Knowles v. HBSC Bank USA

• Court: U.S. District Court — Northern District of Alabama
• Writing for the Court: INGE PRYTZ JOHNSON
• Decision Date: 08 June 2012
• Docket Number: CASE NO. CV-11-J-1953-S
• Citation: Knowles v. HBSC Bank USA, CASE NO. CV-11-J-1953-S (N.D. Ala. Jun 08, 2012)
• Parties: BEVERLY KNOWLES, individually and on behalf of all similarly situated individuals, Plaintiff, v. HBSC BANK USA, Defendant.

BEVERLY KNOWLES, individuallyand on behalf of all similarly situated individuals, Plaintiff,

v.HBSC BANK USA, Defendant.

CASE NO. CV-11-J-1953-S

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

Dated: June 8, 2012

MEMORANDUM OPINION

The plaintiff filed the complaint in this action under the Truth-in-Lending Act ("TILA"), asserting that the defendant failed to notify her within 30 days of the transfer or assignment of the mortgage loan at issue, in violation of 15 U.S.C. § 1641(g).¹ The parties have filed cross motions for summary judgment (docs. 33 and 38) and briefs and evidence in support of their respective positions (docs. 34 and 38-41). The parties filed responses to each others initial briefs² (docs. 48-49 and 53-54) and thereafter filed replies as well (docs. 55 and 56). Upon consideration of the pleadings, memoranda and evidentiary submissions received, the court concludes that the defendant's motion is due to be granted and the plaintiff's motion is due to be denied, for the reasons set forth herein.

FACTUAL BACKGROUND

The undisputed facts of this case are as follows: The plaintiff and her husband owned a house at 1205 Steger Road, Meridianville, Alabama. Plaintiff depo. (submitted as defendant ex. B) at 7, 11. They built the house in 2001 with money James Knowles, plaintiff's husband, inherited. Plaintiff depo. at 11-12. Needing to finance their son's college education, the Knowles took out a mortgage on the property in May 2006. Plaintiff depo. at 12. The Note, signed solely by James Knowles, states that payments will be made to Option One Mortgage Company. Defendant ex. 2. On the same date as the Note, James Knowles also signed a Limited Power of Attorney, which lists the "Name of Lender making new loan" as "Option One Mortgage Company." Defendant ex. 3, at 000325. The mortgage, listing both James and Beverly Knowles as the "grantors" states "[t]his security instrument is given to Option One Mortgage Corporation." Defendant ex. 4.

An "Assignment, Assumption and Recognition Agreement," dated April 1, 2007, was entered between

Citigroup Global Markets Realty Corp. (the "Assignor"), Option One Mortgage Corporation (the "Company" or the "Servicer") and HSBC Bank USA, National Association, as trustee (the "Assignee" or the "Trustee") for the benefit fo the holders of the Citigroup Mortgage Loan Trust, Inc., Asset-Backed Pass-Through Certificates, Series 2007-SHL1.

It states that

In consideration of the mutual promises contained herein the parties hereto agree that the residential mortgage loans (the "Assigned Loans") listed on Attachment 1 annexed hereto (the "Assigned Loan Schedule") owned by the Assignor and now serviced by Company for the Assignor and its successors and assigns ...shall be serviced by the Company on behalf of the Assignee in accordance with the provisions of the Servicing Agreement...

Defendant ex. A-7. See also Affidavit of Kistler, ¶¶ 9-10. There is no dispute that the mortgage loan in question was listed in Attachment 1. That agreement further required that

The Company shall establish a Custodial Account as an Eligible Account, entitled "Option One Mortgage Corporation, as servicer for Wells Fargo Bank, N.A., as master servicer for HSBC Bank, USA, National Association, as trustee for the holders of Citigroup Mortgage Loan Trust Inc., Asset-Backed Pass-Through Certificates...."

Defendant ex. A-7 at 00253. See also Affidavit of Kistler, ¶ 13. Thus, as of April 1, 2007, the HSBC Trust became the owner of the Knowles' mortgage and loan. Kistler affidavit, ¶ 14.

In April 2008 Option One sold its rights to service mortgages, including the Knowles' mortgage, to American Home Mortgage Servicing, Inc. ("AMHSI"). Affidavit of Kistler, ¶ 15; see also defendant exs. A-9 and A-10.

According to the defendant, James Knowles became in default on the Note in the early part of 2009. Kistler affidavit, ¶ 16. Therefore, AMHSI sent James Knowles a mortgage modification package in November 2009. Defendant ex. A-11. In those documents, the HSBC Trust was identified as the lender on the Note.

