Title Company probably mistakenly failed to copy and record the Confirmation side of the
document. The McKinneys further allege that it was Equicredit of Illinois’ policy to require
clients to sign both documents at the closing. Yet, as discussed below, neither Phyllis nor Darryl
McKinney testified that they signed the Confirmation form at the closing.

McKinneys assert that by requiring them to sign at the closing a form stating that their
three-day rescission period had passed and that they had not rescinded their loan, the defendants
deprived them of their right to rescind in violation of TILA. According to the McKinneys, the
defendants violated TILA a second time when they failed to honor the McKinneys’ proper
exercise of their extended right to rescind that resulted from the earlier infraction. The
McKinneys claim they are entitled to rescind the loan under 15 U.S.C. § 1641(c) and obtain
statutory damages for defendants’ failure to rescind their loan under 15 U.S.C. § 1635(g). They
also bring a claim under the Illinois Consumer Fraud Act, contending that all defendants, except
Fairbanks, engaged in unfair and deceptive acts and practices that deprived them of their
rescission rights under TILA.

Discussion
1, Defendants’ Motion for Summary Judgment

Summary judgment is appropriate where “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To determine
whether a genuine issue of material fact exists, the Court views the record in the light most

favorable to the McKinneys, the non-moving party in this instance, drawing reasonable


McKinneys do not provide any additional evidence that it was the practice of the company to
require clients to sign the Confirmation form at the closing. See Pl’s Ex. R; Pl’s 56.1 at {Jj 56-
58.

In sum, the McKinneys have presented insufficient evidence to support a reasonable
inference that they signed the Confirmation form at their closing. See Rand, 42 F.3d at 1146
(“Inferences and opinions must be grounded on more than flights of fancy, speculations, hunches,
intuitions, or rumors.”). Without such evidence, the McKinneys cannot succeed on their TILA
claim. Because the McKinneys cannot show that a genuine issue of material fact exists as to an
essential component of their claim, they are not entitled to rescission or other relief on their TILA
claim, and the Court must grant defendants’ motion for summary judgment. See Celotex, 477
US. at 322 (“Rule 56(c) mandates the entry of summary judgment, after adequate time for
discovery and upon motion, against a party who fails to make a showing sufficient to establish
the existence of an element essential to that party's case, and on which that party will bear the
burden of proof at trial.”). Thus, the Court need not address the parties’ remaining arguments.
Because the McKinneys’ Illinois Consumer Fraud Act Count alleges wrongdoing by defendants
only to the extent that they violated McKinneys’ rescission rights under TILA, see Pl’s Am.
Compl. at 11, summary judgment is appropriate as to Count 2 as well.

2. Plaintiffs’ Motion for Summary Judgment

Plaintiffs move for summary judgment as to the liability of all defendants under TILA

and the implementing Federal Reserve Board Regulation Z, 12 C.F.R. § 226. For the reasons

discussed above, the Court denies the McKinneys’ motion.


simultaneously required them to sign both forms during the closing. But they have provided no
evidence that they actually signed the Confirmation form at the closing. Neither side has been
able to produce a signed copy of the Confirmation form, and the transmittal document used by
the Title Company does not indicate that an executed Confirmation form was sent to the lender.
Even if the closing agent gave McKinneys an unsigned version of the Confirmation at the
closing, this would not have been inconsistent with Equicredit’s stated policy to have the closing
agent wait until the three days expired and then have the customer sign the Confirmation form
and fax or mail the signed sheet to the office. See Dodd Dep. at 105-06.

Neither Darryl or Phyllis McKinney actually testified that they signed the Confirmation
form at their closing. When presented with a copy of the Confirmation form during her
deposition, Phyllis testified that she did not recall receiving or signing the document at the
closing. P. McKinney Dep. at 63-64. Though Darryl testified that the closer asked them to sign
the “cancellation form” at the closing to save her a trip back to Chicago, he later corrected
himself and admitted that he was referring to the Notice of Right to Cancel. D. McKinney Dep.
at 80. At one point he described a document that sounds similar to the Confirmation form, id. at
81, but he later clarified that he was referring to the Notice of Right to Cancel form, id. at 82. In
addition, when shown the Confirmation at his deposition, Darryl stated that he did not know if
the document was presented to him at the closing. Id. at 84. And when asked to review the
entire file of closing documents produced by the plaintiffs during discovery, including a
Confirmation form, and asked to select the document he said the closer asked him to sign, Darryl
stated, “No, the only thing I see in here is the notice of right to cancel.” Id. at 85.

