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Schafer v. Decision One Mortgage Corp.

June 30, 2009

FRANCES L. SCHAFER PLAINTIFF,
v.
DECISION ONE MORTGAGE CORPORATION, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Gene E.K. Pratter, J.

MEMORANDUM

Plaintiff Frances L. Schafer brought suit against the lender in a serial loan transaction, the two assignees and present holders of the loans at issue, and the loan broker. Against the lender and the present holders of the loans, Ms. Schafer sought a declaration of rescission, statutory damages, finance charges and fees under the Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA"), plus reasonable attorneys' fees and costs. She asserted state law claims against the loan broker.*fn1

Motions to dismiss were filed by the lender, Decision One Mortgage Corporation ("Decision One"), and the two present holders of the loans, Greenwich Capital Financial Products, Inc. ("Greenwich") and HSBC Mortgage Corporation ("HSBC"). On May 29, 2009, the Court granted both of these motions on the ground that Ms. Schafer lacked standing to sue in her own capacity. The dismissal was without prejudice to the right of Ms. Schafer's Chapter 7 bankruptcy trustee to pursue the claims that Ms. Schafer asserted, as a party-plaintiff, or the right of Ms. Schafer to re-file a complaint in the event that her claims were abandoned by the bankruptcy trustee. See Order of May 29, 2009 (Docket No. 24).

Ms. Schafer now asks the Court to reconsider the May 29 ruling pursuant to Federal Rule of Civil Procedure 59(e). For the reasons stated below, Ms. Schafer's Motion for Reconsideration is denied.

I. FACTUAL BACKGROUND

Although the facts of this case were articulated in the Court's May 29th Memorandum, they are included here for ease of reference.

Ms. Schafer entered into a mortgage loan transaction with Decision One on December 21, 2004, to refinance the existing mortgage on her residence in Exton, Pennsylvania. Compl. at ¶¶ 3, 6. Ms. Schafer asserts that - contrary to her expectation that she would receive a single loan from Decision One - Decision One "split" the loan transaction into two loans, resulting in a serial loan transaction. Id. at ¶ 6. Ms. Schafer states that she was not provided with disclosures that accurately described the loans she received; rather, she was presented with allegedly inaccurate Notices of Right to Cancel. She claims that she was charged excessive title insurance costs and other costs that were improperly excluded from the finance charge disclosed to her. Id. at ¶¶ 4, 7, 8. All of these improprieties, she alleges, constitute material violations of TILA. Id. The smaller of the two loans eventually was assigned to HSBC and the larger was assigned to Greenwich. Id. at ¶ 2.

On July 14, 2005, Ms. Schafer filed a Chapter 7 bankruptcy petition. She did not reference her TILA claims in the Bankruptcy Schedules, and she did not list them as assets to be exempted from distribution to the trustee. See In re Schafer, No. 05-19676 (DWS), at No. 1 (Bankr. E.D. Pa. 2005) (Voluntary Petition for Bankruptcy with accompanying schedules), attached to Defendant Greenwich's Motion to Dismiss as Ex. A. Ms. Schafer asserts that she was not aware in 2005 that she had any claims arising from her 2004 loan transaction, and neither was the attorney who was then representing her. Pl.'s Mem. Of Law in Opp. to Mot. of Defs. Decision One and HSBC to Dismiss at 2.*fn2 Ms. Schafer was granted a discharge in bankruptcy on November 2, 2005, and her Chapter 7 bankruptcy case was closed two weeks later. See id.

On June 6, 2007, a foreclosure action was brought against Ms. Schafer in the Chester County Court of Common Pleas, arising out of Ms. Schafer's default on the larger of her two loans. See docket sheet from Deutsche Bank Nat'l Trust Co. v. Schafer, No. 2007-5464-C0 (Pa. C.C.P. Chester County), attached to Defendant Greenwich's Motion to Dismiss as Ex. B. See also Compl. at Ex. D. On February 13, 2008, the court in the foreclosure action entered judgment against Ms. Schafer. Id.

Prior to the foreclosure action judgment, Ms. Schafer's present counsel sent letters to HSBC, Decision One, Deutsche Bank National Trust Company (the entity which had instituted foreclosure proceedings against Ms. Schafer), and Countrywide Home Loans, Inc. (the entity servicing the loan owned by Greenwich) on or about October 29, 2007. On Ms. Schafer's behalf, her counsel requested rescission of the loans due to material violations of TILA. See Compl. at ¶¶ 9-10, Ex. D. Ms. Schafer maintained that these letters were "qualified written requests" under the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(5)(e) ("RESPA"). Id.

Ms. Schafer received two responses from Countrywide, neither of which indicated that Countrywide or Greenwich would honor Ms. Schafer's rescission request. Compl. at ¶ 10, Ex. E, Ex. F. HSBC denied the rescission request outright. See Compl. at Ex. G.

In 2008, Ms. Schafer filed a Chapter 13 bankruptcy case to stay a sheriff's sale of her home. See Pl.'s Mem. of Law in Opp. to Mot. of Defs. Decision One and HSBC to Dismiss at 3. This Chapter 13 bankruptcy case predated Ms. Schafer's October 28, 2008 filing of a civil complaint in the Chester County Court of Common Pleas against Decision One, HSBC, Greenwich and Evergreen, which was removed to this Court on December 5, 2008.

On December 12, 2008, Decision One and HSBC filed a motion to dismiss the case, based in part on the ground that Ms. Schafer lacked standing to sue because her claims belonged to her Chapter 7 bankruptcy trustee. On February 2, 2009, Greenwich also filed a motion to dismiss, echoing Decision One and HSBC's argument that Ms. Schafer lacked standing to pursue her TILA claims. After an Initial Pretrial Conference, multiple rounds of briefing, and oral argument, the Court granted the motions to dismiss on May 29, 2009. The dismissal was without prejudice to the right of the bankruptcy trustee to pursue the claims that Ms. Schafer asserted, as a party-plaintiff, or the right of Ms. Schafer to re-file a complaint in the event that her claims were abandoned by her Chapter 7 bankruptcy trustee.

On June 2, 2009, Ms. Schafer filed a motion for reconsideration regarding the Court's dismissal of her claims. On that same date, she also filed a motion to reopen her Chapter 7 bankruptcy case to determine whether the bankruptcy trustee will prosecute her TILA claims or abandon them to her. See Motion to Reopen Case, attached to Pl.'s Mot. for ...


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