R-G Financial Corp. v. Vergara-Nunez, CIV. 03-1841 CCC.

CourtUnited States District Courts. 1st Circuit. District of Puerto Rico
Citation381 F.Supp.2d 1
Decision Date16 March 2005
Docket NumberNo. CIV. 03-1841 CCC.,CIV. 03-1841 CCC.
PartiesR-G FINANCIAL CORPORATION, R-G Mortgage Corporation, R-G Premier Bank of Puerto Rico, Plaintiffs v. Pedro VERGARA-NUÑEZ, John Doe, Jane Doe, et al as unknown heirs of María T. Viera-Clemente, Defendants.

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381 F.Supp.2d 1
R-G FINANCIAL CORPORATION, R-G Mortgage Corporation, R-G Premier Bank of Puerto Rico, Plaintiffs
Pedro VERGARA-NUÑEZ, John Doe, Jane Doe, et al as unknown heirs of María T. Viera-Clemente, Defendants.
No. CIV. 03-1841 CCC.
United States District Court, D. Puerto Rico.
March 16, 2005.

Sonia B. Alfaro-de-la-Vega, for Plaintiff.

Juan M. Suárez-Cobo, San Juan, PR, for Defendant.


CEREZO, District Judge.

The action, for declaratory judgment and/or modification of rescission under the Truth in Lending Act (TILA) is before us on Plaintiffs' Motion for Judgment on the Pleadings (docket entry 23). Defendants opposed the motion (docket entry 26)1 and filed a counterclaim (docket entry 16). The facts that give rise to these motions are as follows:

The plaintiffs are three related companies: R-G Financial Corporation (Financial), R-G Mortgage Corporation (Mortgage) and R-G Premier of Puerto Rico (Premier) (or collectively "R-G"). On February 9, 2001 the defendant, Pedro Vergara-Nuñez and his wife María T. Viera-Clemente2 (Vergara) entered into loan transaction with Premier guaranteed by defendants' home. The loan was a consumer credit transaction for purposes of the Truth in Lending Act (TILA), 15 U.S.C. § 1391(b). The TILA and Home Ownership Equity Protection Act disclosures were delivered to defendants on the

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same date, prior to closing of the transaction on February 9, 2001. The amount of the settlement charges for the loan were disclosed and were then financed as part of the loan transaction. Defendants made five loan payments, through August, 2001, and then failed to pay any others.

Thereafter, Mortgage filed a collection of money and mortgage foreclosure action against defendants in the Puerto Rico Court of First Instance, Superior Court of Carolina, R-G Mortgage Corp. v. Pedro Vegara, Cv. No. FDC2002-0496(404d). The defendants failed to answer the complaint, their default was entered, and on May 29, 2002, the Superior Court entered judgment ordering foreclosure of the mortgage. In November, 2002 defendants filed for bankruptcy, but the case was dismissed on March 3, 2003. The Superior Court then scheduled the judicial public sale of the property for September 5, 2003.

Meanwhile, defendants sent a letter-notice of rescission to Financial on July 15, 2003, allegedly received on July 18, 2003 contending that they had not been provided with accurate material disclosure mandated by TILA §§ 1638 and 1639(a), in that the lender had failed to deduct prepaid finance charges from the amount of the loan principal in calculating the amount financed for TILA purposes. They also alleged that certain disclosures were not delivered three days in advance of the closing, as required by law. Therefore, defendants were rescinding the loan.

Vergara-Nuñez' notice failed to offer timely the amounts received or to express their capacity to return the money loaned, the plaintiffs filed this action for declaratory judgment in lieu of its creditor's response to the notice of rescission. It requests that we declare that the matters are collaterally estopped by the Superior Court judgment, that the TILA claims time-barred, and/or that the Court modify the procedure for rescission.

Defendants, in their opposition to the motion for judgment on the pleadings, note that throughout their complaint and dispositive motion, plaintiffs refer to themselves as a collective entity — "R-G" — instead of three separate corporations. They contend that the loan originated with Premier, that the foreclosure case in Superior Court was filed by Mortgage, which never acquired the rights to the loan, and, therefore, the judgment was obtained by fraud and is invalid. They believe that res judicata does not apply because there is no identity of parties. They also argue that their notice for rescission is not time-barred and that plaintiffs' failure to timely respond to the rescission notice gives rise to a separate damage claim, distinct from the disclosure violation.

Defendants' notice of rescission and their counterclaim in this suit clearly represent an attempt to avoid the consequences of a default judgement entered against them. As in the case of Arecibo Radio Corporation v. Commonwealth of Puerto Rico, 825 F.2d 589 (1st Cir., 1987), defendants chose not to defend the foreclosure action and allowed a default judgment to be brought against them. In an attempt to avoid the consequences of their inaction, they would have us find that the Superior Court judgment is void, that there was fraud on that court, and that there is no identity of parties among the defendants. As we have stated...

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2 cases
  • In re Cooley, Bankruptcy No. 06-11586 (JKF).
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • March 13, 2007
    ...effect of the state court [foreclosure] judgment" that was previously entered against the plaintiff); R-G Financial Corporation v. Vergara-Nunez, 381 F.Supp.2d 1 (D.Puerto Rico 2005) (concluding that right to rescind and counterclaim under TILA were barred under the Rooker-Feldman doctrine ......
  • R.G. Financial Corp. v. Vergara-Nuñez, 05-1945.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • April 21, 2006
    ...statute were satisfied and that the foreclosure judgment precluded the assertion of Vergara's counterclaim. R-G Fin. Corp. v. Vergara-Nuñez, 381 F.Supp.2d 1, 4 (D.P.R.2005). This timely appeal II. DISCUSSION We begin by limning the applicable standard of review. We then proceed to consider ......

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