UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
)
GLORIA S. PENA, )
)
Plaintiff, )
)
v. ) Civil Action No. 09-1830 (ESH)
)
A. ANDERSON SCOTT MORTGAGE )
GROUP, INC., et al. )
)
Defendants. )
__________________________________________)
MEMORANDUM AND OPINION
Plaintiff Gloria S. Pena has sued defendants A. Anderson Scott Mortgage Group, Inc.,
(“Anderson”), American Title and Escrow Company (“ATEC”), CitiMortgage, Inc. (“CMI”),
and Chase Home Finance LLC (“Chase”) for violation of the Truth In Lending Act (“TILA”), 15
U.S.C. §§ 1601-1667 (2006), breach of the implied covenant of good faith and fair dealing,
declaratory judgment/quiet title, and other claims related to defendants’ alleged failure to
disclose information to Ms. Pena about a mortgage loan created for her by Anderson. Before the
Court are motions to dismiss by CMI and Anderson. For the reasons set forth herein, the Court
will grant defendants’ motions to dismiss plaintiff’s TILA claim and remand plaintiff’s
remaining claims to the Superior Court of the District of Columbia.
FACTUAL BACKGROUND
Plaintiff makes the following allegations in her complaint. Ms. Pena is domiciled in
Maryland and resides in a house in Hyattsville. (Compl. ¶ 2.) Her native language is Spanish,
and she has limited proficiency in English. (Id. ¶ 8.) She works as a seamstress, and in 2005 and
2006, her salary was approximately $44,000 per year. (Id. ¶¶ 8-9.) In 2005, Ms. Pena decided to
buy a house in Washington, D.C., and sell her property in Maryland, on which she was making
mortgage loan payments. (Id. ¶¶ 10-11.) Ms. Pena purchased a house in Washington, D.C., after
receiving financing to buy the property for $300,000. (Id. ¶¶ 12-13.) However, prior to moving
into it, Ms. Pena realized that the D.C. house required several major renovations and repairs in
order for her and her family to live there. (Id. ¶ 14.) Ms. Pena undertook these renovations over
the next year, refinancing the loan on her house in Maryland to pay for them, as well as the
mortgage payments on her two properties. (Id. ¶¶ 15-16.)
In September 2006, Ms. Pena decided to refinance the loan she had taken out to purchase
the D.C. property. (Id. ¶ 17.) Ms. Pena contacted defendant Anderson, whose employee, George
Tiqui, assisted her in applying for refinancing. (Id. ¶ 20.) Ms. Pena alleges that when Mr. Tiqui
filled out her loan application, he indicated that her monthly income was $10,800, overstating
her true earnings by approximately $75,000 annually. (Id.) Anderson, through Mr. Tiqui, then
offered Ms. Pena a $390,000 loan with a fixed interest rate of six percent. (Id. ¶ 21.) Prior to
settlement, Ms. Pena received copies of a Good Faith Estimate pursuant to the Real Estate
Settlement Procedures Act, 12 U.S.C. §§ 2601-2617, which also stated that the interest rate on
the Anderson loan to Ms. Pena would be six percent. (Compl. ¶ 22.) However, when Ms. Pena
signed the loan documents on October 20, 2006, the interest rate was 6.5 percent. (Id. ¶ 23.)
After the Anderson loan settled, Ms. Pena continued to make payments on that loan and
the loan on her Maryland property, though she attempted unsuccessfully to sell both properties at
different times. (Id. ¶¶ 24, 26.) On November 1, 2006, Anderson offered Ms. Pena a second lien
loan of $50,000 over the D.C. property with an interest rate of 8.775 percent and a balloon
payment at the end of the loan (on December 1, 2021) of $39,789.00. (Id. ¶ 27.) Mr. Tiqui also
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completed the second loan application for Ms. Pena, though on this form, he stated her monthly
income as $8,000. (Id. ¶ 28.) The second lien loan settled on November 13, 2006. (Id. ¶ 29.)
