The opinion of the court was delivered by: FRANKLIN S. VAN ANTWERPEN
In the only remaining Count of their Complaint,
plaintiffs Robert and Carole Gombosi allege that defendants violated the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq., as amended ("TILA") and its accompanying regulations, 12 C.F.R. §§ 226.1, et seq., by failing to make required disclosures and failing to provide plaintiffs a right of rescission in connection with a $ 250,000 loan secured by a mortgage on plaintiffs' principal residence. Defendants Carteret Mortgage Corporation and the Resolution Trust Company, in its capacity as Receiver of Carteret Savings Bank, F.A., have moved for summary judgment on the ground that the transaction at issue is not covered by the Act.
TILA's disclosure requirements do not apply to "credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes . . . ." 15 U.S.C. § 1603(1); 12 C.F.R. § 226.3(a). Rather, TILA's scope is limited to "consumer" credit transactions, which are defined as transactions in which "the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C. § 1602(h); 12 C.F.R. § 226.2(p). Defendants argue that because the transaction at issue here was primarily business or commercial in nature, TILA does not apply and therefore plaintiffs' claims must fail. Plaintiffs contend that the transaction is properly characterized as personal, pointing out that the defendants attempted to comply with TILA's requirements. In the alternative, they argue that this issue should be left for the trier of fact to decide. This court has jurisdiction under 15 U.S.C. § 1640(e) and 28 U.S.C. § 1337.
Rule 56(c) of the Federal Rules of Civil Procedure provides for summary judgment where the
"The party moving for summary judgment must demonstrate that, under the undisputed facts, the non-movant has failed to introduce evidence supporting a necessary element of his case." In Re Phillips Petroleum Sec. Litig., 881 F.2d 1236, 1243 (3d Cir. 1989). To defeat summary judgment, the non-moving party must respond with facts of record that contradict the facts identified by the movant and may not rest on mere denials. See Celotex Corp. v. Catrett, 477 U.S. 317, 321 n.3, 106 S. Ct. 2548, 2552 n.3, 91 L. Ed. 2d 265 (1986) (quoting Fed. R. Civ. P. 56(e)); see also First Nat'l Bank v. Lincoln Nat'l Life Ins. Co., 824 F.2d 277, 282 (3d Cir. 1987). The non-moving party must demonstrate the existence of evidence that would support a jury finding in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986).
The undisputed facts relevant to the question of whether this transaction was primarily for business or personal purposes are as follows. Sometime prior to September 24, 1990, plaintiffs applied for a mortgage through the Suburban Mortgage Group, Inc., ("Suburban Mortgage") a mortgage broker located in Bluebell, Pennsylvania. Plaintiffs already owned their residence at 937 Barnsdale Road in Bethlehem, Pennsylvania, although it was subject to an existing mortgage. Plaintiffs were refinancing their existing mortgage as well as borrowing additional money. In her deposition, Mrs. Gombosi stated that the purpose of the new mortgage loan was "[to] refinance." Deposition of Carole Gombosi, at 6. Similarly, Mr. Gombosi testified that the loan was intended to pay off existing debts. Deposition of Robert Gombosi, at 5.
In a letter dated September 24, 1990, Suburban Mortgage informed plaintiffs that their loan application had been approved at a fixed annual interest rate of 10.75% with a thirty-year term for a principal amount of $ 250,000. As stated in the letter, the loan had to be secured by a first mortgage on plaintiffs' residence. Accordingly, satisfaction of plaintiffs' existing residential mortgage, which was held by Keystone Savings Association, was a condition of the loan commitment. Satisfaction of another outstanding loan from Meridian Bank was also a condition of the commitment.
The Complaint alleges that Suburban Mortgage obtained a mortgage for plaintiffs from defendant Carteret Mortgage Corporation ("the Carteret loan"). Carteret Mortgage Corporation's letterhead describes it as "a division of Carteret Savings Bank, F.A.," and several documents in the record identify former defendant Carteret Savings Bank, F.A. as the lender. After the inception of this litigation, Carteret Savings Bank, F.A. was put into receivership, and the receiver, Resolution Trust Corporation, was substituted for Carteret Savings Bank, F.A. as a defendant.
Closing for the Carteret loan occurred on October 22, 1990. The U.S. Department of Housing and Urban Development Disclosure and Settlement Statement ("HUD settlement sheet") signed by the Gombosis on that date details the ...