In re Stuart

Decision Date06 April 2007
Docket NumberAdversary No. 05-459ELF.,Bankruptcy No. 05-19154ELF.
Citation367 B.R. 541
PartiesIn re Alan R. STUART Debtor(s). Alan R. Stuart, Elizabeth T. Stuart, Plaintiffs v. Decision One Mortgage Co., LLC, et al. RFC Homecomings Financial Lincoln Mortgage Associates, LLC, Defendants.
CourtU.S. Bankruptcy Court — Eastern District of Pennsylvania

David A. Scholl, Regional Bankruptcy Center of SE PA, Law Office of David A. Scholl, Newtown Square, PA, for Plaintiffs.

Andrew K. Stutzman, Sean Robert Adam, Strandley Ronon Stevens & Young LLP, Daniel S. Bernheim, Jonathan J. Bart, Wilentz Goldman & Spitzer P.A., Philadelphia, PA, Lauren R. Berschler, Wilentz, Goldman & Spitzer, Pittsburgh, PA, for Defendants.

Lincoln Mortgage Associates, LLC, North Wales, PA, pro se.

MEMORANDUM OPINION

ERIC L. FRANK, Bankruptcy Judge.

I. INTRODUCTION

In this adversary proceeding, the Plaintiffs assert claims for violations of federal and state consumer protection statutes. The claims arise from a mortgage refinancing transaction in connection with the Plaintiffs' primary residence. The three (3) defendants are a mortgage broker, the original mortgage lender and the lender's assignee.

Before me are summary judgment motions filed by the mortgage lender and the lender's assignee. The movants' primary arguments are that (1) the court lacks subject matter jurisdiction to hear the merits of the Plaintiffs' federal claim on the basis of the Rooker-Feldman doctrine and (2) to the extent that there may be federal jurisdiction, the Plaintiffs' claims are without merit as a matter of law.

For the reasons stated more fully in this Memorandum, I will grant the motions for summary judgment in part, and deny them in part.

II. BACKGROUND AND PROCEDURAL HISTORY

The Debtor in this case, Alan R. Stuart, and his spouse Elizabeth Stuart (collectively, "the Plaintiffs"), refinanced their home mortgage in a loan transaction that took place in January 2004 ("the Transaction").1 Lincoln Mortgage Associates, LLC ("Lincoln Mortgage") was the mortgage broker involved in the Transaction. Decision One Mortgage Company, LLC ("Decision One") was the original mortgagee. Decision One subsequently assigned the refinancing loan to the third defendant, RFC Homecomings Financial ("Homecomings").

By June 2004, the Plaintiffs defaulted in their mortgage payments. On February 28, 2005, Mortgage Electronic Registration Systems, Inc. initiated foreclosure proceedings against the Plaintiffs in the Chester County Court of Common Pleas.2 On April 20, 2005, the Common Pleas Court entered a judgment by default in mortgage foreclosure. The plaintiffs subsequently were served a notice of a scheduled sheriffs sale of their residence.

On May 9, 2005, the Plaintiffs' counsel sent a letter to Decision One purporting to exercise the Plaintiffs' right to rescind the Transaction pursuant the federal Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. ("TILA"). In a letter dated May 31, 2005, counsel for Decision One responded by declining the Plaintiffs' request for rescission and stating that the disclosures the Plaintiffs received "were compliant with TILA in all respects."

The Debtor filed a bankruptcy petition under chapter 13 of the Bankruptcy Code on July 6, 2005. Shortly thereafter, on July 13, 2005, the Plaintiffs filed the complaint in this adversary proceeding ("the Complaint") against Decision One, Homecomings and Lincoln Mortgage. The Complaint contains the following three (3) counts.

In Count I, the Plaintiffs seek judicial enforcement of their rescission of the Transaction under 15 U.S.C. § 1635(b). Pursuant to §§ 1640(a)(2)(A)(iii) and (a)(3), they request statutory damages, attorney's fees and costs due to the defendants' failure to rescind.3 The Plaintiffs assert that they are entitled to rescission due to the existence of material violations of the TILA disclosure requirements in the Transaction. Specifically, the Plaintiffs allege that Decision One failed to properly disclose certain terms of the transaction, particularly finance charges, and failed to provide the Plaintiffs with two copies of the Notice of Right to Cancel.4

In Count II, the Plaintiffs assert a state law claim under the Pennsylvania Credit Services Act, 73 Pa.C.S. § 2183(3), ("the Credit Services Act") against all of the defendants.

In Count III, the Plaintiffs assert a state law claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. 201-1, et seq. ("the UTPCPL") against all of the defendants.5

On October 24, 2006 and November 6, 2006, Homecomings and Decision One, respectively, filed motions for summary judgment on all three counts. Lincoln Mortgage did not file any such motion. The Plaintiffs filed timely responses. On December 14, 2006, I held a combined hearing on Homecomings' and Decision One's motions. I took the matter under advisement at the close of the hearing.

III. DISCUSSION
A. Legal Standard — Summary Judgment

Federal Rule of Bankruptcy Procedure 7056 incorporates Federal Rule of Civil Procedure 56 governing summary judgment. The standards for evaluating a motion for summary judgment under Fed. R.Civ.P. 56 are well established and have been stated in numerous written opinions in this district. E.g., In re Klayman, 333 B.R. 695 (Bankr.E.D.Pa.2005); In re Lacheen, 2005 WL 1155257 (Bankr.E.D.Pa. April 28, 2005) (Sigmund, Ch. J.); In re Lewis, 290 B.R. 541 (Bankr.E.D.Pa.2003) (per Carey, J.); In re Newman, 304 B.R. 188 (Bankr.E.D.Pa.2002) (per Fox, Ch. J.).

