Glauser et al v. Duetsche Bank National Trust Company et al

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re
JENNIFER M. GLAUSER,
Debtor.
JENNIFER M. GLAUSER,
MARK GLAUSER,
Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST
COMPANY,
AMERIQUEST MORTGAGE COMPANY,
Defendants.
Chapter 13
Bankruptcy No. 05-19233DWS
Adversary No. 05-0527
ORDER
AND NOW, this 3rd day of April, 2007, upon consideration of the Complaint of the
Plaintiffs Jennifer and Mark Glauser against Defendants Deutsche Bank National Trust
Company ("Deutsche Bank") and Ameriquest Mortgage Company ("Ameriquest,"
collectively with Deutsche Bank, the "Defendants"), after trial and consideration of the
parties' memoranda, and for the reasons stated in the accompanying Memorandum Opinion,
It is hereby ORDERED that judgment is entered In Favor Of Defendants and
against Plaintiffs. W.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
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UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re
JENNIFER M. GLAUSER,
Debtor.
JENNIFER M. GLAUSER,
MARK GLAUSER,
Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, :
AMERIQUEST MORTGAGE COMPANY,
Defendants.
Chapter 13
Bankruptcy No. 05-19233DWS
Adversary No. 05-0527
MEMORANDUM OPINION
BY: DIANE WEISS SIGMUND, Chief Bankruptcy Judge
Plaintiffs Jennifer and Mark Glauser ("Jennifer" and "Mark" and collectively
"Plaintiffs") filed this adversary proceeding against Defendants Deutsche Bank National
Trust Company ("Deutsche Bank") and Ameriquest Mortgage Company ("Ameriquest"),
claiming that a loan transaction they entered into with Ameriquest in 2004, subsequently
assigned to Deutsche Bank, violated the federal Truth in Lending Act ("TILA").
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The dispositive issue is whether Ameriquest overcharged Plaintiffs for title insurance when it
charged them the "basic" rate rather than the lower "refinance" rate, so as to make it an
unreasonable charge that should have been disclosed as part of the finance charge. After trial
and a review of the evidence presented, and for the reasons stated below, I find that Plaintiffs
failed to meet their burden of proving that they were entitled to the refinance rate. As the
basic rate was therefore not an unreasonable charge, there was no disclosure violation
committed by Ameriquest that would subject it to TILA liability.1
FINDINGS OF FACT
Plaintiffs are husband and wife and co-owners of property located at 14 Bark Hollow
Lane, Horsham, Pennsylvania (the "Home").2 They purchased the Home on December 12,
2001, and financed the purchase with a mortgage loan from Wells Fargo Mortgage
Resources ("Wells Fargo" and the "Wells Fargo Loan").3
There is no question but that title insurance was secured with respect to the Wells
Fargo Loan. The HUD-1 Settlement Statement for the Wells Fargo Loan ("Wells Fargo
HUD-1") indicates a charge of $1,008.75 for title insurance paid to the closing agent,
1 Deutsche Bank is the subsequent assignee of the loan. See Joint Pretrial Statement § II
("Uncontested Facts") f17. Plaintiffs concede that Deutsche Bank had no involvement with the
underlying loan transaction at issue in this case. Because I find that Plaintiffs failed to prove a TILA
violation by Ameriquest, I need not address Deutsche Bank's liability as assignee of the loan.
2 Uncontested Facts U 9.
3 Trial Transcript (Tr.) at 6; HUD-1 Settlement Statement, Exhibit P-l.
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Diamond Abstract.4 The "Owner's Policy of Title Insurance" issued by Fidelity National
Title Insurance Company ("Fidelity" and the "Fidelity Policy") dated January 24, 2002
was introduced by Plaintiffs.5 The Fidelity Policy is a form document, with the information
specific to the insured property being found in Schedule A, The attached Schedule A
provides the following information: (1) it identifies the "insureds" as Plaintiffs;
(2) it identifies the estate as "fee simple;" (3) it identifies Wells Fargo's recorded lien;
and (4) it states that the insured property is in Montgomery County, Pennsylvania as
further described in the "Attached Schedule A Continuation Page." Plaintiffs did not
produce the referenced Schedule A Continuation Page.
