United States District Court, N.D. Illinois, Eastern Division
December 6, 2004.
DARRYL McKINNEY and PHYLLIS McKINNEY, Plaintiffs,
NATIONSCREDIT FINANCIAL SERVICES CORPORATION, doing business as EQUICREDIT CORPORATION OF ILLINOIS; EQUICREDIT CORPORATION OF MISSOURI; EQUICREDIT CORPORATION OF AMERICA; FAIRBANKS CAPITAL CORPORATION; and BANK OF NEW YORK, Defendants.
The opinion of the court was delivered by: MATTHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
Phyllis and Darryl McKinney have sued their mortgage lender,
its assignees, and the loan servicer claiming that the defendants
deprived them of their rescission rights in violation of the
Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, implementing
Federal Reserve Board Regulation Z, 12 C.F.R. § 226, and the
Illinois Consumer Fraud Act by allegedly requiring them to sign
both a Notice of Right to Cancel form and a Confirmation of
noncancellation form at the closing of their mortgage
loan.*fn1 Plaintiffs sue to rescind the mortgage loan and to
obtain statutory damages, attorneys' fees, and costs. This case
is before the Court on both defendants' and plaintiffs' motions for summary judgment. Because the Court
finds that plaintiffs have not presented evidence sufficient for
a reasonable jury to conclude that they signed the Confirmation
at the closing, the Court grants defendants' motion for summary
judgment and denies plaintiffs' motion.
The McKinneys obtained a $326,700 non-purchase-money mortgage
loan from Equicredit Corporation of Illinois ("Equicredit of
Illinois") on April 23, 2001. Equicredit of Illinois no longer
exists, but its successor by merger is defendant Nationscredit
Financial Services Corporation ("Nationscredit"). Defendant
Fairbanks Capital Corporation is the servicer of the McKinneys'
note and mortgage, and defendant Bank of New York holds title as
assignee of the McKinneys' loan. It appears from plaintiffs'
response memorandum that they have voluntarily dismissed
Equicredit Corporation of America as a defendant. See Pl's
Resp. at 12-13.
It appears undisputed that the closing took place at the
McKinneys' home; however, neither side can with certainty
identify the closing agent. The McKinneys believe the evidence
shows "that most certainly Shannon Haring performed the McKinneys
closing." Pl's 56.1 Resp. at ¶ 17. As support, they point out
that in April 2001 when the closing occurred, Haring was employed
as a searcher and closing agent at Security First Title Company,
Equicredit of Illinois' agent at the closing. Haring Dep. at 7.
Haring testified that there was no way to determine who performed
the closing from looking at the closing documents. Id. at 64.
But Haring also acknowledged that she performed more closings in
people's homes than any other closer at Security First during the
eleven months she worked for the company, and she agreed that if McKinneys' closing was performed at their home, she was most
likely the closing agent. Id. at 65. Nevertheless, Haring could
not recall performing the McKinneys' closing. Id. at 61-62, 68.
The central dispute in the case concerns what documents the
McKinneys signed at the closing. In their complaint, the
McKinneys alleged that "upon information and belief," the closing
agent simultaneously presented them with and required them to
sign a form entitled "Notice of Right to Cancel" and a form
entitled "Confirmation" that confirmed and warranted that they
had not cancelled the transaction. Pl's Am. Compl. ¶ 38. It is
undisputed that the McKinneys signed the Notice of Right to
Cancel at the closing, which informed the McKinneys that they had
a "legal right under federal law to cancel this transaction,
without cost, within three business days." The Confirmation,
which the McKinneys contend was on the opposite side of the sheet
of paper containing the Notice of Right to Cancel, states:
The undersigned, having been given due notice as
required by Federal Law, hereby confirm(s), in all
respects, a real mortgage loan made to him/her/them
by Lender named on the reverse hereof on the date the
notice on the reverse hereof was signed, warrants
that more than 3 business days have elapsed since
receipt of the "Notice of Right to Cancel" and
further warrant(s) that the undersigned has/have not
rescinded or cancelled said real estate mortgage loan
transaction or given notice of rescission or
cancellation of said transaction.
Def's 56.1 Stmt., Ex. A (exhibit to P. McKinney Dep.) (footnote
The McKinneys allege that they also signed the Confirmation at
the closing. But although the McKinneys produced unsigned copies
of both the Notice of Right to Cancel and the Confirmation, which
they claim were given to them at the closing, neither side has
been able to produce a Confirmation form signed by the McKinneys.
The transmittal sheet that Security First Title Company used to
record all documents that were returned to the lender in the
closing package also did not list an executed Confirmation form.
See Haring Dep. at 106-08. The McKinneys argue that because the Confirmation form was on the
reverse side of the Notice, the Title Company probably mistakenly
failed to copy and record the Confirmation side of the document.
The McKinneys further allege that it was Equicredit of Illinois'
policy to require clients to sign both documents at the closing.
