Dent v. Regions Bank
| Decision Date | 23 January 2015 |
| Docket Number | CASE NO.: 1:14-CV-141 (WLS) |
| Parties | SELENIA C. DENT Plaintiff, v. REGIONS BANK, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
This action, originally filed in Dougherty County Superior Court on August 19, 2014, was removed to this Court on September 18, 2014. Presently before the Court is Defendant Regions Bank's (Regions) Motion to Dismiss, filed on September 25, 2014. (Doc. 6.) Plaintiff Selenia Dent filed a Response on October 28, 2014 after the Clerk of Court granted her an extension of the deadline to file a response. (Doc. 9.) Regions filed a Reply to Dent's Response on November 14, 2014. (Doc. 10.) The Court now considers Regions' Motion to Dismiss. (Doc. 6.)
FACTUAL ALLEGATIONS
Plaintiff Selenia Dent alleges the following facts in her Complaint. (Doc. 1-3.) On May 19, 2014, Dent and her spouse, Benjamin F. Dent, executed a security deed, creating a security interest in favor of Regions in Dent and her husband's principal dwelling, located at 2821 Moultrie Road, Albany, Georgia. The security interest was created to guarantee a promissory note on which Benjamin Dent is listed as the sole borrower and on which Selenia Dent's name does not appear. (Doc. 6-3.)
At the time the security deed was executed, Regions delivered to Dent two copies of a "notice of right to cancel," which Dent signed to acknowledge having received them. On May 21, 2014, Dent signed the "notice of right to cancel," indicating that the she wished to cancel the transaction and delivered the signed notice to Regions the same day. On June 9,2014, Regions filed the security deed executed by Dent and her husband in the Dougherty County Superior Court Clerk's Office. The security deed was recorded by the Clerk.
Dent now asserts two claims against Regions: one for violation of 15 U.S.C. § 1635, the right of rescission provision of the Truth in Lending Act and one for breach of contract. As relief, Dent seeks the voiding and cancellation of the recorded security deed, actual damages, costs, and attorney's fees.
DISCUSSION
I. Motion to Dismiss Standard
Regions moves to dismiss Dent's claim based on Federal Rule of Civil Procedure 12(b)(6). Rule 12(b)(6) permits a party to assert by motion the defense of failure to state a claim upon which relief can be granted. A Motion to Dismiss a plaintiff's complaint under Rule 12(b)(6) should not be granted unless the plaintiff fails to plead enough facts to state a claim to relief that is plausible, and not merely just conceivable, on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "Dismissal for failure to state a claim is proper if the factual allegations are not 'enough to raise a right to relief above the speculative level.'" Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (quoting Rivell v. Private Health Care Sys., Inc., 520 F.3d 1308, 1309 (11th Cir. 2008)). "Stated differently, the factual allegations in the complaint must 'possess enough heft' to set forth 'a plausible entitlement to relief.'" Edwards, 602 F.3d at 1291 (quoting Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007)).
While the Court must conduct its analysis "accepting the allegations in the complaint as true and construing them in the light most favorable to the [p]laintiff," Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003), in evaluating the sufficiency of a plaintiff's pleadings the Court must "make reasonable inferences in [p]laintiff's favor, 'but [is] not required to draw [p]laintiff's inference.'" Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009) (quoting Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1248 (11th Cir. 2005)), (abrogated on other grounds by Mohamad v. Palestinian Auth., 132 S. Ct. 1702 (2012)). The Supreme Court instructs that in considering a Motion to Dismiss "a court must accept as true all of the allegations contained in a complaint;" this principle, however, "is inapplicableto legal conclusions," which "must be supported by factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) ().
ANALYSIS
Regions moves to dismiss Dent's TILA claim on the basis that she has no standing under the statute to bring the claim. (Doc. 6-1 at 6.) The TILA right of rescission provision at issue in this Motion to Dismiss provides in pertinent part:
[I]n the case of any consumer credit transaction . . . in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section . . . The creditor shall also provide, in accordance with regulations of the Bureau, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.
15 U.S.C. § 1635(a) (emphasis added). Regions' primary argument in favor of dismissing Dent's TILA claim is that she is not an "obligor" and is therefore not entitled to rescission under this provision. TILA does not define the term "obligor." See 15 U.S.C. §§ 1602, 1635.
Initially, the Court rejects Dent's argument that the Notice of Right to Rescind provided by Regions conferred upon her a right to rescind under TILA. A private party cannot convey a statutory right upon a person who does not fall into the class of people intended by Congress to hold that right. Here, if Dent does not fall into the class of "obligors" intended by Congress to receive a right to rescission under 15 U.S.C. § 1635, then Regions cannot by itself confer that right upon Dent by issuing a notice. Regions is not estopped from challenging the regulation under Chevron simply because it has complied with the regulation, and Regions cannot confer upon Dent a right that is not granted by the statute simply by giving Dent a paper notice.
Dent's primary argument that she is entitled to rescission rests on the language in the Federal Reserve Board regulation implementing TILA, 12 C.F.R. § 226.15, known as "Regu-lation Z." Regulation Z provides in pertinent part, "[I]n a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind . . . ." 12 C.F.R. § 226.15(a)(1)(i) (emphasis added). The regulation uses the term "consumer" instead of the term "obligor." TILA itself does not define the term "consumer" as it is used as a noun. See 15 U.S.C. § 1602 (). However, 12 C.F.R. § 226.2, the definitions section of Regulation Z, defines "consumer" as:
a cardholder or natural person to whom consumer credit is offered or extended. However, for purposes of rescission under §§ 226.15 and 226.23, the term also includes a natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest.
In short, Dent argues that 12 C.F.R. § 226.15 gives her a right to rescission because she falls into the regulatory definition of "consumer," and Regions argues that 12 C.F.R. § 226.15 is not entitled to deference because it violates the Congress' intent for 15 U.S.C. § 1635(a). The Court notes that neither the Eleventh Circuit nor any of its sister circuits have taken up this precise issue yet, so "the great weight of authority" Regions cites in support of its argument is, at best, persuasive. (Doc. 6-1 at 14.)
In Chevron U.S.A., Inc. v. Natural Resources Def. Council, Inc., the United States Supreme Court set forth a two-step analysis to be used in determining whether an agency regulation is entitled to deference. 467 U.S. 837, 842-43 (1984). The first step requires a court to determine whether Congress has directly spoken to the precise question as issue. "If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress." Id. at 843. If a court determines that the intent of Congress is not clear because "the statute is silent or ambiguous with respect to the specific question," then the court should proceed to the second step of the analysis, which requires determining whether the agency's interpretation of the statute is permissible and not arbitrary, capricious, or manifestly contrary to the statute. Id. at 843-44. At all times throughout the Chevron analysis, a court must remember that agency interpretations areentitled to great deference and that a court "may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 844. In this particular context, the Court notes that because TILA is a remedial statute, it should be construed liberally in favor of consumers and that the U.S. Supreme Court has held specifically that the Federal Reserve Board, the agency empowered to promulgate regulations under TILA, is entitled to great deference with regard to its interpretations of the Act. Smith v. Fid. Consumer Disc. Co., 898 F.2d 896, 898 (3d Cir. 1990); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 557-59 (1980).
The Court first considers whether Congress unambiguously expressed to whom it intended to grant a right of rescission to under 15 U.S.C. § 1635(a) through its use of the term "obligor." The Court finds, for several reasons, that Congress' intent...
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