On January 13, 2004 Plaintiffs entered into a new loan with Ameriquest (the
"Ameriquest Loan"), which, inter alia, refinanced the Wells Fargo Loan.6 The Ameriquest
Loan is the transaction at issue in this adversary proceeding. A threshold factual dispute
is whether Ameriquest was provided with any documents evidencing that title insurance
was issued in the Wells Fargo transaction. Mark testified at trial that at Ameriquest's
request, he transmitted by facsimile a copy of all the documents he had from the Wells Fargo
Loan, including the Wells Fargo HUD-1 and the Fidelity Policy.71 do not find his testimony
credible. It directly contradicts Plaintiffs' responses to Ameriquest's Interrogatories and
4 Exhibit P-l.
5 Exhibit P-2.
6 Uncontested Facts f 1.
7 Tr. at 8-9,25.
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the Jennifer's deposition testimony, both of which indicate Plaintiffs only provided
Ameriquest with tax returns.8 There was no corroborating testimony or documentation to
indicate contemporaneous transmission of the Wells Fargo HUD-1 and Fidelity Policy.
On the other hand, Ameriquest's representative, Michael Monsera, testified that he
conducted a search of Ameriquest's records pertaining to the transaction and did not locate
either the Wells Fargo HUD-1 or the Fidelity Policy.9
The January 13, 2004 closing for the Ameriquest Loan was conducted by Express
Financial Services, Inc. ("Express"), an independent contractor that provides closing services
for Ameriquest, including title searches and issuing title insurance.10 Documents presented
to Plaintiffs at the closing included a Federal Truth-in-Lending Act Disclosure Statement
("TILA Statement"),11 a HUD-1 Form Statement (Ameriquest HUD-1),12 and a Notice of
8 Compare Tr. at 25 with Plaintiffs' Responses to Defendant's First Set of Interrogatories
No. 8, Exhibit D-18, and Deposition Transcript of Jennifer Glauser ("J. Glauser Dep.") at 39,
Exhibit D-17. I am also not impressed with Mark's testimony that he retained all documents from
the Wells Fargo settlement, including the Title Policy and HUD-1. in a blue folder at home when
the Title Policy introduced at trial bore the a facsimile legend dated two years after the Wells Fargo
closing of a transmission from Plaintiffs' counsel. Exhibit P-2. Finally Mark's credibility as a
witness is undermined by his admitted misstatements in an affidavit filed in opposition to
Defendants' motion for summary judgment. Tr. at 42-47.
9 Tr. at 148-49.
10 Tr. at 170 (testimony of Scott Bell, General Counsel for Express); Exhibit P-4, Ameriquest
HUD-1 (identifying Express).
11 Exhibit P-3.
12 Exhibit P-4.
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Right to Cancel ("Cancellation Right Notice").13 Plaintiffs had an opportunity to read the
loan documents at the loan closing and did not ask any questions.14
Mark admits that he did not tell Express' representative that they had title insurance
issued with respect to Well's Fargo Loan.15 Plaintiffs were charged $1,178.75 for title
insurance procured by Express through Stewart Title Guaranty Company ("Stewart").16
This amount represents the "basic rate" for title insurance on a loan the size of the
Ameriquest Loan according to the Manual of Title Insurance Rating Bureau of Pennsylvania
(the "TIRBOP Manual").17 Ameriquest agrees that this charge was not included in the
calculated "finance charge" disclosed by the TILA Statement.
As noted, the Ameriquest Loan was subsequently sold and assigned to Defendant
Deutsche Bank as trustee for Ameriquest.18 Plaintiffs fell behind on their mortgage
payments, and a mortgage foreclosure action was instituted against them. No judgment in
foreclosure has been entered against them.19 On or about July 1,2005, Plaintiffs' counsel
13 Exhibit P-5.
14 Tr. at 58.
15 Tr.at48.
16 Ameriquest HUD-1, Exhibit P-4.
17 TIRBOP Manual, Addendum A, Exhibit P-8. The total title insurance charge is actually
$1,423.75, which includes the basic rate of $1,178.75 as well as other components such as
endorsements, closing protection letter and tax certification. Exhibit D-9 ("Express Financial
Disbursement Report"). However, it is only the propriety of the basic rate which is at issue here.
