In re Giza

• Decision Date: 12 October 2011
• Docket Number: Bankruptcy Nos. 07–41782–HJB,09–30886–HJB.Adversary No. 09–03032.
• Citation: 458 B.R. 16
• Parties: In re David GIZA, Debtor.In re Linda Y. Giza, Debtor.David Giza and Linda Y. Giza, Plaintiffsv.Amcap Mortgage, Inc., Deutsche Bank National Trust Company, as Trustee, and OneWest Bank, FSB, Defendants.
• Court: U.S. Bankruptcy Court — District of Massachusetts

458 B.R. 16

In re David GIZA, Debtor.In re Linda Y. Giza, Debtor.David Giza and Linda Y. Giza, Plaintiffs

v.Amcap Mortgage, Inc., Deutsche Bank National Trust Company, as Trustee, and OneWest Bank, FSB, Defendants.

Bankruptcy Nos. 07–41782–HJB

09–30886–HJB.Adversary No. 09–03032.

United States Bankruptcy Court, D. Massachusetts,Western Division.

Oct. 12, 2011.

L. Jed Berliner, Meghan R. Bristol, Berliner Law Firm, Springfield, MA, for Plaintiffs.Amcap Mortgage, Inc., pro se.Howard M. Brown, Sarah A. Smegal, Bartlett Hackett Feinberg P.C., Boston, MA, for Defendants.

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before the Court is a “Motion for Judgment on Partial Findings” (the “Motion for Judgment”), filed by defendant Deutsche Bank National Trust Company, Trustee under the Pooling and Servicing Agreement Series ITF Series NBAS 2006–C (“Deutsche Bank”). By its Motion for Judgment, Deutsche Bank alleges that plaintiffs David and Linda Giza (together, the “Gizas”) have failed to offer sufficient credible evidence to support the essential elements of their claim under the Massachusetts Consumer Credit Cost Disclosure Act, Mass. Gen. Laws ch. 140D, § 1, et seq. (“MCCCDA”) that their residential mortgage held by Deutsche Bank should be rescinded. The Gizas' rescission claim is grounded on their allegation that, at the closing of their loan, the original lender failed to furnish them with all of the forms mandated by the MCCCDA. The Gizas having completed their case and rested, and the Court having carefully reviewed the confused evidence presented, the Court finds and rules that the Gizas have failed to rebut the presumption of delivery under the MCCCDA of the relevant documents and, accordingly, have failed to meet their burden of production. The Court's findings of fact and conclusions of law, pursuant to Rule 7052(a) of the Federal Rules of Bankruptcy Procedure, are cobbled from the parties' Joint Pre–Trial Statement and the evidence presented at trial.

I. FACTS AND TRAVEL OF THE CASE

The Gizas are spouses residing at 15 Orchard Street in Palmer, Massachusetts (the “Property”) and are debtors in these separately filed Chapter 13 cases. ¹ The Gizas purchased the Property on or about January 6, 1988, subject to a purchase-money mortgage; the Property has since served as their primary residence.

On April 1, 2006, the Gizas sought to refinance their mortgage with Amcap Mortgage, Inc. (“Amcap”).² The new loan (the “Loan”) was approved and the closing (the “Closing”) was conducted at the Property on May 24, 2006. Three persons were present: David Giza, Linda Giza, and a female closing agent (the “Closing Agent”).³ According to the Gizas, the Closing lasted somewhere between one and two hours. Trial Tr. June 13, 2011 at 16:12–13; 105:10–11. David Giza executed a promissory note in favor of Amcap and both David and Linda Giza executed a mortgage in order to secure payment of the Loan.⁴ Among the various documents executed by the Gizas (generally, the “Loan Documents”) were some number of Notices of Right to Cancel (the “Notices”) and Truth in Lending Disclosure Statements (the “Disclosure Statements”). Trial Tr. at 18:15–21; 73:6–74:5. Both the Notices and the Disclosure Statements included written acknowledgments of receipt (the “Acknowledgments”), acknowledging the receipt of the required number of forms (two Notices and one Disclosure Statement per borrower). Id. at 74:6–76:2.

At trial, the Gizas appeared hard-pressed to recall the actual events that took place at the Closing, including the manner in which and what documents were presented to and signed by them; however, they concede that they signed the Acknowledgments. Id. at 75:17–76:1. Following the execution of the Loan Documents, the Closing Agent gave the Gizas a set of copies of the Loan Documents (the “May 2006 Documents”). The Gizas could not recall whether the May 2006 Documents given by the Closing Agent to the Gizas were loose and then placed by Linda Giza in a folder or envelope or whether they were given to her by the Closing Agent in a folder or envelope. Id. at 20:14–24. In any event, Linda Giza testified that she took the May 2006 Documents and put them in a safe located on the Property. Id. at 21:24–22:2. The Gizas testified that they did not look at or examine the May 2006 Documents prior to Linda Giza putting them in the safe on the Property and have no recollection of looking at or examining the May 2006 Documents until February 2008. Id. at 28:19–30:13; 107:22–108:8; see also Joint Pre-Trial Statement, Docket No. 149 (“JPTS”), at ¶ 17–18.

