attorney's fees and costs resulting from injury to Oregon revised statute § 59.840, (3) to SGH and HSBC for actual damages, statutory damages, enhanced statutory damages, declaratory relief, rescission, and attorney fees and costs which, by violations of the Truth Lending Act (TILA), 15 USC § 1601 et seq. And its corollary, the Home Ownership and Equity Protection Act (HOEPA), 15 USC § § 1601-1667f, (4) to SGH for concrete, non-economic and punitive damages in common- law negligence, (5) to SGH for actual and consequential damages, which is in breach of contract, and (6) to SGH and HSBC or consequential damages, attorney fees and costs arising from violations of the Real Estate Settlement Procedure Act (RESPA) 12 USC § 2601, et seq
HSBC filed its motion for Summary Judgement of 30 April 2010, and filed its motion for summary SGH Judgement of 3 May 2010. In its response to defendant's motion Summary Judgement, plaintiffs state:
The applicants have informed the defendants to the reduction of claims for damages for violations under RESPA and TILA development / HOEPA. These claims are subject to the one-year statute of limitations and were in the balance of HSBC's efforts to bring the debt of the plaintiffs' residence by foreclosure of security. The foreclosure is not currently pending, plaintiff reserves the right to renew this coverage if HSBC starts the foreclosure.
On 25 August 2010 hearing, the court heard oral argument on the applications. With oral plaintiff repeatedly stated its withdrawal in its response. Plaintiff therefore not pursue their claim under RESPA Sixth or claims for damages after her third claim in connection with credit-origination documents, including a claim the plaintiff called "losses." As far as the defendants are to Summary Judgement as to move these claims therefore defendant requests void.
The court heard oral argument continues on 22 September 2010. During this part of the hearing, the court SGH's Motion for Summary Judgement to plaintiff Fourth Claim for negligence. The court rejected the plaintiff to supplemental pleadings concerning plaintiffs remaining common law claims against Ericsson for fraud and breach of contract file.
Sun plaintiffs remaining claims against the defendants SGH and HSBC move for a ruling on summary are: First claim for common law fraud against SGH, third call for Tila and HOEPA for withdrawal from SGH and HSBC, 1, and fifth claim for breach of contract to Ericsson .
FACTS
The following facts are taken from the parties Concise statements of material facts and their respective answers and are undisputed unless otherwise noted.
The plaintiffs have two houses near the coast of Oregon: a residence in Neotsu, Oregon (Residence), the plaintiff main residence and an apartment building in Lincoln City, Oregon (rental). In September 2006, despite her wish to refinance their rental house only, the applicants were from an employee of the bridge, the California mortgage broker, the plaintiff asked the obtaining of financing, the mortgage on two properties persuaded to refinance separately. Plaintiff ultimately accepts refinance two separate loans: the apartment to $ 259,000 and the rent for $ 178,000. The plaintiffs claim that they decided that two separate loans on assurances from an employee base of the bridge get that they would only be improved on this loan for six months at which time their credit enough for Bridge to pay their loans at better terms. The promised second funding never materialized, despite the plaintiffs access to the loans after the closing of work.
The defendants admit Bridge a series of false statements about the loans, including statements that the plaintiffs would save money with the loan and that there are reserves for taxes and insurance. Plaintiffs admit that they knew before they executed the documents that were refinanced loans, the loan is less favorable to the plaintiff than their previous mortgage, for example, was the interest rate on the lease was originally set to 5.95% and became a mortgage refinance adjustable rate of 10.95% with a balloon in the amount of $ 165,400 at the end of the term. In addition, the refinancing led to an increase in applicants, the monthly payments and cost them nearly $ 40,000 in fees and provides them with less than $ 20,000 in cash. The combined monthly payments on both loans refinanced ultimately exceeded applicants monthly income.
While the plaintiff operated application, the bridge and SGH (then Fremont) under a wholesale brokerage agreement with Bridge were acting as agents of potential borrowers and submit loan applications for approval to SGH. Under the brokerage agreement was Bridge provide needed information such as credit reports of potential borrowers SGH to explain to borrowers the loan conditions and respond to borrowers' questions about the credit-creation process. In performing these tasks is Bridge needed to Ericsson standards, providing accurate information to meet SGH submitted included. plaintiff bridge loan applications to SGH and SGH signed and approved the loans to these applications.