18 Uncontested Facts f 17.
19 Tr. at 28-30.
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forwarded a letter to Deutsche Bank asserting, inter alia, an overcharge of title insurance
giving rise to a violation of the Federal Truth-in-Lending Act, 15 U.S.C. § 1601, et.seg.
("TILA"), and asserting a right to rescind the loan.20 By letter dated July 20, 2005,
Ameriquest denied that Plaintiffs had a right of rescission.21 Jennifer filed a Chapter 13
petition on July 7, 2005. Plaintiffs filed this adversary proceeding on August 19, 2005.
DISCUSSION
The purpose of TILA is to aid unsophisticated consumers lest they be easily misled
as to the costs of financing. Shepeard v. Quality Siding & Window Factory. 730 F.Supp.
1295,1299 (D. Del. 1990). To that end, TILA and the regulations promulgated thereunder
require certain 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. Id.
Pursuant to TILA, a lender must make certain material disclosures, including the
"finance charge" associated with the loan. 15 U.S.C. §§ 1602(u), 1638(a); 12 C.F.R.
§§ 226.17, 226.18.22 This defined term includes all of those charges "payable directly or
20 Exhibit P-7.
21 Exhibit P-8.
22 In 15 U.S.C. § 1604, Congress authorized the Federal Reserve Board to "prescribe
regulations to carry out the purposes" of TILA. Pursuant to this authority, the Federal Reserve
Board promulgated "Regulation Z," which is memorialized in 12 C.F.R. § 226. Rossman v. Fleet
Bank (R.D National Association. 280 F.3d 384, 389 (3d Cir. 2002). The Board "also published
extensive 'Official Staff Interpretations.' 12 C.F.R. Pt. 226, Supp. I." Id. The Supreme Court has
instructed that "[c]ourts should honor that congressional choice. Thus, while not abdicating their
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indirectly by the person to whom the credit is extended, and imposed directly or indirectly
by the creditor as an incident to the extension of credit...," 15 U.S.C. § 1605(a). A lender's
failure to accurately disclose the finance charge provides a borrower with, among other
things, an extended right to rescind the transaction up to three years following consummation
oftheloan. 15U.S.C. § 1635(f); 12 C.F.R, §226.23. That right may also be asserted against
an assignee of the loan. 15 U.S.C. § 1641(c).
Of relevance here, where the transaction involves an extension of credit secured
by an interest in real property, certain real estate related costs, including title insurance,
are specifically excluded from the finance charge calculation. 15 U.S.C. § 1605(e).
However, Regulation Z clarifies that these real estate charges may be excluded only if
they are bona fide and reasonable. 12 C.F.R. § 226.4(c)(7)(I). The only real estate charge
challenged here is the "basic rate" title insurance charge of $1,178.75. There is no dispute
that the title insurance charge is bona fide. Rather, Plaintiffs contend that the amount is
not reasonable because they were entitled to the lower "refinance" rate under the TIRBOP
Manual. As such, they argue that the title insurance charge is unreasonable and should
have been included in the finance charge.
ultimate judicial responsibility to determine the law.. .judges ought to refrain from substituting their
own interstitial lawmaking for that of the Federal Reserve, so long as the latter's lawmaking is not
irrational." Ford Motor Credit Company v. Milhollin. 444 U.S. 555, 568, 100 S.Ct. 790 (1980).
See also Anderson Bros. Ford v. Valencia. 452 U.S. 205.219.101 S.Ct. 2266 (1981) ("absent some
obvious repugnance to the statute, 'Regulation Z' should be accepted by the courts, as should the
Board's interpretation of its own regulation"). In analyzing the Debtor's contentions, my guideposts
are therefore the statutory provisions of TILA as well as Regulation Z and the Official Staff
Interpretations.