When she filed her lawsuit on August 25, 2009, Ms. Pena owed $386,301 on the first
D.C. property loan and $55,680 on the second loan. (Id. ¶ 33.) On May 7, 2009, CMI, the first
lien note holder, had offered Ms. Pena a one-year, “stepped-rate modification” on the first lien,
valid for one year. (Id. ¶ 34.) The document purporting to modify the loan established a new
unpaid principal balance of $417,400, consisting of a principal balance of $386,301, plus a total
capitalized amount of $31,099. (Id.) The loan had an interest rate of two percent for the first
year, and Ms. Pena was asked to make monthly payments of $1,939. (Id.) Ms. Pena signed the
modification documents and sent them to CMI with her first payment of $1,939. (Id.) On June
27, 2009, Ms. Pena mailed a second check to CMI in the same amount. However, CMI returned
this check to her with the explanation that the amount was insufficient. (Id., Ex. 9.) Both of Ms.
Pena’s properties were in foreclosure when she filed suit. (Id. ¶ 32.)
PROCEDURAL BACKGROUND
Ms. Pena’s complaint includes eights claims, four against CMI and seven against
Anderson. 1 Ms. Pena contends that CMI and Anderson failed to comply with the disclosure
requirements of TILA and breached the implied covenant of good faith and fair dealing in their
interactions with her (Counts I and II). (Compl. ¶¶ 37-48.) Accordingly, she claims that she is
entitled to declaratory judgment vesting the titles of the Maryland and D.C. properties in her
name and finding that any promissory notes, deeds, and liens on the properties are null and void
(Count IV). (Id. ¶ 62.) Ms. Pena also alleges breach of contract against CMI for failing to honor
1
The Court dismissed Ms. Pena’s claims against defendants ATEC and Chase in November
2009, based on plaintiff’s failure to respond to these defendants’ motions to dismiss.
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the terms of the “stepped-rate modification” to her mortgage loan (Count VII). (Id. ¶¶ 34, 74-
75.) Additionally, plaintiff has filed claims of fraudulent misrepresentation (Count III), violation
of the D.C. Consumer Protection Procedures Act (Count V), negligence (Count VI), and
equitable estoppel (Count VIII) against Anderson. (Id. ¶¶ 49-56, 63-73, 76-80.)
Plaintiff’s complaint was originally filed in the Superior Court of the District of
Columbia. Defendant CMI, with the consent of the other defendants, filed a notice of removal
on September 25, 2009, pursuant to 28 U.S.C. §§ 1441-1453. Removal was based on this
Court’s federal question subject matter jurisdiction over plaintiff’s TILA claim. See 28 U.S.C. §
1331 (granting district courts jurisdiction over claims arising under federal laws). The Court has
supplemental jurisdiction over plaintiff’s remaining claims, which arise under state law, because
these claims are part of the controversy giving rise to plaintiff’s TILA claim, i.e., the refinancing
and foreclosure of plaintiff’s D.C. property. See 28 U.S.C. § 1367(a).
CMI filed a motion to dismiss all of plaintiff’s claims against it for failure to state a claim
upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). (Mem. of P. &
A. in Supp. of Def. CitiMortgage, Inc.’s Mot. to Dismiss [“CMI Mem.”] at 1-2.) Anderson also
has filed a motion to dismiss under Rule 12(b)(6), incorporating the motions filed by CMI and
ATEC and seeking to dismiss all claims against it. (A. Anderson Scott Mortgage Group, Inc.’s
Mot. to Dismiss at 1.)
STANDARD OF REVIEW
In deciding a motion to dismiss under Rule 12(b)(6), a court may consider only “the facts
alleged in the complaint, any documents either attached to or incorporated in the complaint and
matters of which [the Court] may take judicial notice.” EEOC v. St. Francis Xavier Parochial
Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). As the Supreme Court held in Ashcroft v. Iqbal, “[t]o
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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.’” 129 S. Ct. 1937, 1949 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must be dismissed
under Rule 12(b)(6) if it consists only of “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements.” Id. “Although ‘detailed factual allegations’
are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the ‘grounds’ of
‘entitle[ment] to relief,’ a plaintiff must furnish ‘more than labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action.’” Gerlich v. United States Dep’t of
Justice, 659 F. Supp. 2d 1, 4 (D.D.C. 2009) (quoting Twombly, 550 U.S. at 555-56).
“Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability,
it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Iqbal,
129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 557) (internal quotation marks omitted)). The
allegations in plaintiff’s complaint are presumed true at this stage and all reasonable factual
inferences must be construed in plaintiff’s favor. Maljack Prods., Inc. v. Motion Picture Ass’n of
Am., Inc., 52 F.3d 373, 375 (D.C. Cir. 1995). “However, the court need not accept inferences
drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint.”
Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)).
ANALYSIS
I. DEFENDANTS’ MOTIONS TO DISMISS PLAINTIFF’S TILA CLAIM
A. CMI
Regulation Z implements TILA and requires a creditor to make certain disclosures,
including, inter alia, the “annual percentage rate” on a loan. 12 C.F.R. § 226.18(e). It also
mandates that a “creditor shall make the [required disclosures] clearly and conspicuously in
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writing, in a form that the consumer may keep.” Id. § 226.17(a)(1). Ms. Pena bases her TILA
claim on the alleged failure of Anderson and ATEC to accurately disclose the substitution of a
6.5 percent interest rate in the loan note for the six percent rate stated in the pre-closing
documents. (Compl. ¶¶ 22-23, 40.) The complaint implies that CMI, the loan note assignee, is
liable for this lack of disclosure by alleging that the TILA violation is apparent on the face of the
pre-closing disclosure forms. 2 (Id. ¶ 40); see also 15 U.S.C. § 1641(a) (assignee liable only
when violation is “apparent on the face of the disclosure statement”).
As correctly argued by CMI, Ms. Pena’s TILA claim is barred by the statute of
limitations. TILA states that “[a]ny action under this section may be brought . . . within one year
from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). “In closed-end consumer
credit transactions, such as the one in this case, the limitations period begins to run on the date of
settlement.” Johnson v. Long Beach Mortage Loan Trust 2001-4, 451 F. Supp. 2d 16, 39
(D.D.C. 2006) (citing Postow v. OBA Fed. Sav. & Loan Assoc., 627 F.2d 1370, 1380 (D.C. Cir.
2
In her opposition, Ms. Pena explains her allegations against CMI. She suggests that CMI “is
the real creditor” because Anderson assigned CMI the loan note on the day of settlement, thereby
making Anderson a mere proxy for CMI. (Response of Pl. Gloria Pena to Def. Citi Mortgage
Inc. (Citi) Mot. to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) [“CMI Opp’n”] at 7.) She then
moves to amend her complaint to add additional claims and defendants and to identify CMI as a
creditor on the transaction. (Id. at 8.) However, “[i]t is axiomatic that a complaint may not be
amended by the briefs in opposition to a motion to dismiss.” E.g., Arbitraje Casa de Cambio,
S.A. de C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C. 2003) (quoting Coleman v.
Pension Benefit Guar. Corp., 94 F. Supp. 2d 18, 24 n.8 (D.D.C. 2000)); see also Coll. Sports
Council v. Gov't Accountability Office, 421 F. Supp. 2d 59, 71 n.16 (D.D.C. 2006) (“[P]laintiff
cannot amend [her] complaint de facto to survive a motion to dismiss by asserting new claims for
relief in [her] responsive pleadings.”). Moreover, Ms. Pena’s attempt to amend does not comply
with Local Rule 15.1, which states that “[a] motion for leave to file an amended pleading shall be
accompanied by an original of the proposed pleading as amended.” Local Civ. R. 15.1. Indeed,
the Court has no knowledge of the specific claims, defendants, or allegations plaintiff seeks to
add to her complaint. As such, the Court may only consider those claims and allegations made
in the complaint in deciding CMI’s motion to dismiss. See Coll. Sports Council, 421 F. Supp. 2d
at 71 n.16 (“[T]he Court does not, and cannot, consider claims first raised in the plaintiff’s
opposition.”).
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1980) and Lawson v. Nationwide Mortgage Corp., 628 F. Supp. 804, 807 (D.D.C. 1986)). The
settlement of the loan to Ms. Pena occurred on October 20, 2006. (Compl. ¶ 23). Ms. Pena did
not file her lawsuit until August 25, 2009, nearly three years after settlement, clearly outside of
the one-year limit.
Plaintiff’s argument that the statute of limitations should be tolled in this case due to
fraudulent concealment of the TILA violation is unconvincing. Under the doctrine of fraudulent
concealment, if a plaintiff
did not discover [her] injury because the defendant fraudulently
concealed material facts related to its wrongdoing, then the court
will deem the cause of action not to have accrued during the period
of such concealment—unless the defendant shows that the plaintiff
would have discovered the fraud with the exercise of due
diligence.