Before closing the loan, the applicant had no contact with SGH or its employees. In its response to the SGH concise statement of material facts, plaintiffs do not acknowledge SGH had heard before the loans closed. SGH claims and the plaintiffs do not dispute that SGH was not at any time before closing alerted plaintiff concerns the conditions of loans or bridge promises to repay the loan within six months to refinance. SGH plaintiff first contacted about a week after closing in September 2006 on the money that the plaintiff, as a part of the loan transaction received. The applicants deny SGH claim that if the plaintiff SGH contacted in September 2006, they did not raise the issue to develop a second bridge promises to finance loans after six months. Justin James, however, testified plaintiff first SGH awareness about such issues in July 2007 made.
The plaintiffs allege, bridge loan fees and SGH moved by plaintiff Residence loans, the rental to avoid loans with refinancing process the application to plaintiff's Residence HOEPA loans. SGH admits she discusses various broker requirements Bridge before an agreement on the terms of the loan, but it denies SGH illegally manipulated fees.
SGH pay underwriting fees in connection with the processing of loan applicants and accepts personal and financial information from the applicants in relation to the review of loan applications sent to them from the bridge on the applicants behalf. The defendants admit Bridge made inaccurate and inconsistent messages on loan applications, including the amount of applicants income despite the fact that the plaintiff W-2 tax forms, payroll, and information on their existing mortgage, insurance and 401 (k) provided . SGH denies she knew this information was incorrect at the time of the review of loan applications.
When concluding on 15 September 2006, unsigned and undated copies of the applicants of the documents were given loans and Withdrawal of notices that the wrong deadline and was not the end provided the applicant returns. The emergence of documents not included HOEPA disclosures also violated TILA and be financed by reflection inconsistent information to the APR, the amount which the finance charge and the total payments. Upon conclusion of the plaintiffs expressed reservations to the terms of the loans, especially with regard to the monthly payments and interest that were higher than the previously indicated by Bridge. In fact, contacted claimants bridge during the closing process and Bridge repeated his statement to the applicant that the money they receive as part of the transaction, the loans for six months, at which point a new bridge, would pay to secure loans want plaintiffs would use should save about $ 700 per month. Plaintiff accepted the terms and executed two loans.
HSBC was not involved in the development of the two loans. Both plaintiff and securitized loans sold, HSBC to 3 November 2006. SGH continue the credits after the sale to 1 June 2008 when Litton Loan Servicing LP, assumed the role service.
Plaintiffs failed on both loans, not on payments by credit from more than three years.Plaintiffs sent letters of intent, their right to withdraw SGH exercise to 26 February 2008, and HSBC to 25 February 2009. Neither letter has been honored by SGH or HSBC.
Although HSBC began foreclosure proceedings, it has stopped these efforts during the pendency of the case. The applicants remain in the possession of the properties, but they claim, this dispute led to the loss of tenants.
STANDARDS
I. Summary Judgement.
Federal Rule of Civil Procedure 56 (c) authorizes summary decree, if not a real problem exists with respect to any material fact and the moving party to the decision as a matter of law. The moving party must show the absence of an issue of material fact. Rivera v. Philip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005). In response to a properly supported summary ruling party, the immovable will of the pleadings and show that there is a genuine issue of material fact in court. Id
An issue of fact is genuine "', proof that a reasonable jury, a verdict for the party to return dormant." Villiarimo v. Aloha Iceland Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002)(Anderson v. Liberty Lobby, cited, Inc., 477 U.S. 242, 248 (1986)). The court must draw all reasonable inferences in favor of the real party. Id "Summary Judgement can not be granted where contrary inferences from the evidence may be drawn to material problems are." Easter v. Am. W. Fin., 381 F.3d 948, 957 (9th Cir. 2004) (quoting Sherman Oaks Medical Arts Ctr. Ltd. v. Carpenters Local Union No. 1936, 680 F.2d 594, 598 (9th Cir. 1982) ).
A mere difference of opinion on a material issue of fact, however, this does not, a ruling on summary. Jackson v. Bank of Haw., 902 F.2d 1385, 1389 (9th Cir. 1990). If the immovable party claims are factually plausible, that party must "come forward with convincing evidence than would otherwise be necessary." Wong v. Regents of Univ. of Cal., 379 F.3d 1097 (9th Cir. 2004), by 410 F.3d 1052, 1055 (9th Cir. 2005) as amended (cited Blue Ridge Ins. Stanewich Co. v., 142 F.3d 1145 , 1149 (9th Cir. 1998)).
