The plaintiffs, defendants in a state foreclosure action they could not win, asked the servicer for loan information, and when the servicer responded partially, the plaintiffs sued in federal court for a TILA violation. The judge dismissed the case with prejudice and mooted all other motions, claiming the plaintiff had 2 years to solicit the information, and ask the lender attorney who held the note, etc, but instead filed the sham lawsuit just for the fine and fees.
Even federal judges have sublime common sense that many foreclosure defense attorneys lack. How much did the Loan Lawyer bozos charge their desperate clients for this wasted action? The clients should sue Loan Lawyers for malpractice, in my humble opinion.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION
Case No.: 12-CV-80625-RYSKAMP/HOPKINS
WILNER GUILLAUME et al.,
FEDERAL NATIONAL MORTGAGE
ASSOCIATION et al.,
ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
THIS CAUSE comes before the Court on Defendants’ motions to dismiss [DE 23, 24]
filed on November 14, 2012. Plaintiffs filed responses [DE 31, 32] on December 10, 2012.
Defendants filed a joint reply [DE 34] on December 20, 2012. A hearing was held on the matter
on January 18, 2013. This motion is ripe for adjudication.
Plaintiffs Wilner Guillaume and Rachel Guillaume (“Plaintiffs”), husband and wife, filed
this action through their counsel, Loan Lawyers, LLC (“Loan Lawyers”), against Defendants
Federal National Mortgage Association (“Fannie Mae”) and Wells Fargo Bank, N.A. (“Wells
Fargo) (collectively, “Defendants”) under the Truth in Lending Act, 15 U.S.C. § 1601, et seq.
(“TILA”). Plaintiffs are borrowers whose mortgage loan obligation is owned by Fannie Mae1
1 The amended complaint alleges, and the exhibits attached demonstrate, that Fannie Mae was assigned
Plaintiffs’ mortgage loan, and was not the initial creditor.
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and serviced by Wells Fargo.2 On July 15, 2008, Wells Fargo initiated foreclosure proceedings
against Plaintiffs, alleging that “as servicer for the owner and acting on behalf of the owner with
authority to do so, is the present designated holder of the note and mortgage with authority to
pursue the present action.” Plaintiffs, represented by Loan Lawyers in that action, allege they
were unsure of who owned their mortgage loan, and thus, through Loan Lawyers, sent a written
request for information to Wells Fargo pursuant to TILA § 1641(f)(2) insisting that it identify the
owner or master servicer of their loan. The letter was sent on June 21, 2011 and contained
requests for fifteen items, including an itemized pay-off statement for the full amount needed to
reinstate the mortgage. Wells Fargo responded to Loan Lawyers on July 5, 2011, providing a
complete payment history of the loan and the address and contact information of its attorneys
managing the foreclosure action. Wells Fargo directed Loan Lawyers to the phone numbers of
its servicing representatives for any additional questions. Without any further inquiry, however,
Plaintiffs filed this action on May 25, 2012 alleging Defendants failed to identify the “master
servicer” of the loan required under TILA § 1642(f)(2), and that failed to provide a pay-off
statement within a reasonable time in violation of Regulation Z, 12 C.F.R. § 226.36(c)(1)(iii).
Defendants now move to dismiss this action claiming, inter alia, that this lawsuit is a
sham, and should be dismissed as such, because Plaintiffs (through Loan Lawyers) manufactured
TILA claims to obtain statutory damages and attorneys’ fees and gain leverage in the pending
foreclosure proceedings. For the reasons discussed below, this Court agrees.
2 As demonstrated in the exhibits attached to Plaintiffs’ amended complaint, the mortgage loan was actually
serviced by Wells Fargo Home Mortage (“WFHM”), an operating division of Wells Fargo. For the purpose of this
action, they are one in the same, see In re Krause, 414 B.R. 243, 248 (Bankr. S.D. Ohio 2009), and the Court will
refer to WFHM and Wells Fargo unanimously as Wells Fargo.
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II. Legal Standard on Motion to Dismiss
In order to state a claim for relief, Federal Rule of Civil Procedure Rule 8(a) requires
only “a short and plain statement of the claim showing that the pleader is entitled to relief.” FED.
R. CIV. P. 8(a)(2). When considering a motion to dismiss, the Court must accept all of the
plaintiff’s allegations as true. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). However, the
Court need not accept legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Further, “a court’s duty to liberally construe a plaintiff’s complaint in the face of a motion to
dismiss is not the equivalent of a duty to re-write it for [him].” Peterson v. Atlanta Hous. Auth.,
998 F.2d 904, 912 (11th Cir. 1993).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678.
“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). “Factual
allegations must be enough to raise a right to relief above the speculative level.” Id.
