922 F. Supp. 2d 1309
M.D. Fla.2013Background
- Citron plaintiffs filed a TILA action against Wachovia Mortgage (World Savings Bank predecessor) seeking rescission and damages; second amended complaint substituted Wachovia Mortgage FSB as defendant; allegations centered on failure to provide two copies of the Notice of Right to Cancel and alleged forgery of the Citron signature.
- Closing occurred August 29, 2007; Citrons signed a Note and Mortgage to World Savings Bank, FSB for about $787,500; closing process involved a two-copy Notice of Right to Cancel and a closing agent under World Savings Bank oversight.
- Plaintiffs later transferred title to the Citron Family Trust (May 6, 2008); plaintiffs made payments under forbearance (Dec 2008) and did not pursue claims of impropriety for nearly two years.
- Defendant Wells Fargo (successor through merger) now holds the Note/Mortgage and seeks foreclosure; the court found no rescission rights, awarded foreclosure in the amount of principal, interest, and escrow, and ordered the sale of the property.
- Damages claims under TILA were time-barred; plaintiffs waived/ratified any forgery claims by forbearance and continued payments; the court held Wells Fargo standing to foreclose as holder of note and mortgage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Right to rescind terminated by sale | Plaintiffs allege rescission rights persisted; sale to trust not a true sale under 1635(f) | Sale/transfer to trust terminates rescission rights under 1635(f) and 226.23 | Rescission right terminated by May 6, 2008 sale to the Citron Family Trust |
| Notice to Cancel was proper and clear | Notice date confusion extended rescission period; not clear and conspicuous | Notice advised three-day period after later of closing or receipt; compliant | Notice was clear and conclusive; no extended rescission period applied |
| Forgery claim credibility and waiver/ratification | Citron signature forged; forgery tolls rescission rights | Citron delay and forbearance waive and ratify; forgery not credible | Forgery claims not credible; waiver/ratification bars claims; rescission not available |
| Damages under TILA time-bar | Damages claims timely; tolling argued | Claims time-barred under 1640(e); disclosures at closing occurred then | Damages claims time-barred; tolling not applicable; equitable tolling rejected |
| Foreclosure standing and remedy | Wells Fargo lacked standing and/or improperly foreclosed under MDL settlement | Wells Fargo as successor to World Savings Bank held note and mortgage; foreclosure appropriate | Wells Fargo entitled to foreclosure; summary judgment for foreclosure granted |
Key Cases Cited
- Palmer v. Champion Mortgage, 465 F.3d 24 (1st Cir.2006) (clear notice suffices; extended rescission period not triggered by minor form defects)
- Smith v. Highland Bank, 108 F.3d 1325 (11th Cir.1997) (clear and conspicuous notice suffices; not extended by minor defects)
- Veale v. Citibank, F.S.B., 85 F.3d 577 (11th Cir.1996) (model form alignment; good faith compliance protects liability)