403 F. App'x 717
3rd Cir.2010Background
- St. Hill sought rescission of a $1.3 million Tribeca loan alleging TILA and UTPCPL violations and damages under Pennsylvania CSA and LBTPR; the district court denied rescission and damages.
- Loan refinancing occurred in 2006 to pay business creditors; St. Hill had a Chapter 7 bankruptcy, and the loan was secured by her home.
- Francis Kilson (not a mortgage broker) introduced St. Hill to David Diamond (mortgage broker) who arranged the loan; Kilson and Diamond charged substantial fees paid by St. Hill outside the settlement.
- Tribeca’s loan officer advised Diamond that his fees would be waived or paid outside settlement; St. Hill paid Diamond $6,500 post-closing and additional amounts thereafter.
- The district court concluded TILA disclosures were largely satisfied except for Diamond’s fees; it found no damages due to a one-year limitations period and rejected UTPCPL claims.
- The court held the loan’s primary purpose was commercial, not consumer, thus TILA, UTPCPL, and Door-to-Door Act concepts did not apply; CSA and LBTPR did not apply to FCS.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does TILA apply where loan is primarily consumer or business? | St. Hill asserts TILA applies as consumer financing. | Tribeca argues loan primarily for business purposes; TILA inapplicable. | TILA does not apply; loan is primarily commercial. |
| Do UTPCPL or Door-to-Door Act rescission claims apply? | UTPCPL/Door-to-Door provide rescission rights. | Transaction not consumer; act not applicable. | UTPCPL and Door-to-Door Act do not apply. |
| Do CSA or LBTPR claims against FCS survive as to misrepresentation? | CSA/LBTPR cover mortgage brokers and misrepresentation claims. | FCS is regulated and excluded from CSA/LBTPR. | CSA and LBTPR do not apply to FCS; judgment for FCS affirmed. |
| If TILA applied, would Diamond/Kilson fees be finance charges requiring disclosure? | Fees should be disclosed as finance charges. | Kilson not a mortgage broker; disclosure not required for Kilson’s fees. | Not reached as TILA does not apply; Kilson’s fees not subject to disclosure under TILA. |
Key Cases Cited
- Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir. 1974) (burden to show TILA applicability in consumer cases)
- Gombosi v. Carteret Mortg. Corp., 894 F. Supp. 176 (D. N.J. 1995) (primary purpose determines consumer vs commercial loan)
- In re DiPietro, 135 B.R. 773 (Bankr. E.D. Pa. 1992) (fees and purposes in refinancing analyzed for primary purpose)
- Sherrill v. Verde Capital Corp., 719 F.2d 364 (5th Cir. 1983) (home-secured loans do not automatically become consumer loans)
- McGreevy v. Stroup, 413 F.3d 359 (3d Cir. 2005) (plenum review standard for summary judgment on UTPCPL-related issues)
- McCutcheon v. Am. Servicing Co., 560 F.3d 143 (3d Cir. 2009) (standard of review on bench-trial findings)