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In determining whether a charge is reasonable, courts have examined whether
the disputed charges are comparable to the prevailing rates of the industry in the locality at
the time of the transaction. Brannam v. Huntington Mortgage Co.. 287 F.3d 601, 606
(6th Cir. 2002) (auotine Griesbv v. Thorp Consumer Discount Co. dn re GriesbvX 119 B.R.
479 (Bankr. E.D. Pa. 1990), vacated on other grounds by 127 B.R. 759 (E.D. Pa. 1991)).
The parties agree that the 2003 TIRBOP Manual in effect at the time of the Ameriquest
Loan serves to establish the prevailing rates and thus the "reasonable" rate for purposes of
this proceeding (the "2003 TIRBOP Manual").23 See Johnson v. Know Financial Group.
LLC. 2004 WL 1179335, at *6 n.5 (E.D. Pa. May 26, 2004) (accepting Rate Manual as
representing the relevant market for title insurance). However, the parties dispute which
rate within the 2003 TIRBOP Manual is applicable here.
As noted, Plaintiffs were charged the "basic rate" for title insurance, i.e.. $1,178.75.
However, the 2003 TIRBOP Manual in effect at the time of the Ameriquest Loan provides
for a deviation from the basic rate under the following circumstances:
When a refinance or substitution loan is made within 3 years from the date of
closing of a previously insured mortgage or fee interest and the premises to be
insured are identical to or part of the real property previously insured and there
has been no change in the fee simple ownership, the Charge shall be 80% of
the reissue rate.
23 Exhibit P-8. As noted below, the Manual has since been amended, effective August 2005.
Infra, note 24.
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2003 TIRBOP Manual § 5.6 (hereinafter the "refinance rate"). The refinance rate applicable
to the Ameriquest Loan would be S848.70.24 The "reissue rate," while not applicable to the
refinance transaction that occurred in this case, is relied upon by Plaintiffs to support their
interpretation of the requirements of the refinance rate of § 5.6. It states:
A purchaser of a title insurance policy shall be entitled to purchase this
coverage at the reissue rate if the real property to be insured is identical to or
is part of real property insured 10 years immediately prior to the date the
insured transaction closes when evidence of the earlier policy, is produced
notwithstanding the amount of coverage provided by prior policy,
2003 TIRBOP Manual § 5.3 (emphasis added).25 As seen from the highlighted language,
the reissue rate provision requires "evidence of the earlier policy [be] produced," whereas
the refinance rate provision (§5.6) does not have this explicit requirement. Plaintiffs contend
that the absence of a requirement that the earlier policy be produced in a refinance absolves
Plaintiffs from the duty to inform Ameriquest of the Fidelity Policy in connection with the
issuance of a new title policy and fixing the charge therefor.26
Perhaps anticipating some difficulty with their evidence of submission of the Title
Policy and HUD-1 to Ameriquest at closing, the Plaintiffs argue that mere knowledge of
a prior loan secured by a mortgage is sufficient to put Ameriquest on notice that a title
24 The reissue rate is 90% of the basic rate. 2003 TIRBOP Manual § 5.50 and Addendum A.
Exhibit P-8.
25 Exhibit P-8.
26 Notably, the TIRBOP Manual was amended in August 2005, making significant changes
that effectively eliminated the confusion giving rise to the dispute here. Among other things, the
mere existence of an unsatisfied mortgage to an institution lender is now explicitly defined as
evidence which the insurer must rely upon to provide the refinance rate. Exhibit P-12 at 8-9.
However, both parties agree that the TIRBOP Manual as amended through April 1,2003, governs
this loan. Nonetheless, Plaintiffs appear to argue for the application of the new rule in this case.
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policy may exist. Ameriquest clearly knew about the existence of the Wells Fargo Loan as
it appears on the title commitment prepared by Express, which was in Ameriquest's file.
