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Davi Schwartzbaum and Salvacion Schwartzbaum v. Emigrant Mortgage Company

December 14, 2012

DAVI SCHWARTZBAUM AND SALVACION SCHWARTZBAUM,
PLAINTIFFS,
v.
EMIGRANT MORTGAGE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge

OPINION & ORDER

Plaintiffs Davi and Salvacion Schwartzbaum bring suit against Defendant Emigrant Mortgage Company ("Emigrant"), challenging Emigrant's disclosures on its Truth-in-Lending Disclosure Statement ("TILDS"). Emigrant now moves for summary judgment based on the remaining two issues in this case: whether Emigrant failed (1) to properly disclose the "amount financed," "finance charge" and "annual percentage rate" to plaintiffs on the TILDS or (2) to deliver two copies of the Notice of Right to Cancel to each plaintiff, as required by the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.,and implementing Regulation Z, 12 C.F.R. §§ 226 et seq. For the reasons that follow, Emigrant's motion is granted.

I.Background*fn1

In January 2008, the Schwartzbaums applied for a refinance loan of $180,000 from Emigrant, to pay for repairs on their house in Nanuet, New York. Def. 56.1 ¶¶ 7, 10. On February 13, 2008, the Schwartzbaums closed on the mortgage agreement with Emigrant. Id.

¶ 13. The final note evidencing indebtedness ("Note") signed by the Schwartzbaums was for a 30-year adjustable rate mortgage of $180,000, with an initial interest rate of 11.625% and subject to a default interest rate of 18%. Id. ¶ 14; Flickinger Decl. Exs. E, F.In addition to the Note, the Schwartzbaums signed (1) a Notice of Right to Cancel, in which they acknowledged receipt of two copies of that document, and (2) the TILDS, which disclosed the amount financed, finance charge, and annual percentage rate, as required by TILA. Id. ¶¶ 14, 16; TILDS.

The Schwartzbaums began making monthly payments on April 1, 2008. Compl. ¶ 30; see TILDS. However, by October 2008, the Schwartzbaums became unable to timely make those payments. Compl. ¶ 31.

On April 16, 2009, the Schwartzbaums filed this lawsuit. Dkt. 1. Their 10-count Complaint alleged, inter alia, that they had not received adequate notice of their right to cancel the loan transaction, as required by TILA, Compl. ¶¶ 27, 43; that Emigrant failed to properly disclose the "amount financed," "finance charge," and "annual percentage rate" to plaintiffs on the TILDS, id. ¶ 43; that they were entitled to, but did not receive, the disclosures required by the Home Ownership Equity Protection Act ("HOEPA"), 14 U.S.C. §§ 1639 et seq.,Compl.¶¶ 27, 54; and that they did not understand the default interest rider to the subject loan documents, id. ¶ 25. In addition to their TILA and HOEPA claims, the Schwartzbaums brought claims under the New York State Deceptive Business Practices Act (General Business Law § 349), as well as common law claims of unjust enrichment, usury, unconscionability, and breach of the implied covenant of good faith and fair dealing. Id. ¶ 10.*fn2

On May 29, 2009, Emigrant moved to dismiss for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). Dkt. 4. On June 16, 2010, the Honorable Stephen C. Robinson, to whom this case was then assigned, granted in part Emigrant's motion to dismiss, adopting in part the Report and Recommendation of Hon. Magistrate Judge Lisa Margaret Smith (Dkt. 19). Dkt.

25. Specifically, Judge Robinson dismissed Counts Two, Six, and Nine, which alleged violations of HOEPA, unjust enrichment, and usury, respectively. Id. at 11.On October 7, 2011, the case was reassigned to this Court.

On July 23, 2012, the Schwartzbaums agreed to voluntarily dismiss with prejudice all remaining claims except for Count One. Dkt. 57. That Count seeks an extended right of rescission for violations of TILA and Regulation Z, pursuant to 12 C.F.R. § 226.23(a)(3). It alleges that Emigrant violated TILA and Regulation Z by: (1) failing to deliver to them two copies of the Notice of the Right to Cancel as required by 12 C.F.R. § 226.23(b)(1); (2) failing to disclose properly and accurately the amount financed, pursuant to 15 U.S.C. § 1638(a)(2)(A) and 12 C.F.R. § 226.18(b); (3) failing to disclose properly and accurately the finance charge, pursuant to 15 U.S.C. § 1638(a)(3) and 12 C.F.R. §§ 226.4, 226.18(d); (4) failing to disclose properly and accurately the annual percentage rate, pursuant to 15 U.S.C. § 1638(a)(4) and 12 C.F.R. § 226.18(e); and (5) failing to disclose properly and accurately all escrow agreements. Compl. ¶ 43.

On July 20, 2012, Emigrant moved for summary judgment on Count One. Dkt. 52. On August 27, 2012, after the Court granted the plaintiffs an extension of their time to respond, plaintiffs filed their opposition to the motion for summary judgment. Dkt. 59. On September 10, 2012, Emigrant filed its reply. Dkt. 61.

II.Discussion

A.Legal Standard

To prevail on a motion for summary judgment, the movant must "show [ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The movant bears the burden of demonstrating the absence of a question of material fact. In making this determination, the Court must view all facts "in the light most favorable" to the non-moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); see also Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d Cir. 2008). The movant may also discharge its burden by demonstrating, where the ...


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