### RICARDO BOPP,



### v. UNITED STATES DISTRICT COURT FORTHE DISTRICT OF COLUMBIA

Plaintiff, ) ) ) ) 

### ) Civil Case No. 09-1736 (RJL) ) 

### WELLS FARGO BANK, N.A., etal., ) ) 

### Defendants. )

# MEMORAND~N (September**~201O)** [#5, #6] Plaintiff, Ricardo Bopp ("Bopp"), brings this action against Wells Fargo Bank, N.A. ("Wells Fargo"), World Savings Bank, FSB ("World"), Wachovia Mortgage, FSB ("Wachovia"), and Transcontinental Title Company ("TTC"), seeking damages and a declaratoryjudgmentfor violations ofthe Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 etseq., the D.C. ConsumerProtection Procedures Act, D.C. Code §28-3901 et seq., and state law. Before the Court is a Motion to Dismiss or, in the Alternative, Motion for More Definite Statement and to Strike Portions ofPlaintiffs Complaint by Wells Fargo, World, and Wachovia (collectively, the "defendants"). Forthe following reasons, the defendants' Motion to Dismiss is GRANTED. 

### BACKGROUND Bopp is the sole owner and operator ofa home reconstruction and renovation business. Compi.**~** 15. In late 2006, his business experienced a decline in revenue, and he could no longermeethis monthly mortgage obligation. 

### ld. On or about January 25,2007, Bopp contacted World about refinancing his home. Id. 

### ,-r 17. World was subsequently acquired by Wachovia, id. 

### ,-r 1, which eventually merged with Wells Fargo, id. 

### ,-r 6. Bopp completed a Uniform Residential Loan Application to assess his creditworthiness for a fixed rate loanprogram called "Pick-A-Payment." Id. 

### ,-r,-r 18-19. The Pick-A-Payment loanprovides four payment options every month: a minimumpayment amount, an interest only payment amount, a payment based on a 30-year amortization, and a payment based on a 15-year amortization. Id. 

### ,-r 10. Several days later, Bopp received notice from World thathis loan had been approved. Id. 

### ,-r 21. Bopp closed on his loan on March 8, 2007, with a representative from TTC, which conducts closings and settlement for properties in the District ofColumbia. Id. 

### ,-r,-r 8, 23. Ultimately, Bopp defaulted on the loan, and the defendants began to foreclose on the property. Id. 

### ,-r 35. Plaintifffiled this suit on August 7, 2009, in Superior Court. Defendants removed the action to this Court on September 11,2009. ANALYSIS Defendants move to dismiss for "failureto state a claim upon which reliefcan be granted." Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a plaintiffs "[fJactual allegations must be enough to raise a right to reliefabove the speculative level, on the assumption that all the allegations in the complaint are true (even ifdoubtful in fact)." BellAt!. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see also Ashcroftv. Iqbal, 129 S. Ct. 1937, 1950 (2009) (stating that ifa court has determined that

2a plaintiffhas asserted "well-pleaded factual allegations," the court "should assume their veracity and then determine whetherthey plausibly give rise to an entitlementto relief'). When a Court is resolving a motion to dismiss, "the complaint is construed liberally in the plaintiff1's] favor," and he is granted "the benefit ofall inferences that can be derived from the facts alleged." Kowalv. MCI Commc 'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)). Atthe same time, the Court need not accept the inferences drawn by the plaintiff "ifsuch inferences are unsupported by the facts set out in the complaint," nor must it "accept legal conclusions cast in the form offactual allegations." 

### ld. Nor must this Court "accept as true the complaint's factual allegations insofar as they contradict exhibits to the complaint ormatters subject tojudicial notice." Kaempe v. Myers, 367 F.3d 958, 963 (D.C. Cir. 2004). Regulation Z implements TILA and requires a creditorto make certain disclosures, including the identity ofthe creditor, the amount financed, and the annual percentage rate ofaproposed loan, before consummation ofthe transaction. See 15 U.S.C. § 1638; 12 C.F.R. §§ 226.17-226.18. Italso mandates that a "creditor shall make the [required disclosures] clearly and conspicuously in writing, in a form thatthe consumermay keep." 12 C.F.R. 

### §226. 17(a)(l). These disclosures mustbe grouped together and, for this reason, many lenders place the disclosures in a TILA Disclosure Statement ("TILD"). In addition, lenders who secure an interest in the borrower's home must provide "good faith estimates" ofthese disclosures in writing at least seven business days before a transaction

3is consummated. See 15 U.S.C. § 1638(b)(2). TILAprovides for rescission and statutorypenalties ifthe creditor fails to make certain disclosures required underthe statute. See 15 U.S.C. § 1640(a). Toprevail on a damages claim for a TILA violation, however, a plaintiffmustbring suit "within one year from the date ofthe occurrence ofthe violation." 15 U.S.C. § 1640(e). 