According to Plaintiffs, this evidence is sufficient to meet their burden of proof that they
were eligible for the refinance rate. That position, however, is not supported by Plaintiffs'
own expert witness, William C. Hart ("Hart"),27 who conceded that this knowledge alone
is probably insufficient to demonstrate that Plaintiffs were entitled to the refinance rate:
Q: Would just the fact that there had been a prior loan, that was
a first mortgage on a property that it was purchased, would that
be sufficient?
A: Probably not under the then-rate rule [§ 5.6]
Tr. at 99. Indeed, Hart stated that § 5.6 requires some indicia of prior title insurance
notwithstanding that § 5.6 does not contain the same explicit requirement to produce the
prior policy that is found in § 5.3: "You've got to have something." i.e.. such as a HUD-1
form. Tr. at 108.28 As the facts demonstrate, Ameriquest had nothing. Significantly Hart
did not opine that Ameriquest had a responsibility to discover whether title insurance
27 Both Hart and Ameriquest's expert, E.A. Dixon, Jr., Esq. ("Dixon"), were stipulated by
the parties as experts in the area of title insurance.
28 Ameriquest's expert, Dixon was not reticent to define that "something." By reading the
2003 TIRBOP Manual to incorporate the section 5.3 production requirement into the silent 5.6
provision, he concluded that the borrower has a duty to produce the prior policy. While I note that
Dixon's interpretation is belied by other sections in the Manual that contain cross-references,
indicating that its drafters knew how to expressly incorporate sections when they wished to do so,
the outcome of this contested matter is not driven by an interpretation of the 2003 TIRBOP Manual.
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had been issued with respect to the prior mortgage loan. Upon my questioning, he stated:
"Now, what the extent of Ameriquest's responsibility was, I can't address." Tr. at 103.29
Hart did opine that Express had a duty to inquire about prior title insurance.
Tr. at 90.30 Neither the relevance nor the legal correctness of this view was established.
Plaintiffs have neither argued nor established that the acts and/or omissions of Express, who
is not a defendant in this action, can be imputed to Ameriquest.31 Moreover Pennsylvania
law is clear that "the relationship between the insurance agent and the purchaser reflects
'the quintessential arm's-length relationship, that of seller and buyer,'. . . rather than a
confidential relationship. Id. at 22 (quoting Weisblatt v. Minnesota Mut. Life Ins. Co..
4 F.Supp. 2d 371, 381 (E.D. Pa. 1998)). Accord Johnson v. Robinson (In re Johnson).
292 B.R. 821,829-30 (Bankr. E.D. Pa. 2003) (doubting that Pennsylvania law would
recognize a fiduciary duty between a title company and a borrower). As such, the action or
inaction of Express has no bearing on the issue before me, i.e.. Ameriquest's duty to
affirmatively seek out information to provide the lowest possible title insurance rate
to the borrower.
29 In a case with comparable facts discussed infra, it has been noted that absent evidence
of special confidence or overmastering dominance, "Pennsylvania courts have held that a lender is
not a fiduciary of a borrower." Strong v. Option One Mortgage. 2004 WL 5032530, at *21 (Bankr.
E.D. Pa. Aug. 31,2004).
30 Plaintiffs' post-trial memorandum misconstrues Hart to have stated that Ameriquest had
a duty, but Hart clearly testified that it was gxpress which bore the burden of determining the title
insurance charge and therefore had the burden of inquiry. Tr. at 90,98,102-03.
31 Indeed Plaintiffs' own post-trial submission recognizes Hart's testimony that Express is
the agent for Stewart Title Guaranty Company. Tr. at 75.
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The extent of Ameriquest's obligation is determined based upon facts that it
knew or should have known at the time of the loan transaction. While a lender has some
evidentiary burden to demonstrate the reasonableness of loan charges, especially where it
has greater access to marketplace information to demonstrate the reasonableness of the
fee, a plaintiff nonetheless bears the burden of proving her claims. Fields v. Option One
Mortgage (In re Fields! Adv. No. 04-005, slip op. at 28-29, affirmed 2006 WL 2191342
(E.D. Pa. July 31, 2006). In Fields, the parties' stipulation that the plaintiff had obtained
title insurance with her prior mortgage, the Plaintiffs' sole evidence here, was insufficient
to meet the plaintiffs evidentiary burden on a similar challenge to a title insurance charge.
