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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

SALEH ALI M. BAKABAS,

Case No. 09-11260

Plaintiff,

v. HON. SEAN F. COX

United States District Judge

JP MORGAN CHASE BANK, N.A.

Defendant.

_______________________________/

OPINION & ORDER GRANTING DEFENDANT’S 

MOTION FOR SUMMARY JUDGMENT [Doc. No. 38]

Plaintiff Saleh Ali M. Bakabas (“Bakabas”) brings this cause of action for violations of

the Truth In Lending Act, 15 U.S.C. § 1601 et seq., against Defendant JP Morgan Chase Bank,

N.A. (“the Bank”). The matter is currently before the Court on the Bank’s motion for summary

judgment [Doc. No. 38]. The parties have fully briefed the issues, and a hearing was held on

July 8, 2010. For the reasons below, the Court GRANTS the Bank’s motion [Doc. No. 38], and

will DISMISS this action WITH PREJUDICE unless Bakabas tenders the $157,000.00 in

mortgage principal involved in this action to the Bank no later than thirty (30) days from the

date of this opinion. 

BACKGROUND

Consistent with the requirements of FED. R. CIV. P. 56, the following are the relevant

facts of this matter, taken in the light most favorable to the non-moving party, Mr. Bakabas.

Bakabas is a resident of Dearborn, Michigan, and the owner of real property located at

4091 Bingham Street, Dearborn, Michigan (“the Real Property”). Bakabas owns the Real

Property along with his mother, who resides in Saudi Arabia. 
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 This fact is disputed vigorously by the Bank, and in support of its motion the Bank attaches an

affidavit from Ms. Shannon Barkley [see Def.’s Ex. E, Doc. No. 38], who attests that she notarized the

documents at issue in this lawsuit, personally observed Bakabas sign the TILA notice of right to

cancellation, and then personally handed Bakabas copies of these documents at the end of the closing. Id.

at ¶¶6-11. In its reply brief, however, the Bank states that “for purposes of this motion only, the Court

should assume that Plaintiff did not receive copies of those documents.” [See Def.’s Reply Br., Doc. No.

42, p.1]. 

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In July of 2007, Bakabas alleges that he went to an entity he names as “Millennium

Loans” (“Millennium”) to secure a commercial loan. Millennium told Bakabas he could get the

loan, and had Bakabas sign documents, but allegedly did not give Bakabas a copy of these

documents.1

 

In November of 2007, Bakabas claims he first realized that Millennium had placed a

mortgage (“the Mortgage”) on the Real Property in favor of Washington Mutual Bank

(“WAMU”). Bakabas immediately called Millennium’s office, and was told he had to come to

their offices to cancel the mortgage if that was his intention. Bakabas, though, alleges that when

he and two friends arrived at Millennium’s offices, the doors were locked and he was unable to

get anyone to come to the door. As a result, on December 7, 2007 Bakabas faxed a notice to

Millennium purporting to cancel the loan [Ex. 3 to Pl.’s Complaint, Doc. No. 1]. 

Bakabas retained legal counsel to assist in this matter, and Plaintiff’s Counsel himself

wrote several letters to WAMU during March and April of 2008, but these letters are alleged to

have largely gone ignored. WAMU was subsequently taken over by the Federal Deposit

Insurance Corporation (“FDIC”), and the Bank purchased assets, including the Mortgage, from

the FDIC as receiver for WAMU, on September 25, 2008. 

Bakabas did not make payments on the Mortgage, which as a consequence went into

default. On March 11, 2009, a notice was tacked on the front door of the Real Property notifying
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Bakabas that the Real Property was being foreclosed by the Bank. The sale was originally

scheduled for April 1, 2009, but has not yet taken place due to this litigation. 

Bakabas filed the instant lawsuit against the Bank and against the law firm Trott & Trott,

P.C. on March 18, 2009 in the Wayne County, Michigan, Circuit Court, claiming that the

Mortgage should be rescinded as Bakabas received no proceeds from the mortgage [Count I],

and because he did not receive two copies of the “right to cancel” notice required under the

Truth In Lending Act (“TILA”), 15 U.S.C. § 1635(a) [Count II]. Bakabas also attached a request

for sanctions [Count III], alleging that the foreclosure was frivolous. The Bank removed the

action under the Court’s federal question jurisdiction on April 4, 2009. 

On July 9, 2009, the Court granted Trott & Trott, P.C.’s motion for summary judgment

[Doc. No. 11], holding that the law firm was not a proper defendant in this action. [See Doc. No.

