Pinson v. Pioneer WV Fed. Credit Union (In re Pinson)
| Decision Date | 28 March 2016 |
| Docket Number | ADVERSARY PROCEEDING NO. 2:15–ap–02022,CASE NO. 2:15–bk–20206 |
| Court | U.S. Bankruptcy Court — Southern District of West Virginia |
| Parties | In re: Stephanie Lynne Pinson and Kendall Quinn Pinson, Debtors. Stephanie Lynne Pinson and Kendall Quinn Pinson, Plaintiffs, v. Pioneer WV Federal Credit Union, Defendant. |
Gary Michael Smith, Mountain State Justice, Charleston, WV, for Plaintiffs.
Matthew Lee Ward, Dinsmore and Shohl LLP, Janet Smith Holbrook, Huntington, WV, for Defendant.
Frank W. Volk
Pending are Defendant's Motion to Dismiss Plaintiffs' Claim for Penalties and Costs for Defendant's Alleged Violation of the Truth in Lending Act ("TILA"), filed November 6, 2015 ("Motion to Dismiss") [Dckt. 33] and Plaintiffs' Motion to Award Partial Judgment on the Pleadings, filed December 21, 2015 ("Motion for Partial Judgment on the Pleadings") [Dckt. 47]. The Motion to Dismiss is GRANTED to the extent set forth within and otherwise DENIED without prejudice. The Motion for Partial Judgment on the Pleadings is DENIED without prejudice.
The Plaintiffs, Stephanie Lynne and Kendall Quinn Pinson, claim, inter alia, that Pioneer WV Federal Credit Union ("Pioneer") violated TILA by failing to remove its security interest within 20 days following receipt of the Pinsons' rescission notice. Pioneer seeks dismissal of the claim. The Pinsons responded in opposition to Pioneer's Motion to Dismiss on December 21, 2015, seeking affirmative relief, and Pioneer replied on January 4, 2016. The matter is ready for adjudication.
On March 22, 2012, the Pinsons and Pioneer executed a mortgage through Pioneer's closing agent, BesTitle Agency, Inc. The mortgage was designed to refinance an existing loan and stave off foreclosure on the Pinson's home under a prior mortgage between the Pinsons and Pioneer. See Compl. ¶¶ 36, 50–51. The new mortgage had a principal balance of $125,000.00, id. ¶ 52, carried an annual interest rate of 8%, id., was secured by a Deed of Trust on the Pinsons' home, id. ¶ 53, and included a prior "charged-off" deficiency on a purchase money security interest loan for a vehicle that Mr. Pinson alone owned, id. ¶¶ 37–42. Mr. Pinson surrendered that vehicle in 2006. Id. ¶ 39. The March 22, 2012, loan required the Pinsons to make monthly payments of $917.21. Id. ¶ 60.
The Complaint alleges that the Truth in Lending Disclosure Statement associated with the March 22, 2012, loan "failed to provide timely the true, correct, and complete material disclosures required by the ... [TILA] and Regulation Z." Id. ¶ 63. The Complaint further alleges that each of the Pinsons' signatures found on the Notice of Right to Cancel associated with the March 22, 2012, loan were made on March 22, 2012, including those signatures dated March 27, 2012. Id. ¶¶ 68–69. The Complaint additionally alleges that the Pinsons did not return to BesTitle Agency's office, nor any other location on March 27, 2012, to sign the documents and that the Pinsons were not given any documents to sign and return to BesTitle Agency or Pioneer in three days. Id. ¶¶ 70–75.
The Pinsons were unable to make payments under the new mortgage and, in January 2015, Pioneer told the Pinsons they should put their home up for sale immediately as Pioneer intended to foreclose. Id. 77–78.
In February 2015, after seeking assistance from counsel, the Pinsons learned that Pioneer, at the time of the March 22, 2012, loan, had not provided them with the proper disclosures and notice of right to rescind required by TILA. Id. ¶¶ 80–82. On March 11, 2015, the Pinsons had their rescission notice delivered to Pioneer. Id. ¶ 145. Delivery of that rescission notice gave Pioneer 20 days "to take the steps necessary to terminate formally the Deed of Trust security interest in plaintiffs' principal dwelling, or, as an alternate, to seek a court order to unwind the transaction pursuant to steps different from those required by the statute." Id. ¶ 146 (emphasis added); see 15 U.S.C. § 1635(b)
; 12 C.F.R. § 1026.23(d)(2). The Complaint states that Pioneer has failed to honor the Pinsons' lawful rescission since March 11, 2015. Compl. ¶ 147.