My colleague Judge Bruce Fox found that the plaintiff had an evidentiary burden of
production to demonstrate that the defendant knew or should have known at the time of the
loan transaction that the plaintiff qualified for the lower insurance rate. Id^ at 30. I concur
with Judge Fox's conclusion that, at the very least, "if a borrower contends that a lender
failed to obtain the lowest title insurance rate permitted by law, she has an affirmative burden
to demonstrate that the lender knew or should have known of the facts justifying that lower
rate." Id^ at 31-32 (citing Jones v. Aames Funding Corp.. 2006 WL 2845689, *5-7 (E.D. Pa.
Mar. 8, 2006)).
To refute that proposition, Plaintiffs refer to an earlier case by Judge Fox, in Strong v.
Option One Mortgage. 2004 WL 5032530 (Bankr. E.D. Pa. Aug. 31, 2004), which also
involved the reasonableness of title insurance charges for TILA purposes.32 In Strong.
32 Strong, and Fjgld_s. infra, addressed whether title insurance charges were "reasonable"
as defined under the 1994 amendment to TILA, the Home Ownership and Equity Protection Act,
15 U.S.C. § 1639 et seq. ("HOEPA"), and the corresponding Regulation Z provision, 12 C.F.R.
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the plaintiffs, like the Glausers, failed to produce a prior title insurance policy to the lender,
Option One. Nevertheless, at trial they did present other facts to the court, not present here,
which proved that Option One knew a prior title insurance policy existed: (1) Option One
had obtained the HUD-1 Form from the prior lender that reflected a payment for title
insurance; and (2) the entity which Option One hired to obtain title insurance expressly told
Option One that it could obtain a lower reissue rate if it received a copy of the Schedule A
and B from the previous title insurance policy. 14 at *34.33 With these facts, Judge Fox
placed the burden upon the lender to prove the reasonableness of the title insurance
charge based upon its knowledge of the existence of the title policy. Significantly, he did
not impose any duty upon Option One to investigate the existence of prior title insurance
and never concluded that the mere fact a prior mortgage loan existed was sufficient to require
further inquiry. And significantly in the later Fields, decision Judge Fox contrasted the
§ 226.32(b)(l). While the parties agree that the Ameriquest Mortgage does not fall under the
provisions of HOEPA, courts agree that the definition of "reasonable" is identical as used throughout
the TILA statute, including HOEPA and Regulation Z. See Strong v. Option One Mortgage. 2004
WL 5032530, at *41 (Bankr. E.D. Pa. Aug. 31, 2004); Johnson. 2004 WL 1179335, at *8.
33 Plaintiffs argue that: "Strong is correct when it states that the [court in] Johnsonlv. Knox
Financial Group. L.L.C.. 2004 WL 1179335 (E.D. Pa. May 26,2004)] implicitly accepted the
position of the borrowers in that case and the Plaintiffs here that no more than the making of a new
loan within the requisite three year period was necessary [to obtain the refinance rate]." Plaintiffs'
Proposed Findings of Facts and Conclusions of Law ("Plaintiffs' FOFCOL") at 11. The Johnson
court made no such implicit finding (which is also notably contrary to Hart's testimony, supra). The
title insurance issue in Johnson was the requirement of § 5.6 of the TIRBOP Manual that there be
no change in fee simple ownership. 2004 WL 1179335 at *7. The other requirements of § 5.6 of
the TIRBOP Manual, identical property and prior insurance, appear not to have been in dispute.
Plaintiffs also misstate Strong's summation of Johnson. Judge Fox merely noted: "Implicitly,
therefore, the court in Johnson placed upon the lender the duty to charge the borrower the lowest rate
for which he was eligible under Pennsylvania law." 2004 WL 5032530 at *30 (emphasis added).
