381 F.Supp.2d 1 (D. Puerto Rico 2005), CIV. 03-1841, R-G Financial Corp. v. Vergara-Nunez

Docket Nº:CIV. 03-1841 CCC.
Citation:381 F.Supp.2d 1
Party Name:R-G FINANCIAL CORPORATION, R-G Mortgage Corporation, R-G Premier Bank of Puerto Rico, Plaintiffs v. Pedro VERGARA-NU
Case Date:March 16, 2005
Court:United States District Courts, 1st Circuit, District of Puerto Rico

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381 F.Supp.2d 1 (D. Puerto Rico 2005)

R-G FINANCIAL CORPORATION, R-G Mortgage Corporation, R-G Premier Bank of Puerto Rico, Plaintiffs


Pedro VERGARA-NUÑEZ, John Doe, Jane Doe, et al as unknown heirs of María T. Viera-Clemente, Defendants.

No. CIV. 03-1841 CCC.

United States District Court, D. Puerto Rico.

March 16, 2005

Sonia B. Alfaro-de-la-Vega, for Plaintiff.

Juan M. Suárez-Cobo, San Juan, PR, for Defendant.


CEREZO, District Judge.

The action, for declaratory judgment and/or modification of rescission under the Truth in Lending Act (TILA) is before us on Plaintiffs' Motion for Judgment on the Pleadings (docket entry 23). Defendants opposed the motion (docket entry 26) 1 and filed a counterclaim (docket entry 16). The facts that give rise to these motions are as follows:

The plaintiffs are three related companies: R-G Financial Corporation (Financial), R-G Mortgage Corporation (Mortgage) and R-G Premier of Puerto Rico (Premier) (or collectively "R-G"). On February 9, 2001 the defendant, Pedro Vergara-Nuñez and his wife María T. Viera-Clemente 2 (Vergara) entered into loan transaction with Premier guaranteed by defendants' home. The loan was a consumer credit transaction for purposes of the Truth in Lending Act (TILA), 15 U.S.C. § 1391(b). The TILA and Home Ownership Equity Protection Act disclosures were delivered to defendants on the

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same date, prior to closing of the transaction on February 9, 2001. The amount of the settlement charges for the loan were disclosed and were then financed as part of the loan transaction. Defendants made five loan payments, through August, 2001, and then failed to pay any others.

Thereafter, Mortgage filed a collection of money and mortgage foreclosure action against defendants in the Puerto Rico Court of First Instance, Superior Court of Carolina, R-G Mortgage Corp. v. Pedro Vegara, Cv. No. FDC2002-0496(404d). The defendants failed to answer the complaint, their default was entered, and on May 29, 2002, the Superior Court entered judgment ordering foreclosure of the mortgage. In November, 2002 defendants filed for bankruptcy, but the case was dismissed on March 3, 2003. The Superior Court then scheduled the judicial public sale of the property for September 5, 2003.

Meanwhile, defendants sent a letter-notice of rescission to Financial on July 15, 2003, allegedly received on July 18, 2003 contending that they had not been provided with accurate material disclosure mandated by TILA §§ 1638 and 1639(a), in that the lender had failed to deduct prepaid finance charges from the amount of the loan principal in calculating the amount financed for TILA purposes. They also alleged that certain disclosures were not delivered three days in advance of the closing, as required by law. Therefore, defendants were rescinding the loan.

Vergara-Nuñez' notice failed to offer timely the amounts received or to express their capacity to return the money loaned, the plaintiffs filed this action for declaratory judgment in lieu of its creditor's response to the notice of rescission. It requests that we declare that the matters are collaterally estopped by the Superior Court judgment, that the TILA claims time-barred, and/or that the Court modify the procedure for...

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