Plaintiffs argue that Darryl was confusing the forms. His testimony, however, was more



inferences in their favor. Id, at 322. Nonetheless, a party opposing summary judgment may not
simply rest on the pleadings, but must instead affirmatively demonstrate that there is a genuine
issue for trial. Payne v. Pauley, 337 F.3d 767, 771 (7th Cir. 2003); see also Davis v. GN
Mortgage Corp., 244 F. Supp. 2d 950, 955 (N.D. Ill. 2003) (“A defendant is entitled to put the
plaintiff to his proofs and demand a showing of the evidence.”). Thus, the McKinneys must
produce specific facts to support their contentions rather than relying on speculation and
conclusions without factual support. Rand v. CF Industries, Inc., 42 F.3d 1139, 1146 (7th Cir.
1994). When the defendant moves for summary judgment based on the lack of proof of a
material fact, the Court must ask whether a fair-minded jury could return a verdict for the
plaintiff on the evidence presented. Anderson v. Liberty, Inc., 477 U.S. 242, 249 (1986).

The McKinneys first contend that the defendants interfered with their right to rescind and
violated TILA’s “clear and conspicuous” notice requirement by presenting and requiring them to
sign both a Notice of Right to Cancel and a Confirmation of noncancellation at the closing.
Under TILA, a debtor “shall have the right to rescind the transaction until midnight of the third
business day following the consummation of the transaction or the delivery of the information
and rescission forms . . . whichever is later.” 15 U.S.C. § 1635(a). A debtor must receive notice
of her right to rescind “on a separate document that identifies the transaction and . . . clearly and
conspicuously disclose[s]” the debtor’s rights. 12 C.F.R. § 226.23(a)(3). A creditor who fails to
comply with these requirements may face civil liability under TILA, 15 U.S.C. § 1640(a), and the
debtor’s right to rescind is extended up to three years after the transaction. 12 C.F.R. §
226.23(a)(3).

The McKinneys’ TILA claim is based entirely on their allegation that the closing agent


closing agent, is not a reasonable inference; it is a leap of faith.

The McKinneys likewise allege that Equicredit intended both forms to be signed together
at the closing. As evidence of this, they point to James Dodd’s testimony that the Notice of
Right to Cancel and Confirmation documents were both sent as part of the closing package to
closing agents in 2001 and that the documents appeared on opposite sides of a single page. Dodd
Dep. at 60. Dodd, Assistant General Counsel in the Bank of America Legal Department, drafted
Equicredit’s standard Letter of Closing Instructions. See Pl’s Mem. at 14,1 45.

In addition, the McKinneys maintain that Equicredit of Illinois’ Letter of Closing
Instructions and internal and external documents show that it intended the signed confirmation to
be returned within one day of the closing. Though the Closing Instructions indicate that the
“Notice to Customet/Confirmation” should be “returned within one working day after closing,”
Pl’s Ex. K, § 6.1, as Dodd stated in his deposition, the instructions do not specifically instruct the
closing agent to have the client sign the confirmation upon disbursement. Dodd Dep. at 83-84.
Dodd further testified that the instructions are designed to be utilized by someone who is
knowledgeable with the federal regulations and that it would be apparent from reading the
Confirmation that it would be inappropriate to have it signed at the closing. Id. at 84.
Furthermore, Equicredit produced a checklist that it purportedly distributed to closing agents, to
be used along with the closing instructions, that directed agents to retain the Confirmation until
the three-day rescission period had passed and to have the customer sign it on the day of funding
before mailing it to the office. Def’s 56.1 Resp., Ex. B; Dodd Dep. at 105-06. Dodd testified
that this instruction reflected Equicredit’s policy with respect to the Confirmation form. Id.