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record before him to that in Strong, where it was clear that the lender did know or should
have known about the prior insurance. Fields, slip op. at 32-33.
In short, I find that Plaintiffs have failed to met their evidentiary burden here, L&, the
existence of facts supporting their claim. Ameriquest neither knew nor should have known
about the Fidelity Policy. Hart concedes that nothing in the 2003 TIRBOP Manual creates
an independent duty of investigation,34 and Plaintiffs provide no legal authority for such a
proposition. Moreover, even had Ameriquest inquired of the Plaintiffs, the outcome would
have been the same since as of the date of their depositions in this adversary proceeding,
Plaintiffs did not even know whether title insurance had been issued with the Wells Fargo
Loan.35 The credibility of Mark's self-serving testimony that he provided the Wells Fargo
HUD-1 and the Fidelity Policy to Ameriquest is conclusively undermined by the Plaintiffs'
pretrial admissions.
a
The absence of knowledge about the Fidelity Policy is not the only requirement that
rendered the refinance rate unavailable to Plaintiffs. As noted from the plain language of
§5.6 of the 2003 TIRBOP Manual, the premises sought to be insured must also be "identical
to or part of the real property previously insured."36 Plaintiffs bear the burden of proving this
criteria was met and that Ameriquest knew, or should have known, this fact. Hart agreed
34 Tr. at 119-20. Indeed, Hart states that his own practice would have been to have obtained
a HUD-1 form from Plaintiffs. Tr. at 107-09.
35 Tr. at 47; Exhibit D-16 at 9; Exhibit D-17 at 14.
36 2003 TIRBOP Manual at 6, Exhibit P-8. The third requirement, no change in fee simple
ownership, is not disputed here.
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on cross that one would need a legal description from the prior policy or title commitment
to make this determination, "[bjecause many companies improperly don't attach metes
and bounds descriptions and make references to tax lots or street addresses in an effort to
save time, which is wrong." Tr. at 116-17. Indeed, the Fidelity Policy placed into evidence
by Plaintiffs fails to supply even a street address or tax lot. The only reference to the
insured property is to Schedule A, which in turn references the Wells Fargo Mortgage, the
Mortgage/Land Record Book number and page on which it is recorded, and the notation:
"See Attached Schedule A Continuation Page for Legal." The continuation page, which
purportedly contains the legal description of the insured property, is not attached.
Plaintiffs clearly had a burden of proof at trial to demonstrate the existence of this
essential fact, i.e. that the premises insured in the Wells Fargo Loan is "identical" to that
insured in the Ameriquest Loan. Their failure to do so provides a further basis to conclude
that the refinance rate was not available to them.37
CONCLUSION
The crux of Plaintiffs' TILA claim is that they were eligible for the refinance rate for
title insurance charged with respect to the Ameriquest Loan. At best, they proved that they
paid for title insurance in the context of the Wells Fargo Loan and that the Fidelity Policy
was issued to them contemporaneously with that transaction. However, nothing on this
37 Mr. Hart testified title insurance policies are generally not recorded, but it is customary
for Schedule A or C of such policies to be inserted into the recorded mortgage. Tr. at 118.
Thus, proving the identical nature of the property insured would have been as simple as going to the
recorded mortgage and extracting the legal description for comparison to the legal description in the
title commitment provided by Express. Tr. at 118.
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record demonstrates that Ameriquest knew, or should have known, about the Fidelity Policy.
Plaintiffs also failed to meet their burden of proving to the Court that the "identical" premises
was insured in both transactions as required by § 5.6 of the 2003 TIRBOP Manual. As such,
I cannot find that Ameriquest's charge for title insurance was unreasonable, thus rendering
the disclosed "finance charge" inaccurate under TILA. Absent any TILA violation by
Ameriquest, Plaintiffs cannot assert a claim for rescission against it or Deutsche Bank
as assignee.
For the foregoing reasons, I find that Defendants are entitled to judgment. An Order
consistent with the foregoing Memorandum Opinion shall issue.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: April 3, 2007
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