### In addition, as there is no allegation in the Complaintthat Bopp did not receive notice ofhis right to rescind his loan at closing,l Bopp had "until midnight ofthe third business day following the consummation ofthe transaction orthe delivery of' all required information and disclosures, whichever is later, to rescind. 15 U.S.c. § 1635(a). Underthe facts ofthis case, Bopp's claim for a violation ofTILA is barredby the applicable statute of limitations. How so? Although plaintiffasserts that he did not receive a good faith estimate ofhis closing costs or sign his loan application priorto closing, he does admit in his Complaint thathe received and signed those documents at the March 8, 2007 closing. See Compi.**~~** 22,25, Ex. 3. Furthermore, despite Bopp's claim that "[u]pon information and belief

...he was neverprovided a Truth and Lending Disclosure Statement," Compi.**~** 26, he attached as an exhibit to his Complaint the TILD that he signed and received at the March 8,2007 closing. See Compi. Ex. 4. Becausethis Court does not have to accept as true Bopp asserts in a footnote in his opposition to defendants' motionthathe did not receive notice ofright to rescind. Pl.'s Opp'n 7n1. Because plaintiffdid not raise any such allegations in his Complaint, the Court does not consider whether any purported failure to notify Bopp his right to rescind provides the basis for aTILA violation in this case. 4any factual allegations in the Complaint insofar as they contradict exhibits to the complaint ormatters subjecttojudicial notice, see Kaempe, 367 F.2d at 963, I find that plaintiffreceived the required TILA disclosures no later than March 8, 2007. To that end, Bopp's assertions that the defendants failed to make certain mandatory disclosures, thereby extending his right to rescind, are, at best, unpersuasive. Plaintiffprimarily bases his TILA claim on an alleged failure ofthe defendants to provide him with a TILD that clearly and conspicuously disclosed: (I)that the payment schedules provided to Bopp were not based on his "actual" interest rate; and (2) that negative amortization was certain to occur. As an initial matter, only "alender's failure to disclose the existence ofa variable rate feature"-a situation notpresent here-will toll the rescissionperiod. Pulphus v. Sullivan, 2003 U.S. Dist. LEXIS 7080, *42 (D. Ill. 2003). "A lender's failure to provide any ofthe other rate disclosures required by 12 C.F.R. §§ 226.18(t) and 226.19(b) may subject it to other sanctions, but it will not extend the rescission period granted to the consumer." Id. at *42-43. Regardless, I find thatthe Note and the TILD provided to Bopp correctly identifY the initial interest rate and annual percentage rate and also clearly and conspicuously disclosed that the actual cost ofthe credit would depend on the payment option that he selected. See Compl. Ex. 3-4. Furthermore, the Note and the TILD indicate that negative amortization could result, depending upon the payment option thatplaintiffselected. See id.; see also Commentary to 12 C.F.R. § 226. 19(b), 60 Fed. Reg. 16771, 16780 (Apr. 3, 1995) ("A

5creditor must disclose, where applicable, the possibility ofnegative amortization

.... Ifa

consumer is given the option to cap monthly payments that may result in negative amortization, the creditor must fully disclose the rules relatingto the option, including the effects ofexercising the option (such as negative amortization will occur and the principal loan balance will increase)."). Here, Bopp'sNote, which is quoted in his Complaint and attached as Exhibit 3, stated, Myinitial monthlypaymentamountwas selectedbymefrom arange ofinitial payment amounts approved by Lender 

### andmay not be sufficient topay the entire amount

## 0/ Interestaccruingon the unpaidPrincipalbalance

. ...From time totime my monthlypaymentmaybe insufficientto paythe total amount ofmonthly interestthatis due. 

## If this occurs, the amounto/interestthat is not paideach month, called "DeferredInterest, " will be addedto myPrincipal andwillaccrue interestat the same rate as the Principal. Compi. Ex. 3 at 2-3 (emphasis added). In addition, the TILD expressly referenced, in all capital letters, a Deferred Interest Acknowledgment Disclosure ("DIAD"), which Bopp also received on March 8, 

### 2007. See Compi. Ex. 4. The DIAD stated, Youhave selected a loanproductthat lets you choose howmuchtopay each month from among several choices on your billing statement. As described below, 

## if youmake aperiodicpaymentthat is less than the interestowingon the loan, you will incur deferred interest and theprincipal balance o/your loan will increase. Defs.' Reply Ex. A at 1 (emphasis added).2 The DIAD goes on to define deferred interest

