The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge
MEMORANDUM OPINION AND ORDER
Now pending before the Court are Defendant The CIT Group/Consumer Finance, Inc.'s ("CIT") MOTION FOR SUMMARY JUDGMENT (Document No. 34) and Defendant MorEquity, Inc.'s ("MorEquity") MOTION FOR SUMMARY JUDGMENT (Document No. 38). Plaintiffs have filed responses to the motions and the issues have been thoroughly briefed and are ripe for disposition.
Factual and Procedural Background
This action was originally filed under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., in state court and removed by Defendants to this Court. Plaintiffs are sisters who purchased a home in 1981 on Mt. Vernon Street in the Homewood section of Pittsburgh for $16,000 cash. In September 2001, Ms. Jackson responded to a television advertisement by Defendant, The Application Center Ltd., to inquire about minor home repairs. She was allegedly induced to enter into a contract for home improvements, to borrow the sum of $33,750.00, and accede to a mortgage on the home in that amount. The Application Center organized the parties, secured CIT as a lender, obtained the contractor and appointed Corestate Settlement Services ("Corestate") to conduct the closing. Plaintiffs assert that they requested to use their own contractor, but were told that they were required to use Brimanda Builders, the contractor chosen by The Application Center. The contract between Plaintiffs and Brimanda Builders is dated September 26, 2001.
The closing occurred in Plaintiffs' home on November 9, 2001. John Morell from Corestates was the only person who met with Plaintiffs and he conducted the closing. Plaintiff, Jackie Jackson, signed a Promissory Note, a Uniform Residential Loan Application, a U.S. Department of Housing and Urban Development Settlement Statement, a Federal Disclosure Statement and a Real Property Mortgage (See Document No. 41, Appendices 3-7). Plaintiffs were also given a Notice of Right to Cancel. No representative of CIT attended the closing, although a check in the amount of $33,374.00 was sent from CIT. Of this amount, $24,451.84 was to be paid to Ms. Jackson. Morell instructed Ms. Jackson to endorse the check and return it to him. The check then was sent immediately to Brimanda Builders. Thus, Plaintiffs were deprived of the ability to withhold payment to the contractor for non-conforming work. All Plaintiffs received was a check in the amount of $2040.00. Certain other disbursements of approximately $6,095 were made from the loan proceeds, including payments to PHFA, the City and County treasurers and National City Bank.
Plaintiffs made monthly payments to CIT from December 2001 through February 2002, after which CIT sold the loan to Defendant MorEquity.*fn1 Plaintiffs continued to make the required payments to MorEquity through April 2003.
The contractor who actually performed the work was Porter Contracting. The work was allegedly done so poorly that it amounted to fraud and had a negative value impact because it ruined the infrastructure of the house. The cost to repair the poor work exceeds the value of the house. After trying for more than a year to get the contractor to remedy the improper work, Plaintiffs stopped making payments on the mortgage. On October 3, 2003, Plaintiffs' attorney sent a notice letter to CIT that Plaintiffs were rescinding the contract pursuant to TILA. CIT refused to take any action to rescind the contract or to terminate the security interest, which Plaintiffs contend is required by TILA, 15 U.S.C. § 1635(b) and Regulation Z, 12 C.F.R. § 226.23(d)(2).
This lawsuit was filed on March 20, 2006. In an October 30, 2006 Memorandum Opinion and Order, the Court denied Defendants' Motions to Dismiss, noting that the parties had not provided the applicable loan documents. The Court observed that Defendants would be entitled to renew their arguments upon a more fully-developed record at the summary judgment stage. The relevant loan documents have now been provided. The Court granted Plaintiffs' Motion for Default Judgment against Defendant, The Application Center Ltd.
Rule 56(c) of the Federal Rules of Civil Procedure reads, in pertinent part, as follows: [Summary Judgment] shall be rendered forthwith 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.
In interpreting Rule 56(c), the United States Supreme Court has stated:
The plain language . . . mandates entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to material fact," since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.
An issue of material fact is genuine only if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must view the facts in a light most favorable to the non-moving party, and the burden of establishing that no genuine issue of material fact exists rests with the movant. Celotex, 477 U.S. at 323. The "existence of disputed issues of material fact should be ascertained by resolving all inferences, doubts and issues of credibility against the moving party." Ely v. Hall's Motor Transit Co., 590 F.2d 62, 66 (3d Cir. 1978) (quoting Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir. 1972)). Final credibility determinations on material issues cannot be made in the context of a motion for summary ...