Little v. Bank of Am.

• Decision Date: 03 January 2011
• Docket Number: Civil Action No. 2:10cv311.
• Citation: 769 F.Supp.2d 954
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Lloyd R. LITTLE, Plaintiff,v.BANK OF AMERICA, N.A., Defendant.

769 F.Supp.2d 954

Lloyd R. LITTLE, Plaintiff,

v.BANK OF AMERICA, N.A., Defendant.

Civil Action No. 2:10cv311.

United States District Court, E.D. Virginia,Norfolk Division.

Jan. 3, 2011.

Henry W. McLaughlin, III, The Law Office of Henry McLaughlin, P.C., Richmond, VA, for Plaintiff.Georgianna Gaines Ramsey, Hunton & Williams LLP, Norfolk, VA, for Defendant.

MEMORANDUM OPINION AND ORDER

RAYMOND A. JACKSON, District Judge.

Before the Court is Defendant Bank of America, N.A.'s Motion to Dismiss Plaintiff's Complaint, pursuant to Fed.R.Civ.P. 12(b)(6). This matter has been fully briefed by both parties and is ripe for judicial determination. For the reasons stated herein, Defendant's Motion to Dismiss for failure to state a claim upon which relief may be granted is GRANTED in part and DENIED in part.

I. FACTUAL AND PROCEDURAL HISTORY

On June 29, 2010, Plaintiff, Lloyd R. Little (“Little”), filed a Complaint against Defendant, Bank of America, N.A. (“BOA”), under the Truth–in–Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., seeking, inter alia, a declaratory judgment that he sent a valid notice of rescission of her credit transaction, pursuant to 15 U.S.C. §§ 1635 and 1641(c) and reasonable attorney's fees, pursuant to 15 U.S.C. § 1640(a)(3).

In his Complaint, Little alleges that, on October 25, 2007, he and his wife, Gloria Little, (collectively, “the Littles”) refinanced their primary residence with Nationwide Lending Corporation (“Nationwide”). Compl. ¶ 6. The credit transaction between the Littles and Nationwide was evidenced by a note in the amount of $393,300. Compl. ¶ 6. The note was secured by a deed of trust signed by the Littles on October 25, 2007. Compl. ¶ 6. Nationwide also provided the Littles with a disclosure statement which contained, inter alia, a finance charge in the amount of $649,766.94, and a document entitled “Notice of Right to Cancel.” Compl. ¶¶ 8, 9, 10. Additionally, Nationwide provided the Littles with closing instructions, indicating that the loan was required to be recorded in first lien position on or prior to disbursement. Compl. ¶¶ 12, 19.

According to Little, because the loan could not be recorded unless notarized, Nationwide's requirement that the loan be recorded, necessarily required that the Littles pay for the service of a notary public. Compl. ¶ 20. Thus, Little alleges that Nationwide imposed a $250 notary fee as a condition of going forward with the credit transaction. Compl. ¶ 18. However, the disclosure statement indicated that Nationwide had excluded the $250 notary fee from the computation of the finance charge. Compl. ¶ 11. Additionally, Little alleges that the prevailing local rate for a notary fee at the time of the credit transaction was less than $50, such that Nationwide inflated the imposed notary fee by at least $200. Compl. ¶ 24. Thus, Little claims that Nationwide materially under-disclosed the finance charge by excluding the $250 notary fee and charging a hidden finance charge of $200. Compl. ¶ 23C. Furthermore, Little claims that because Nationwide failed to indicate a deadline date for rescission, the Littles were not adequately notified of their right to rescind the credit transaction. Compl. ¶ 23A. Little also alleges that the disclosure statement failed to disclose the dates of the payments as required under TILA. Compl. ¶ 23B.

The Littles fell into arrears on the note with Nationwide. Compl. ¶ 24. Subsequently, Nationwide assigned the note to BOA, which instructed a substitute trustee to foreclose on the Littles' home. Compl. ¶¶ 25–26. BOA scheduled a foreclosure auction of the home for June 29, 2010. Compl. ¶ 26. On June 25, 2010, Little, by counsel, sent a notice of rescission to Nationwide and BOA. Compl. ¶ 27. On June 28, 2010, Little, by counsel, sent a second notice of rescission to Nationwide and BOA. Compl. ¶ 27. Little asserts that he would be able to tender the amount necessary for TILA rescission, either through refinancing or, as a last resort, by sale of the home. Compl. ¶ 30. Little is unaware of the exact amount he would be required to tender, but believes that the amount is approximately $325,000 or less. Compl. ¶ 30.

