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JACOBS v. CITIBANK

August 4, 2005.

HARRY JACOBS, on behalf of himself and all all others similarly situated, Plaintiff,
v.
CITIBANK, N.A., CITICORP., ET AL., Defendants.



The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge

REPORT AND RECOMMENDATION

TO THE HONORABLE JED S. RAKOFF, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

  In this action brought for alleged violations of The Truth In Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., and the regulations promulgated thereunder, the defendants have made a motion for summary judgment pursuant to Fed.R.Civ.P. 56. The defendants contend that: (a) the action was not commenced timely, within the one-year statute of limitations applicable to TILA actions; and (b) the plaintiff's claim that the defendants failed to fulfill disclosure obligations imposed upon them by TILA and its regulations is wrong and, therefore, the plaintiff has failed to state a claim under TILA.

  The plaintiff opposes the defendants' motion. He contends that the applicable statute of limitations does not bar him from maintaining this action because the limitation period was equitably tolled by virtue of the defendants' fraudulent concealments. In addition, the plaintiff alleges that disputed material facts concerning the TILA disclosure(s), if any, made by the defendants to the plaintiff require the court to reject the defendants' request for summary judgment.

  II. BACKGROUND

  In July 1988, plaintiff Harry Jacobs ("Jacobs") and his wife made application to defendant Citibank N.A. ("Citibank") for a home equity loan known as an "Equity Source Account Loan." The loan closing proceeding occurred on September 27, 1988. On that date, Jacobs and his wife executed a mortgage loan note and other closing documents through which they agreed to repay Citibank the principal amount of $117,000 or such portion of that amount as might be advanced and be outstanding from time to time under the mortgage loan note plus any interest on the principal at the interest rate set forth in the mortgage loan note. The parties agreed that the loan would have a variable interest rate. The index for calculating the interest rate was the prime rate published daily in the Wall Street Journal.

  Pursuant to the provisions of the mortgage loan note, the loan was divided into two payment periods. The initial payment period of 120 months began when the loan closed. This payment period was referred to as the "Interest Period." During the Interest Period, Jacobs and his wife could borrow, repay, and re-borrow advances up to the aggregate sum of $117,000, as long as no event of default occurred. The second payment period identified in the mortgage loan note was to exist for not more than 240 months. This payment period was referred to as the "Repayment Period;" it began 120 months after the loan closed.

  During the Interest Period, Jacobs and his wife were required to make monthly interest-only payments to Citibank. During the Repayment Period, Jacobs and his wife were required to make monthly payments to Citibank of principal and interest. The principal portion of those monthly payments was to be equal to the greater of: a) $75.00; or b) 1/240th of the unpaid principal outstanding on the last day of the Interest Period. The principal portion of the monthly payments made during the Repayment Period remained fixed. However, the interest portion of those monthly payments varied, as it was equal to the amount of interest determined by the interest rate specified in the mortgage loan note, which was to be applied on the principal outstanding from time to time.

  After the loan closing proceeding had occurred and the loan's recision period had expired, Jacobs and his wife borrowed $108,868.78. For ten years thereafter, they made interest-only payments on a monthly basis. It is undisputed that by September 19, 1998, the outstanding principal balance on the loan was $116,454.36. In April 1998, and July 1998, Citibank, F.S.B.'s ("FSB") Home Equity Department informed Jacobs and his wife, in writing, of the following:
[A]s per your original agreement . . . repayment/amortization of your outstanding balance will begin on [the date specified in the respective writings]. Your existing Equity Source Account is approaching the amortization period, which requires a monthly payment consisting of principal and interest to be repaid over a 20 year period. Pre-payment may reduce the term of your loan but will not lower the principal portion of your regular monthly payments . . .
* * *
When your account enters repayment/amortization, your monthly payments will include the sum of 1/240th of your principal balance as of the end of the access period plus interest?. Please note that you will continue to receive monthly statements which will indicate the total payment due.
  According to Jacobs, the FSB letters contained a telephone number through which borrowers like Jacobs could make inquiries. Jacobs used that number to inquire about the monthly repayment amount he was being billed, which had increased from approximately $1,003 during the Interest Period to approximately $1,470 during the Repayment Period. Jacobs recalls that he was informed, when he made contact with a FSB representative, that the billed amount "was what had been agreed to and in the absence of prepayment in full of the total principal amount owed there was no alternatives (sic) to making the schedules (sic) payment."

  Jacobs and his wife defaulted on the loan. Thereafter, Citibank initiated a mortgage foreclosure proceeding, which was resolved on or about October 10, 2000. In connection with the foreclosure process, Jacobs communicated with Michael Florian ("Florian"), who managed the Foreclosure Department. Jacobs contends that Florian pledged to "work with [him] to establish how [Jacobs'] monthly payments during the Repayment Period were calculated and [to] furnish [Jacobs] with an amortization table." Jacobs recalls that he exchanged correspondence with Florian and Florian's assistant, Christie Yallally ("Yallally'), for approximately six weeks, until November 19, 2000. At that time, Jacobs became ill. Thereafter, Yallally informed Jacobs, in a letter, that she could not find an amortization table for his account. Florian also wrote to Jacobs, advising him that Florian was unable to provide further assistance in determining how Jacobs' Repayment Period monthly bills were calculated.

  In September 2001, Jacobs initiated the instant action. In his complaint, Jacobs alleges that "during the period commencing September 10, 1998, and continuing until the present, [i.e., the date on which the action was commenced]," Citibank "knew or should have known that" he was no longer an open-end borrower but, rather, had become a closed-end mortgagor to whom Citibank was required to provide "notices and information that complied strictly with the rules and regulations of the TILA and Reg. Z relating to closed end mortgages."*fn1 For its part, Citibank contends that it satisfied its TILA disclosure obligations. Citibank maintains that its "ordinary and customary practice [is] to furnish a standard mortgage disclosure statement" to customers such as Jacobs, and "to maintain separate customer loan files containing all documents related to each home equity loan issued by Citibank for the life of the loan plus an additional seven years after full repayment of the loan." In support of the defendants' motion for summary judgment, they submitted to the Court a copy of a disclosure statement that was retrieved from the customer loan file Citibank maintained for the home equity loan it made to Jacobs in 1988. However, nowhere on the disclosure statement is there anything indicating that Jacobs actually received the document. In further support of their contention that Jacobs received the requisite disclosure statement from Citibank, the defendants point to a document contained in the Jacobs loan file entitled, "ESA Legal Quality Control Check List." Among other things, the checklist contains the word "disclosure" and a check mark next to that word. The checklist bears the initials of the person who reviewed it for Citibank and the date on which that review took place, October 12, 1988. According to the defendants, the mark that appears on the checklist opposite the word "disclosure" signifies only that the disclosure statement Citibank maintains it provided to Jacobs is among the several documents contained in the Jacobs loan file made and kept by Citibank. The mark next to the word "disclosure" on the checklist does not signify that Jacobs received the subject disclosure statement. III. DISCUSSION

  Summary Judgment

  Summary judgment may be granted in favor of the moving party "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998). When considering a motion for summary judgment, "the court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor." L.B. Foster Co. v. ...


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