Campbell v. Machias Sav. Bank, Civ. No. 93-0282-B.

• Citation: 865 F. Supp. 26
• Decision Date: 07 October 1994
• Docket Number: Civ. No. 93-0282-B.
• Parties: Lisa M. CAMPBELL a/k/a Lisa M. Staff, Plaintiff, v. MACHIAS SAVINGS BANK, Defendant.
• Court: United States District Courts. 1st Circuit. United States District Court (Maine)

865 F. Supp. 26

Lisa M. CAMPBELL a/k/a Lisa M. Staff, Plaintiff, v. MACHIAS SAVINGS BANK, Defendant.

Civ. No. 93-0282-B.

United States District Court, D. Maine.

October 7, 1994.

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Ralph A. Dyer, Portland, ME, for plaintiff.

Bernard J. Kubetz, Eaton, Peabody, Bradford & Veague, Bangor, ME, Edgar S. Catlin, III, Stephen G. Morrell, Eaton, Peabody, Bradford & Veague, Brunswick, ME, for defendant.

ORDER AND MEMORANDUM OF OPINION

BRODY, District Judge.

This dispute arises out of a loan transaction between Plaintiff, Lisa M. Campbell, and Defendant, Machias Savings Bank. Plaintiff asserts that the Bank violated certain provisions of the Real Estate Settlement Practices Act, 12 U.S.C. §§ 2601-17; and both federal and state Truth-in-Lending Acts, 15 U.S.C. §§ 1601-1667e, and 9-A M.R.S.A. §§ 8-101 to 8-404 (Supp.1994). She also raises a number of state common-law claims. The Bank moves for partial summary judgment.¹

The facts, viewed in the light most favorable to Campbell, the non-moving party, are as follows: In August of 1985, Campbell applied for a loan to finance the purchase of a mobile home. According to Campbell, Carolyn Foster, then a loan officer at the Bank, made a number of representations about the loan for which Campbell was applying. For example, Foster informed Campbell that the loan was provided through the Maine State Housing Authority (MSHA), and that Campbell would therefore have to comply with MSHA requirements. Foster further informed Campbell that a downpayment of five-percent of the purchase price of the mobile home would be required. Campbell told Foster that she did not wish to provide a security interest in her land and was told that no lien on her land would be necessary. Within a few days of her application, the Bank provided Campbell with required disclosure statements: an "Estimated Settlement Statement" and a "Preliminary Truth-in-Lending Disclosure Statement."

Under the MSHA guidelines then in effect, the loan had to be insured. The Bank submitted an application for mortgage insurance to Mortgage Guaranty Insurance Company (MGIC) on Campbell's behalf. MGIC accepted Campbell's application for mortgage insurance on the condition that she purchase the land on which the mobile home was to be located prior to the loan closing. In December 1985, Campbell purchased a house lot in Machias for $2900.² Campbell paid cash for the property; there was no financing involved in the transaction.

The closing for Campbell's loan was held on February 25, 1986. At that time, Campbell borrowed $20,594.00 from the Bank toward a mobile home with a purchase price of $21,678.75. She paid $1695.29 toward the contract sales price of the mobile home.

Campbell asserts that the Bank charged her twice for a title search. She also alleges that she paid $266.89, prior to closing, and $205.94, at closing, to the Bank for mortgage insurance; in essence paying twice for the same policy. Finally, she contends that she paid $213.00 to the Bank for hazard insurance which the Bank failed to purchase.

The documents provided to Campbell at closing included a Promissory Note and Security Agreement granting a first mortgage lien on the mobile home and on Campbell's house lot. The Bank also provided a Final Settlement Statement and a final Truth-in-Lending Disclosure Statement. The figures provided in these statements differed from those provided on the earlier disclosure statements provided by the Bank and from the Note and Security Agreement. According to Campbell, these statements also fail to properly reflect the closing expenses that she actually paid.

In addition to these discrepancies, the Maine Bureau of Consumer Credit Protection discovered, around March 1987, that the method used by the Bank to calculate mortgage insurance premiums was inaccurate. This error resulted in an increased finance charge of $38.33 over the thirty-year life of the loan. As a result of the Bureau's discovery, the Bank sent Campbell a Revised Disclosure Statement in June 1987 reflecting this correction.

Campbell had difficulty meeting her obligations under the loan.³ In January 1993, the Bank threatened foreclosure. Campbell then went to the Bank requesting information about her loan. At the Bank, Campbell met with Lawrence Baker. Baker alleged that, after his meeting with Campbell, he was unable to locate the Bank's file on Campbell's loan. Assuming that Campbell had stolen the Bank's file, Baker filed a complaint of theft with the Machias Police Department. Campbell contends that she never took the loan file from the Bank.

