Breux v. U.S. Bank, National Ass'n
919 F. Supp. 2d 1371
S.D. Fla.2013Background
- Plaintiff had a mortgage on real property in Broward County, Florida, assigned to the C-Bass Mortgage Loan Trust 2007-CB3; U.S. Bank is the assignee and Litton was the master servicer.
- The mortgage contains a notice-and-cure provision requiring notice to the other party before suit arising from the mortgage for breaches and permitting a cure period.
- Litton provided a disclosure identifying the owner but not its status as master servicer or Litton’s role, prompting a TILA § 1641(f)(2) dispute.
- Plaintiff sued U.S. Bank (the assignee) for TILA violations without giving proper notice or opportunity to cure under the mortgage.
- The court later addressed whether an assignee can be liable for its servicer’s TILA violations and whether the notice-and-cure provision bars the claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notice and cure can bar this TILA claim | U.S. Bank cannot enforce the provision since it is not a party to the mortgage. | As assignee, U.S. Bank steps into Nation One’s shoes and can invoke notice and cure. | Not applicable; not sufficiently related to the mortgage. |
| Whether the mortgage requires notice and cure for this TILA suit | TILA claim did not arise by reason of the mortgage. | TILA duties arise by reason of the mortgage via assignee status. | Duty not owed by reason of the mortgage; not barred by notice and cure. |
| Whether Litton's disclosure violated § 1641(f)(2) and subjected the assignee to liability | Litton failed to identify the owner and master servicer adequately. | Litton’s disclosure was sufficient or the error is not the assignee’s fault. | Litton violated § 1641(f)(2); assignee liable for post-assignment disclosure failures. |
| Whether assignees can be liable for servicer’s TILA violations | Assignee liability follows from the servicer’s TILA violations. | Liability should be limited to the original creditor or pre-assignment acts. | Assignees may be vicariously liable for servicer’s § 1641(f)(2) violations. |
Key Cases Cited
- Foley v. Wells Fargo Bank, N.A., 849 F. Supp. 2d 1345 (S.D. Fla. 2012) (mortgage-related waiver can govern TILA action when related to loan documents)
- Bahamas Sales Assoc., LLC v. Byers, 701 F.3d 1335 (11th Cir. 2012) (relates to when a claim ‘relates to’ a contract via direct relationship)
- Khan v. Bank of N.Y. Mellon, 849 F. Supp. 2d 1377 (S.D. Fla. 2012) (creditor/assignee liability for servicer’s TILA violations recognized)
- Runkle v. Fed. Nat’l Mortg. Ass’n, 905 F. Supp. 2d 1326 (S.D. Fla. 2012) (assignee liability for post-assignment disclosures under § 1641(f)(2))
- Santos v. Fed. Nat'l Mortg. Ass’n, 889 F. Supp. 2d 1363 (S.D. Fla. 2012) (TILA disclosures and assignee liability discussed in context of face-of-disclosure standard)