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David Christensen and Christine V. Shea v. Fifth Third Bank

October 24, 2012


The opinion of the court was delivered by: Magistrate Judge Arlander Keys


In this lawsuit, the plaintiffs David Christensen and Christine Shea allege violations of the Truth in Lending Act ("TILA") in connection with the refinancing of their home mortgage through Fifth Third Bank. The case is before the Court on cross motions for summary judgment. For the reasons explained in detail below, both sides' motions are denied.

Factual Background

David Christensen and his wife Christine Shea reside at 738 Bonaventure Drive in Oswego, Illinois. In 2007, they refinanced the property with a loan from Fifth Third Bank. The transaction was scheduled to "close" on April 10, 2007; on that date, the plaintiffs appeared at the office of Chicago Title Company to sign the necessary paperwork and to consummate the transaction. The plaintiffs were not represented by counsel at that time, but also present was Lori Kovac, the Chicago Title Company closing agent.

The plaintiffs claim that, at the time of the closing on that transaction, they learned for the first time that they were expected to pay in excess of $3,000; because they were not prepared to pay that amount at the time of the closing, they adjourned and agreed to come back with a check, which they claim they did on April 12, 2007. The plaintiffs contend that they did not receive any documents on April 10, but instead received the closing documents on April 12, 2007, when Ms. Shea returned to Chicago Title and tendered the check for the amount owed. Fifth Third disputes that the closing was adjourned on April 10th and disputes that the plaintiffs left the closing on that date empty handed. But Fifth Third concedes that the plaintiffs were required to come up with more than $3,000 to close the deal and concedes that the plaintiffs did not tender that amount on April 10, 2007.

Although this seems like a trivial point, it is not: as will become clear, the date on which the plaintiffs received the closing documents turns out to be a central issue in the case. In connection with the closing, the plaintiffs were provided with a notice of right to cancel, which advised that they could cancel the transaction within three business days from the last occurring of "the transaction date, which is April 10, 2007 or the date you received your Truth in Lending disclosure or the date you received this notice of your right to cancel." Thus, the notice stated, the plaintiffs had until April 13, 2007 at midnight to cancel the transaction. It is undisputed that they did not cancel by the April 13 deadline.

The plaintiffs contend that, on April 12, 2007, Ms. Shea returned to the Chicago Title office, tendered the amount demanded and was given an envelope containing the documents signed at the closing two days before. Ms. Shea admits that she did not go through the documents when she received them from Chicago Title, but claims that she put them in a file cabinet in her husband's home office. It is undisputed that, after the closing, the plaintiffs made mortgage payments to Fifth Third consistent with the mortgage documents they signed at closing on April 10, 2007; Ms. Shea testified at her deposition that, at some point in 2008, they stopped making their mortgage payments because their attorney advised them that there were problems with the documents they received at their closing. Deposition of Christine Shea, pp. 42-43.

It is undisputed that neither plaintiff opened the envelope of closing documents until 2008, when they brought it to their attorney's office. Ms. Shea testified that, when she went to the title company on April 12th, she handed the receptionist a check for more than $3,000 and the receptionist handed her an envelope, which she placed in a drawer in her husband's home office and did not open until she and her husband were meeting with their attorney; she did not know, on April 12th, how many copies of the notice of right to cancel she received, but realized, in 2008, that there were only two copies in their envelope. Shea Dep., pp. 50-52.

On July 9, 2008, the plaintiffs, through their attorney, sent a letter notifying Fifth Third that the plaintiffs were rescinding the loan for failure to comply with TILA. According to the return receipt, Fifth Third received the notice to rescind on July 11, 2008; it is undisputed that, since that time, Fifth Third has taken no steps to rescind the transaction and done nothing to further that goal. In fact, it appears that, rather than rescinding the loan, Fifth Third initiated a foreclosure action against the plaintiffs.

On April 8, 2010, the plaintiffs filed this action. In their complaint, they allege that Fifth Third violated TILA in several ways involving the Notice of the Right to Cancel and the TILA Statement prepared by Fifth Third and provided to them in connection with the closing of the refinancing transaction. More specifically, the plaintiffs allege, the bank failed to provide the requisite number of copies of the notice of the Right to Cancel; included the wrong date on that notice; failed to provide accurate information on the TILA statement; and failed to take steps to rescind the contract once the plaintiffs exercised their right to cancel. With regard to the TILA statement, the plaintiffs allege in their complaint that Fifth Third failed to deliver to PLAINTIFFS, all "material" disclosures required by the Act and Regulation Z including the following:

A. By failing to properly and accurately disclose the "amount financed," using that term in violation of Regulation Z §226.18(b) and 15 U.S.C. §1638(a)(2)(A).

B. By failing to properly and accurately disclose the "finance charge," using that term, in violation of Regulation Z §§226.4 and 226.18(d) and 15 U.S.C. §1638(a)(3).

C. By failing to clearly and accurately disclose the "annual percentage rate," using that term, in violation of Regulation Z §226.18(e) and 15 U.S.C. §1638(a)(4).

D. By failing to properly disclose the number, amounts, and timing of payments scheduled to repay the obligation, in violation of Regulation Z ...

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