28, pp.4-5]. The Court then remanded Bakabas’ state law claims [Counts I, III] to the Wayne

County, Michigan, Circuit, on the grounds that those claims predominated over the TILA claim,

and presented a potential for jury confusion, pursuant to 28 U.S.C. § 1367(c)(2). [See Doc. No.

32]. Accordingly, the only claim currently remaining in this action is Bakabas’ TILA claim

[Count II] against the Bank. 

Following the close of discovery in this action, the Bank filed its instant motion for

summary judgment [Doc. No. 38] on May 7, 2010. In its motion, the Bank argues that dismissal

of Bakabas’ TILA claim is warranted unless Bakabas is willing to return the principal loaned to

him by WAMU - an asset now currently owned by the Bank. Id. at pp.6-8. In opposition to the

Bank’s motion, Bakabas argues that: 1) he is not obligated to tender back any monies loaned

“unless there is a determination that Plaintiff is entitled to rescind[;]” and 2) that if it is
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determined that Bakabas has the right to rescind, all he need tender to the Bank is $3,500.00. 

STANDARD OF REVIEW

Summary judgment “shall be rendered forthwith if 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 a judgement as a

matter of law.” FED.R.CIV.P. 56(c). The party seeking summary judgment has the initial burden

of informing the court of the basis for its motion and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file together with the affidavits which

it believes demonstrate the absence of a genuine issue of material fact. Celotex v. Catrett, 477

U.S. 317, 323 (1986). The burden then shifts to the nonmoving party who “must set forth

specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 250 (1986) (quoting FED.R.CIV.P. 56(e)). 

ANALYSIS

In its motion for summary judgment, the Bank asks this Court to dismiss the instant

action unless Bakabas is willing to return the entire principal advanced by WAMU. Bakabas

argues that, at most, he should be required to return is the $3,500.00 he alleges he personally

received at the loan closing. The Court disagrees with Bakabas, and GRANTS the Bank’s

motion for summary judgment [Doc. No. 38] - in effect, dismissing this matter unless Bakabas

agrees to tender the entire amount loaned by WAMU - $157,000.00 - to the Bank no later than

thirty (30) days from the date of this opinion. 

TILA provides for statutory penalties if a creditor fails to make certain disclosures

required under the statute. The Sixth Circuit has held that: 
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One of the primary purposes of the TILA is to assure a meaningful disclosure of

credit terms so that the consumer will be able to compare more readily the various

credit terms available to him and avoid the uninformed use of credit. 

Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002) (internal citations and quotations

omitted). To accomplish this purpose, TILA empowers the Federal Reserve Board, through

Regulation Z, 12 C.F.R. § 226, to require certain disclosures to consumers regarding the terms

and costs of credit. Id. 

One such disclosure, required under 15 U.S.C. § 1635(a), is known as a “Notice of Right

to Cancel” - the same disclosure which Bakabas alleges he was not provided by the lender during

his loan transaction. “The relevant regulations require that a creditor shall deliver two copies of

the notice of the right to rescind to each consumer.” Lancaster v. Countrywide Home Loans,

Inc., 2009 WL 2584736, *6 (E.D. Mich. Aug. 19, 2009) (internal citations and quotations

omitted). “When a creditor fails to deliver a Notice of Right to Cancel to a debtor, the debtor has

three years to rescind the loan.” Id. (internal citation omitted). In this case, for purposes of this

motion only, the Bank has stipulated that Bakabas did not receive this notice - and therefore is

eligible to exercise his right to rescind the transaction under TILA. 

The procedure for the return of money or property upon a consumer’s right to exercise

his or her right to rescind the transaction is set forth in 15 U.S.C. § 1635(b). Under that

subsection, the borrower is not liable for any finance charges related to the transaction, and is

entitled to the return of any money or property given as down payment or earnest money related

to the transaction. In return for this, however, the consumer must return to the lender the

principal amount advanced in the transaction. 

Due to the Bank’s stipulation for purposes of this motion that Bakabas did not receive
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copies of the “Notice of Right to Cancel,” Bakabas is eligible to rescind the transaction. 

Therefore, only two issues remain for the Court’s consideration: 1) what must Bakabas return to

the Bank; and 2) who must perform first. 

I. The Amount of “Mortgage Proceeds” Bakabas is Required to Return. 

Bakabas argues that all he is required to tender to the Bank is “3,500.00 of the mortgage

proceeds that were wired into his account.” [Pl.’s Br., Doc. No. 41, p.2]. The Court disagrees. 

This Court considered a similar situation in Lancaster, where debtor sought rescission of

a mortgage which the debtors alleged they did not receive a Notice of Right to Cancel disclosure. 

