United States District Court, E.D. Kentucky, Lexington
MEMORANDUM OPINION & ORDER
M. Hood Senior U.S. District Judge
matter is before the Court upon the Motion to Dismiss filed
by Defendant, Wells Fargo, N.A., a/k/a Wells Fargo Home
Mortgage Inc. (“Wells Fargo”) [DE 8]. Plaintiffs
Len Kirschbaum and Kim Kirschbaum (“Plaintiffs”)
have filed a Response [DE 10] and Wells Fargo has filed a
Reply in further support of its Motion [DE 11]. Thus, the
matter is fully briefed and ripe for review.
Factual and Procedural Background
the allegations of the pro se Complaint filed by
Plaintiffs are vague, the Complaint generally alleges that
Wells Fargo wrongfully foreclosed on real estate belonging to
Plaintiffs and violated various provisions of the Truth in
Lending Act (“TILA”), 15 U.S.C. § 1601,
et seq., the underlying Regulation Z, 12 C.F.R.
§ 226.1, et seq., and the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C.
§ 2601, et seq. Plaintiffs request rescission
of the Mortgage and Note at issue, clear title to the
property, damages for emotional distress as a result of
“countless telephone calls ascertaining the delinquency
of the bill and or mortgage, ” statutory damages for
violations of TILA, RESPA, and “the Unfair and
Deceptive Acts and Practices, ” treble damages for
“usurious interest, ” return of Plaintiffs'
down payment, installments, late payments, and other
payments, as well as interest on the entire amount of the
loan, and costs of the litigation. Plaintiffs also seek
injunctive relief enjoining the foreclosure action and all
other activities complained of “preliminarily and
permanently, ” as well as an injunction enjoining Wells
Fargo from “keeping relevant documents such as,
complete loan package but not limited there to and to forward
all foreclosure documents” to Plaintiffs. [DE 1-1 at
Plaintiffs' Complaint does not provide specific details
regarding the foreclosure action referenced therein, copies
of the docket sheet, Foreclosure Complaint, and the Judgment
from Wells Fargo Bank, N.A. v. Kirschbaum, Case No.
15-CI-326, filed in the Jessamine Circuit Court in Jessamine
County, Kentucky, are attached to Wells Fargo's Motion to
Dismiss [DE 8-2, State Court Record]. According to these
documents, Plaintiffs obtained a mortgage loan from Central
Bank on December 1, 2005 (the “Loan”) [DE 8-2].
In connection with the Loan, Plaintiffs executed a promissory
note (the “Note”) and a mortgage (the
“Mortgage”) pledging their property located at
152 Cherrybrook Drive, Nicholasville, Kentucky as collateral
for the Loan [Id.]. The Mortgage was filed on
December 7, 2005 in Mortgage Book 802, Page 391 of the
Jessamine County Clerk's Office and was subsequently
assigned to Wells Fargo [Id.]. After Plaintiffs'
defaulted in the payment of the Note and Mortgage, Wells
Fargo filed the foreclosure action on or around May 26, 2015
[Id.]. A Judgment and Order of Sale was entered
by the Jessamine Circuit Court on March 7, 2016, finding in
Wells Fargo's favor and referring the matter to the
Master Commissioner for judicial sale. [Id.].
Plaintiffs filed the Complaint in this case in the Jessamine
Circuit Court on April 8, 2016 [DE 1-1]. This case was
removed to this Court on May 5, 2016 [DE 1]. Plaintiffs also
filed a voluntary Chapter 13 bankruptcy petition in the
Eastern District of Kentucky on April 14, 2016, and Wells
Fargo filed a notice of automatic stay in the foreclosure
action on April 21, 2016, staying the foreclosure sale [DE
Standard of Review
Fargo seeks dismissal of Plaintiffs' Complaint pursuant
to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Specifically, Wells
Fargo argues that Plaintiffs' claims seeking rescission
of the foreclosure action pursuant to TILA should be
dismissed pursuant to Rule 12(b)(1) and that the remainder of
Plaintiffs' claims should be dismissed pursuant to Rule
12(b)(6) for failure to state a claim.