TILA is a consumer protection statute enacted “to assure a meaningful disclosure of
credit terms so that the consumer will be able to compare more readily the various credit terms
available . . . and avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). For certain
Case 9:12-cv-80625-KLR Document 40 Entered on FLSD Docket 03/11/2013 Page 3 of 8
disclosure (nondisclosure) violations, TILA creates a private cause of action. Specifically, §
1640(a) creates creditor liability for violations of § 1641(f), which provides in pertinent part:
Upon written request by the obligor, the servicer shall provide the obligor, the
best knowledge of the servicer, with the name, address, and telephone number of
the owner of the obligation or the master servicer of the obligation.3
15 U.S.C. § 1641(f)(2) (emphasis added).4 For other violations under TILA, it is unclear
whether a private right of action exists. Particularly, courts are divided as to whether individuals
may bring an action under Regulation Z, 12 C.F.R. § 226.36(c)(1)(iii) for failure to provide a
pay-off statement within a reasonable time. See Runkle, 2012 WL 5861803, at *5 (concluding
there is a private right of action for violations of 12 C.F.R. § 226.36(c)(1)(iii)); Montano, 2012
WL 5233653 at *6 (holding 12 C.F.R. § 226.36(c)(1)(iii) only applies to high cost mortgages);
Kievman v. Fed. Nat’l Mortg. Ass’n, Case No. 12-cv-22315, 2012 WL 5378036, at *4 (S.D. Fla.
Sept. 14, 2012) (holding there is no private right of action). See generally Danier v. Fed. Nat’l
Mortg. Ass’n, Case No. 12-cv-62354, 2012 WL 462385, at *3–4 (discussing the differing
holdings of the cases above and concluding there is a private right of action for violations of 12
C.F.R. § 226.36(c)(1)(iii)).
3 A “master servicer” is defined as “the owner of the right to perform servicing, which may actually
perform the servicing itself or may do so through a subservicer.” 24 C.F.R. § 3500.21. A subservicer does not own
the right to perform the servicing, but does so on behalf of the master servicer. Id. TILA does not impose liability
on servicers, but rather on creditors who fail to comply with various requirements under TILA. 15 U.S.C. § 1640(a).
4 Most courts addressing the issue have found that a creditor is vicariously liable for the acts of the servicer
under § 1641(f)(2). See Montano v. Wells Fargo Bank, N.A., Case No. 12-cv-80718, 2012 WL 5233653, at *3–4
(S.D. Fla. Oct. 23, 2012); Santos v. Fed. Nat’l Mortg. Ass’n, Case No. 12-cv-61173, 2012 WL 3860559 (S.D. Fla.
Sept. 6, 2012); Galeano v. Fed. Home Loan Mortg. Corp., Case No. 12-cv-61174, 2012 WL 3613890 (S.D. Fla.
Aug. 21, 2012); Kissenger v. Wells Fargo Bank, N.A., Case No. 12-cv-60878 (S.D. Fla. Aug. 30, 2012); Khan v.
Bank of New York Mellon, 849 F. Supp. 2d 1377 (S.D. Fla. Mar. 19, 2012). But see Holcomb v. Fed. Home Loan
Mortg. Corp., Case No. 10-cv-81186, 2011 WL 5080324 (S.D. Fla. Oct. 26, 2011). Further, courts have expanded
the scope of vicarious liability to hold assignees vicariously liable for their servicer’s violations under § 1641(f)(2),
as well. See Runkle v. Fed. Nat’l Mortg. Ass’n, ___ F. Supp. 2d ___ , 2012 WL 5861802, at *7 (S.D. Fla. 2012),
vacated on other grounds on reconsideration, Case No. 12-cv-61247, 2012 WL 6554755 (S.D. Fla. Dec. 10, 2012)
(“[A]n interpretation of TILA that did not hold assignees liable would conflict with the purpose of Congress’ 2009
TILA amendment, other statutory language within TILA, and case law recognizing the possibility that assignees of
creditors can also be held liable for servicer’s § 1641(F)2) violations.”) (internal citations omitted).
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TILA was designed to protect consumers by ensuring access to information concerning
who owned and serviced their loans and how much they owed. Thus, the language of §
1641(f)(2) states that “obligors,” or consumers, may send servicers requests for this information;
a choice of words which, while may not be preclusive to the sending of such requests by
attorneys, reflects Congress’s intention that the statute serve as a framework for meaningful
disclosure to borrowers with a genuine need for information regarding their loans. See Marx v.
Gen. Revenue Corp., __ S. Ct. __, 2013 WL 673254, at *4 (2013) (“In all statutory construction
cases, the court assumes the ordinary meaning of the statutory language accurately expresses the
legislative purpose.”). Instead of being used as a shield, however, plaintiffs’ lawyers have used
TILA to spawn a cottage industry of lawsuit farming by sending requests for information and,
without further inquiry, suing creditors and servicers for technical violations of the statute.
Presumably, lawyers assume defendants would rather settle such claims rather than engage in
costly litigation, and they use the statute’s statutory damages and mandatory attorneys’ fees as
leveraging blocks to do so. Such strategies are particularly effective when the same lawyers
bringing suit under TILA are also defending their clients in parallel foreclosure proceedings, as a
creditor faced with such claims may opt to discontinue foreclosure and modify a loan in
exchange for dismissal of the TILA action.
While Congress included statutory damages and attorneys’ fees as incentives for lawyers
to bring claims under TILA, where such claims exceed the scope of Congress’s intent, the Court
may deny relief. In particular, where the application of a statute is at odds with its spirit and
purpose as intended by its drafters, “the intention of the drafters . . . controls.” United States v.
Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989). See Zuni Pub. Sch. Dist. No. 89 v. Dep’t of
Educ., 550 U.S. 81, 105 (2007) (J. Stevens, concurring) (“As long as the court is faithful to the
Case 9:12-cv-80625-KLR Document 40 Entered on FLSD Docket 03/11/2013 Page 5 of 8
intent of Congress, the decision to override the strict interpretation of the text is a correct
performance of the judicial function.”). This doctrine, sometimes referred to as the “antiabsurdity
canon,” empowers courts to preserve the legislative integrity of a statute by preventing
absurd results in its application. See Silva-Hernandez v. U.S. Bureau of Citizenship and
Immigration Servs., 701 F.3d 356, 363 (11th Cir. 2012). Here, the Court finds that the
invocation of this doctrine is necessary to promote Congress’s intent and safeguard TILA from
manipulative practices of plaintiffs’ attorneys attempting to pervert its effect.
In this case, allowing Loan Lawyers to capitalize on alleged defects in a response to a
request for information sent to Wells Fargo while foreclosure proceedings were pending between
parties is not in keeping with the spirit or purpose of TILA as a framework for meaningful
disclosure and consumer protection. Specifically, Wells Fargo initiated foreclosure proceedings
against Plaintiffs on July 15, 2008. In those proceedings, Plaintiffs were represented by Loan
Lawyers. Loan Lawyers waited until June 21, 2011 to send Wells Fargo a request for
information under TILA. Loan Lawyers sent the request directly to Wells Fargo, and did not
forward a copy to Wells Fargo’s counsel. After Wells Fargo responded, Loan Lawyers, on
behalf of Plaintiffs, filed suit against Defendants without any further inquiry or request for
clarification. It is clear from the facts that Plaintiffs did not suffer from any meaningful
deprivation of information concerning their mortgage loan; if Loan Lawyers did not know the
owner or master servicer of Plaintiffs’ loan or the amount of money Plaintiffs owed, it could
have easily acquired such information through discovery in the state foreclosure action, or even
through such traditional means as asking Wells Fargo’s counsel. This is further evidenced by the
fact that Loan Lawyers waited over two years from the commencement of the foreclosure
proceedings to send its request, and then delivered it directly to Wells Fargo without noticing its
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counsel. Loan Lawyers’s advancements in this action are not grounded on genuine failures of
disclosure or surreptitious loan practices, but rather as a superfluous attempt to leverage
settlement and obtain fees. Such actions, even if supported by a strict interpretation of the text,
are contrary to the intent of the statute, and thus fail as a matter of law. See Holy Trinity Church
v. United States, 143 U.S. 457, 459 (1892) (“It is a familiar rule that a thing may be within the
letter of the statute and yet not within the statue, because not within its spirit nor within the
intention of its makers.”).
The Court is not convinced by Plaintiffs arguments otherwise. Plaintiffs point out that
other courts have declined to dismiss actions brought under TILA § 1642(f)(2) and 12 C.F.R. §
226.36(c)(1)(iii) when defendants have alleged such misuse. The cases which Plaintiffs cite,
however—Santos v. Fed. Nat’l Mortg. Ass’n, ___ F. Supp. 2d ___, 2012 WL 3860559 (S.D. Fla.
Sept. 6, 2012) and Galeano, 2012 WL 3613890—are inapposite. In neither of those cases were
parties engaged in foreclosure proceedings when the alleged violation occurred. See Santos,
2012 WL 3860559, at *2; Galeano, 2012 WL 3623890, at *3. Here, Plaintiffs, represented by
Loan Lawyers, were engaged in a state foreclosure action with Wells Fargo when the request for
information was made and when Defendants’ alleged violations took place. Thus, whereas the
plaintiffs’ requests for information in Santos and Galeano may have been legitimate, here they
were not. As explained above, these factual distinctions merit dismissal.
TILA must be construed “in order to best serve Congress’ intent.” Ellis v. Gen. Motors
Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998). Here, the Court finds that Plaintiffs’
claims are contrary to Congress’s intent and at odds with the purpose and spirit of the law. Thus,
Plaintiffs’ claims are dismissed.
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The Court has carefully considered the motions, responses, replies, applicable law, and
pertinent portions of the record. For the foregoing reasons, it is hereby
ORDERED AND ADJUDGED that Defendants’ motions to dismiss [DE 23, 24] are
GRANTED. Plaintiffs’ claims are DISMISSED WITH PREJUDICE. The Clerk of Court is
directed to CLOSE this case and DENY any pending motions as MOOT. Final judgment will
be entered for Defendants by separate order.
DONE AND ORDERED in Chambers at West Palm Beach, Florida this 7 day of March,
/s/ Kenneth L. Ryskamp
KENNETH L. RYSKAMP
UNITED STATES DISTRICT JUDGE
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