Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Macheda v. Household Finance Realty Corp. of New York

January 15, 2009

WINIFRED MACHEDA AND RICHARD MACHEDA, PLAINTIFFS,
v.
HOUSEHOLD FINANCE REALTY CORPORATION OF NEW YORK, DEFENDANT.



The opinion of the court was delivered by: Glenn T. Suddaby, United States District Judge

DECISION and ORDER

I. INTRODUCTION

Plaintiff commenced this action on March 24, 2004, pursuant to the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq, the Home Ownership and Equity Protection Act of 1994 ("HOEPA"), 15 U.S.C. § 1602 (aa) and 1639, and the New York General Business Law § 349 and 3 N.Y.C.R.R. Part 41. (See Dkt. No. 1, ¶ 1 [Plf.'s Compl.]

In their Amended Complaint, Plaintiffs allege as follows. On March 27, 2001, Plaintiffs and Defendant, through an account executive, entered into a loan agreement under which Defendant agreed to lend Plaintiffs a sum of $139,538.04 to be paid over 360 months, with a disclosed annual percentage rate of 10.926%.*fn1 (See Dkt. No. 8, Part 1, ¶ ¶ 15, 16, 18 [Plf.'s Am. Compl.].) Plaintiffs allege that Defendant violated the TILA in the following two ways: (1) failing to provide Plaintiff with a notice of their Right to Cancel the mortgage loan at the proper time or in the proper manner; and (2) misdating the expiration of the Notice of right to cancel provided to Plaintiffs. Plaintiffs also allege that Defendant violated HOEPA in the following three ways: (1) failing to provide the statutorily required pre-loan disclosures 3 days prior to execution of the agreement; (2) making a loan to Plaintiffs based on the value of their home, and not on their ability to repay; and (3) engaging in a pattern or practice of extending mortgages to consumers based on the consumer's collateral without regard to the consumer's repayment ability. (Id. at ¶¶ 46-62.) Finally, Plaintiffs allege that TILA affords them the right to rescind their loan agreement with Defendant until up to three (3) years after the loan's consummation, and statutory damages. (Id. at ¶ 41.) They allege that HOEPA mandates that Defendant relinquish its security interest in Plaintiffs' property within twenty (20) days of receiving notice of Plaintiffs' rescission, and that failure to do so entitles them to additional damages. (Id. at ¶ 44.)

Currently before the Court are Plaintiffs' three motions in limine and Defendant's three motions in limine. In their three motions, Plaintiffs request that the Court issue an Order that precludes Defendant from introducing at trial any discussion, argument, testimony and/or evidence regarding (1) the $20,122.39 Defendant paid to Robert Riedl two years after the loan transaction, (2) Defendant's contention that it made an error on its forms regarding payment to Information and Real Estate Services, LLC ("IRES") for title fees, and (3) Plaintiffs' tax forms and the contention that Plaintiffs secured their loan from Defendant for primarily business purposes. (Dkt. No. 82.) In its three motions, Defendant requests that the Court issue an Order that (1) denies Plaintiffs' demand for a jury trial, (2) precludes Plaintiffs from denying that they did not owe Robert Ridel the second payment amount of $20,122.39, which Defendant paid Robert Riedl subsequent to making the March 27, 2001 loan to Plaintiffs, and (3) precludes Plaintiffs from raising claims of representations contrary to the terms of the loan documents given the parol evidence rule. (Dkt. No. 91.)

For the reasons set forth below, the Court denies Plaintiffs' three motions in limine and grants in part and denies in part Defendant's three motions in limine.

II. DISCUSSION

A. Plaintiffs' Motions in Limine

1. Whether Defendant Should Be Precluded from Introducing Evidence of the $20,122.39 Defendant Paid to Robert Riedl Two Years After the Loan Transaction

In their first motion in limine, Plaintiffs argue that Defendant should be precluded from making any mention of the $20,122.39 sum that Defendant paid to Robert Riedl to assure their priority interest on Plaintiffs' home. (Dkt. No. 82, at 2.) Plaintiffs argue that the amount was paid by Defendant "on its own accord and solely to assure that it would have the first lien on the Plaintiffs' home." (Dkt. No. 82, at 2.) Plaintiffs further argue that, because the amount was paid two years after the loan transaction, it is not part of the loan transaction, has "absolutely nothing to do with [the loan transaction]," and is therefore irrelevant to the issue of rescission. (Id. at 3.) Finally, Plaintiffs argue that, because the sum should not be included in the "total loan amount" calculation, it is not permissible to introduce evidence of Defendant paying this amount to Mr. Riedl. (Id.)