Pursuant to Rule 56, summary judgment should be granted when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Before a motion for summary judgment may be granted, the court must find that the motion alleges facts which, if proven at trial, would require a directed verdict in favor of the movant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993). If the movant meets this initial burden, the responding party may not rest on his pleadings, but must designate specific factual averments through the use of affidavits or other permissible evidentiary material that demonstrate a triable factual dispute.6 Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). Such evidence must be sufficient to support a jury's factual determination in favor of the nonmoving party. Id. Evidence that merely raises some metaphysical doubt regarding the validity of a material facts is insufficient. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). If the party opposing the motion believes that summary judgment is premature, Rule 56(f) requires the party' to present by affidavit the reasons why the party is presently unable to submit evidence in opposition to the motion. Celotex, 477 U.S. at 326, 106 S.Ct. at 2554.

In its consideration of the evidentiary matter submitted in support and in opposition to a motion for summary judgment, the court's role is not to weigh the evidence but only to determine whether there is a disputed, material fact for determination at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-50, 106 S.Ct. at 2510-11. All reasonable inferences must be drawn in favor of the nonmoving party and against the movant. United States v. Premises Known as 717 South Woodward Street, 2 F.3d 529, 533 (3d Cir.1993).

B. Summary Judgment Will Be Granted in Favor of Decision One and Homecomings on Count I
1.

As a basis for the entry of summary judgment in their favor, Homecomings and Decision One assert that this court lacks subject matter jurisdiction over the Plaintiffs' TILA rescission claim. They argue that pursuant to the Rooker-Feldman doctrine, the court is precluded from exercising its jurisdiction because the foreclosure judgment entered in state court against the Plaintiffs bars the federal court enforcement of a TILA rescission claim. Before considering any other issues, I am obliged to determine the scope of the court's jurisdiction. See Packard v. Provident National Bank, 994 F.2d 1039, 1049 (3d Cir.), cert. denied, 510 U.S. 964, 114 S.Ct. 440, 126 L.Ed.2d 373 (1993) (federal courts are courts of limited jurisdiction, and as such are under a continuing duty to satisfy themselves of their jurisdiction before proceeding to the merits of any case).

Derived from the two Supreme Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16, 44 S.Ct. 149, 68 L.Ed. 362 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 483-84, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), the Rooker-Feldman doctrine divests a federal court of subject matter jurisdiction if the relief requested effectively would reverse a state court decision or void its ruling. See, e.g., Turner v. Crawford Square Apartments III, L.P., 449 F.3d 542, 547 (3d Cir.2006); In re Knapper, 407 F.3d 573, 580 (3d Cir.2005). In effect,. the Rooker-Feldman doctrine prevents "inferior" federal courts from sitting as appellate courts for state court judgments. Knapper 407 F.3d at 580 (citing Port Auth. Police Benevolent Assoc Inc. v. Port Auth. of N.Y. and N.J. Police Dept., 973 F.2d 169, 173 (3d Cir.1992)).

The Rooker-Feldman doctrine is necessarily limited to "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005). In explaining this jurisdictional bar, the Third Circuit has described the Rooker-F...

To continue reading

Request your trial
33 cases
  • Stewart V. JPMorgan Chase Bank, N.A. v. Stewart (In re Stewart)
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania
    • 21 Mayo 2012
    ...but also to default judgments. See, e.g., Knapper v. Bankers Trust Co., 407 F.3d 573 (3d Cir.2005); Stuart v. Decision One Mortgage Co., LLC (In re Stuart), 367 B.R. 541 (Bankr.E.D.Pa.2007); Holler v. Fairbanks Capital Corp. Serv. Ctr. (In re Holler), 342 B.R. 212 (Bankr.W.D.Pa.2006). Accor......
  • Stewart v. JPMorgan Chase Bank, N.A. (In re Stewart), Bankruptcy No. 10-26939JAD
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania
    • 21 Mayo 2012
    ...also to default judgments. See, e.g., Knapper v. Bankers Trust Co., 407 F.3d 573 (3d Cir. 2005); Stuart v. Decision One Mortgage Co., LLC (In re Stuart), 367 B.R. 541 (Bankr. E.D. Pa. 2007); Holler v. Fairbanks Capital Corp. Serv. Ctr. (In re Holler), 342 B.R. 212 (Bankr. W.D. Pa. 2006). Ac......
  • In re Stuart, 05-19154 (ELF).
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • 15 Marzo 2009
    ...Court Rescission Litigation because it lacked subject matter jurisdiction under the Rooker-Feldman doctrine. See In re Stuart, 367 B.R. 541 (Bankr.E.D.Pa.2007). The dismissal was without prejudice to the right of the Debtor and his spouse to assert their TILA rescission claim in a court of ......
  • In re Stuart, Bky. No. 05-19154 (ELF) (Bankr. E.D. Pa. 3/15/2009), Bky. No. 05-19154 (ELF)
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • 15 Marzo 2009
    ...Bankruptcy Court Rescission Litigation because it lacked subject matter jurisdiction under the Rooker-Feldman doctrine. See In re Stuart, 367 B.R. 541 (Bankr. E.D. Pa. 2007). The dismissal was without prejudice to the right of the Debtor and his spouse to assert their TILA rescission claim ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT