Opinion
Case No. 2:04-CV-774 TC.
January 21, 2005
ORDER
This case concerns a June 6, 2002 mortgage transaction governing the financing of the Plaintiffs' home in Santaquin, Utah. It appears that pro se Plaintiffs Dirk and Gessica Smith initiated this suit against Countrywide Home Loans, Inc. and Mortgage Electronic Registration Systems, Inc. (collectively "Defendants" or "Countrywide") after the Defendants, who alleged that the Smiths were in default on the loan, began foreclosure proceedings on the property.
This matter is before the court on the Defendants' Motion to Dismiss Portions of Plaintiffs' Complaint. The Smiths allege twenty-four causes of action, most under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601- 1641, and the Real Estate Settlement Practices Act ("RESPA"), 12 U.S.C. §§ 2601- 2617, and one claim under Article 9 of the Uniform Commercial Code ("UCC"). The Plaintiffs, in their prayer for relief, seek rescission of the mortgage contract, monetary damages, and temporary injunctive relief. The court has already denied Plaintiffs' request for injunctive relief (see Sept. 8, 2004 Order (Docket # 3) (denying request for relief set forth in Verified Complaint's Twenty-Fourth Cause of Action titled "Injunctive Relief Pursuant to Rule 65(a) and (b)")), so only Plaintiffs' claims for monetary damages and rescission remain for consideration in this Order.
Countrywide seeks dismissal of all of the Plaintiffs' monetary damages claims under TILA (Countrywide asserts that TILA's one-year statute of limitations bars all of Plaintiffs' monetary claims under TILA), Plaintiffs' Uniform Commercial Code ("UCC") Article 9 claim (Countrywide asserts that the UCC does not apply to the real property transaction), and all of Plaintiffs' RESPA claims (Countrywide asserts that RESPA does not provide a private cause of action for the situations alleged by Plaintiffs and that all of Plaintiffs' RESPA causes of action are time-barred).
For the reasons set forth below, Defendants' Motion to Dismiss Portions of Plaintiffs' Complaint is GRANTED.
ANALYSIS
Standard of Review
Countrywide styles its motion as a motion to dismiss for failure to state a claim upon which relief can be granted (Fed.R.Civ.P. 12(b)(6)). Despite the fact that both sets of parties submitted evidence that goes beyond the scope of the Verified Complaint's allegations, the court declines to convert the motion to one for summary judgment. See Poole v. County of Otero, 271 F.3d 955, 958 n. 2 (10th Cir. 2001) ("district court has discretion to decide whether to convert a motion to dismiss into one for summary judgment"). Accordingly, the court relies only on the Plaintiffs' allegations in the Verified Complaint.
In evaluating a motion brought under Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded facts as true. See Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002). The court must also "view all reasonable inferences in favor of the plaintiff, and the pleadings must be liberally construed," particularly because Plaintiffs are pro se. Id.; Ledbetter v. City of Topeka, 318 F.3d 1183, 1187 (10th Cir. 2003) (courts must construe pro se pleadings liberally); Meade v. Grubbs, 841 F.2d 1512, 1526 (10th Cir. 1988) (" pro se complaints . . . are held `to less stringent standards than formal pleadings drafted by lawyers'"). Still, the fact that the Plaintiffs are proceeding pro se does not excuse their obligation to comply with the requirements of federal procedural law. See Ogden v. San Juan County, 32 F.3d 452, 455 (10th Cir. 1994).
Plaintiffs' Claim Under Article 9 of the UCC
In their Second Cause of Action, Plaintiffs allege that the June 2002 transaction was subject to disclosure and filing requirements imposed by Article 9 of the UCC. Countrywide asserts that "[b]y its express terms Article 9 of the Uniform Commercial Code has no application" to the transaction at issue in this case. (Defs.' Mem. In Supp. of Mot. to Dismiss at 3.) Specifically, Countrywide cites to Utah Uniform Commercial Code § 70A-9A-109(4)(k), which provides in relevant part that Utah's UCC Article 9 (relating to secured transactions) "does not apply to . . . the creation or transfer of an interest in or lien on real property. . . ." The court agrees with Countrywide. Accordingly, Plaintiffs have failed to state a claim under UCC Article 9 and their Second Cause of Action is dismissed. Plaintiffs' Truth In Lending Act ("TILA") Claims
TILA's One-Year Statute of Limitations
Section 1640(e) of TILA provides that "[a]ny action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year of the occurrence of the violation." 15 U.S.C. 1640(e) (emphasis added). This section applies to all monetary damage claims under TILA, as opposed to a claim for rescission, which is subject to a three-year statute of limitations. See Betancourt v. Countrywide Home Loans, Inc., ___ F. Supp. 2d ___, 2004 WL 2601141 at *4 (D. Colo. Nov. 17, 2004) (stating that "action for an alleged violation of TILA is subject to two statutes of limitation. . . . First, actions for statutory and actual damages must be brought within one year from the date of the violation. 15 U.S.C. § 1640(e)" and noting that a claim for rescission under § 1635 has three-year limitation period).
See 15 U.S.C. § 1635(f) ("An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first. . . .").
The statute of limitations begins to run when the contractual relationship is created. Betancourt at *4 (citing Stevens v. Rock Springs Nat'l Bank, 497 F.2d 307, 310 (10th Cir. 1974)). In this case, the statute of limitations began to run on June 6, 2002 (when the mortgage note was executed), and Plaintiffs' monetary damage claims expired on June 6, 2003. Plaintiffs filed their monetary damage claims under TILA on August 23, 2004. Accordingly, all of Plaintiffs' monetary damage claims for alleged violations of TILA at the time of contracting are untimely and must be dismissed. That includes Plaintiffs' causes of action for monetary damages in numbers one, three through thirteen, fifteen though nineteen, and the twenty-first and twentysecond causes of action.
