Gisondi v. Countrywide Bank, N.A. (In re Gisondi)

• Decision Date: 26 February 2013
• Docket Number: Adversary No. 08–170–mdc.,Bankruptcy No. 08–14444–mdc.
• Citation: 487 B.R. 423
• Parties: In re Maureen H. GISONDI, Debtor. Maureen H. Gisondi, Plaintiff, v. Countrywide Bank, N.A., Wells Fargo (SAMI II 2006–AR 7), Countrywide Home Loans, Inc., and Cross Country Funding, LLC, Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

487 B.R. 423

In re Maureen H. GISONDI, Debtor.Maureen H. Gisondi, Plaintiff,

v.Countrywide Bank, N.A., Wells Fargo (SAMI II 2006–AR 7), Countrywide Home Loans, Inc., and Cross Country Funding, LLC, Defendants.

Bankruptcy No. 08–14444–mdc.

Adversary No. 08–170–mdc.

United States Bankruptcy Court, E.D. Pennsylvania.

Feb. 26, 2013.

Roger V. Ashodian, William H. Hall, IV, The Regional Bankruptcy Center of Southeastern PA, Havertown, PA, for Plaintiff.

Daniel J.T. McKenna, Martin C. Bryce, Jr., Ballard Spahr Andrews & Ingersoll LLP, Philadelphia, PA, for Defendants.

MEMORANDUM

MAGDELINE D. COLEMAN, Bankruptcy Judge.

I. INTRODUCTION

On May 18, 2012, this Court held a trial (the “Trial”) addressing the remaining claims of Maureen Gisondi (the “Debtor”) against Countrywide Bank, N.A. (“Countrywide Bank”) and Wells Fargo (SAMI II 2006–AR 7) (“Wells Fargo,” together with the Countrywide Bank, the “Defendants”) for alleged violations of the Truth in Lending Act, 15 U.S.C. § 1601et seq. (“TILA”) asserted by Count I of the Debtor's Amended Complaint dated April 6, 2009 (the “Amended Complaint”). At the close of the Debtor's case, the Defendants presented to this Court an oral motion for judgment on partial findings (the “Motion”).

The Defendants identified five grounds for their Motion: (1) the Debtor's failure to meet her burden of establishing that she could obtain rescission from Wells Fargo or Countrywide Bank; (2) the Debtor's failure to meet her burden of establishing that she did not receive the required copies of the Truth in Lending Disclosure Statement and Notice of Right to Cancel (the “Disclosures”); (3) the Debtor's failure to meet her burden of establishing her title insurance overcharge claim; (4) the failure to disclose the yield spread premium paid to the mortgage broker does not, as a matter of law, constitute a TILA violation; and (5) the Debtor's failure to establish her ability to tender the loan proceeds precluded her from advancing her rescission claim.

After this Court heard arguments from all parties and for the reasons stated on the record, this Court granted the Motion with regard to the Debtor's title insurance overcharge claim. This Court declined to rule on the issue of the credibility of the Debtor's testimony as it related to her burden of establishing that she did not receive the required copies of the Disclosures, took the remaining three issues under advisement, and invited the parties to submit briefs addressing the same.

This Court is now in receipt of the parties' respective briefs and the matters raised by the Motion are ripe for this Court's consideration.¹ As discussed below, this Court will:

1. grant the Motion as to Wells Fargo and dismiss with prejudice all claims against it because the Debtor has failed to establish that Wells Fargo holds any interest in the loan at issue;

2. deny the Motion as to Countywide Bank because the Debtor has presented sufficient evidence to establish that Countrywide Bank is the present holder of the Loan. Countrywide Bank will remain as a defendant in this matter and be permitted to present evidence rebutting the Debtor's claim that she may seek recourse against it;

3. grant the Motion and dismiss with prejudice the Debtor's TILA claim related to the alleged inaccuracy of the finance charge because Countrywide Bank was under no obligation to separately disclose the yield spread premium; and

4. deny the Motion based upon Debtor's alleged failure to establish her ability to repay the Loan because the Debtor's ability to tender the proceeds of the Loan is not a prerequisite to her right to exercise the remedy of rescission. See, e.g. Sherzer v. Homestar Mortgage Services, et al., 707 F.3d 255 (3d Cir.2013) (recognizing that the right of rescission is exercised upon sending a notice to creditor).

Consistent with this Court's ruling, Countrywide Bank will be permitted to present its rebuttal case at a continuation of the Trial.

II. BACKGROUND

The Debtor's claim relates to the refinancing of the Debtor's then existing indebtedness on her home located at 2561 Skippack Pike, Lansdale, PA (the “Property”) whereby Countrywide Bank provided to the Debtor a loan in the amount of $337,500 (the “Loan”). Closing of the transaction occurred at the Property on August 10, 2006 (the “Closing”), and is evidenced by an Adjustable Rate Note in the amount of $337,500 issued by the Debtor to Countrywide Bank dated August 10, 2006 (the “Note”), and a Mortgage dated August 10, 2006 (the “Mortgage”), that granted to Mortgage Electronic Registration Systems, Inc. (“MERS”), as the nominee of Countrywide Bank, a security interest in the Property to secure the Debtor's repayment of the Loan.

