Foqle v. Finance

• Decision Date: 31 January 2011
• Docket Number: Civil No. 08-cv-388-JD,Opinion No. 2 011 DNH 018
• Parties: Howard R. Foqle, Jr. and Sharon Foqle v. Wilmington Finance, a division of AIG Federal Savings Bank, CountryWide Home Loans, and Saratoga First Guarantee Funding
• Court: U.S. District Court — District of New Hampshire

Howard R. Foqle, Jr. and Sharon Foqle
v.
Wilmington Finance, a division of AIG Federal Savings Bank,
CountryWide Home Loans, and Saratoga First Guarantee Funding

Civil No. 08-cv-388-JD
Opinion No. 2 011 DNH 018

UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE

Dated: January 31, 2011

ORDER

Howard R. Fogle, Jr. and Sharon Fogle brought suit against Wilmington Finance, a division of AIG Federal Savings Bank, ("AIG FSB"), Countrywide Home Loans (Countrywide), and Saratoga First Guarantee Funding (Saratoga), alleging violations of federal and state law in the course of providing, collecting and foreclosing on a home mortgage. The Fogles assert that AIG FSB, as originator of the loan, violated the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), the Real Estate Settlement Procedures Act, 15 U.S.C. § 2601 et seq. ("RESPA"), the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA"), and the New Hampshire Unfair, Deceptive or Unreasonable Collection Practices Act, N.H. Rev. Stat. § 358-C. They also claim breach of contract, breach of fiduciary duty, unjust

Page 2

enrichment, wrongful foreclosure, and fraud. AIG FSB now moves for summary judgment under Federal Rule of Civil Procedure 56(b) and (c). The Fogles object.

Standard of Review

"A party claiming relief may move... for summary judgment on all or part of the claim." Fed. R. Civ. P. 56(a). Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The party seeking summary judgment must first demonstrate the absence of a genuine issue of material fact in the record. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party opposing a properly supported motion for summary judgment must present competent evidence of record that shows a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). All reasonable inferences and all credibility issues are resolved in favor of the nonmoving party. See id. at 255.¹

Page 3

Background

In November, 2005, the Fogles contacted a mortgage broker, Saratoga, to inquire about refinancing their Canterbury, New Hampshire home. At some point during the refinancing, the Fogles received a TILA disclosure statement showing the finance charges and monthly payments that would be associated with a 30-year fixed-rate loan having an annual percentage rate of 6.398 percent ("Fixed-Rate TILA Disclosure Statement"). The document identifies Howard Fogle as the "Applicant" and provides an application number. It states that it was "prepared by" Saratoga on November 18, 2005. At the top of the page, in capital letters, it reads "THIS IS NEITHER A CONTRACT NOR A COMMITMENT TO LEND." (Doc. no. 24, Ex. 12).

Through Saratoga, the Fogles ultimately received an adjustable rate mortgage ("ARM")loan from AIG FSB in the amount of $294,750. The loan had an initial interest rate of six percent that would adjust based on fluctuations in the London Interbank Offered Rate ("LIBOR") index every six months thereafter.

Page 4

On November 21, 2005, one week prior to the loan's closing, AIG FSB mailed the Fogles several pre-disclosures, including (1) A "Letter of Explanation" explaining how the "Amount Financed" and "APR" on the TILA disclosure statement would differ from those reflected in the Note; (2) an ARM disclosure outlining how the Fogles' interest rate would be determined under the terms of the loan; (3) a copy of the Fogles' initial loan application, dated November 18, 2005; and (4) a Good Faith Estimate estimating the closing costs of the loan.

At the closing of the loan on November 28, 2005, one or both of the Fogles signed the Mortgage and Note and several other disclosures, including (1) a RESPA Servicing Disclosure which stated that AIG FSB "presently intend[ed] to assign, sell or transfer the servicing of [the Fogles'] mortgage loan"; (2) a HUD-1 Settlement Statement summarizing the loan's transaction and settlement charges;² (3) a copy of the ARM disclosure; (4) a Mortgage Brokerage Business Contract stating the compensation to be paid to Saratoga as the Fogles' broker; (5) a Notice of the

Page 5

Fogles's Right to Cancel; and (6) a TILA disclosure statement, prepared by AIG FSB, which provided the annual percentage rate and finance charge of the loan, an itemization of the amount financed and a payment schedule reflecting the loan's variable rate ("Variable-Rate TILA Disclosure Statement"). (Doc. no. 24, Ex. 1-11). Both Fogles also signed the Fixed-Rate TILA Disclosure Statement at closing.

