Opinion
No. 78-1727.
Argued and Submitted June 10, 1980.
Decided March 12, 1981.
Aaron L. Katz, Dawson, Maino, Chapman, Mattern, Bishop, Katz Kellenberger, Campbell, Cal., for plaintiff and appellant.
Bernard W. Schmidt, San Jose, Cal., for defendant and appellee.
Appeal from the United States District Court for the Northern District of California.
The parties here argue whether the one-year period of limitations contained in both the Truth in Lending Act, 15 U.S.C. section 1640(e), and the Real Estate Settlement Procedures Act, 12 U.S.C. § 2614, commences on the date the credit contract is executed, see Wachtel v. West, 476 F.2d 1062 (6th Cir.), cert. denied, 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114 (1973), or at the time the plaintiff discovered, or should have discovered, the acts constituting the violation. See NLRB v. Don Burgess Construction Corp., 596 F.2d 378 (9th Cir.), cert. denied, 444 U.S. 940, 100 S.Ct. 293, 62 L.Ed.2d 306 (1979) (applying general rule for commencement of federal periods of limitations). We need not reach this issue because even applying the more expansive "discovery" rule, the district properly dismissed Katz' complaint.
Our discussion of § 1640(e) applies with equal force to Katz' claim brought under the Real Estate Settlement Procedures Act and its limitations provision, 12 U.S.C. § 2614, because the relevant language of the § 2614 and § 1640(e) provisions is nearly identical, and, the purpose of the two Acts are the same. See Vega v. First Federal Savings Loan Ass'n, 622 F.2d 918 (6th Cir. 1980).
Mr. Katz alleged that in September 1975 he and his wife agreed to borrow $55,000 at 9 1/2% interest, but that due to Mrs. Katz' status as a bank employee, the Katzes annual percentage rate would be 8 1/2%, the rate listed on the Bank's Truth in Lending disclosure statement. Mr. Katz alleged that the Bank violated these statutes by failing to disclose before execution of the mortgage agreement that this "employee letter rate" of 8 1/2% would be raised to 9 1/2% if the property ceased to be Ms. Katz' permanent residence. The bank, however, clearly disclosed to Mr. Katz the existence of the employee's permanent residency condition in a letter dated October 20, 1975, more than one year before Mr. Katz filed his complaint. Mr. Katz argues that he regarded this letter merely as an attempt to modify an existing contract. Yet even if Mr. Katz did not know of the alleged Truth in Lending violation on October 20, 1975, the letter made him aware of the acts constituting the violation, i. e., Mr. Katz had actual knowledge of the allegedly nondisclosed term. We hold, therefore, that the period of limitations commenced no later than October 20, 1975, the date of actual disclosure.
The affidavits of both Mr. Katz and Mrs. Katz show that Mr. Katz had actual knowledge of the October 20 letter. They contradict Katz' disingenuous assertion in his reply brief that it is a disputed fact whether he received and read the October 20 letter. His "proposed modification" theory also contradicts this statement.
Nor would it do Katz any good to prove that the October 20 letter was in fact a proposed modification of an existing credit contract. If permanent residency condition was not part of the original contract, then the Bank breached no law in failing to disclose it.
Katz' alternative argument, that nondisclosure was a "continuing" violation, must also be rejected. Even if a continuing violation theory is viable, the Bank's actual disclosure of the previously undisclosed term commenced the running of the period of limitations. Cf. Postow v. OBA Federal Bank, 627 F.2d 1370, 1379-80 (D.C. Cir. 1980) (violation continues up to point of actual disclosure).
Finally, Katz argues that the district court erred in treating the Bank's motion to dismiss as one for summary judgment. The requirement that a district court treat a motion to dismiss as one for summary judgment applies where the motion to dismiss is brought pursuant to Federal Rules of Civil Procedure section 12(b)(6) and not rule 12(b)(1), which is the rule the Bank invoked to dismiss Katz' second, third, and fourth causes of action. In any event, even if the district court was required to treat the matter as a motion for summary judgment, Katz was afforded the notice required by Federal Rules of Civil Procedure section 56, and was allowed to respond by way of affidavit.
The judgment of the district court is affirmed.