                           UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA

 RICARDO BOPP,                                     )
                                                   )
                         Plaintiff,                )
                                                   )
               v.                                  )   Civil Case No. 09-1736 (RJL)
                                                   )
 WELLS FARGO BANK, N.A., et al.,                   )
                                                   )
                         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

declaratory judgment for violations of the Truth in Lending Act ("TILA"), 15 U.S.C.

§ 1601 et seq., the D.C. Consumer Protection 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 of Plaintiffs Complaint by Wells

Fargo, World, and Wachovia (collectively, the "defendants"). For the following reasons,

the defendants' Motion to Dismiss is GRANTED.

                                       BACKGROUND

      Bopp is the sole owner and operator of a home reconstruction and renovation

business. Compi.    ~   15. In late 2006, his business experienced a decline in revenue, and

he could no longer meet his 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 credit-

worthiness for a fixed rate loan program called "Pick-A-Payment." Id. ,-r,-r 18-19. The

Pick-A-Payment loan provides four payment options every month: a minimum payment

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 that his 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 of Columbia. Id. ,-r,-r 8, 23. Ultimately, Bopp

defaulted on the loan, and the defendants began to foreclose on the property. Id. ,-r 35.

Plaintiff filed 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 "failure to state a claim upon which relief can 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 relief above the speculative level, on the

assumption that all the allegations in the complaint are true (even if doubtful in fact)."

Bell At!. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see also

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) (stating that if a court has determined that



                                              2
a plaintiff has asserted "well-pleaded factual allegations," the court "should assume their

veracity and then determine whether they plausibly give rise to an entitlement to relief').

When a Court is resolving a motion to dismiss, "the complaint is construed liberally in the

p laintiff1' s] favor," and he is granted "the benefit of all inferences that can be derived

from the facts alleged." Kowal v. MCI Commc 'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir.

1994)). At the same time, the Court need not accept the inferences drawn by the plaintiff

"if such inferences are unsupported by the facts set out in the complaint," nor must it

"accept legal conclusions cast in the form of factual allegations." ld. Nor must this Court

"accept as true the complaint's factual allegations insofar as they contradict exhibits to

the complaint or matters subject to judicial notice." Kaempe v. Myers, 367 F.3d 958, 963

(D.C. Cir. 2004).

       Regulation Z implements TILA and requires a creditor to make certain disclosures,

including the identity of the creditor, the amount financed, and the annual percentage rate

ofa proposed loan, before consummation of the transaction. See 15 U.S.C. § 1638; 12

C.F.R. §§ 226.17-226.18. It also mandates that a "creditor shall make the [required

disclosures] clearly and conspicuously in writing, in a form that the consumer may keep."

12 C.F.R. § 226. 17(a)(l). These disclosures must be 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" of these disclosures in writing at least seven business days before a transaction


                                               3
is consummated. See 15 U.S.C. § 1638(b)(2).

         TILA provides for rescission and statutory penalties if the creditor fails to make

certain disclosures required under the statute. See 15 U.S.C. § 1640(a). To prevail on a

damages claim for a TILA violation, however, a plaintiff must bring suit "within one year

from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). In addition, as

there is no allegation in the Complaint that Bopp did not receive notice of his right to

rescind his loan at closing,l Bopp had "until midnight of the third business day following

the consummation of the transaction or the delivery of' all required information and

disclosures, whichever is later, to rescind. 15 U.S.c. § 1635(a). Under the facts of this

case, Bopp's claim for a violation of TILA is barred by the applicable statute of

limitations. How so?

        Although plaintiff asserts that he did not receive a good faith estimate of his

closing costs or sign his loan application prior to closing, he does admit in his Complaint

that he 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 never provided 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. Because this Court does not have to accept as true


        Bopp asserts in a footnote in his opposition to defendants' motion that he did not receive
notice of right to rescind. Pl.'s Opp'n 7 n1. Because plaintiff did 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 a TILA violation in this case.

                                                 4
any factual allegations in the Complaint insofar as they contradict exhibits to the

complaint or matters subject to judicial notice, see Kaempe, 367 F .2d at 963, I find that

plaintiff received 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.

Plaintiff primarily bases his TILA claim on an alleged failure of the 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 "a lender's failure to disclose

the existence of a variable rate feature"-a situation not present here-will toll the

rescission period. Pulphus v. Sullivan, 2003 U.S. Dist. LEXIS 7080, *42 (D. Ill. 2003).