Plaintiffs appear to contend that the alleged TILA violations are continuing violations so that collection of monetary damages is not barred by the one-year statute of limitations. The court disagrees. The Tenth Circuit rejected such an argument inStevens v. Rock Springs Nat'l Bank, 497 F.2d 307, 309-10 (10th Cir. 1974). See also King v. California, 784 F.2d 910, 913-14 (9th Cir. 1986) (rejecting continuing violation theory in TILA context and noting Tenth Circuit's rejection of same).
Plaintiffs' Twenty-Third Cause of Action
The Plaintiffs allege that Countrywide violated TILA when it initiated the 2004 foreclosure proceedings, because it allegedly did not provide proper notice of default, notice of the Plaintiffs' right to cure, and notice of acceleration of the loan payments. Assuming, without deciding, that Plaintiffs have stated a cause of action under TILA with respect to Countrywide's actions relating to the foreclosure proceedings (which occurred in 2004 so the claim does not appear to be time-barred), the court nevertheless finds that Plaintiffs' claim is moot because Countrywide did not follow through with the foreclosure proceedings when Plaintiffs cured the default on the loan (as was noted during the court's hearing on Plaintiffs' request for temporary injunctive relief). Accordingly, Plaintiffs' Twenty-Third Cause of Action for an alleged violation of TILA is dismissed (the Twenty-Third Cause of Action also purports to bring a claim under RESPA, which is dealt with below).
Plaintiffs' RESPA Claims
Private Causes of Action Under RESPA
Plaintiffs cite to Sections 2601 and 2610 of RESPA as the basis for their Ninth, Fourteenth, Nineteenth, and Twentieth causes of action. The Tenth Circuit has not addressed the issue of what private causes of action exist under RESPA. However, as noted by Countrywide, other jurisdictions have held that RESPA does not provide a private cause of action under either section 2601 or 2610. See 12 U.S.C. § 2614 (setting forth statute of limitations for private actions but only providing limitation periods for sections 2605, 2607, and 2608 of RESPA; the inference is that their private cause of action only exists for those three sections); Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir. 1997) (no private right of action under RESPA § 2604); Louisiana v. Litton Mortgage Co., 50 F.3d 1298, 1301-02 (5th Cir. 1995) (no private right of action under RESPA § 2609); Allison v. Liberty Savings, 695 F.2d 1086, 1089 (7th Cir. 1982) (holding no private right of action existed under 12 U.S.C. § 2609, and suggesting that private right of action under RESPA only existed under §§ 2605, 2607, and 2608). The court believes that the reasoning set forth in those cases is sound. The court holds that the Plaintiffs' Ninth, Fourteenth, Nineteenth, and Twentieth causes of action do not state a claim upon which relief can be granted, because there is no private cause of action available to them under §§ 2601 and 2610. Accordingly, they are dismissed.
The District of Kansas, in an unreported case, predicted that the Tenth Circuit would follow the reasoning in Allison. See Reese v. 1st Metropolitan Mortgage Co., 2003 WL 22454658 at *4 (D. Kan. Oct. 28, 2003) (holding that RESPA §§ 2603 and 2604 do not provide private cause of action).
Statute of Limitations
RESPA provides that:
Any action pursuant to the provisions of section 2605, 2607, or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a violation of section 2605 of this title and 1 year in the case of a violation of section 2607 or 2608 of this title from the date of the occurrence of the violation.12 U.S.C. § 2614 (emphasis added). Because the Plaintiffs filed their Complaint more than one year after the transaction occurred, their RESPA claims are time-barred. Accordingly, all of Plaintiffs' RESPA claims must be dismissed on the basis that the statute of limitations has run.
Section 2605, the other section allowing for a private cause of action, is limited to the obligation to notify the borrower that the loan may be or has been assigned, sold or transferred and the lender's obligation to pay taxes and insurance obligations as they become due if funds are placed in escrow for that purpose. See 12 U.S.C. § 2605(a), (b), (g). Plaintiffs do not cite to section 2605 in their Complaint, nor do they set forth allegations that would state a claim under § 2605. Accordingly, the three-year statute of limitation is not applicable here and cannot save Plaintiff's RESPA claims from dismissal.
ORDER
For the foregoing reasons, Defendants' Motion to Dismiss Portions of Plaintiffs' Complaint is GRANTED. Specifically, the court ORDERS as follows:1. Plaintiffs' Second Cause of Action (Article 9 UCC claim) is DISMISSED;
2. Plaintiffs' Twenty-Fourth Cause of Action (claim for temporary injunctive relief) is DISMISSED;
3. Plaintiffs' Twenty-Third Cause of Action (alleging failure to provide notice of default, notice of right to cure, and notice of acceleration of loan payments) is DISMISSED as MOOT;
4. Plaintiffs' First, Third, Fourth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twenty-First, and Twenty-Second Causes of Action (seeking only monetary damages under TILA) are DISMISSED.
5. The portions of Plaintiffs' Fifth and Twenty-Second Causes of Action seeking monetary damages under TILA are likewise DISMISSED. However, the portions of Plaintiffs' Fifth and Twenty-Second Causes of Action seeking rescission under TILA § 1635 are NOT DISMISSED; and
6. Plaintiffs' Ninth, Fourteenth, Nineteenth, and Twentieth Causes of Action (RESPA claims) are DISMISSED.