In preparation to initiate foreclosure proceedings on plaintiff's home, an Assignment of Mortgage, from Sand Canyon Corporation f/k/a option One Mortgage Corporation to HSBC Bank USA, National Association, as Trustee for Citigroup Mortgage Loan Trust, Inc., Asset-Backed Pass-Through Certificates, Series 2007-SHL1, was filed with the Probate Court of Madison County, Alabama, on May 19, 2011. Plaintiff ex. 6 (doc. 34). That document reflects an "effective date of May 2, 2011" although it was actually executed on May 9, 2011. Id. Also in May 2011, plaintiff received a notice of foreclosure on the home. Kistler affidavit, ¶ 17. At the time, payments were to be made to AMHSI. See plaintiff's statement of undisputed facts at ¶¶ 34-43. The foreclosure and any actions by AMHSI are the subject ofseparate litigation and not before this court.³ Rather, the sole issue in this case is whether the defendant, the HSBC Trust, violated TILA 15 U.S.C. § 1641(g)(1), as alleged by the plaintiff.

The relevant section of TILA, was added in 2009. It requires that

In addition to other disclosure required by this subchapter, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer ...

15 U.S.C. § 1641(g)(1).

Defendant does not dispute that this section was enacted in 2009, that it applies to the transfer of mortgage loans, or that it must comply with this law from the date of its enactment forward. The defendant asserts that the HSBC Trust became the owner of the mortgage loan at issue on April 1, 2007, thus predating the above law, and that the plaintiff here, Beverly Knowles, was not a signatory on the Note securing the mortgage, thus drawing into question her standing to sue.⁴

STANDARD OF REVIEW

A moving party is entitled to summary judgment if there is no genuine issue of material fact, leaving final judgment to be decided as a matter of law. See Federal Rule of Civil Procedure 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1355-56 (1986); Reeves v. C.H. Robinson Worldwide, Inc., 525 F .3d 1139, 1143 (11th Cir.2008). The facts, and any reasonable inferences therefrom, are to be viewed in the light most favorable to the non-moving party, with any doubt resolved in the non-movant's favor. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158, 90 S.Ct. 1598, 1609 (1970). All "reasonable doubts" about the facts and all justifiable inferences are resolved in favor of the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993). However, all "doubts" need not be so resolved. Barnes v. Southwest Forest Industries, Inc., 814 F.2d 607, 609 (11th Cir.1987). Once met by the moving party, however, the burden shifts to the non-moving party to come forward with evidence to establish each element essential to that party's case sufficient to sustain a jury verdict. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986); Earley v. Champion Int'l Corp., 907 F.2d 1077, 1080 (11th Cir.1990).

A party opposing a properly submitted motion for summary judgment may not rest upon mere allegations or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Eberhardt v. Waters, 901 F.2d 1578, 1580 (11th Cir. 1990). In addition, the non-moving party's evidence on rebuttal must be significantly probative and not based on mere assertion or be merely colorable. See Rule 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511 (1986). Speculation does not create a genuine issue of fact. Cordoba v. Dillard's, Inc., 419 F.3d 1169, 1181 (11th Cir.2005).

"The mere existence of some factual dispute will not defeat summary judgment unless that factual dispute is material to an issue affecting the outcome of the case .... A genuine issue of material fact does not exist unless there is sufficient evidence favoring the nonmoving party for a reasonable jury to return a verdict in its favor." Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir.2000), quoting Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995). A factual dispute regarding a non-material issue will not preclude the defendant from succeeding on a motion for summary judgment. Brown v. American Honda Motor Co., 939 F.2d 946, 953 (11th Cir.1991).

LEGAL ANALYSIS

The parties do not dispute that the loan in question was assigned to the defendant. See e.g., defendant memorandum (doc. 39) at 7, plaintiff memorandum in support (doc. 34), at ¶ 36. Under amendments to TILA, no later than thirty days after the date a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer." 15 U.S.C. § 1641(g). This written notification must include: (1) the identity, address, telephone number of the new creditor; (2) the date of the transfer; (3) information regarding how to reach an agent or party authorized to act on the new creditor's behalf; (4) the location of the place where the transfer of the ownership of the debt is recorded; and (5) any other relevant information regarding the new creditor. Id. That section of TILA became effective May 19, 2009. See Pub.L.No. 111-22, § 404(a), 123 Stat. 1632, 1658 (2009). Neither party has suggested to the court that §1641(g) applies retroactively.

A borrower must bring an action for damages based on a faulty disclosure within one year from the date the violation occurs. 15 U.S.C. § 1640(e); Smith v. Am. Fin. Sys., Inc., 737 F.2d 1549, 1552 (11th Cir.1984) ("Nondisclosure is not a continuing violation for purposes of the statute of limitations." (citations omitted)).Thus, the plaintiff must...