Bonney v. Washington Mut. Bank, No. 08-30087-MAP.

• Decision Date: 09 February 2009
• Docket Number: No. 08-30087-MAP.
• Citation: 596 F.Supp.2d 173
• Parties: Allan and Donna BONNEY, Plaintiffs v. WASHINGTON MUTUAL BANK, as Successor in Interest to Long Beach Mortgage Company, Defendant.
• Court: U.S. District Court — District of Massachusetts

Page 173

596 F.Supp.2d 173

Allan and Donna BONNEY, Plaintiffs v. WASHINGTON MUTUAL BANK, as Successor in Interest to Long Beach Mortgage Company, Defendant.

C.A. No. 08-30087-MAP.

United States District Court, D. Massachusetts.

February 9, 2009.

Thomas J. Enright, Patridge, Snow & Hahn LLP, Providence, RI, for Defendant.

Christopher M. Lefebvre, Pawtucket, RI, for Plaintiffs.

MEMORANDUM AND ORDER RE: REPORT AND RECOMMENDATION WITH REGARD TO DEFENDANT'S MOTION TO DISMISS (Dkt. Nos. 3 & 10)

PONSOR, District Judge.

I. INTRODUCTION

This is an action pursuant to the Truth in Lending Act, 15 U.S.C. § 1601(a) ("TILA"), in which Plaintiffs challenge the legal sufficiency of the Notice of Right to Cancel provided to Plaintiffs in connection with their home loan transactions. Defendant filed a Motion to Dismiss, which was referred to Chief Magistrate Judge Kenneth P. Neiman for report and recommendation.

On July 30, 2008, Judge Neiman issued his Report and Recommendation, to the effect that Defendant's motion should be denied. Defendant thereafter filed timely objections. For the reasons set forth below, this court will decline to adopt the Report and Recommendation and will allow Defendant's Motion to Dismiss.

II. BACKGROUND

The essential facts are simple and undisputed. On or about May 13, 2005, Plaintiffs obtained a loan from Defendant's predecessor in interest, Long Beach Mortgage Company ("Long Beach"), secured by their residence, for the purpose of debt consolidation. Plaintiffs received a Notice of Right to Cancel in connection with the transaction that did not specify the date of the transaction or the date the recision period expired. Nearly three years later on or about March 20, 2008, Plaintiffs sent Defendant a recision request based upon the allegedly deficient Notice of Right to Cancel. Defendant declined to rescind the loan, and in April 2008, Plaintiffs filed this complaint seeking a recision of the loan, a refund of all monies paid to Long Beach in connection with the loan, statutory damages, and attorneys' fees and costs.

The wealth of authority in this Circuit and District makes lengthy discussion of the issues raised by this case unnecessary. The First Circuit in Palmer v. Champion Mortgage, 465 F.3d 24 (1st Cir. 2006), and the District of Massachusetts in Carye v. Long Beach Mortgage Co., 470 F.Supp.2d 3 (D.Mass.2007), addressed factual scenarios very similar to this one. In Palmer and Carye, the First Circuit and Judge William G. Young found that purely technical violations of TILA, in circumstances where the notice was in fact quite clear, could not provide the foundation for a statutory claim. This court has adopted the logic of the two decisions in Megitt v. Indymac Bank, F.S.B., 547 F.Supp.2d 56 (D.Mass.2008).

The Magistrate Judge here distinguished Palmer and Megitt, and disagreed with Carye, because the notice in this case omitted the transaction date. This precise issue has been addressed by Judge F. Dennis Saylor IV in two recent decisions, Quiles v. Washington Mutual Bank, C.A. 08-40039, 2008 WL 5650852 (D.Mass. Dec. 30, 2008), and Omar v. Washington Mutual Bank, C.A. 08-40044, 2008 WL 5650851 (D.Mass. Dec. 30, 2008).¹ In both these decisions, Judge Saylor agreed with Judge Young's logic in the Carye decision and ordered dismissal despite the absence of the transaction date in the Notice of Right to Cancel form.² This court agrees with Judge Saylor that the omission of a transaction date from the form "would not be confusing to an average borrower, whether considered alone or in conjunction with the other omission." Quiles v. Washington Mutual Bank, Slip op. at 9, citing Megitt. An identical result was reached in McMillian v. AMC Mortgage Services, Inc., 560 F.Supp.2d 1210 (S.D.Ala.2008).

Counsel for Plaintiffs condemns the state of Massachusetts law in this area as being "in a state of total chaos." See Dkt. 12 at 1. This court must disagree. The law in this district is consistent that merely technical violations of TILA that would not confuse a reasonably alert buyer cannot form the basis for a cause of action. There is no persuasive reason to treat the scenario presented in this case any differently.

III. CONCLUSION

Based upon the foregoing, the court declines to adopt the Report and Recommendation of July 30, 2008 (Dkt. No. 10), and hereby ALLOWS Defendant's Motion to Dismiss (Dkt. No. 3). The clerk is ordered to enter judgment for Defendant. This case may now be closed.

It is So Ordered.

REPORT AND RECOMMENDATION WITH REGARD TO DEFEDANT'S MOTION TO DISMISS (Document No. 3)

July 30, 2008

NEIMAN, United States Chief Magistrate Judge.

This action involves the legal sufficiency of the Notice of Right to Cancel ("Notice") that Washington Mutual Bank ("WaMu" or "Defendant"), as successor in interest to Long Beach Mortgage Company ("Long Beach"), provided to Allan and Donna Bonney (together "Plaintiffs") in connection with their home loan transaction. The basis of Plaintiffs' claims is that Defendant failed to properly notify them when their three-day cancellation period expired. Defendant has moved to dismiss Plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6) and the motion has been referred to this court for a report and recommendation. See 28 U.S.C. § 636(b)(1)(B). For the reasons that follow, the court will recommend that Defendant's motion to dismiss be denied.

I. BACKGROUND

The following allegations come from Plaintiffs' complaint and the Notice annexed thereto. See Palmer v. Champion Mortg., 465 F.3d 24, 28 (1st Cir.2006) (citing cases). The court has accepted all well-pleaded facts as true and has given Plaintiffs, the parties who pursue the contested claims, the benefit of all reasonable inferences. See id. (citations omitted).

On or about May 13, 2005, Plaintiffs obtained a loan from Long Beach, secured by their residence, for debt consolidation purposes. (Complaint ¶ 7.) In connection with the loan transaction, Plaintiffs received a copy of the Notice which, purportedly, disclosed the manner and method by which they were entitled to cancel the transaction. (Id. ¶ 11, Exh. A.) Alleging that the Notice was deficient, Plaintiffs, on or about March 20, 2008, sent WaMu (Long Beach's successor), a request seeking rescission of the loan. (Id. ¶ 12.)

The Notice provided Plaintiffs tracked the model form for such disclosures. In relevant part, the Notice, like the model form, informed Plaintiffs as follows:

You have a legal right under federal law to cancel this transaction, without cost, within THREE BUSINESS DAYS from whichever of the following events occurs last:

(1) the date of the transaction, which is ______; or

(2) the date you received your Truth in Lending disclosures; or

(3) the date you received this notice of your right to cancel.

(Id., Exh. A.) The Notice further provided: "If you cancel by mail or telegram, you must send notice no later than MIDNIGHT of ______ (or MIDNIGHT of the THIRD BUSINESS DAY following the latest of the three events listed above.)" (Id.) As indicated, no date was inserted in either the first blank space (hereinafter the "transaction date") or the second blank space (hereinafter the "rescission deadline"). (See id.)

Plaintiffs allege that, because Defendant failed to insert both a specific transaction date and a rescission deadline, Defendant's Notice violated the federal Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA"), the implementing Federal Reserve Board Regulation Z, 12 C.F.R. § 226.1, et seq. ("Regulation Z"), and TILA's Massachusetts counterpart. (See id. ¶ 16.) In due course, Defendant filed a motion to dismiss, Plaintiffs tendered an opposition, Defendant filed a reply brief, and Plaintiffs submitted supplemental authority.³

II. STANDARD OF REVIEW

A complaint should be dismissed pursuant to Rule 12(b)(6) only if it "fails to set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir. 2008) (citations and internal quotation marks omitted). The court must accept a complaint's well-pleaded facts as true and indulge all reasonable inferences in the plaintiff's favor. Cook v. Gates, 528 F.3d 42, 48 (1st Cir.2008) (citation omitted). In the end, "[i]n order to survive a motion to dismiss, the complaint must allege a plausible entitlement to relief." Chmielinski v. Mass. Office Comm'r Probation, 513 F.3d 309, 314 (1st Cir.2008) (citing, inter alia, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1967, 167 L.Ed.2d 929 (2007)) (internal quotation marks omitted).

III. DISCUSSION

Relying primarily on District Judge Michael A. Ponsor's recent decision in Megitt v. Indymac Bank, 547 F.Supp.2d 56 (D.Mass.2008), which adopted the undersigned's report and recommendation of dismissal, as well as District Judge William G. Young's decision in Carye v. Long Beach Mortg. Co., 470 F.Supp.2d 3 (D.Mass.2007), Defendant asserts that the "technical" omissions of which Plaintiffs complain—the blank transaction date and rescission deadline—do not constitute actionable claims. For the reasons which follow, this court disagrees. In sum, the court not only finds the instant case to be distinguishable from Megitt (as well as Palmer, the First Circuit decision upon which Megitt principally relied) but also respectfully disagrees with the conclusions reached in Carye. Accordingly, the court recommends that Plaintiffs' complaint not be dismissed.

It is unnecessary to re-plow the legal terrain described in Megitt. See id., 547 F.Supp.2d at 58-59 (citing extensively from Palmer). Suffice it to say that here, as in both Megitt and Palmer, "the question is whether Defendant clearly disclosed Plaintiffs' rescission rights." See id. at 59 (citing Palmer, 465 F.3d at 27). "If so, Plaintiffs may well be entitled to an extended, three-year rescission period and, in turn, the right...