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Lippner v. Deutsche Bank National Trust Co.

February 26, 2008

KELLIE LIPPNER, PLAINTIFF,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Kellie Lippner's ("Lippner") motion for summary judgment. This matter is also before the court on Defendant Litton Loan Servicing, L.P.'s ("Litton") and Defendant Deutsche Bank National Trust Co.'s ("Deutsche") motion for summary judgment. For the reasons stated below, we grant Litton's motion for summary judgment with respect to all claims. We deny Deutsche's motion for summary judgment with respect to all claims. Finally, we grant summary judgment in favor of Lippner with respect to its claims against Deutsche, the only remaining Defendant.

BACKGROUND

Lippner alleges that on June 25, 2004, she obtained a $161,000 mortgage loan ("Mortgage") from Residential Mortgage Assistance Enterprise, LLC ("Residential Mortgage"), a mortgage assistance company, in order to refinance her prior existing loan obligations. The loan was allegedly secured by Lippner's home in New Lenox, Illinois. Lippner further states that at some point during the life of the loan, Litton obtained a legal interest in the Mortgage and asserted a right to collect payment under the terms of the adjustable rate note ("Note") that Lippner signed in connection with her Mortgage. Lippner also alleges that Deutsche subsequently retained an interest in the loan.

According to Lippner, at the closing of the Mortgage she was provided with a Truth in Lending Disclosure Statement ("Disclosure Statement") and a Notice of Right to Cancel ("NORTC"). Lippner claims that the Disclosure Statement she received was incomplete in violation of Federal Reserve Board Regulation Z, 12 C.F.R. § 226 ("Regulation Z"), since it did not include a complete payment schedule. Lippner also alleges that she did not receive enough copies of the NORTC and that the copy she did receive was incomplete, also in violation of Regulation Z. Lippner alleges that the violations with respect to the Disclosure Statement and the NORTC extended the period of time in which she had a legal right to cancel the Note and rescind the Mortgage.

Lippner alleges that she exercised her right to cancel the Note within the extended time period. Defendants allegedly refused to acknowledge Lippner's loan cancellation, return the funds received, and void the security interest held in Lippner's property. Lippner has brought the instant action to rescind the Mortgage and recover damages for alleged violations of the Truth in Lending Act, 15 U.S.C. 1601, et seq. ("TILA"). Residential Mortgage, which was originally a defendant in the instant action, was voluntarily dismissed by Lippner after it filed for Chapter 11 Bankruptcy. Litton and Deutsche have filed a joint motion for summary judgment.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In seeking a grant of summary judgment the moving party must identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).

On cross-motions for summary judgment, each party's motion is considered separately and all factual uncertainties are resolved and all reasonable inferences are drawn against the party whose motion is under consideration. Benion v. Bank One, Dayton, N.A., 967 F. Supp. 1031, 1035 (N.D. Ill. 1997); Crespo v. Unum Life Ins. Co. of Am., 294 F. Supp. 2d 980, 991 (N.D. Ill. 2003).

DISCUSSION

In support of her motion for summary judgment, Lippner argues: (1) that the undisputed facts establish a violation of Regulation Z and TILA since Lippner was not provided with a complete Disclosure Statement and NORTC and since Lippner was not provided with two copies of the NORTC, (2) that by law, the failure to disclose material information and proper notice of Lippner's right to cancel extended the period during which Lippner had a right to cancel the loan for three years, (3) that the undisputed facts establish that Lippner properly and timely elected to cancel the Note and rescind the Mortgage, and (4) that the undisputed facts establish that Defendants refused to allow Lippner to exercise rescission in further violation of TILA. Defendants also move for summary judgment arguing: (1) that Litton is not a creditor, but rather a loan servicer, and is therefore not liable for TILA violations, (2) that the undisputed facts establish that the Disclosure Statement provided by Deutsche was accurate and that Lippner did receive two copies of the NORTC, (3) that since Lippner is not capable of tendering payment and for other statutory reasons, Deutsche cannot be liable for statutory damages or attorney's fees for failing to rescind, and (4) that summary judgment is appropriate since a state court has ruled that the subject loan transaction is a valid lien on Lippner's real estate.

I. Liability of Litton

Defendants assert that Litton is entitled to summary judgment since Litton is not a creditor as defined by TILA and therefore cannot be liable for violations of TILA. Only creditors can be liable for damages and rescission for failure to comply with TILA's terms relating to disclosures and notice of the right to cancel. 15 U.S.C. § 1640 ("Section 1640"). TILA defines a "creditor" as:

. . . a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the ...


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