On or around January 1, 2006, AIG FSB sold the loan and servicing rights to Countrywide.³ On January 10, 2006, AIG FSB sent Howard Fogle a letter notifying him of the transfer of servicing rights. In the letter, the bank stated that the assignment of servicing rights would be effective January 30, 2006, and that AIG would stop accepting loan payments on January 29, 2006.

The Fogles made regular payments on the loan until February, 2008. Countrywide sent the Fogles a Notice of Default on April 2, 2008. On May 30, 2008, Howard Fogle sent AIG FSB a letter alleging various violations under TILA and notifying the bank of his intent to rescind the loan pursuant to 15 U.S.C. § 1635(a).

Page 6

AIG FSB responded to the letter on July 2, 2008. It stated that after conducting a review of the Fogles' loan file, it "vigorously disput[ed] any suggestion of 'material violations' of the TILA" that would give rise to an extended rescission right. (Doc. no. 29, Ex. 10). The letter also offered to refund the Fogles the $13,461 in settlement fees they had paid in connection with the closing of their loan with the bank.⁴

The Fogles filed suit on September 19, 2008.

Discussion

A. Truth in Lending Act Claims

In Counts I and III, the Fogles allege that AIG FSB violated various provisions of TILA by failing to disclose, inter alia, that the Fogles' loan had a variable interest rate and the terms of that rate, ⁵ that the bank was taking a security interest in the plaintiffs' residence, ⁶ and that the Fogles could be charged

Page 7

for late payments.⁷ The Fogles also allege that the bank failed to provide various required documents in the time frame set forth by TILA, including a brief description of the loan's APR, ⁸ a copy of the Consumer Handbook on Adjustable Rate Mortgages or a suitable substitute, ⁹ a payment schedule reflecting the terms of the note, ¹⁰ a description of the total of payments, ¹¹ and notice of the Fogles' right to cancel the contract.¹² AIG FSB moves for summary judgment on both Counts I and III, on the ground that the claims are time-barred, or, in the alternative, that the undisputed evidence shows that AIG FSB complied with TILA's provisions as a matter of law. The Fogles object.

Consumers who assert violations of TILA may seek damages under 15 U.S.C. § 1640(a), or, for certain violations, rescission of the loan transaction under 15 U.S.C. § 1635(a)-(b). The Fogles do not specify the statute underlying their claim for TILA violations in Count I. Because they seek rescission explicitly

Page 8

in Count III, the Court will construe Count I as a claim for damages under § 1640(a).

1. Count I — Violations of TILA

In Count I, the Fogles allege that AIG FSB violated several provisions of TILA. AIG FSB claims that to the extent that the Fogles seek damages under 15 U.S.C. § 1640(a), their claim is time-barred because it was brought more than a year after the alleged violations. See 15 U.S.C. § 1640(e)(TILA actions must be brought "within one year from the date of the occurrence of the violation").

In their objection, the Fogles argue that their claim for damages is timely because it is subject to equitable tolling. They claim that AIG FSB sought to "fraudulently conceal the true nature of the credit transaction, " (Doc. no. 29, Ex. 12, p. 8). They allege that AIG FSB did this by (1) providing two materially different TILA disclosure statements at closing, the combination of which obfuscated the terms of the loan; and (2) failing to deliver TILA-mandated pre-disclosures prior to the closing, or the final HUD-1 Settlement Statement until several days after the closing, thereby concealing certain payments that AIG FSB made to Saratoga for having brokered the loan. The Fogles also point to

Page 9

AIG FSB's offer to refund them more than $13,000 in closing costs as further evidence of the bank's fraudulent intent.

Generally, "the federal doctrine of fraudulent concealment operates to toll the statute of limitations 'where a plaintiff has been injured by fraud and remains in ignorance of it without any fault or want of diligence or care on his part.'" Salois v. Dime Sav. Bank, FSB, 128 F.3d 20, 25 (1st Cir. 1997)(quoting Holmberg v. Armbrecht, 327 U.S. 392, 397 (194 6))(internal quotation marks omitted).

Several circuits have held that this doctrine may be applied to a TILA violation, thus extending the time during which a consumer may raise a TILA claim. See, e.g., Ellis v. General Motors Acceptance Corp., 160 F.3d 703 (11th Cir. 1998); Ramadan v. Chase Manhattan Corp., ...