Sprint Commc’ns Co. v. FCC, 76 F.3d 1221, 1226 (D.C. Cir. 1996). “In order to establish
fraudulent concealment and hence to toll the running of the statute of limitations, the plaintiff
must show that the defendant took ‘some misleading, deceptive or otherwise contrived action’ to
conceal information material to the plaintiff’s claim.” Id. (quoting Hobson v. Wilson, 737 F.2d
1, 34 (D.C. Cir. 1984) (abrogated on other grounds by Leatherman v. Tarrant County Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993))). Even in a case where the
defendant’s underlying wrong is “self-concealing,” such as a fraud, “the defendant’s silence is
usually not enough” to establish fraudulent concealment, unless the defendant has an affirmative
duty to disclose relevant information. Williams v. Conner, 522 F. Supp. 2d 92, 100 (D.D.C.
2007); see also Hobson, 737 F.2d at 33 (“There must be some trick or contrivance intended to
exclude suspicion and prevent inquiry.”) (quoting Wood v. Carpenter, 101 U.S. 135, 143
(1879)). Here, plaintiff has not alleged any affirmative acts of fraudulent concealment by CMI.
The only affirmative act identified by Ms. Pena is defendants’ failure to comply with Regulation
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Z’s disclosure requirement, but this failure to disclose is the basis of the TILA claim and cannot
serve as both the violation and the concealment of the violation. See Johnson, 451 F. Supp. 2d at
52 (“Extending the statute of limitations on non-disclosure due to a defendant’s non-disclosure
surely is contrary to the intention of the legislature in enacting that statute.”). Moreover, Ms.
Pena has not demonstrated or even alleged that CMI had an affirmative duty to her such that its
silence after the loan settled became in effect an affirmative act of fraudulent concealment. 3 See
Williams, 522 F. Supp. 2d at 100-01. Because Ms. Pena has not alleged facts sufficient to state a
claim of fraudulent concealment, her TILA claim against CMI is barred by the statute of
limitations, and Count I is dismissed as to CMI. 4
B. Anderson
Ms. Pena claims that Anderson violated TILA when it failed to disclose the 6.5 percent
interest rate on her mortgage loan in pre-closing documents. (Compl. ¶ 40.) She also alleges
that Anderson, unlike CMI, had an affirmative duty as a creditor to make such a disclosure prior
to settlement. (See id. ¶¶ 21-23, Ex. 7); see also 12 C.F.R. §§ 226.2(a)(17), 226.17(b)-(c)
(requiring creditors to make disclosures “before consummation of the transaction,” including the
3
As discussed, plaintiff has argued that CMI was a de facto creditor and should be held to the
disclosure requirements for creditors under TILA. (CMI Opp’n at 7-8.) However, nothing in
plaintiff’s complaint or the documents attached to it or incorporated therein suggests that CMI
was the creditor of Ms. Pena’s loan, as all of these documents list Anderson as the lender.
(Compl. ¶¶ 18, 20-21, 23, Exs. 6-7.) The Court relies on these documents alone in deciding the
instant motions. See St. Francis Xavier Parochial Sch., 117 F.3d at 624.
4
CMI also argues that because it is an assignee of the loan at issue, the TILA violation must be
apparent on the face of the disclosure in order for it to be liable, and that no such violation is
apparent on the forms signed by Ms. Pena. (CMI Mem. at 5-7.) It further contends that Ms.
Pena is not entitled to recission of the transaction because the D.C. property was never her
primary residence. (Id. at 7.) Because the Court concludes that Count I is barred by the statute
of limitations, it need not address the merits of these arguments.
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“terms of the legal obligation between the parties”). 5 However, the Court concludes that Ms.
Pena’s claim against Anderson, filed nearly three years after settlement, is barred by TILA’s one-
year statute of limitations. While silence can toll the statute of limitations if a defendant “has an
affirmative duty to disclose the relevant information to the plaintiff,” Sprint Commc’ns Co., 76
F.3d at 1226, equitable tolling under the fraudulent concealment doctrine is not appropriate in
this case because plaintiff had notice of her potential TILA claim on the day her loan settled.
