Stanton v. Bank of America, N.A.
834 F. Supp. 2d 1061
D. Haw.2011Background
- Plaintiff Stanton refinanced her Honolulu property in 2007 with two loans through Countrywide/BOA, with Fidelity Escrow serving as escrow holder per closing instructions.
- Two loans: a $1,505,000 fixed/adjustable first loan and a $215,000 HELOC second loan, documented Feb. 1, 2007 and recorded Feb. 12, 2007.
- Plaintiff alleges pre-signing misrepresentations by Loan Network about loan terms, and asserts she did not review documents at closing where she signed the loan papers.
- Fidelity Escrow’s role was to hold and timely deliver documents per closing instructions; Plaintiff alleges she did not receive certain loan documents timely.
- Plaintiff exercised rescission rights under TILA for both loans, but BOA did not honor rescission; plaintiff also asserts UDAP, fraud, conspiracy, and negligence-related claims against multiple defendants.
- Judge Ezra’s prior order on Oct. 19, 2010 addressed Fidelity Escrow; this order now resolves BOA and Fidelity Escrow motions on remaining claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TILA rescission notices valid and effect of late delivery | Plaintiff seeks rescission within 3 years; notices were defective, extending rescission. | BOA argues Palmer/Melfi control; model forms and late delivery compliance justify no extended period. | Count I and III denied as to clear entitlement to rescission; genuine issues remain. |
| TILA damages and whether rescission period affects damages | Damages flow from exercise of rescission rights; disputes about timing. | Damages limited if rescission improper; material issues of timing unresolved. | Counts II and IV denied as to summary judgment due to disputed rescission period. |
| UDAP claim against BOA based on loan origination conduct | Countrywide misrepresented terms and costs; UDAP applicable; damages shown. | Misrepresentations reflected in signed documents; terms disclosed; no deceptive practice. | Partial denial: (a) preempts some UDAP theories by TILA; (b) granted as to failure to disclose negative amortization. |
| Fraud claim against BOA | False representations about loan terms; intent to mislead. | Promises were future-oriented; no present intent or misrepresentation of existing fact. | Granted in BOA’s favor on Count IX (fraud). |
| Civil conspiracy and aiding/abetting against BOA | Countrywide and Loan Network conspired with Fidelity Escrow; substantial evidence. | No illegal objective; routine communications; no agreement. | Count XI granted to BOA; Count XII partly granted/denied depending on theory. |
Key Cases Cited
- Palmer v. Champion Mortgage, 465 F.3d 24 (1st Cir. 2006) (properly completed notice may comply with TILA requirements)
- Semar v. Platte Valley Fed. Sav. & Loan Ass'n., 791 F.2d 699 (9th Cir. 1986) (strict reading of rescission form expiration date; technical violations can trigger rescission rights)
- Williamson v. Lafferty, 698 F.2d 767 (5th Cir. 1983) (omission of rescission expiration date constitutes TILA violation with potential three-year period)
- Kajitani v. Downey Sav. & Loan Ass’n., 647 F.Supp.2d 1208 (D. Haw. 2008) (UDAP/TILA interplay and Hawaii remand considerations in loan disclosures)