The Debtor admits that at the Closing she executed the following documents: (i) a Loan Application Disclosure Acknowledgement; (ii) a Loan Application; (iii) an Adjustable Rate Rider; (iv) an Adjustable Rate Note; (v) a Payoption Adjustable Rate Mortgage Loan Program Disclosure; (vi) a Truth–in–Lending Disclosure Statement; (vii) a Settlement Statement; (viii) a Prepayment Penalty Addendum; and (ix) a Notice of Right to Cancel (collectively, the “Loan Documents”). Other than with regard to the accuracy of the finance charge and the yield spread premium, the Debtor does not take issue with the form or substance of any of the Loan Documents. Rather, she claims that Countrywide Bank did not provide her copies of the Loan Documents for her personal records as required by 12 C.F.R. § 226.17(a)(1). Despite signing each of these documents to acknowledge her receipt, the Debtor testified at the Trial that at the conclusion of the closing the title agent left her home without providing her any copies of the Loan Documents. She claims that it was not until discovery in these proceedings that she finally received copies of each document.

As is the case with many disputes arising from the business practices of the mortgage industry, the present relationship between the various parties to the Loan has been less than clear. This litigation has been pending for nearly four years. Originally, the parties labored under the assumption that Countrywide Bank was the holder of the Loan. As memorialized by Chief Judge Raslavich's Prior Opinion, the parties later realized that Countrywide Bank was not the holder because Wells Fargo had purportedly taken assignment of the Loan. In re Gisondi, Bky. No. 08–14444, 2009 WL 2913424 (Bankr.E.D.Pa. Apr. 2, 2009) (discussing Wells Fargo's potential TILA liability as assignee of the Loan). However, Wells Fargo now maintains that, contrary to its prior representations to this Court, it never took assignment of the Loan. Instead, Wells Fargo contends that the mortgage was assigned to Bank of New York Mellon (“BONY”).

From the record now before this Court, this Court can only determine that the Loan was originated by Countrywide Bank. The parties appear to agree that Countrywide Bank is no longer the holder of the Loan. However, this Court is not in receipt of any evidence sufficient to establish the identity of the Loan's present holder. The parties have not submitted to this Court any documents evidencing the assignment of the Note from Countrywide Bank to any other party or the assignment of the Mortgage from MERS to any other party. However, the evidence before the Court does not establish that Wells Fargo was a holder of the Loan.

III. DISCUSSION

At the close of the Debtor's case, the Defendants moved for judgment on partial findings pursuant to Fed.R.Civ.P. 52, as made applicable to this proceeding by Fed. R. Bankr.P. 7052. Rule 52 permits a court, in its discretion, to enter judgment against a party after that party's case has been fully presented to a court. Payne ex rel. Estate of Payne v. Equicredit Corp. of America, 71 Fed.Appx. 131, 133 (3d Cir.2003). The purpose of Rule 52 motions is to conserve the time and resources of the parties and of this Court by obviating the need for moving party to present its rebuttal case where the nonmoving party has failed to present evidence sufficient to carry its ultimate burden of persuasion. In re Machne Menachem, Inc., 425 B.R. 749, 755–56 (Bankr.M.D.Pa.2010); 9 Moore's Federal Practice 52–124, ¶ 52.50[2]. This Court should enter a judgment pursuant to Rule 52(c) only if, after a party completes presentation of its evidence, this Court determines such evidence, standing alone, is insufficient to sustain the party's claim. EBC, Inc. v. Clark Bldg. Systems, Inc., 618 F.3d 253, 272 (3d Cir.2010); Giza v. Amcap Mortgage, Inc., et al. (In re Giza), 458 B.R. 16, 23–24 (Bankr.D.Mass.2011) (addressing pursuant to a Rule 52 motion the sufficiency of debtor's evidence submitted in support of alleged TILA violation).

In evaluating the sufficiency of a party's evidence, this Court draws no inferences in favor of either party and applies “the same standard of proof and weighs the evidence as it would at the conclusion of the trial.” EBC, Inc. v. Clark Bldg. Systems, Inc., 618 F.3d 253, 272 (3d Cir.2010). In weighing whether a party has met its factual burdens by a preponderance of the evidence, this Court is entitled to make determinationsof credibility where appropriate. Parker v. F.D.I.C., 447 Fed.Appx. 332, 335 (3d Cir.2011) (holding that court may make credibility determinations to determine whether borrower's unsubstantiated testimony is sufficient to rebut presumption of receipt); EBC, Inc. v. Clark Bldg. Systems, Inc., 618 F.3d 253, 273 (3d Cir.2010); Parker v. Long Beach Mortg. Co., 534 F.Supp.2d 528, 535 (E.D.Pa.2008).

The Defendants' Motion seeks judgment on Count I of the Debtor's Complaint which states a claim for rescission against both Countrywide Bank and Wells Fargo based upon Countrywide Bank's alleged violations of TILA's disclosure requirements. TILA was enacted “to assure meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to...