Campbell filed this action in December 1993. The Bank responded with a counterclaim demanding foreclosure and recovery under the loan. The Bank also demanded recovery for amounts due under another loan it extended to Campbell.

Count I — RESPA Violations

In Count I, Campbell claims that the Bank committed several violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601-17.

1. Overcharges

First, Campbell alleges that she was overcharged for attorney fees and mortgage insurance in violation of 12 U.S.C. § 2607 and 24 C.F.R. § 3500.14(c) which prohibit kickbacks and unearned fees. The Bank disputes that Campbell was ever overcharged.

Despite the factual dispute between the parties, the Court finds summary judgment is appropriate on this claim because it is time-barred.⁴ A private action brought pursuant to § 2607 must be brought "within one year from the date of the occurrence of the violation...." 12 U.S.C. § 2614. The alleged overcharges occurred at the loan closing in February 1986. This action was not filed until December 14, 1993, over seven years later. Campbell's claim under § 2607 is therefore time-barred.⁵

2. Excess Insurance Charges and Escrow Accounting

Campbell also claims that the Bank's requirement that she prepay a one-year premium for both mortgage and hazard insurance violated 12 U.S.C. § 2609(a)(1) which limits the amount of money that lenders can require borrowers to deposit in escrow. She also asserts that the Bank violated 12 U.S.C. § 2609(c) by failing to provide her with complete and accurate statements of her escrow account on an annual basis.

Although the parties dispute the factual underpinnings of this claim, the Court finds that summary judgment is nevertheless appropriate on this claim because Campbell has no private right of action to proceed under § 2609. The Circuits have split over the standing of a private party to bring an action under § 2609. Compare Vega v. First Fed'l Sav. & Loan Ass'n, 622 F.2d 918, 925 n. 8 (6th Cir.1980) (finding implied private right of action under § 2609), with Allison v. Liberty Sav., 695 F.2d 1086, 1087-91 (7th Cir. 1982) (finding no implied private right of action under § 2609) and Bergkamp v. New York Guardian Mortgagee Corp., 667 F.Supp. 719, 722-23 (D.Mont.1987) (same).

The Court agrees with the Seventh Circuit's decision in Allison and finds no implied private right of action under § 2609. The central inquiry in determining whether a private right of action is implied is whether Congress intended to create such a right. Allison, 695 F.2d at 1088 (citing Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16, 100 S.Ct. 242, 245, 62 L.Ed.2d 146 (1979)). The Allison Court was persuaded by the fact that Congress expressly provided private remedies under three other sections of the Act, § 6 (now repealed), § 8 (12 U.S.C. § 2607), and § 9 (12 U.S.C. § 2608); but chose not do so in § 10 of the Act (12 U.S.C. § 2609). Allison, 695 F.2d at 1088. The Court also noted that § 2614, entitled "Jurisdiction of courts; limitations," mentions only actions brought under §§ 2607 and 2608. Id. at 1089 and 12 U.S.C. § 2614. The Allison Court found the legislative history to be silent on this question. Allison, 695 F.2d at 1089. Finding no Congressional intent to create a private right of action, the Allison Court appropriately concluded that no such right existed.⁶Id.

The Sixth Circuit in Vega also relied on legislative intent to reach its decision. That Court, however, answered the question briefly in a footnote, "while the Act does not expressly provide for such a causes sic of action, we believe, based on the legislative history, that Congress intended to create a private remedy for violations of the Act." Vega, 922 F.2d at 925 n. 8. The Vega Court, however, cited no legislative history supporting this conclusion. Id. This Court agrees with the Allison Court that there is no private right of action implied in § 2609.

Campbell argues that no private right of action under § 2609 is necessary because the overcharges also violate § 2607. If, however, Campbell brought these claims under § 2607, they would be time-barred as previously discussed.

3. Good Faith Estimates

Finally, Campbell contends that the Bank's estimates were not made in good faith and thereby violated 12 U.S.C. §§ 2603-04 and 24 C.F.R. § 3500.7. These provisions require lenders to provide borrowers with a good faith estimate of the expenses likely to be incurred in connection with the closing. 12 U.S.C. § 2604(c). As in § 2609, however, Congress did not provide an express private right of action in § 2604. Again, a search of the legislative history for intent to provide an implied private right of action was unavailing. Therefore, Campbell is without a private right of action to pursue her claim under this provision as well.

The Court grants the Bank's Motion for Summary Judgment on Count I.

Count II and Count III — Truth-in-Lending

Campbell raises several claims in Count II under the federal Truth-in-Lending Act, 15 U.S.C. §§ 1601-1667e and, in Count III, under the Maine Consumer Credit Code — Truth-in-Lending Act, 9-A M.R.S.A. §§ 8-101 to 8-404 (Supp.1994) (referred to collectively as "TILA").

1. Are Campbell's TILA Claims Time-Barred?

Actions brought under TILA generally must be filed ...