12(b)(1) motion can either attack the claim of jurisdiction
on its face, in which case all allegations of the plaintiff
must be considered as true, or it can attack the factual
basis for jurisdiction, in which case the trial court must
weigh the evidence and the plaintiff bears the burden of
proving that jurisdiction exists. See RMI Titanium Co. v.
Westinghouse Elec. Corp., 78 F.3d 1125, 1133-35 (6th
Cir. 1996); United States v. Ritchie, 15 F.3d 592,
598 (6th Cir. 1994); Ohio Nat'l Life Ins. Co. v.
United States, 922 F.2d 320, 325 (6th Cir.1990). Here,
Defendants have put forth a “factual attack” on
the Court's jurisdiction to hear this case; thus, the
Court need not presume the facts in the Complaint as true.
RMI Titanium Co., 78 F.3d at 1134.
a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests
the sufficiency of Plaintiffs' complaint. In ruling on a
Rule 12(b)(6) motion to dismiss, the court “must
construe the complaint in the light most favorable to the
plaintiff and accept all allegations as true.” Keys
v. Humana, Inc., 684 F.3d 605, 608 (6th Cir.
2012)(citation omitted). 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.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). 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.
matters outside the pleadings may not be considered by the
Court in ruling on a motion to dismiss pursuant to Rule
12(b)(6) without converting the motion to a motion for
summary judgment. See Fed. R. Civ. Pro. 12(d).
However, “[i]n addition to the allegations in the
complaint, the court may consider other materials that are
integral to the complaint, are public records, or are
otherwise appropriate for the taking of judicial
notice.” Wyser-Pratte Management Co., Inc. v.
Telxon Corp., 413 F.3d 553, 560 (6th Cir.
2005)(citations omitted). The Foreclosure Complaint and
Judgment from the Jessamine Circuit Court are referred to in
the Complaint and are, indeed, integral to Plaintiffs'
allegations of wrongful foreclosure. Moreover, these
documents are public records and are appropriate for the
taking of judicial notice, as they can be accurately and
readily determined from the Jessamine Circuit Court records,
a source whose accuracy cannot reasonably be questioned. Fed.
R. 201(c). For all of these reasons, the Court may consider
these materials in ruling on Wells Fargo's motion without
converting the motion to a motion for summary judgment.
Plaintiffs' TILA Claims
their Complaint, Plaintiffs allege various violations of the
lender's disclosure obligations arising under TILA, 15
U.S.C. § 1601, et seq., and seek money damages,
as well as rescission of the entire loan transaction [DE
1-1]. TILA “was enacted to promote the informed use of
credit by consumers by requiring meaningful disclosure of
credit terms.” Barrett v. JP Morgan Chase Bank,
N.A., 445 F.3d 874, 875 (6th Cir. 2006)(quoting
Begala v. PNC Bank, Ohio, N.A., 163 F.3d 948, 950
(6th Cir. 1998)). Accordingly, TILA “requires creditors
to provide borrowers with clear and accurate disclosures of
terms dealing with things like finance charges, annual
percentage rates of interest, and the borrower's
rights.” Beach v. Ocwen Federal Bank, 523 U.S.
410, 412 (1998)(citations omitted).
addition to being subject to statutory and actual damages
traceable to a lender's failure to make the required
disclosures, “the Act also authorizes a borrower whose
loan is secured with his ‘principal dwelling, ' and
who has been denied the requisite disclosures, to rescind the
loan transaction entirely.” Id. In these
circumstances, the borrower has the right to rescind the loan
agreement for up to three business days after the
transaction. See 15 U.S.C. § 1635(a). Moreover,
“[w]hen the lender ‘fails to deliver certain
forms or to disclose important terms accurately' to the
borrower, the Act extends the borrower's right to rescind
the transaction to three years.” Barrett, 445
F.3d at 875-876 (quoting Beach, 523 U.S. at 411).