Yet, as discussed below, neither Phyllis nor Darryl McKinney
testified that they signed the Confirmation form at the closing.
McKinneys assert that by requiring them to sign at the closing
a form stating that their three-day rescission period had passed
and that they had not rescinded their loan, the defendants
deprived them of their right to rescind in violation of TILA.
According to the McKinneys, the defendants violated TILA a second
time when they failed to honor the McKinneys' proper exercise of
their extended right to rescind that resulted from the earlier
infraction. The McKinneys claim they are entitled to rescind the
loan under 15 U.S.C. § 1641(c) and obtain statutory damages for
defendants' failure to rescind their loan under
15 U.S.C. § 1635(g). They also bring a claim under the Illinois Consumer
Fraud Act, contending that all defendants, except Fairbanks,
engaged in unfair and deceptive acts and practices that deprived
them of their rescission rights under TILA.
1. Defendants' Motion for Summary Judgment
Summary judgment is appropriate where "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 judgment as a matter of law." Fed.R.Civ.P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To
determine whether a genuine issue of material fact exists, the
Court views the record in the light most favorable to the McKinneys, the non-moving party in this
instance, drawing reasonable inferences in their favor. Id. at
322. Nonetheless, a party opposing summary judgment may not
simply rest on the pleadings, but must instead affirmatively
demonstrate that there is a genuine issue for trial. Payne v.
Pauley, 337 F.3d 767, 771 (7th Cir. 2003); see also Davis v. GN
Mortgage Corp., 244 F. Supp. 2d 950, 955 (N.D. Ill. 2003) ("A
defendant is entitled to put the plaintiff to his proofs and
demand a showing of the evidence."). Thus, the McKinneys must
produce specific facts to support their contentions rather than
relying on speculation and conclusions without factual support.
Rand v. CF Industries, Inc., 42 F.3d 1139, 1146 (7th Cir.
1994). When the defendant moves for summary judgment based on the
lack of proof of a material fact, the Court must ask whether a
fair-minded jury could return a verdict for the plaintiff on the
evidence presented. Anderson v. Liberty, Inc., 477 U.S. 242,
The McKinneys first contend that the defendants interfered with
their right to rescind and violated TILA's "clear and
conspicuous" notice requirement by presenting and requiring them
to sign both a Notice of Right to Cancel and a Confirmation of
noncancellation at the closing. Under TILA, a debtor "shall have
the right to rescind the transaction until midnight of the third
business day following the consummation of the transaction or the
delivery of the information and rescission forms . . . whichever
is later." 15 U.S.C. § 1635(a). A debtor must receive notice of
her right to rescind "on a separate document that identifies the
transaction and . . . clearly and conspicuously disclose[s]" the
debtor's rights. 12 C.F.R. § 226.23(a)(3). A creditor who fails
to comply with these requirements may face civil liability under
TILA, 15 U.S.C. § 1640(a), and the debtor's right to rescind is
extended up to three years after the transaction.
12 C.F.R. § 226.23(a)(3). The McKinneys' TILA claim is based entirely on their allegation
that the closing agent simultaneously required them to sign both
forms during the closing. But they have provided no evidence that
they actually signed the Confirmation form at the closing.
Neither side has been able to produce a signed copy of the
Confirmation form, and the transmittal document used by the Title
Company does not indicate that an executed Confirmation form was
sent to the lender. Even if the closing agent gave McKinneys an
unsigned version of the Confirmation at the closing, this would
not have been inconsistent with Equicredit's stated policy to
have the closing agent wait until the three days expired and then
have the customer sign the Confirmation form and fax or mail the
signed sheet to the office. See Dodd Dep. at 105-06.
Neither Darryl or Phyllis McKinney actually testified that they
signed the Confirmation form at their closing. When presented
with a copy of the Confirmation form during her deposition,
Phyllis testified that she did not recall receiving or signing
the document at the closing. P. McKinney Dep. at 63-64. Though
Darryl testified that the closer asked them to sign the
"cancellation form" at the closing to save her a trip back to
Chicago, he later corrected himself and admitted that he was
referring to the Notice of Right to Cancel. D. McKinney Dep. at
80. At one point he described a document that sounds similar to
the Confirmation form, id. at 81, but he later clarified that
he was referring to the Notice of Right to Cancel form, id. at
82. In addition, when shown the Confirmation at his deposition,
Darryl stated that he did not know if the document was presented
to him at the closing. Id. at 84. And when asked to review the
entire file of closing documents produced by the plaintiffs
during discovery, including a Confirmation form, and asked to
select the document he said the closer asked him to sign, Darryl
stated, "No, the only thing I see in here is the notice of right
to cancel." Id. at 85. Plaintiffs argue that Darryl was confusing the forms. His
testimony, however, was more consistent with the idea that he was
confused about the meaning of the forms. With the Notice of Right
to Cancel in front of him, Darryl stated, "I thought your notice
of right to cancel was a form you received during a closing that
allowed you to have 72 hours to reconsider your loan. . . . [a]nd
that it shouldn't be signed until three days later." Id. at
82-83. Plaintiffs could have also used the deposition to clear up
any supposed confusion but elected not to do so.