"A lender's failure to provide any of the 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 that the

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 of the

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 that plaintiff selected. See id.; see also

Commentary to 12 C.F .R. § 226. 19(b), 60 Fed. Reg. 16771, 16780 (Apr. 3, 1995) ("A


                                             5
creditor must disclose, where applicable, the possibility of negative amortization .... If a

consumer is given the option to cap monthly payments that may result in negative

amortization, the creditor must fully disclose the rules relating to the option, including the

effects of exercising the option (such as negative amortization will occur and the principal

loan balance will increase)."). Here, Bopp's Note, which is quoted in his Complaint and

attached as Exhibit 3, stated,

       My initial monthly payment amount was selected by me from a range of initial
       payment amounts approved by Lender and may not be sufficient to pay the
       entire amount 0/Interest accruing on the unpaid Principal balance . ... From
       time to time my monthly payment may be insufficient to pay the total amount
       of monthly interest that is due. If this occurs, the amount o/interest that is not
       paid each month, called "Deferred Interest, " will be added to my Principal
       and will accrue interest at 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,

       You have selected a loan product that lets you choose how much to pay each
       month from among several choices on your billing statement. As described
       below, ifyou make a periodic payment that is less than the interest owing on
       the loan, you will incur deferred interest and the principal 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 complaint by reference and
matters of which a court may take judicial notice without converting a motion to dismiss into one
for summary judgment. 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 of the
exhibits that Bopp attached and are considered by this Court to determine whether a disclosure
was clear, as required by TILA.

                                                6
and discuss the various payment options available to Bopp. See id. Thus, putting aside

the issue of whether the Commentary to § 226.19 even requires lenders to disclose the

likelihood, or certainty, that a borrower will experience negative amortization, Bopp's

argument that the defendants failed to disclose that negative amortization was certain to

occur in violation of TILA is unavailing for two reasons. First, negative amortization was

not certain to occur. It resulted because of the payment option that Bopp himself chose.

Second, the DIAD clearly and conspicuously discloses that negative amortization would

in fact occur if Bopp chose to make a payment less than the interest owed on the loan.

       Finally, plaintiffs argument that he did not receive a copy of the TILD until March

8, 2009, and that the statute of limitations thus should be equitably tolled is wholly

unconvincing. The TILD attached to the Complaint as Exhibit 4 is signed and dated

March 8, 2007. See Compl. Ex. 4. Therefore, I find that Bopp received all required

TILA disclosures by March 8, 2007, and the one year statute of limitations period for

TILA violations applies. Plaintiff did 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's remaining claims against these defendants are state law claims for breach

of the implied covenant of good faith and fair dealing (Count II), fraudulent

misrepresentation (Count III), declaratory judgment/quiet title (Count IV), and equitable

estoppel (Count VII), each of which is preempted by the Home Owner's Loan Act

("HOLA"), 12 U.S.C. § 1461 et seq. HOLA was designed to create a nationwide system



                                              7
of federal savings and loan associations to be centrally regulated. See Fid. Fed. Sav. &

Loan Ass 'n v. de la Cuesta, 458 U.S. 141, 160-61 (1982). To that end, BOLA states that

the Office of Thrift Supervision ("OTS") "hereby occupies the entire field of lending

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 lending powers in accordance with a uniform federal scheme of regulation"

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 or otherwise affect their 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 of federal law in a field

preempted entirely by federal law. The general presumption against preemption is not

applicable here, and the relevant regulation is clear-the field of lending regulation of

federal savings associations is preempted." (emphasis in original». It is clear that the

gravamen ofBopp's state law claims is the same as what underlies his TILA claim. A

thorough reading of plaintiffs Complaint reveals that he is challenging the terms of his

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 of these complaints are expressly enumerated in BOLA as

illustrative examples of preempted state law. See 12 C.F.R. § 560.2(b)(4)-(5), (9)-(11);


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

the status of state laws under § 560.2, the first step will be to determine whether the type

of law in question is listed in paragraph (b). If so, the analysis will end there; the law is

preempted."). Even if plaintiffs claims could be characterized as not falling within one

ofHOLA's illustrative examples in § 560.2(b), he cannot demonstrate that the state law

claims "only incidentally affect the lending operations of Federal 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 attempt to plead 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 of the foregoing reasons, the Court GRANTS the defendants' Motion To

Dismiss and DISMISSES Counts I, II, III, IV, and VII of the Complaint. Furthermore,

the Court DENIES AS MOOT defendants' Motion for More Definite Statement and to

Strike Portions of Plaintiffs Complaint. An Order consistent with this decision

accompanies this Memorandum Opinion.




                                                   United States District Judge




                                              9
