557 F. App'x 416
6th Cir.2014Background
- In 2004 Humphreys refinanced with a $800,000 Pay-Option ARM through Countrywide; loan featured negative amortization, annual minimum-payment increases, and recasting to fully amortizing payments after a trigger.
- Humphreys alleges Countrywide concealed key loan terms and misrepresented the mortgage’s nature; by 2005–2009 he received notices of rising minimum payments and increasing principal.
- Bank of America (BOA) later acquired or began servicing Countrywide loans through BAC; Humphreys sought loan modification, was denied, and sued in 2011 in Tennessee state court asserting fraudulent inducement (rescission), negligent and intentional misrepresentation, TILA § 1641(g) disclosure violations, and TCPA claims tied to servicing/HAMP and a Countrywide–Tennessee settlement.
- The district court dismissed the fraudulent inducement and misrepresentation claims as time‑barred (Rule 12(b)(6)) and granted summary judgment to the banks on remaining TILA and TCPA claims; Humphreys appealed.
- The Sixth Circuit affirmed most rulings but reversed the dismissal of the equitable fraudulent‑inducement (rescission) claim and overlapping intentional‑misrepresentation theory as premature, remanding for further proceedings; it affirmed dismissal of negligent/intentional misrepresentation to the extent pursued as damages, summary judgment on TILA (no evidence BOA acquired loan after May 2009), and dismissal of undeveloped TCPA/HAMP and settlement‑based claims.
Issues
| Issue | Humphreys' Argument | Bank's Argument | Held |
|---|---|---|---|
| Applicable statute of limitations for fraudulent inducement (rescission) | Use Tennessee 7‑year adverse‑possession period or otherwise longer period so claim is timely | 3‑year property‑injury period (Tenn. Code § 28‑3‑105) bars the claim | Reversed dismissal as premature; 3‑year rule not necessarily applicable to equitable rescission—district court erred to dismiss on pleadings; remand to assess applicability of longer periods (e.g., ten‑year catchall or six‑year contract) |
| Accrual and timeliness of misrepresentation claims (negligent/intentional) | Accrual occurred later (2009 recast or 2010 learning), so claims timely | Accrual occurred by May 2006 when notices of payment increases and amortization were apparent | Affirmed: claims accrued by May 2006; negligent‑misrepresentation (and any damages theory) time‑barred under 3‑year rule |
| TILA § 1641(g) disclosure claim (failure to notify borrower of owner/assignee after May 2009) | BOA acquired loan via mergers/servicing changes and failed to disclose assignment as required after May 2009 | No evidence BOA acquired the loan after May 2009; summary judgment appropriate | Affirmed summary judgment: Humphreys failed to produce evidence that BOA acquired the loan post‑May 2009 and failed to meet Rule 56(d) or produce contrary proof |
| TCPA / HAMP / Countrywide settlement claims (servicing and modification failures) | BOA violated TCPA by concealing owner, failing to seek modification, misrepresenting authority, and breaching Countrywide settlement/HAMP guidelines | Claims not pled or developed; plaintiff not shown eligible under the settlement; no specific HAMP violations alleged | Affirmed dismissal/summary judgment: new TCPA theories were beyond the pleadings or undeveloped; no evidence plaintiff qualified for settlement‑based modification; HAMP theory too conclusory |
Key Cases Cited
- Vance v. Schulder, 547 S.W.2d 927 (Tenn. 1977) (fraudulent‑inducement plaintiff may elect rescission (equity) or damages (law); gravamen controls limitations period)
- Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459 (6th Cir. 2013) (Rule 12(b)(6) statute‑of‑limitations dismissal inappropriate unless pleadings clearly show claim is time‑barred)
- Bartholomew v. Blevins, 679 F.3d 497 (6th Cir. 2012) (standard of review for dismissal and summary judgment)
- Guarino v. Brookfield Twp. Trs., 980 F.2d 399 (6th Cir. 1992) (nonmoving party who fails to rebut summary‑judgment evidence waives opportunity)
- Prescott v. Adams, 627 S.W.2d 134 (Tenn. Ct. App. 1981) (application of property‑injury limitations to some rescission cases involving physical injury to land)