On July 30, 2010, BOA filed the instant Motion to Dismiss Plaintiff's Complaint. Little filed a Memorandum in Opposition to the Motion on August 13, 2010 and BOA filed a Reply to Plaintiff's Memorandum on August 19, 2010. Accordingly, this matter is now ripe for judicial determination.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of actions that fail to state a claim upon which relief can be granted. For purposes of a Rule 12(b)(6) motion, courts may only rely upon the complaint's allegations and those documents attached as exhibits or incorporated by reference. See Simons v. Montgomery Cnty. Police Officers, 762 F.2d 30, 31 (4th Cir.1985). Courts will favorably construe the allegations of the complainant and assume that the facts alleged in the complaint are true. See Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). However, a court “need not accept the legal conclusions drawn from the facts,” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000). A complaint need not contain “detailed factual allegations” in order to survive a motion to dismiss, but the complaint must incorporate “enough facts to state a belief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008). This plausibility standard does not equate to a probability requirement, but it entails more than a mere possibility that a defendant has acted unlawfully. Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009). Accordingly, the plausibility standard requires a plaintiff to articulate facts that, when accepted as true, demonstrate that the plaintiff has stated a claim that makes it plausible he is entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.2009) (quoting Iqbal, 129 S.Ct. at 1949, and Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

III. DISCUSSION

Defendant, BOA, asserts that Plaintiff's Complaint should be dismissed for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). BOA sets forth five bases for its contention. First, BOA charges that Little failed to state a claim for TILA rescission because his allegation that Nationwide failed to provide notice of his right to cancel is legally implausible. Def.'s Mem. Supp. at 8–10. Second, BOA asserts that Little's claim that Nationwide failed to disclose the payment dates should be dismissed because the disclosure statement properly and reasonably provided the payment schedule. Def.'s Mem. Supp. at 10–11. Third, BOA contends that Little failed to plead sufficient facts to support his claim that the $250 notary fee was a hidden finance charge. Def.'s Mem. Supp. at 11–15. Specifically, BOA alleges that, because Nationwide did not impose the notary fee on the Littles, the notary fee cannot be considered a finance charge under TILA. Def.'s Mem. Supp. at 13–14; see 15 U.S.C. § 1605(a) (“The finance charge shall not include fees and amounts imposed by third party closing agents ... if the creditor does not require the imposition of the charges or the services provided and does not retain the charges.”). Further, BOA claims that Little failed to plead sufficient facts to support his allegation that the notary fee was not bona fide and reasonable. Def.'s Mem. Supp. at 14–15. Fourth, BOA argues that Little has not adequately pled that he has the ability to tender the borrowed funds back to BOA, as required by TILA. Def.'s Mem. Supp. at 15–16. Finally, BOA claims that Little cannot state a claim for attorney's fees against an assignee of the note, where the TILA violation is not apparent on the face of the disclosure statement, and the particular violations alleged by Little are not facially apparent. Def.'s Mem. Supp. at 16–17. Before addressing the parties' arguments, the Court will first examine the statutory text and history of TILA.

Congress enacted TILA in order to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). Accordingly, TILA and its implementing regulation, 12 C.F.R. § 226 (“Regulation Z”), require creditors to “clearly and conspicuously” disclose certain information pertaining to credit transactions. See 15 U.S.C. §§ 1632(a), 1635(a). TILA provides individuals with a civil cause of action for damages against any creditor who fails to make the required disclosures under the Act, see 15 U.S.C. § 1640(a)(1), in addition to providing for the costs of the action and a reasonable attorney's fee where the action is successful, 15 U.S.C. § 1640(a)(3).

Furthermore, where a credit transaction is secured by an interest in property that is used as the principal dwelling of the person to whom credit was extended, the obligor enjoys a right to rescind the transaction until midnight on the third business day following the latter of either consummation of the transaction or delivery of the information, rescission forms, and material disclosures. 15 U.S.C. § 1635(a). However, where the creditor fails to provide the required information and disclosures, including disclosure of the right to rescind, the right to rescind is extended from three days to three years following the earlier of either consummation of the transaction or the sale of the property. 15 U.S.C. § 1635(f). Plaintiff has raised both a cause of action for a reasonable attorney's fee, pursuant to § 1640(a)(3), and a right of rescission, pursuant to § 1635. The Court now...