In response, Defendant argues that "the uncontroverted $20,122.39 payment Defendant made to Mr. Riedl in order to satisfy plaintiffs' indebtedness is entirely relevant." (Dkt. No. 100, at 7.) Defendant argues that Plaintiffs are attempting to eliminate an issue that they themselves created (by demanding that Defendant pay the amount in question), and that they introduced in their Amended Complaint. (Id.) Defendants further argue that the issue is relevant to (1) the calculation of the "total loan amount" of the loan (for purposes of calculating the interest actually charged on that loan), and (2) the restitution Plaintiffs must make to Defendant if rescission were granted. (Id. at 7-8.)

Under the Federal Rules of Evidence, "[a]ll relevant evidence is admissible, except as otherwise provided by... these rules...." Fed. R. Evid. 402. "Evidence which is not relevant is not admissible." Fed. R. Evid. 402. "'Relevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed. R. Evid. 401. "Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Fed. R. Evid. 403.

In their Amended Complaint, Plaintiffs allege that they are entitled to a rescission of the loan agreement because Defendant violated § 1635 of TILA. (See Dkt. No. 8, Part 1, ¶¶ 46-62 [Plf.'s Am. Compl.].) "When a borrower rescinds a loan, he or she must return the money borrowed." In re Porter, 961 F.2d 1066, 1077 (3rd Cir.1992); see also Valentine v. Influential Sav. & Loan Ass'n, 572 F. Supp. 36, 40-41 (E.D. Pa.1983) (noting that TILA rescission "is an equitable remedy and the court may condition it upon the borrower's return of the monies advanced by the lender")*fn2 Consequentially, the $20,122.39 payment by Defendant may be relevant to the amount of money that Plaintiffs must return to Defendants. In addition, the Court finds that the probative value of such evidence is not substantially outweighed by the danger of unfair prejudice, confusion of the issues or misleading the jury.

Moreover, the $20,122.39 payment by Defendant may be relevant to the calculation of the "total loan amount" of the loan made to Plaintiffs (for purposes of calculating the interest actually charged on that loan). As Plaintiffs' themselves point out, when they entered into the loan agreement with Defendant on March 27, 2001, one of the documents they signed stated that they "granted a 1st position lien to [Defendant] on [their] real property... located at [Plaintiffs' current home address]." (Dkt. No. 45, Part 15, at 14 [Exh. H to Zarlock Affid., in Support of Def.'s Motion for Summ. Judg.].) Moreover, Plaintiffs' Amended Complaint alleges that, contrary to their understanding on March 27, 2001, the loan made by Defendant to Plaintiffs at that time did not in fact pay off their total indebtedness to Mr. Riedl (implying that there was some other amount owed to Mr. Riedl at the time). (Dkt. No. 8, Part 1, ¶ 19 [Plf.'s Am. Compl.].)*fn3 At least an argument exists, then, that the $20,122.39 amount that Defendant paid Mr. Riedl was part of the "total loan amount" in that it was necessary for Defendant to secure the first priority lien that Plaintiffs promised to provide Defendant. In addition, the Court finds that the probative value of such evidence is not substantially outweighed by the danger of unfair prejudice, confusion of the issues or misleading the jury.

As a result, the Court denies Plaintiffs' motion.

2. Whether Defendant Should Be Precluded from Introducing Evidence that It Made an Error on Its Forms Regarding Payment to IRES for Title Fees

In their second motion in limine, Plaintiffs argue that Defendant should be precluded from introducing any evidence that it made an error on the forms it asked Plaintiffs to sign during the March 27, 2001, loan transaction authorizing Defendant's payment to its affiliate company Integrated Real Estate Solutions ("IRES") for performing the title fees. (Dkt. No. 82, at 4.)*fn4 Plaintiffs argue that such evidence is inadmissible under Federal Rule of Evidence 403. (Dkt. No. 82, at 8.) In support of their position, Plaintiffs argue that "[t]he Truth in Lending Act provides two (2) separate defenses that a creditor may assert with respect to an error it may have committed[,]" but "[t]he Defendant may not avail itself of either of the error defenses in this matter."*fn5 (Dkt. No. 82, at 4-5.) Plaintiffs argue that "[t]he correction of error defense is not available to the Defendant since it failed to timely assert such defense[,] and [t]he Defendant may not avail itself of the bona fide error defense because it has not properly plead such a defense." (Id.)

In response, Defendant asserts three arguments: (1) Plaintiffs' argument is barred by the law-of-the-case doctrine; (2) the two §1640 defenses pertain only to claims involving failure to disclose; and (3) because Plaintiffs' Amended Complaint includes allegations as to points and fees paid, in which Plaintiffs allege that TILA and HOEPA govern their loan agreement, Defendant must be permitted to present evidence to the contrary. (Dkt. No. 100, at 10-12.)

As an initial matter, Plaintiff has not persuaded the Court that, even if Defendant is limited by the two defenses listed in §1640 TILA, Defendant's typographical error argument does not fall within the category of the statutorily authorized bona fide errors defense. See 15 U.S.C.§ ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.