“[T]he doctrine of fraudulent concealment does not come into play, whatever the lengths
to which a defendant has gone to conceal the wrongs, if a plaintiff is on notice of a potential
claim.” Riddell v. Riddell Wash. Corp., 866 F.2d 1480, 1494 (D.C. Cir. 1989). It is true that
notice “in the context of fraudulent concealment is close to actual notice,” Molecular
Diagnostics Labs. v. Hoffmann-La Roche, Inc., 402 F. Supp. 2d 276, 284 (D.D.C. 2005), and
consists of an “awareness of sufficient facts to identify a particular cause of action,” not mere
“hints, suspicions, hunches or rumors.” Hobson, 737 F.2d at 35. Nonetheless, Ms. Pena
concedes in her complaint that when she signed the note, she had notice of the actual interest rate
on her loan, and therefore, it must be concluded that she had notice of the discrepancy between
that rate and the rate disclosed to her pre-settlement. (Compl. ¶ 23 (noting that plaintiff “signed
documents for the aforementioned refinancing loan but now the loan had a higher fixed-interest
rate of 6.5%”); see also id. Ex. 7 (stating interest rate of “6.500%”)). Moreover, Ms. Pena
5
As discussed, non-disclosure under TILA cannot serve as both a violation and an “affirmative
act” in fraudulent concealment of that violation in order to equitably toll the statute of
limitations. See Johnson, 451 F. Supp. 2d at 52. However, beyond alleging that Anderson failed
to disclose the applicable interest rate, plaintiff alleges that Anderson disclosed an interest rate to
her, then applied a different interest rate to her loan without disclosing it. Such action on
Anderson’s part could be sufficient to invoke the doctrine of fraudulent concealment. See id.
(lender’s assurance to plaintiff as to terms of mortgage might be affirmative act under doctrine
triggering tolling of TILA statute of limitations). However, the Court need not make such a
determination here, where the statute of limitations will not be tolled because plaintiff had notice
of her potential claim. See id. at 52-53.
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cannot allege (nor does she) that she exercised due diligence in uncovering her claim, since she
was in possession of loan documents clearly indicating the 6.5 percent interest rate. See
Firestone v. Firestone, 76 F.3d 1205, 1210 (D.C. Cir. 1996) (to plead fraudulent concealment,
plaintiff must allege that defendant “engaged in an on-going scheme to conceal the alleged”
violation, plaintiff “did not have actual or constructive notice of the concealment,” and plaintiff
“exercised due diligence”). A motion to dismiss “may be granted on the basis that the action is
time-barred . . . when it appears from the face of the complaint that the relevant statute of
limitations bars the action.” Doe v. U.S. Dep’t of Justice, 753 F.2d 1092, 1115 (D.C. Cir. 1985).
Based Ms. Pena’s statements in her complaint and the documents attached thereto, the
Court concludes that such dismissal of Count I as barred by the one-year statute of limitations is
appropriate here. See, e.g., In re Roberson, 262 B.R. 312, 321 (Bankr. E.D. Pa. 2001)
(dismissing TILA claim despite allegation of fraudulent concealment of loan terms where
plaintiff “could have learned of the existence of the [term] by reviewing the Promissory Note”).
II. PLAINTIFF’S REMAINING CLAIMS
The Court has dismissed plaintiff’s TILA claim, and no other federal claims were filed.
As such, the Court no longer has jurisdiction under 28 U.S.C. § 1331 and may dismiss the case,
remand it to D.C. Superior Court, or exercise supplemental jurisdiction over the remaining
claims. 6 28 U.S.C. § 1367(c)(3); see also Shekoyan v. Sibley Int'l, 409 F.3d 414, 423 (D.C. Cir.
2005). “[I]n the usual case in which all federal-law claims are eliminated before trial, the
balance of factors to be considered under the pendent jurisdiction doctrine-judicial economy,
convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the
remaining state law claims.” Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988); see
6
The parties do not allege any other basis for jurisdiction besides 28 U.S.C. § 1331.
10
also Shekoyan, 409 F.3d at 424 ((quoting Cohill). For these reasons, the Court will remand
plaintiff’s remaining claims to Superior Court, where Ms. Pena initially filed the case.
CONCLUSION
For the foregoing reasons, the Court grants CMI’s and Anderson’s motions to dismiss
plaintiff’s claim in Count I for violation of TILA, and this claim is dismissed with prejudice.
Plaintiff’s remaining claims against both defendants are remanded to Superior Court. A separate
Order will accompany this Memorandum Opinion.
_________/s/______________
ELLEN SEGAL HUVELLE
United States District Judge
DATE: March 11, 2010
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