Finally, the Court finds that Equicredit’s internal and external communications produced by the



Minute Order For (06/97)

United States District Court, Northern District of Winois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Matthew F. Kennelly than Assigned Judge
CASE NUMBER 02 C 7262 DATE 12/6/2004
CASE McKinney vs, Nationscredit Financial
TITLE
{in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) 0 Brief in support of motion due
(3) oO Answer brief to motion due Reply to answer brief due
(4) Qo Ruling/Hearing on set for at
(5) o Status hearing[held/continued to] [set for/re-set for]on___ set for at _
(6) Oo Pretrial conference{held/continued to] [set for/re-set for] on set for at
(7) oa Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to_ at_—
(9) im} This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) O Local Rule 41.1 CIFRCP41(a)(1) CO FRCP41(a)(2).
ao) =o (Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,
the Court grants defendants’ motion for summary judgment (43-1) and denies plaintiffs’ motion for
summary judgment (46-1). It appears to the Court that the claims of one plaintiff, Deborah Fentress, may
still be pending. The case is set for a status hearing on 12/13/04 at 9:30 a.m.
(il) (For further detail see order attached to the original minute order.]
No notices required, advised in open court. Document
N ; Number
lo notices required. ube of oes
Notices mailed by judge’s staff. DEC 0 q 2004
Notified counsel by telephone te driers
YS | Docketing to mail notices. —
Mail AO 450 form Taking dep tie O
Copy to judge/magistrate judge yen
pee
dae mailed novice
courtroom Lost
OR deputy’s cog en ia pe CEPYRLES
initials = a
Date/time received in
central Clerk's Office trafing deputy iials



Conclusion
For the reasons stated above, the Court grants defendants’ motion for summary judgment
[docket no. 43] and denies plaintiffs’ motion for summary judgment [docket no. 46]. It appears
to the Court that the claims of one plaintiff, Deborah Fentress, may still be pending. The case is

set for a status hearing on December 13, 2004 at 9:30 a.m.

WdMignelee,

MATTHEW F, KENNELL
United States District Judg,

Date: December 6, 2004

10


consistent with the idea that he was confused about the meaning of the forms. With the Notice of
Right to Cancel in front of him, Darryl stated, “I thought your notice of right to cancel was a
form you received during a closing that allowed you to have 72 hours to reconsider your loan... .
[a]nd that it shouldn’t be signed until three days later.” Id. at 82-83. Plaintiffs could have also
used the deposition to clear up any supposed confusion but elected not to do so.

The McKinneys’ vague and uncertain testimony surrounding the key element of their
claim is insufficient to show that a genuine issue of material fact exists.? Had the McKinneys
actually testified that they signed the Confirmation at their closing, the Court would be required
to deny defendants’ motion for summary judgment. But they did not so testify.

The McKinneys next attempt to bolster their position by arguing that Equicredit of
Illinois had a policy of requiring clients to sign both the Notice of Right to Cancel and
Confirmation at the closing, thus raising an inference that they were required to sign both
documents at their own closing. This argument, however, is not supported by the record.

The McKinneys argue that it was Haring’s practice to present the Confirmation for
signature with the Notice of Right to Cancel at the closing. This exaggerates Haring’s testimony.
In fact, she indicated only that there were instances in which she presented both documents at the
closing. Haring Dep. at 100-01. To draw from this the conclusion the McKinneys represented

one such instance, particularly when there is no evidence that Haring was even the McKinneys’

2 Tt also has not escaped the Court’s attention that prior to filing this lawsuit, the McKinneys received an
unsolicited letter from plaintiffs’ counsel alerting them that they might be entitled to benefits as high as $20,000 to
$60,000 if they signed “a ‘confirmation’ representing that they would not cancel their loans at the same time as they
were given the required notice of the right to cancel.” Def’s Ex. M. Upon receiving the letter, Phyllis testified that
her husband wanted to be part of the lawsuit, remarking, “{SJounds like why not; if it’s true, it’s true. If it’s not, it’s
not. Why not do it.” Phyllis Dep. at 59-60. Though the Court has not factored this letter into its analysis, it does
note with some irony that Darryl claims that he was asked to sign some form that deprived him of his right to rescind,
yet was unable to recognize the actual Confirmation form.