The substantive law of a claim or a defense to determine whether a fact is material.Miller v. Glenn Miller Prod, Inc., F.3d 454, 975, 987 (9th Cir. 2006). If the resolution of a factual dispute would not affect the outcome of the claim, the court may grant a ruling on summary. Id
TILA II.
Tila is a consumer protection law that was enacted in 1968 and was designed to ensure that consumers will be able to make informed decisions regarding their use are to make use of credit claims. See 15 U.S.C. § 1601 (a). As a consumer protection statute is interpreted TILA generous benefit of consumers and is enforced strictly against creditors. Rubio v. Capital One Bank, 613 F.3d 1195, 1202 (9th Cir. 2010). TILA requires creditors certain information to the borrower to pass, and failed to do so, are the borrowers of certain rights to rescind the borrowing and to make compensation. 15 U.S.C. § § 1635, 1640.2 action for damages under § 1640 are subject to a one-year limitation period. 15 U.S.C. § 1640 (e). to work in relation to the rescission remedy, a borrower who has secured a loan, with its principal place of residence the right to the transaction until midnight on the third business day after the resignation of completion of the transaction or after the date of delivery of the forms of Tila required. 15 U.S.C. § 1635 (a). "[N] of the child denied that the information and forms in this section or other information required in this part requires not served on the debtor," a borrower rescission remedy expires after three years from the date of the transaction. 15 U.S.C. § 1635 (f).
III. HOEPA.
HOEPA was as an amendment to TILA additional special details such as the APR and the amount of monthly payments for a loan, if adopted creditor loans with high interest rates or excessive fees offer demand. 15 U.S.C. § 1639th See also In re Community Bank of N. Va., 622 F.3d 275, 282-83 (3d Cir. 2010). HOEPA applies only to loans that a borrower's primary residence in which either the interest rate exceeds a certain threshold or hedged the fees and costs no more than eight percent of the total loan amount. See 15 U.S.C. § § 1602 (aa) (1), (3), 12 C.F.R. § 226.32.
DEFENDANT HSBC DRAFT Summary Judgement (# 64)
HSBC moved for Summary Judgement as to the plaintiff: "do not third party entitled to the following reasons (1) Tila and HOEPA to cancel the plaintiffs' loans to refinance their rent, (2) plaintiff claims to Tila and HOEPA are barred by the applicable limitation (3) is not responsible for HSBC HOEPA violations, as Ericsson did not provide HSBC with a notice of application for residence HOEPA loans, and (4) The plaintiffs are not entitled to withdraw from the Residence loans because they can not fulfill its obligation the loan proceeds for tender.
I. Withdrawal of the landlord loans under HOEPA and Tila.
The parties do not contest the remedies of rescission under HOEPA and Tila are not applicable to refinance the loan applicants 'rent, because the loan is not secured by plaintiffs' primary residence. " See 15 USC § § 1602 (aa) (1), 1635. As the plaintiff conceded at oral argument that Tila and HOEPA not request to the hiring credit, the court grants the motion part of HSBC.
II statute of limitations for claims against HSBC under HOEPA and Tila.
In its third plea, plaintiffs seek damages, attorney fees and costs from the defendants for breach of Tila and HOEPA. As already mentioned, the plaintiff withdrew its claim for damages under HOEPA and Tila in connection with the loan-origination documents.
HSBC makes plaintiff's claim against HSBC for any damages that are barred from the assignment of loans from the SGH. As mentioned earlier, the HSBC loan thirdNovember 2006 assigned, and these plaintiffs filed suit to 27 March 2008, which was about the one-year limitation period of § 1640 record (s). Thus, the plaintiff claims against HSBC under HOEPA Tila and from the assignment of loans to HSBC SGH are barred. Accordingly, the Court grants that are part of the HSBC Motion.
