United States District Court, E.D. Arkansas, Western Division
motion to dismiss [Doc. No. 12] is granted and
plaintiffs' complaint [Doc. No. 1] is dismissed with
prejudice. Plaintiffs' motion to strike [Doc. No. 16] is
denied as moot.
the third lawsuit filed by plaintiffs John and Wendy Dunn to
void their February 21, 2008, mortgage and loan, and to
enjoin foreclosure. See Dunn v. Am. Mortgage Associates,
Inc., 2015 Ark.App. 358, 1-4 (Ark. Ct. App. 2015)
(summarizing prior lawsuits).
first case, plaintiffs sued American Mortgage Association,
Inc. (the original lender), Citimortgage, Inc. (who was
assigned the loan), and Wilson and Associates, PLLC (the law
firm that initiated foreclosure proceedings), claiming that
American Mortgage Associates failed to provide disclosures as
required by the Truth in Lending Act (“TILA”), 15
U.S.C. § 1635. See John F. Dunn and Wendy Dunn v.
American Mortgage Associates, et al., Case No.
CV-2010-310 (Pulaski Cnty. Cir. Ct., Ark.). Plaintiffs sought
to enjoin foreclosure and a declaration that the mortgage and
loan were void. The state court granted summary judgment to
the defendants and found that plaintiffs were provided the
the first case was underway, plaintiffs filed a second case
alleging that American Mortgage Association failed to provide
terms of financing disclosures as TILA required. See John
Dunn and Wendy Dunn v. Mortgage Electronic Registration
Systems, Inc. et al., Case No. 60CV-13-102 (Pulaski
Cnty. Cir. Ct., Ark.). As in the first case, plaintiffs
sought to enjoin foreclosure and a declaration that the
mortgage and loan were void. The state court dismissed the
claims, holding that res judicata and collateral
estoppel barred re-litigating substantially similar claims
involving the same obligations.
bring this third case concerning the same obligations seeking
an order requiring defendant to: (1) return the cancelled
original note; (2) file the documents required to release any
encumbrance or lien on the property; and (3) repay the money
received from plaintiffs. Complaint 7, Doc. No. 1. Plaintiffs
argue that this relief is appropriate because defendant
failed to respond to their TILA-compliant notice of recission
on April 21, 2009. Id. ¶¶ 23-24.
Essentially, plaintiffs claim that TILA required defendant to
respond, and since the defendant failed to do so, plaintiffs
can bring this lawsuit. Id. ¶ 23. Defendant
moves to dismiss. See Doc. No. 12.
Rule of Civil Procedure 12(b)(6) permits dismissal when the
plaintiff fails to state a claim upon which relief may be
granted. To meet the 12(b)(6) standard, a complaint must
allege sufficient facts to entitle the plaintiff to the
relief sought. See Ashcroft v. Iqbal, 556 U.S. 662,
663 (2009). Although detailed factual allegations are not
required, threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, are
insufficient. Id. In ruling on a 12(b)(6) motion to
dismiss, materials embraced by the pleadings, as well as
exhibits attached to the pleadings and matters of public
record, may all be considered. Mills v. City of Grand
Forks, 614 F.3d 495, 498 (8th Cir. 2010).
motion to dismiss is granted because TILA provides no relief
for plaintiffs simply because defendant failed to respond to
the notice of rescission. Indeed, plaintiffs had no right to
rescind at the time they delivered the April 2009 rescission
notice and therefore nothing in the statute required
defendant to respond.
initial matter, plaintiffs had no right to rescind at the
time they delivered the rescission notice. The right to
rescind arises under 15 U.S.C. § 1635. An obligor has an
unconditional right to rescind within three days after a loan
is consummated. 15 U.S.C. § 1635(a). If the required
forms and disclosures are not provided during the
transaction, this three day period is extended to three
years. Id. § 1635(f). This three-year extension
is not applicable, however, because the binding state court
judgments established that plaintiffs received the required
disclosures. Therefore, when plaintiffs delivered their
notice of rescission in April 2009, more than one year after
loan consummation, the three-day window to exercise the right
to rescind had long since closed.
having no right to rescind, plaintiffs interpret 15 U.S.C.
§ 1635(b) and the Supreme Court's ruling in
Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct.
790 (2015), as requiring a response to an invalid rescission
notice. These interpretations are rejected.
in subsection 1635(b) required defendant to respond to
plaintiffs' April 2009 rescission notice. The statute
Within 20 days after receipt of a notice of rescission, the
creditor shall return to the obligor any money or property
given as earnest money, downpayment, or otherwise, and shall
take any action necessary or appropriate to reflect the