7


65. Nevertheless, Haring could not recall performing the McKinneys’ closing. Id. at 61-62, 68.

The central dispute in the case concerns what documents the McKinneys signed at the
closing. In their complaint, the McKinneys alleged that “upon information and belief,” the
closing agent simultaneously presented them with and required them to sign a form entitled
“Notice of Right to Cancel” and a form entitled “Confirmation” that confirmed and warranted
that they had not cancelled the transaction. Pl’s Am. Compl. {[ 38. It is undisputed that the
McKinneys signed the Notice of Right to Cancel at the closing, which informed the McKinneys
that they had a “legal right under federal law to cancel this transaction, without cost, within three
business days.” The Confirmation, which the McKinneys contend was on the opposite side of
the sheet of paper containing the Notice of Right to Cancel, states:

The undersigned, having been given due notice as required by Federal Law, hereby

confirm(s), in all respects, a real mortgage loan made to him/her/them by Lender named

on the reverse hereof on the date the notice on the reverse hereof was signed, warrants
that more than 3 business days have elapsed since receipt of the “Notice of Right to

Cancel” and further warrant(s) that the undersigned has/have not rescinded or cancelled

said real estate mortgage loan transaction or given notice of rescission or cancellation of

said transaction.
Def’s 56.1 Stmt., Ex. A (exhibit to P. McKinney Dep.) (footnote omitted).

The McKinneys allege that they also signed the Confirmation at the closing. But
although the McKinneys produced unsigned copies of both the Notice of Right to Cancel and the
Confirmation, which they claim were given to them at the closing, neither side has been able to
produce a Confirmation form signed by the McKinneys. The transmittal sheet that Security First
Title Company used to record all documents that were returned to the lender in the closing

package also did not list an executed Confirmation form. See Haring Dep. at 106-08. The

McKinneys argue that because the Confirmation form was on the reverse side of the Notice, the


and plaintiffs’ motions for summary judgment. Because the Court finds that plaintiffs have not
presented evidence sufficient for a reasonable jury to conclude that they signed the Confirmation
at the closing, the Court grants defendants’ motion for summary judgment and denies plaintiffs’
motion.
Facts

The McKinneys obtained a $326,700 non-purchase-money mortgage loan from
Equicredit Corporation of Illinois (“Equicredit of Illinois”) on April 23, 2001. Equicredit of
Illinois no longer exists, but its successor by merger is defendant Nationscredit Financial
Services Corporation (“Nationscredit”). Defendant Fairbanks Capital Corporation is the servicer
of the McKinneys’ note and mortgage, and defendant Bank of New York holds title as assignee
of the McKinneys’ loan. It appears from plaintiffs’ response memorandum that they have
voluntarily dismissed Equicredit Corporation of America as a defendant. See Pl’s Resp. at 12-13.

It appears undisputed that the closing took place at the McKinneys’ home; however,
neither side can with certainty identify the closing agent. The McKinneys believe the evidence
shows “that most certainly Shannon Haring performed the McKinneys closing.” Pl’s 56.1 Resp.
at 117. As support, they point out that in April 2001 when the closing occurred, Haring was
employed as a searcher and closing agent at Security First Title Company, Equicredit of Illinois’
agent at the closing. Haring Dep. at 7. Haring testified that there was no way to determine who
performed the closing from looking at the closing documents. Id. at 64. But Haring also
acknowledged that she performed more closings in people’s homes than any other closer at
Security First during the eleven months she worked for the company, and she agreed that if

McKinneys’ closing was performed at their home, she was most likely the closing agent. Id. at



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DARRYL MCKINNEY and
PHYLLIS MCKINNEY,

Plaintiffs,

vs. Case No. 02 C 7262
NATIONSCREDIT FINANCIAL SERVICES
CORPORATION, doing business as
EQUICREDIT CORPORATION OF
ILLINOIS; EQUICREDIT CORPORATION
OF MISSOURI; EQUICREDIT
CORPORATION OF AMERICA;
FAIRBANKS CAPITAL CORPORATION;
and BANK OF NEW YORK,

DOCKETED

DEC 07 2004

wee eee eee ee ere ere

Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Phyllis and Darryl McKinney have sued their mortgage lender, its assignees, and the loan
servicer Claiming that the defendants deprived them of their rescission rights in violation of the
Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, implementing Federal Reserve Board
Regulation Z, 12 C.F.R. § 226, and the Illinois Consumer Fraud Act by allegedly requiring them
to sign both a Notice of Right to Cancel form and a Confirmation of noncancellation form at the
closing of their mortgage loan.' Plaintiffs sue to rescind the mortgage loan and to obtain

statutory damages, attorneys’ fees, and costs. This case is before the Court on both defendants’

' The McWethy class allegations were dismissed by agreement on November 17, 2003.

1

59