At some point in 2007, the Gizas sought to list the Property for sale. In an effort to clean the Property in preparation for sale, some documents, including at least one document related to the Loan, were relocated to a storage facility not on the Property.

On May 10, 2007, David Giza filed a voluntary Chapter 13 case in this Court. In re David Giza, No. 07–41782. Some time between the commencement of that case and February 2008, Linda Giza claims to have discovered that the “seam” on the original folder or envelope containing the May 2006 Documents “let loose.” Trial Tr. at 30:7–21; see also JPTS, at ¶ 23. She then separated the May 2006 Documents into different containers. Trial Tr. at 31:20–24; see also JPTS, at ¶ 23. Linda Giza testified that she put the papers relating to David Giza into a “Landry, Lyons & White” folder, but she could not recall for certain the second container used to hold the remaining papers nor whether she put them back in the safe.⁵ Trial Tr. at 31:25–32:13; 33:7–14. Linda Giza further testified that at some time between David Giza's case filing and February 2008, she brought the Landry, Lyons & White folder to the Gizas' attorney's office where copies were made. Id. at 23:5–24:5; 32:17–21. Afterwards, Linda brought her papers home, and put them back in the safe located on the Property.⁶ Id. at 26:6–13; 32:22–33:6.

On February 4, 2008, Linda Giza claims to have taken documents out of the safe located on the Property and handed them to David Giza who then took them to the Gizas' attorney's office (the “February 2008 Documents”). Id. at 34:6–22; 108:10–109:25. The February 2008 Documents were scanned at the Gizas' attorney's office and remained in David Giza's custody throughout the scanning. David Giza then took the February 2008 Documents home and Linda Giza put them back in the safe located on the Property. Id. at 35:22–36:1.

On June 14, 2008, the Gizas' attorney sent a notice of rescission (the “2008 Rescission Letter”) to Amcap and Deutsche Bank on behalf of the Gizas, claiming Truth in Lending Act (“TILA”) violations ⁷ as grounds for the Gizas rescinding the Loan. See Pls.' Ex. 2.

On October 30, 2008, Linda Giza claims to have again personally delivered documents taken from the safe on the Property to the Gizas' attorney's office for scanning (the “October 2008 Documents”).⁸ The October 2008 Documents remained in Linda Giza's custody throughout the scanning and subsequently went home with her where she put them back in the safe located on the Property. Trial Tr. at 37:3–38:8.

On May 27, 2009, Linda Giza filed a voluntary Chapter 13 case in this Court. In re Linda Giza, No. 09–30886. Three days later, on May 30, 2009, the Gizas instituted the instant adversary proceeding in David Giza's case against Amcap, Deutsche Bank, and OneWest Bank, FSB (“OneWest”), the servicer of the Loan. David Giza and Linda Y. Giza v. Amcap mortgage, Inc., Deutsche Bank National [Trust] Company, as Trustee, and OneWest Bank, FSB, A.P. No. 09–04099.

On June 2, 2009, the Gizas' attorney sent a second notice of rescission (the “2009 Rescission Letter”) to Amcap, Deutsche Bank, and OneWest on behalf of the Gizas, this time citing TILA and MCCCDA violations ⁹ as grounds for the Gizas rescinding the Loan. See Pls.' Ex. 3.

On June 25, 2009, three weeks after David Giza filed his adversary proceeding, Linda Giza filed a nearly identical adversary proceeding in her bankruptcy case, although she added claims for violation of the automatic stay by the defendants with regard to her interest in the Property. Linda Y. Giza v. Amcap mortgage, Inc., Deutsche Bank National Trust Company, [as Trustee], and OneWest Bank, FSB, A.P. No. 09–03032. On June 3, 2010, the two adversary proceedings were consolidated.

Through their Complaint, the Gizas sought to (1) have this Court determine the validity and extent of the recorded mortgage in light of the 2008 and 2009 Rescission Letters and (2) recover, under TILA and MCCCDA, statutory damages, injunctive relief, costs, and attorney's fees for the failure of the defendants to honor their mortgage rescission.¹⁰ In response to the Gizas' Complaint, Defendants Deutsche Bank and OneWest moved to dismiss. On April 15, 2010, this Court issued its decision dismissing all of the Gizas' asserted claims against OneWest and all of the claims against Deutsche Bank, save for the Gizas' claim for rescission under MCCCDA. Giza v. Amcap Mtg., Inc. (In re Giza), 428 B.R. 266 (Bankr.D.Mass.2010) (“Giza I”).

On May 20, 2010, the parties filed a Joint Pre–Trial Statement with this Court, agreeing to a discovery plan with respect to the Gizas' remaining claim. In the meantime, sometime in early May 2010, Linda Giza claims to have found additional documents related to the Amcap Loan in a storage facility not located on the Property. (She testified at trial to having no recollection as to how they got there. Trial Tr. at 40:7–41:19; see also JPTS, at ¶ 36.) On May 25, 2010, the Gizas personally delivered to their attorney, various documents related to the Loan, including those discovered in the storage facility, as well as documents related to the adversary proceeding (the “May 2010 Documents”). Trial Tr. at 40:7–16; see also JPTS, at ¶ 37. The May 2010 Documents were scanned at the Gizas' attorney's office and remained in the Gizas' custody throughout the...