This Court has Subject-Matter Jurisdiction Over
Plaintiff's Claim for Rescission
extent that Plaintiffs' Complaint seeks rescission of the
Loan due to an alleged failure to provide the disclosures
required under TILA, Wells Fargo argues that this Court does
not have subject-matter jurisdiction over this claim, as this
claim is barred by the Rooker-Feldman doctrine. The
Rooker-Feldman doctrine precludes this Court
“from exercising appellate jurisdiction over final
state-court judgments.” Lance v. Dennis, 546
U.S. 459, 463 (2006). In Exxon Mobil Corp. v. Saudi
Basic Indus. Corp., 544 U.S. 280 (2005), the
United States Supreme Court explained:
[t]he Rooker-Feldman doctrine...is confined to cases
of the kind from which the doctrine acquired its name: cases
brought by state-court losers complaining of injuries caused
by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and
rejection of those judgments. Rooker-Feldman does
not otherwise override or supplant preclusion doctrine or
augment the circumscribed doctrines that allow federal courts
to stay or dismiss proceedings in deference to state-court
Id. at 284.
Court further explained that “[i]f a federal plaintiff
‘present[s] some independent claim, albeit one that
denies a legal conclusion that a state court has reached in a
case to which he was a party..., then there is jurisdiction
and state law determines whether the defendant prevails under
principles of preclusion.'” Id. at 293
(quoting GASH Assocs. v. Rosemont, 995 F.2d 726, 728
(7th Cir. 1993)(alterations in original)). The Sixth Circuit
Court of Appeals has noted that the scope of
Rooker-Feldman has been tightened post-Exxon
Mobile Corp., and distinguishes “between
plaintiffs who bring an impermissible attack on a state court
judgment - situations in which Rooker-Feldman
applies - and plaintiffs who assert independent claims before
the district court - situations in which
Rooker-Feldman does not apply.” Kovacic v.
Cuyahoga County Dep't of Children and Family
Services, 606 F.3d 301, 309 (6th Cir. 2010)(citations
omitted). Accordingly, “the pertinent inquiry after
Exxon is whether the ‘source of the
injury' upon which plaintiff bases his federal claim is
the state court judgment, not simply whether the injury
complained of is ‘inextricably intertwined' with
the state-court judgment.” Id. (citing
McCormick v. Braverman, 451 F.3d 382, 394-95 (6th
with respect to Plaintiffs' TILA claim seeking
rescission, Plaintiffs are not complaining of an injury
caused by the state court foreclosure judgment. Rather, the
source of Plaintiffs' alleged injury is the alleged
failure of the lender in their loan transaction to make the
disclosures required under TILA. Therefore, Plaintiffs'
Complaint presents an independent claim and
Rooker-Feldman does not apply. See Veasley v.
Federal Nat. Mortg. Ass'n (FNMA), 623 Fed.App'x.
290 (6th Cir. 2015)(where plaintiff sued a mortgage assignee
and purchaser at a foreclosure sale, alleging that the
foreclosure sale was invalid based on improper chain of
title, Rooker-Feldman did not preclude jurisdiction
over the plaintiff's case because the source of
plaintiff's injury was an alleged faulty mortgage
assignment, thus plaintiff raised a claim independent from
the state court judgment of foreclosure); Brown v. First
Nationwide Mortg. Corp., 206 Fed. App'x 436, 440
(6th Cir. 2006)(plaintiff's complaint alleging fraud in
connection with state court foreclosure proceedings not
barred by Rooker-Feldman because it did not claim
the source of plaintiff's injury was the foreclosure
decree itself, but rather concerned the actions of defendants
that preceded the decree). Accordingly, this Court has
jurisdiction over Plaintiffs' rescission
Plaintiffs' TILA Claims are Time-Barred
Plaintiffs' TILA claims survive Rooker-Feldman,
they must still be dismissed, as they are time-barred. The
statute of limitations for a TILA claim for damages is
governed by ...