Sibby v. Ownit Mortgage Solutions, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0484n.06
Filed: July 6, 2007
No. 06-1472
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
NIAKEIA SIBBY, )
) ON APPEAL FROM THE
Plaintiff-Appellant, ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
v. ) DISTRICT OF MICHIGAN
)
OWNIT MORTGAGE SOLUTIONS, INC., (formerly ) OPINION
known as OAKMONT MORTGAGE COMPANY, )
INC.); and COUNTRYWIDE HOME LOANS, INC., )
)
Defendants-Appellees. )
BEFORE: NORRIS, GILMAN, and SUTTON, Circuit Judges.
ALAN E. NORRIS, Circuit Judge. Plaintiff Niakeia Sibby appeals from a grant of
summary judgment to defendants Ownit Mortgage Solutions, Inc. (“Ownit”), formerly known as
Oakmont Mortgage Company, Inc., and Countrywide Home Loans, Inc.1 Plaintiff refinanced her
home with Ownit in 2001. In 2004, she sought to rescind the transaction, alleging that Ownit
violated the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and its implementing
Regulation Z, 12 C.F.R. § 226.23, by failing to provide her with the required notice of her right to
1
On December 29, 2006, Ownit filed a voluntary petition under Chapter 11 of the United States Bankruptcy
Code and all proceedings against it are currently stayed. See 11 U.S.C. § 362(a). Consequently, our judgment
applies exclusively to defendant Countrywide.
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Sibby v. Ownit Mortgage Solutions, Inc.
rescind. The complaint also included a count brought pursuant to the Michigan Consumer Protection
Act, Mich. Comp. Laws § 445.901 et seq., which was dismissed by agreement below.
I.
The property in question is located at 14200 Forrer, Detroit, Michigan. On December 26,
2001, plaintiff refinanced her home by closing on a loan of $70,200. At her deposition, plaintiff
acknowledged that she had received and signed a Notice of Right to Cancel, but said that she
received only one copy. That signed notice includes the following language above plaintiff’s
signature:
“I/WE ACKNOWLEDGE RECEIPT OF TWO COPIES OF NOTICE OF RIGHT
TO CANCEL AND ONE COPY OF THE FEDERAL TRUTH-IN-LENDING
DISCLOSURE STATEMENT, ALL GIVEN BY LENDER IN COMPLIANCE
WITH TRUTH-IN-LENDING SIMPLIFICATION AND REFORM ACT OF 1980
(PUBLIC LAW 96-211).
Under the terms of the notice, plaintiff had until midnight on December 29, 2001, to exercise her
right of recision. At her deposition, however, plaintiff stated she had in fact received only one copy
of the notice to cancel. When asked why she signed a receipt stating that she received two copies of
the notice to cancel if she had received only one, plaintiff replied that she was essentially told to
“sign here” and that she did not read the pages before signing. Plaintiff went on to testify that she
did not look at the paperwork that she received at her closing until November of 2004. When she
did look, the notices of her right to cancel were not among the papers.
Despite an anti-conveyance provision contained in the mortgage, plaintiff executed a
quitclaim deed on January 14, 2003, which conveyed her entire interest in the property to herself and
an unrelated individual, Jennifer Ridley, as joint tenants in common with full rights of survivorship.
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According to plaintiff’s deposition testimony, she did this because Ms. Ridley lived with her and had
put some $1,500 into the home for remodeling. Less than two months later, on March 1, 2003, the
property was forfeited to the Wayne County treasurer for non-payment of property taxes. On April
7, 2004, Ridley and plaintiff executed another quitclaim deed that returned ownership of the property
to plaintiff alone.
Plaintiff mailed Oakmont Mortgage Company a notice of intent to cancel the loan on
December 21, 2004. One week later, plaintiff filed suit.
II.
TILA, which is to be liberally construed in the consumer’s favor, Inge v. Rock Fin. Corp.,
281 F.3d 613, 621 (6th Cir. 2002), was enacted to “assure a meaningful disclosure of credit terms
. . . [to] avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). The statute delegates the
authority to promulgate regulations to the Federal Reserve Board. 15 U.S.C. § 1604(a). Those
regulations, like TILA itself, are entitled to deference. See Ford Motor Credit Co. v. Milhollin, 444
U.S. 555, 560 (1980) (“[I]t is appropriate to defer to the Federal Reserve Board and staff in
determining what resolution of [an] issue is implied by the truth-in-lending enactments.”).
At issue in this appeal is the requirement imposed by both TILA and Regulation Z that an
obligor has defined rights of recission:
[I]n the case of any consumer credit transaction (including opening or increasing the
credit limit for an open end credit plan) in which a security interest, including any
such interest arising by operation of law, is or will be retained or acquired in any
property which is used as the principal dwelling of the person to whom credit is
extended, the obligor shall have the right to rescind the transaction until midnight of
the third business day following the consummation of the transaction or the delivery
of the information and rescission forms required under this section together with a
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statement containing the material disclosures required under this subchapter,
whichever is later, by notifying the creditor, in accordance with regulations of the
Board, of his intention to do so. The creditor shall clearly and conspicuously disclose,
in accordance with regulations of the Board, to any obligor in a transaction subject
to this section the rights of the obligor under this section. The creditor shall also
provide, in accordance with regulations of the Board, appropriate forms for the
obligor to exercise his right to rescind any transaction subject to this section.
