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Burnham v. WMC Mortgage Corp.

June 21, 2010

DR. LEM BURNHAM AND BARBARA BURNHAM, PLAINTIFFS,
v.
WMC MORTGAGE CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge

OPINION

Presently before the Court is Defendant WMC Mortgage Corporation's motion for summary judgment on all claims by Plaintiffs Lem and Barbara Burnham [Docket Item 31]. Though initially bringing twelve causes of action against WMC, Plaintiffs have since waived all but two claims, one seeking rescission of their mortgage under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f, and one seeking relief under the New Jersey Consumer Fraud Act ("CFA"), N.J. Stat. Ann. §§ 56:8-1 to -195. For the reasons expressed below, the Court will grant in part and deny in part Defendant's motion for summary judgment. Plaintiffs may continue to pursue only their quest to rescind their WMC loans based on Defendant's alleged failure to provide proper notice of their right to rescind and may only seek voidance of any security interest and return of any related charges.

I. BACKGROUND

A. Facts

Dr. Lem Burnham is a former professional football player who subsequently earned a Masters Degree ("MD") and a Doctorate of Philosophy ("PhD") in psychology. (Lem Burnham Dep. at 8-9, 22-23.) Barbara Burnham, Dr. Burnham's wife, is a math teacher. (Barbara Burnham Dep. at 6.) In September 1997, Dr. and Mrs. Burnham purchased a newly constructed, five-bedroom home in Moorestown, New Jersey. (Deed, Defs. Exh. E; Appraisal, Defs. Exh. D.) Between 2003 and 2006, the Burnhams refinanced their home four times. (Credit Report, Defs. Exh. G.)

On June 26, 2006, Plaintiffs received two loans from WMC; the first for $937,500 ("first loan") and the second for $250,000 ("second loan"). (Note and Balloon Note, Defs. Exh. J.) These loans refinanced a loan from Fremont Mortgage Company for $980,000. (Fremont Loan Documents, Defs. Exh. H.) Plaintiffs took the proceeds they received from the WMC loans for personal use. (Lem Burnham Decl. at 111.) In April 2007, Wells Fargo initiated foreclosure proceedings against Plaintiffs and on April 8, 2008, Plaintiffs signed a consent order in which they agreed not to contest foreclosure. (Foreclosure Complaint, Defs. Exh. N; Consent Order, Defs. Exh. O.) The Superior Court of New Jersey, Burlington County, entered a final judgment of foreclosure on June 23, 2009. (Foreclosure Judgment, Docket Item 53.)

Plaintiffs allege that Darren Ginas, a mortgage broker with Apex Financial Group, Inc., falsely offered Dr. Burnham a job in order to induce Plaintiffs to enter into the June 2006 loans, but the job never materialized. (Lem Burnham Dep. at 93, 96, 99-103.) Plaintiffs admit that they never had any discussions with WMC regarding this job offer.

At issue in this case are the number of Notices of Right to Cancel provided to Plaintiffs, the amount of disclosed finance charges as compared to actual finance charges, and the appropriate and actual fee for title insurance. Plaintiffs state that they did not receive the necessary two Notices of Right to Cancel for each of the June 2006 loans and that only one of the loans they received is dated. (Pls. May 18, 2010 Aff't; Pls. Statement of Uncontested Facts ¶ A1-A2; Pls. Exh. A.) Plaintiffs did, however, sign Notices of Right to Cancel in which they each acknowledged receiving two copies of the required notices. (Defs. Reply Exhs. C & D.) For the first loan, Plaintiffs were charged either $2,026 (Defs. Reply Exh. E) or $2,343.75 (Pls. Exh. C) for title insurance. Plaintiffs offer a print-out from the Chicago Title Insurance Company's National Insurance Company that the title insurance fee for a loan of $937,500 would be $2,026. (Pls. Exh. D.) Finally, as to the first loan, Plaintiffs argue that the disclosed finance charges can be calculated by subtracting the amount financed, $898,515.22, from the loan amount, $937,500, for a disclosed finance charge of $38,984.78.*fn1 (Pls. Exh. B.) Plaintiffs state that they actually paid $38,984.78. (Pls. Exh. C.)

B. Procedural History

On December 21, 2007, Plaintiffs brought suit against WMC, as well as Mortgage Electronic Registration Systems, Inc., HomeQ Servicing Corporation, Barclays Capital Real Estate, Inc., Wells Fargo Bank, Apex Financial Groups, Inc., and Darren Ginas. Plaintiffs have since settled with all defendants except WMC, Apex, and Ginas [Docket Item 15]. Apex and Ginas have not entered an appearance in this case. On October 2, 2009, WMC filed the instant motion for summary judgment. After some delay, the parties completed briefing on May 19, 2010, when Plaintiffs submitted, with Court permission, a sur-reply. As discussed, in their opposition to summary judgment, Plaintiffs waived all claims against WMC except rescission under TILA and their claim under the CFA. With respect to their "rescission" claim, Plaintiffs "seek rescission against WMC for the amount of the difference between the Fremont and WMC loan ($207,500), plus closing costs[.]" (Pls. Opp'n at 7.)

II. DISCUSSION

A. Standard of Review

Summary judgment is appropriate when the materials of record "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). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if it might affect the outcome of the suit under the ...


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