The McKinneys' vague and uncertain testimony surrounding the
key element of their claim is insufficient to show that a genuine
issue of material fact exists.*fn2 Had the McKinneys
actually testified that they signed the Confirmation at their
closing, the Court would be required to deny defendants' motion
for summary judgment. But they did not so testify.
The McKinneys next attempt to bolster their position by arguing
that Equicredit of Illinois had a policy of requiring clients to
sign both the Notice of Right to Cancel and Confirmation at the
closing, thus raising an inference that they were required to
sign both documents at their own closing. This argument, however,
is not supported by the record.
The McKinneys argue that it was Haring's practice to present
the Confirmation for signature with the Notice of Right to Cancel
at the closing. This exaggerates Haring's testimony. In fact, she
indicated only that there were instances in which she presented
both documents at the closing. Haring Dep. at 100-01. To draw
from this the conclusion the McKinneys represented one such instance, particularly when there
is no evidence that Haring was even the McKinneys' closing agent,
is not a reasonable inference; it is a leap of faith.
The McKinneys likewise allege that Equicredit intended both
forms to be signed together at the closing. As evidence of this,
they point to James Dodd's testimony that the Notice of Right to
Cancel and Confirmation documents were both sent as part of the
closing package to closing agents in 2001 and that the documents
appeared on opposite sides of a single page. Dodd Dep. at 60.
Dodd, Assistant General Counsel in the Bank of America Legal
Department, drafted Equicredit's standard Letter of Closing
Instructions. See Pl's Mem. at 14, ¶ 45.
In addition, the McKinneys maintain that Equicredit of
Illinois' Letter of Closing Instructions and internal and
external documents show that it intended the signed confirmation
to be returned within one day of the closing. Though the Closing
Instructions indicate that the "Notice to Customer/Confirmation"
should be "returned within one working day after closing," Pl's
Ex. K, § 6.1, as Dodd stated in his deposition, the instructions
do not specifically instruct the closing agent to have the client
sign the confirmation upon disbursement. Dodd Dep. at 83-84. Dodd
further testified that the instructions are designed to be
utilized by someone who is knowledgeable with the federal
regulations and that it would be apparent from reading the
Confirmation that it would be inappropriate to have it signed at
the closing. Id. at 84. Furthermore, Equicredit produced a
checklist that it purportedly distributed to closing agents, to
be used along with the closing instructions, that directed agents
to retain the Confirmation until the three-day rescission period
had passed and to have the customer sign it on the day of funding
before mailing it to the office. Def's 56.1 Resp., Ex. B; Dodd
Dep. at 105-06. Dodd testified that this instruction reflected
Equicredit's policy with respect to the Confirmation form. Id. Finally, the Court finds that Equicredit's internal and external
communications produced by the McKinneys do not provide any
additional evidence that it was the practice of the company to
require clients to sign the Confirmation form at the closing.
See Pl's Ex. R; Pl's 56.1 at ¶¶ 56-58.
In sum, the McKinneys have presented insufficient evidence to
support a reasonable inference that they signed the Confirmation
form at their closing. See Rand, 42 F.3d at 1146 ("Inferences
and opinions must be grounded on more than flights of fancy,
speculations, hunches, intuitions, or rumors."). Without such
evidence, the McKinneys cannot succeed on their TILA claim.
Because the McKinneys cannot show that a genuine issue of
material fact exists as to an essential component of their claim,
they are not entitled to rescission or other relief on their TILA
claim, and the Court must grant defendants' motion for summary
judgment. See Celotex, 477 U.S. at 322 ("Rule 56(c) mandates
the entry of summary judgment, after adequate time for discovery
and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to
that party's case, and on which that party will bear the burden
of proof at trial."). Thus, the Court need not address the
parties' remaining arguments. Because the McKinneys' Illinois
Consumer Fraud Act Count alleges wrongdoing by defendants only to
the extent that they violated McKinneys' rescission rights under
TILA, see Pl's Am. Compl. at 11, summary judgment is
appropriate as to Count 2 as well.
2. Plaintiffs' Motion for Summary Judgment
Plaintiffs move for summary judgment as to the liability of all
defendants under TILA and the implementing Federal Reserve Board
Regulation Z, 12 C.F.R. § 226. For the reasons discussed above,
the Court denies the McKinneys' motion. Conclusion
For the reasons stated above, the Court grants defendants'
motion for summary judgment [docket no. 43] and denies
plaintiffs' motion for summary judgment [docket no. 46]. It
appears to the Court that the claims of one plaintiff, Deborah
Fentress, may still be pending. The case is set for a status
hearing on December 13, 2004 at 9:30 a.m.