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Dahn v. Fifth Third Bank

August 20, 2009


The opinion of the court was delivered by: J. Phil Gilbert District Judge


This matter comes before the Court on defendant Fifth Third Bank's ("Fifth Third") Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 31). Plaintiff Kevin L. Dahn has responded to the motion (Doc. 36).

This case arose after Dahn obtained a home mortgage from Fifth Third. He alleges he did not receive the documents Fifth Third was required to give him under the Truth in Lending Act, ("TILA"), 15 U.S.C. § 1635. As a consequence, he claims, he can rescind the mortgage transaction any time within three years of the transaction and seeks to do so in this litigation. Fifth Third maintains it gave Dahn the proper documents and asks the Court to dismiss Dahn's claim for rescission.

As a preliminary matter, Fifth Third's motion to dismiss refers to matters outside the pleadings, namely, a bank document and a model form contained in the Code of Federal Regulations. With respect to the bank document, when such material is presented in connection with a Rule 12(b)(6) motion to dismiss, the Court may treat the motion to dismiss as a motion for summary judgment or it may exclude the additional material from consideration in determining the relevant facts. See Fed. R. Civ. P. 12(d). In this case, the Court declines to consider the bank document and will consider this motion as it was captioned, under Rule 12(b)(6). With respect to the model form contained in the Code of Federal Regulations, that form is essentially a citation to a regulation, not additional evidentiary material. For this reason, the Court will consider that form in ruling on the motion to dismiss.

I. Standard for Dismissal

When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To avoid dismissal under Rule 12(b)(6) for failure to state a claim, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This requirement is satisfied if the complaint (1) describes the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and (2) plausibly suggests that the plaintiff has a right to relief above a speculative level. Bell Atl., 550 U.S. at 555; see EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl., 550 U.S. at 556).

Although liberal federal notice pleading standards ensure that even non-detailed complaints can survive a motion to dismiss, they will not prevent dismissal of complaints that plead too much. A case can be dismissed because a complaint pleads facts establishing that the defendant is entitled to prevail. Bennett v. Schmidt, 153 F.3d 516, 519 (7th Cir. 1998); Soo Line R.R. Co. v. St. Louis S.W. Ry. Co., 125 F.3d 481, 483 (7th Cir. 1997); see Hecker v. Deere & Co., 556 F.3d 575, 588 (7th Cir. 2009) (dismissal appropriate when party pleads facts establishing defense to his claim). It is this theory upon which Fifth Third seeks dismissal in this case.

II. Analysis

A. TILA Requirements

Congress enacted TILA "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices." 15 U.S.C. § 1601(a); see also 15 C.F.R. § 226.1(b); Handy v. Anchor Mortg. Corp., 464 F.3d 760, 762 (7th Cir. 2006). To achieve this goal, Congress authorized the Board of Governors of the Federal Reserve System to promulgate disclosure regulations, 15 U.S.C. § 1604(a), which it has done in the form of Regulation Z, 12 C.F.R. § 226.

Under TILA, in home mortgage transactions like the one at issue in this case, the consumer has a right to rescind the transaction within three business days following either the consummation of the transaction, the delivery to him of a notice of his rescission rights or delivery of all other material disclosures (annual percentage rate, finance charge, amount financed, total payments, payment schedule and certain other disclosures and limitations), whichever is later. 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(a). The creditor must clearly and conspicuously inform the consumer of that right and provide a form he may use to exercise that right. 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(b)(1); see Handy, 464 F.3d at 761, 763. If the notice of right to rescission or the material disclosures are not delivered, the consumer may rescind the transaction anytime within three years of its consummation. 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3); see Handy, 464 F.3d at 761.

Regulation Z requires the creditor to deliver two copies of a notice of rescission rights to a consumer, and the notice is required to contain:

(i) The retention or acquisition of a security interest in the consumer's principal dwelling.

(ii) The consumer's right to rescind the transaction.

(iii) How to exercise the right to rescind, with a form for that purpose, designating the address of the ...

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