On March 31, 2015, Pioneer instituted a declaratory judgment action in this district. Pioneer desired a binding determination respecting whether the Pinsons received their statutorily required disclosures. Def.'s Answer, at 29. On April 15, 2015, the Pinsons petitioned for relief under Chapter 13 of the Bankruptcy Code, staying the declaratory judgment proceeding pursuant to 11 U.S.C. § 362(a)(1)
. In re Stephanie Lynne Pinson and Kendall Quinn Pinson, No. 2:15–bk–20206 (Bankr.S.D.W.Va. Apr. 15, 2015). The Pinsons then instituted this adversary proceeding against Pioneer on July 17, 2015. In Count II, they seek, inter alia, statutory and actual damages for Pioneer's failure to honor and implement the rescission notice pursuant to 15 U.S.C. § 1640. Compl., at 23. On August 19, 2015, Pioneer answered and counterclaimed, seeking the same relief pursued in the declaratory judgment action. See Def.'s Answer, at 33. On November 6, 2015, Pioneer moved for judgment on the pleadings of the Pinsons' claims under Count II of the Complaint.
Federal Rule of Civil Procedure 12(c)
is made applicable in adversary proceedings by Federal Rule of Bankruptcy Procedure 7012(b). Rule 12(c) provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgement on the pleadings." Fed. R. Civ. P. 12(c). Rule 12(c) motions are subject to the same legal standards applied to motions made under Rule 12(b)(6). Butler v. United States, 702 F.3d 749, 751–52 (4th Cir.2012) ; Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999).
In adjudicating a motion for judgment on the pleadings, a court evaluates whether the pleadings state "a claim to relief that is plausible on its face."
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)
; US. ex rel. Oberg v. Penn. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir.2014). In doing so, a court must construe the "facts in the light most favorable to the [non-movant]," Oberg, 745 F.3d at 136 (quoting Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.2009) ), and "draw all reasonable inferences in [the non-movant's] favor." Id. (quoting E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir.2011) ). The court need not, however, "accept as true unwarranted inferences, unreasonable conclusions, or arguments," id. (quoting Kloth v. Microsoft Corp., 444 F.3d 312, 319 (4th Cir.2006) ), nor "credit allegations that offer only ‘naked assertions devoid of further factual enhancement ....’ " Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks, alteration, and citation omitted)).
Akin to a Rule 12(b)(6)
analysis, the Rule 12(c) calculus prescribes that "a court is not confined to the four comers of the complaint"; rather, a court " ‘may properly take judicial notice of matters of public record,’ including statutes." Id. (quoting Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir.2009) ); see Papasan v. All ain, 478 U.S. 265, 298, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). Further, although " ‘[c]ourts have not explicitly defined what constitutes a public record for 12(b)(6) purposes ... some have determined ... letter decisions of government agencies[ ] and published reports of administrative bodies' to be public records that properly can be considered on a motion to dismiss." Guthrie v. McClaskey, No. 1:11CV00061, 2012 WL 5494457, at *3 (W.D.Va. Nov. 13, 2012) (footnote omitted) (quoting Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1197 (3d Cir.1993) ).
Rule 7(a) provides that the pleadings are closed upon the filing of a complaint, an answer, an answer to a counterclaim designated as a counterclaim, and, if the court orders one, a reply to an answer, among other pleadings not at issue. Here, the Pinsons filed their Complaint and Pioneer filed its Answer, asserting therein a counterclaim for declaratory relief. The Pinsons have replied to that counterclaim. The pleadings are thus closed for purposes of Rule 12(c)
.
Based on the closed pleadings, Pioneer moves to dismiss Count II, which alleges its failure to honor the Pinsons' Rescission Notice. That allegation provides that "[m]ore than 20 calendar days passed [after delivery of the Rescission Notice] without [Pioneer] taking action necessary to reflect the termination of any security interest created by the transaction, or to obtain a court order modifying its legal obligation to do so, all as required by 15 U.S.C. § 1635(b)
and Regulation Z § 1026.23(d)(2)." Compl. ¶ 146. The Pinsons contend that Pioneer "failed to obtain any court order extending its period for compliance with 15 U.S.C. § 1635(b) or modifying ‘procedures' prior to expiration of the statutory period for compliance." Pls.’ Reply ¶ 19. On close study, however, the portions of TILA and Regulation Z upon which the Pinsons rely in Count II do not support their contentions.
The relevant TILA mandate, found in 15 U.S.C. § 1635(b)
, provides pertinently as follows:
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