In that case, the Court held as follows: 

Ordinarily a creditor must return all security interests, downpayments, and

finance or other similar charges, and the debtor must return the full amount of the

mortgage, plus any interest accrued during the time the debtor had access to the

funds. 

Lancaster, 2009 WL 2584736, *7 (emphasis added). The original loan from WAMU to Bakabas

was for $157,000.00, [See Def.’s Ex. A, Doc. No. 38], a figure that neither disputed at the July 8,

2010 hearing was the remaining outstanding balance. Thus, for purposes of this motion, the

Court will assume that the uncontested amount of the outstanding mortgage on the Real Property

is $157,000.00. Bakabas’ arguments to the contrary are without merit. 

II. The Order of Performance between Bakabas and the Bank. 

The Bank argues that Bakabas “is not entitled to rescission unless he tenders the

consideration received in the loan transaction. . . which he has not done.” [Def.’s Reply Br.,

Doc. No. 42, p.1]. Though Sixth Circuit case law gives this Court discretion to set the order of

rescission performance by the parties in whatever manner is equitable, the Court agrees with the

Bank’s argument. 
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Analyzing the law of the Sixth Circuit regarding rescission under TILA, the Western

District of Michigan held as follows: 

Although § 1635(b) specifies that the consumer’s obligation to tender the

property arises only after the creditor has performed its obligations of taking steps

to terminate its security interest and returning any money or property given as a

downpayment or earnest money, many courts, including the Sixth Circuit, have

recognized that the express language of § 1635(b), as well as equitable principles,

permit a court to modify those procedures to condition the lender’s obligations

upon the borrower’s tender of the amount due to the lender. 

Moore v. Cycon Enterprises, Inc., 2007 WL 475202, *2 (W.D. Mich. Feb. 9, 2007). The Sixth

Circuit explained the rationale behind this requirement as follows:

After weighing the equities, the district court properly conditioned the Fraleys’

rescission on repayment of the net loan principal received. Without requiring the

Fraleys to return the net loan principal, the Fraleys would receive a windfall and

be placed in a far better position than they were in prior to the transaction. The

provision for rescission aims to restore parties, as much as possible, to the

position they held prior to entering into the transaction. 

Decision One Mortgage v. Fraley, 2000 WL 18889700, *2 (6th Cir. Dec. 19, 2000). This Court

has also previously sanctioned the conditioning of rescission upon the return of the loan

principal by the borrower: 

Rescission is an equitable remedy, and the court may condition cancellation of the

security interest by the creditor upon the return of the loan amount to the creditor

by the debtor.

Lancaster, 2009 WL 2584736, *7. 

Weighing the equities in this matter, the Court conditions Bakabas’ right to rescission

upon his first tendering the entire loan principal back to the Bank. WAMU, the original lender

of the funds advanced on the Real Property’s mortgage, has not been alleged by Bakabas to have

done anything wrong in this transaction. The Bank purchased assets, including the Mortgage,

from WAMU after the FDIC stepped in as receiver for WAMU’s assets - and therefore is also
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not alleged by Bakabas to have done anything wrong. 

Rather, the essence of Bakabas’ argument is that he was taken advantage of by Millenium

- whom Bakabas has not attached as defendant to this action. As the Bank argues in its reply: 

If Plaintiff got taken by Millenium, that was his own doing. Plaintiff’s ill advised

decision to do business with Millenium was not caused by Defendant[,] and

Defendant should not be penalized for Plaintiff’s decision.

[Def.’s Reply Br., Doc. No. 42, p.2]. The Court agrees. Further, it is undisputed that Bakabas

has fallen behind on the Mortgage payments related to the Real Property - so much so that the

Bank began the process of foreclosure before this lawsuit was filed. Under these circumstances,

the equities weigh in favor of the Bank, and the Court therefore conditions Bakabas’ right to

rescission upon his first tendering the loan principal to the Bank. 

CONCLUSION

For the reasons stated above, the Court the Court GRANTS the Bank’s motion [Doc. No.

38], and will DISMISS this action WITH PREJUDICE unless Bakabas tenders the

$157,000.00 in mortgage principal involved in this action to the Bank no later than thirty (30)

days from the date of this opinion. 

IT IS SO ORDERED.

S/Sean F. Cox 

Sean F. Cox

United States District Judge

Dated: August 11, 2010

I hereby certify that a copy of the foregoing document was served upon counsel of record on

August 11, 2010, by electronic and/or ordinary mail.

S/Jennifer Hernandez 

Case Manager