The opinion of the court was delivered by: Gilbert, District Judge
This matter comes before the Court on Defendants' Motion to Dismiss (Doc. 5) and accompanying memorandum of law (Doc. 10), to which plaintiffs have responded (Doc. 12) and defendants have replied (Doc. 13). For the following reasons, this motion will be GRANTED in part and DENIED in part.
Plaintiffs Rickie and Cindy Horton brought an eleven-count complaint against the First State Bank of Eldorado ("First State") and Glenn DeFur ("DeFur"), a First State employee, principally alleging violations of the Federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., as amended by the Home Ownership and Equity Protection Act of 1994 ("HOEPA"), 15 U.S.C. §§ 1602(aa) and 1639. The final two counts of the complaint arise under state law. Defendants move for dismissal of plaintiffs' federal claims and request that the Court decline to exercise supplemental jurisdiction over the remaining state court claims.
This action stems from a mortgage transaction entered into between plaintiff Rickie Horton and First State. In June 2004, the Hortons had oral discussions with DeFur that culminated in the closing of one loan on June 30, 2004. This loan was evidenced by a promissory note and secured by the Hortons' primary residence. Set to have surgery on June 29, 2004, Mrs. Horton quitclaimed her interest in the residence to her husband on June 28.*fn1 Because she was recovering from her surgery and had quitclaimed her interest in the residence, Mrs. Horton did not sign the note giving rise to this action and did not attend the closing. Despite this fact, Mrs. Horton is a named plaintiff in this action and she seeks both rescission of the note and statutory damages.
When Mr. Horton met with DeFur at the closing on June 30, DeFur presented him with disclosures required under federal law, and Mr. Horton signed a promissory note. At some point during the closing process, Mr. Horton realized that almost all of the proceeds of the loan were to be used to pay off various outstanding loans he had with First State, and that he would only be receiving $300.00 cash from the transaction, despite the fact that the amount borrowed was set to be $37,276.18. Mr. Horton convinced DeFur to change the terms of the loan so that he would receive at least $1,500.00 cash at closing. Accordingly, the relevant loan documents were redrafted to reflect the agreed-upon change. All the documents signed during the closing were dated June 25, though the closing took place on June 30.
First State disbursed the proceeds of the loan, totaling $38,776.18 -- reflecting the additional $1,500.00 cash requested by Mr. Horton -- on June 30, the day of closing. Mr. Horton and First State were the only parties to the note. On March 28, 2005, both Mr. and Mrs. Horton mailed letters to First State purporting to exercise their right to rescind the loan agreement. In those letters, the Hortons demanded that First State release its mortgage within 20 days of the receipt of the letter. First State did not comply with these requests. Plaintiffs argue First State and DeFur violated TILA and HOEPA by fraudulently inducing Mrs. Horton to quitclaim her interest in their residence, fraudulently inducing Mr. Horton to backdate the loan documents, by backdating the documents, by failing to provide the requisite TILA and HOEPA disclosures three days prior to the consummation of the transaction, and by failing to rescind the transaction pursuant to the Hortons' requests
A. Standard on Summary Judgment
The defendants have presented matters outside the pleading in their motion and agree that their motion to dismiss should be treated as one for summary judgment. See F.R.Civ.P. 12(b). Both sides have submitted affidavits and other documents, and have been given the opportunity to present the material they feel is relevant to this motion. See F.R.Civ.P. 12(b). Therefore, the Court will treat defendants' motion to dismiss as one 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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath, 211 F.3d at 396.
In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine issue of material fact is not demonstrated by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Michas v. Health Cost Controls of Illinois, Inc., 209 F.3d 687, 692 (7th Cir. 2000). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252; accord Michas, 209 F.3d at 692.
TILA's stated purpose is to ensure that consumers make informed decisions regarding their use of credit. 15 U.S.C. § 1601. To effectuate TILA, the Federal Reserve Board, pursuant to authority granted by Congress, has promulgated rules and regulations collectively known as Regulation Z. 12 C.F.R. § 226.1 et seq. TILA requires lenders to make certain disclosures to consumers with whom they enter various types of credit agreements. See15 U.S.C. §§ 1635 & 1639. Among other things, TILA requires lenders to furnish consumers with a written statement summarizing their loan transaction and related finance charges. 15 U.S.C. § 1605(a); Guise v. BWM Mortg., LLC, 377 F.3d 795, 798 (7th Cir. 2004). One important disclosure relevant here is of the consumer's right to rescind a credit transaction secured by the consumer's principal ...