15 U.S.C. § 1635(a). In the event that the consumer has not been duly notified of her right to
rescind, Regulation Z extends the right to rescind to three years unless the property has been sold or
all of the consumer’s interest in the property has been transferred. 12 C.F.R. § 226.3(a)(3). The
regulations require that “a creditor shall deliver two copies of the notice of the right to rescind to
each consumer . . . .” 12 C.F.R. § 226.3(b)(1). In this appeal, plaintiff alleges that she did not
receive the requisite two copies of the notice informing plaintiff of her rescission rights and thus she
had three years rather than three days to inform the holder of the mortgage of her intention to cancel
the loan.
We review a district court’s grant of summary judgment de novo, employing the same
standard as the district court. Farhat v. Jopke, 370 F.3d 580, 587 (6th Cir. 2004). Summary
judgment is appropriate where the record shows that “there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). For the
following reasons, we conclude that plaintiff failed to establish an issue of material fact concerning
her receipt of the required notices of her right to rescind her loan. As a result, her right to rescind
expired three days after her closing and her attempt to rescind the transaction nearly three years later
was untimely.
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On September 30, 2005, defendants served plaintiff with discovery requests, including the
following requests for admission: 1) “Do you admit that you signed on December 26, 2001 a Notice
of Right to Cancel, in which you acknowledged receipt of two copies of a Notice of Right to
Cancel?”; 2) “Do you admit that on or about December 26, 2001 you received two copies of the
Notice of Right to Cancel with respect to the property located at 14200 Forrer, Detroit, MI 48227?”
When plaintiff failed to respond, defendants filed a motion to compel that asked the district court
to deem these requests to be admitted pursuant to Rule of Federal Procedure 36(a).
The district court extended the discovery deadline to November 29, 2005 from November
2 without explicitly reaching the requests for admission issue. Plaintiff did not respond to the
discovery request by the new deadline and defendants moved for summary judgment on December
12. Plaintiff filed a motion to withdraw and/or amend admissions on January 5, 2006. Her theory,
reiterated to this court, is that she submitted to a deposition on November 23, 2005, at which time
the issues covered in the request for admissions were discussed. Consequently, she was no longer
obliged to respond to them.
The district court based its decision granting summary judgment in part upon those
admissions:
Defendants have presented evidence that Plaintiff signed the Notice of Right to
Cancel which stated above the signature line that Plaintiff “acknowledge[s] receipt
of two copies of Notice of Right to Cancel,” thereby making her right to rescission
expire on December 29, 2001. Defendants also presented Ali Ghias’s affidavit [the
agent of the title company who was present at the closing]. Mr. Ghias states that
“[a]t the closing, I made copies of all of the closing documents, including two copies
of the Notice of Right to Cancel provided to Ms. Sibby.” Defendants also point to
Plaintiff’s deemed admissions (due to her failure to respond to Defendants’ Requests
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for Admissions), in which she, by default, was held as admitting that she did receive
two copies of the Notice. . . .
Contrary to plaintiff’s deemed admission that she received two copies of the
Notice of the Right to Cancel, Plaintiff testified in her deposition that she did not
receive two copies. If this testimony were permitted to contradict binding
admissions, a reasonable jury could conclude that she did not receive the two copies
and should be entitled to three years to rescind the agreement. The court doubts that
a binding admission can be so easily contradicted and undone. Admissions would
lose their force and be drained of their purpose if Plaintiff’s testimony were allowed
on this point. In addition, the court recently considered and denied a motion filed by
Plaintiff seeking to permit late responses to the requests to admit . . . .
Order, Case No. 04-CV-75025-DT, Feb. 28, 2006 at 6-7 (footnotes and citations omitted). As this
passage makes clear, while the district court did consider the disputed requests to be admitted, it did
not base its grant of summary judgment solely on that factor. Furthermore, prior to granting
summary judgment, the district court denied plaintiff’s motion to withdraw her admissions on the
theory that permitting her to do so would prejudice defendants. Order, 04-CV-75025-DT, Feb. 23,
2006 at 5-6.
While it is true that the district court “may permit withdrawal or amendment when the
presentation of the merits of the action will be subserved thereby and the party who obtained the
admission fails to satisfy the court that withdrawal or amendment will prejudice that party in
maintaining the action or defense on the merits,” Fed.R.Civ.P. 36(b), we review that decision for an
abuse of discretion. Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 154 (6th Cir. 1997) (a
district court has considerable discretion over whether to permit withdrawal or amendment of
admissions).
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We detect no such abuse of discretion by the district court. On the contrary, plaintiff’s
counsel had ample opportunity to respond to the requests for admission and failed to do so despite
being provided with additional time. In any event, the admissions are not the sole evidence that
plaintiff received the requisite explanation of her right to rescind. She signed an acknowledgment
that she received two copies of those rights at the closing. TILA provides that “written
acknowledgment of receipt of any disclosures required under this subchapter by a person to whom
information, forms, and a statement is required to be given pursuant to this section . . . create[s] a
rebuttable presumption of delivery thereof.” 15 U.S.C. § 1635(c). Plaintiff’s deposition testimony
that she only received one copy is insufficient to rebut this presumption. See Williams v. First Gov’t
Mortgage and Investors Corp., 225 F.3d 738, 751 (D.C. Cir. 2000) (testimony by plaintiff of non-
delivery insufficient to rebut presumption).
In short, plaintiff failed to create an issue of material fact with respect to this issue and the
district court therefore properly concluded that her right to rescind expired three days after she closed
on the mortgage.2
III.
The judgment below is affirmed.
2
The district court also granted summary judgment on the alternative theory that she had forfeited her right to
rescind when she transferred her entire interest in the property by executing the quitclaim deed alluded to earlier.
Because we find that judgment was properly granted based upon notice, we need not reach this issue.
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