The plaintiffs also assert a claim for damages against Ericsson and HSBC, because it will give effect to the applicants notice of their intention to exercise their rights of withdrawal under Tila and HOEPA, as in her letters to HSBC to 25 to set for 26 February 2009 and SGH February 2008. HSBC said the hearing on oral argument on 25 August 2010, it had not moved for summary judgment of any such claim and was not prepared to address this claim. Although plaintiff complaint did not expressly make such a claim, the plaintiffs amended complaint sufficiently put on notice HSBC of such a claim under § § 1635 and 1640. See Miguel v. Country Funding Corp., 309 F.3d 1161, 1165 (9th Cir. 2002) (recognizing a "failure-to-effect-cancellation claim" for damages under § § 1635 and 1640). In any case, this claim is not before the court at this time.
III. Limitations of HSBC liability for violations of HOEPA.
HSBC makes it as the successor shall not be liable for the plaintiff under HOEPA because the loan originator (SGH) contained no reference to the assignee (HSBC) that the loan is covered by HOEPA. HSBC calls § 1641, which reads: ". Any person who sells or otherwise assigns a mortgage under section 1602 (aa) of this title is a visible indication of the potential liability under this subsection include, as determined by the Board" See also 12 CFR § 226.34 (a) (2) (same). Neither the statute nor the regulation, however, the condition of an assignee liability on the receipt of such notice.
Although the applicant does not respond directly negotiated HSBC and the parties do not dispute that SGH not included notices with the HOEPA loans, the Court can not find any evidence for the proposition that the failure of the assignor SGH to ensure that proper regard to its HOEPA successors shall HSBC undermines the rights of the plaintiffs against the assignee. In fact, the law makes clear that applicants are rights of rescission against an assignee congruent with its rights against the original lender. 15 U.S.C. § 1641 (c). § 1641 (d) (1), but offers the following restrictions on the responsibility of the transferee:
Any person who purchases or otherwise assigned a mortgage referred to in Section 1602 (aa) of this title shall apply to all claims and defenses with respect to the mortgage that the consumer has had against the creditor of the mortgage claim, if the purchaser or assignee demonstrates, by a preponderance of the evidence that a reasonable person in normal due diligence, could not determine, based funds required to the documentation by the subchapter, the itemization of the amount, and other disclosure of disbursements that the mortgage of a mortgage pursuant to section 1602 (aa) this title.
Given the requirement to interpret the court Tila and HOEPA far in order concludes the objective of protecting consumers against predatory lending tactics on the Court, the failure of an assignor of a loan to an assignee with notice that the loan is covered by HOEPA not the rights of the borrower to the creditor for HOEPA violations. Under § 1641 (d) (1), the applicant on a defense "that a reasonable person could not be normal due diligence, be ascertained, financed based on the documentation by the subchapter, the itemization of the amount required is limited, and disclosure of other disbursements that the mortgage was a mortgage under section 1602 (aa) of this title. "However, § 1641 (d) (4) the rights between the assignor and assignee and can see as the impact on the assignee a claim against the transferor to provide the proper notice to pay damages to a borrower could draw for HOEPA violations.
So in the extent HOEPA applies Residence loan applicant, the Court concludes SGH noted the failure of HSBC of the HOEPA proposal to grant the assigned residence loan under § 1641 does not exclude applicants HOEPA claims for violations of HSBC.Accordingly, the Court denied that part of the HSBC Motion.
Cancellation by the Residence Act, loans under HOEPA and Tila.
Although HSBC is not against the merits of the plaintiff is entitled to withdraw their residence loans HSBC has the means of withdrawal is not available to the plaintiff because they did not would be able to tender the loan proceeds if the court ordered a withdrawal. See 15 U.S.C. § 1635 (b), 12 C.F.R. § 226.23. See also Am. Hyp. Network, Inc. v. Shelton, 486 F.3d 815, 821 (4th Cir. 2007) (confirmed granting summary Judgement in favor of defendant on plaintiff TILA claims on the grounds that after "... the trial judge determines that was [plaintiff] will call the loan, the agent's unconditional resignation was inappropriate. ").
Here, HSBC maintains plaintiffs could not satisfy its obligation to the loan proceeds in 20-day period of § 1635 (b) and set in 12 CFR § 226.23 return. In his testimony, testified Justin James plaintiffs could not immediately call the loan proceeds and would have 20-30 years to pay back the loan amount on a payment plan. Justin James stated, in fact, that the plaintiff could not made any announcement of the loan at the time of his dismissal. Justin James clear later in his statement that the applicant would be willing to get pay back a loan if their credit has been restored as part of this litigation. In any case, the plaintiffs allege they have presented sufficient evidence on this record, establish an issue of fact exists as to their ability to tender the loan proceeds.