2 A court may consider documents incorporated into the complaintby reference and matters ofwhich a court may takejudicial notice without converting amotion to dismiss into one for summaryjudgment. See Tellabs, Inc. v. Makar Issues & Rights, Ltd., 551 U.S. 308,322 (2007). Here, the DIAD was incorporated by reference into the Complaint by virtue ofthe exhibits that Bopp attached and are considered by this Courtto determine whether a disclosure was clear, as required by TILA. 6and discuss the various payment options available to Bopp. See id. Thus, putting aside the issue ofwhetherthe Commentaryto § 226.19 evenrequires lenders to disclose the likelihood, or certainty, that a borrowerwill experience negative amortization, Bopp's argument that the defendants failed to disclose that negative amortization was certain to

occur in violation ofTILA is unavailing for two reasons. First, negative amortization was notcertain to occur. Itresulted because ofthe payment option that Bopp himselfchose. Second, the DIAD clearly and conspicuously discloses that negative amortization 

### would in fact occur ifBopp chose to make apayment less than the interest owed on the loan. Finally, plaintiffs argument that he did not receive a copy ofthe TILD until March 8, 2009, and that the statute oflimitations thus should be equitably tolled is wholly unconvincing. The TILD attachedto the Complaint as Exhibit 4 is signed and dated March 8, 2007. See Compl. Ex. 4. Therefore, I find thatBopp received all required TILA disclosures by March 8, 2007, and the one year statute oflimitations period for TILA violations applies. Plaintiffdid not file the instant action until August 7, 2009. As

a result, his TILA claim in Count I is time-barred and must be dismissed. Bopp'sremaining claims against these defendants are state law claims for breach ofthe implied covenant ofgood faith and fair dealing (Count II), fraudulent misrepresentation (Count III), declaratoryjudgment/quiettitle (Count IV), and equitable estoppel (Count VII), each ofwhich is preempted by the Home Owner's Loan Act ("HOLA"), 12 U.S.C. § 1461 etseq. HOLA was designed to create a nationwide system

7offederal savings and loan associations to be centrally regulated. See Fid. Fed. Sav. & LoanAss 'n v. de la Cuesta, 458 U.S. 141, 160-61 (1982). Tothat end, BOLA states that the Office ofThrift Supervision ("OTS") "hereby occupies the entire field oflending regulation for federal savings associations." 12 C.F.R. § 560.2(a). This regulation also states that "OTS intends to give federal savings associations maximum flexibility to exercise their lendingpowers in accordance with a uniform federal scheme ofregulation" and that, except for as provided, these "federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate orotherwise affecttheir credit activities." Id.; see also Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001,1004 (9th Cir. 2008) ("[Fjieldpreemption applies because Appellants' state law claims provide state remedies for violations offederal law in a field preempted entirely by federal law. The general presumption againstpreemption is not applicable here, and the relevant regulation is clear-the field oflending regulation of federal savings associations is preempted." (emphasis in original». Itis clearthatthe gravamen ofBopp's state law claims is the same as what underlies his TILA claim. A thorough reading ofplaintiffs Complaintreveals that he is challenging the terms ofhis credit, the manner in which his loan was amortized, the quality and quantity of information disclosed to him, and the manner in which his mortgage application loan and origination was processed. All ofthese complaints are expressly enumerated in BOLA as illustrative examples ofpreempted state law. See 12 C.F.R. § 560.2(b)(4)-(5), (9)-(11);

8see also OTS Final Rule, 61 Fed. Reg. 50951, 50966 (Sept. 30, 1996) ("When analyzing the status ofstate laws under 

### § 560.2, the first step will beto determine whetherthe type oflaw in question is listed in paragraph (b). Ifso, the analysis will end there; the law is preempted."). Even ifplaintiffs claims could be characterized as not falling within one ofHOLA's illustrative examples in § 560.2(b), he cannot demonstrate thatthe state law claims "only incidentally affectthe lending operations ofFederal savings associations." 12 C.F.R. § 560.2(c); see also OTS Final Rule, 61 Fed. Reg. at 50966-67 ("[P]aragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved in favor of preemption."). Bopp was too late to sue under TILA, and his attempttoplead around it will not succeed. The state law claims asserted against the defendants in Counts II, III, IV, and VII must, therefore, be dismissed as preempted. CONCLUSION For all ofthe foregoing reasons, the Court GRANTS the defendants' Motion To Dismiss and DISMISSES Counts I, II, III, IV, and VII ofthe Complaint. Furthermore, the Court DENIES AS MOOT defendants' Motion for More Definite Statement and to Strike Portions ofPlaintiffs Complaint. An Order consistentwith this decision accompanies this Memorandum Opinion.

United States District Judge

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