Although the plate is thin, it seems that on this record that the plaintiff probably would not be possible to immediately call the loan proceeds if the Court to determine, resignation is appropriate. § 1635 (b) provides:
When a debtor to relinquish his right of cancellation under paragraph (a) of this section exercises, he will not be responsible for finance and other charges and that all security rights given to the debtor, including such interest arising from operation of law, in goes out like a step down. Within 20 days of receipt of notice of withdrawal of the creditor after the debtor has no money or property to return as earnest money, deposit, or otherwise stated, and proposes measures to be necessary or appropriate to reflect the termination of the security interest created under the transaction. If the creditor has a property given to the debtor, the debtor can retain possession. The transfer of the creditor obligations under this section, the debtor the property to the creditor, tender, except that if restitution of property in kind would be impracticable or unfair to the debtor all reasonable value tender. Tender will be made at the location of the property or at the residence of the debtor, at the option of the debtor. If the creditor does not owned the property within 20 days after tender by the obligor, ownership of the property vests in the pay of the debtor without obligation on his part to it. The procedures prescribed by this subsection, apply unless otherwise ordered by the court.
Although the statute requires the lender to extend its offer by 20 days of notification of cancellation is not as long as the right to tender by the borrower down to perform. In addition, the Statute of the Court may change the procedure in § 1635 (b).
The Ninth Circuit has held, if the trial court, the debtor can not fulfill its obligation to tender the loan proceeds, it should be rejected in the Court's equitable discretion, proceed in court on the question of repeal. Yamamoto v. Bank of New York, 329 F.3d 1167, 1171-1173 (9th Cir. 2003). The Ninth Circuit declared the court in its reasonable discretion, taking into account "should be exercised, the shares in a particular case, and consideration of legislative policy of full disclosure, that the truth is based in Lending Act and the remedial-penal nature of the private enforcement provisions of the law. "Id at 1171 (quoting Palmer v. Wilson, 502 F.2d 860, 862-63 (9th Cir. 1974)). A court has the competence, the process for tendering in accordance with the shares of the case change. Yamamoto, with F.3d 329 1171-1172. See also Semar v. Platte Valley Fed.Savings & Loan Ass'n, F.2d 791 699, 705-06 (9th Cir. 1986). A decision of the court on the borrower's ability to offer a ruling on summary or after a jury verdict, withdrawal is justified to determine, is made on a case-by-case basis. Yamamoto, 329 F.3d at 1173rd
In its Notice of Supplemental Authority appointed Mr Coleman v. Crossroads Lending Group, Inc., 09-CV-0221 (PJS / FLN), 2010 WL 4676984 (D. Minn. 9 November 2010), a decision by the United States District Court for the District of Minnesota in which the court after a trial to the court that the plaintiff was entitled to withdraw determined. The court then in its reasonable discretion, to a hearing for the purpose of making a withdrawal means by which the lender takes the security interest of the applicant maintained his residence and require the applicant to repay the loan proceeds in monthly payments would be exercised with. Id, at * 6-10.
HSBC, but points out that Coleman is not binding precedent and requested the Court to be constituted by the Ninth Circuit opinion in Yamamoto. In addition, the facts with HSBC in Colemen are from the facts in this matter be distinguished. The Court notes, however, some important similarities: In Coleman, the applicant accepted a refinancing loan on terms that had worse based than the conditions of their existing mortgage on their house mortgage broker assurances that they would refinance the loan to the applicant mentioned were made a series of payments under the new loan. Id, at * 1-2.On the day of closing, the plaintiff discovered the monthly payments on the loan was refinanced more than had been promised. Id The court concluded there was compliance with the applicable disclosure requirements. Id addition, had reviewed the lender is not independent in the income of the applicant to ensure it was sufficient to afford the applicant the monthly payments. Id, at * 1 The applicant did Coleman just two monthly payments and the promised funding never materialized. Id, at * 1-2. So even though it is not binding authority, the Court's decision in Coleman is convincing in light of actual similarities in this matter.
Ultimately, the court has the shares in this case, consider whether the plaintiff declared incapacity, the residence of loan proceeds should offer at this stage of the procedure to exclude plaintiffs exercise of remedy of rescission.
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