The opinion of the court was delivered by: Hon. Joseph H. Rodriguez
Plaintiffs Tracey Lockwood and Frank Lockwood are husband and wife and co-owners of a home in Browns Mill, New Jersey. Compl. ¶ 1. They have defaulted on their mortgage and Defendants NationStar Mortgage and Federal National Mortgage Association*fn1 instituted foreclosure proceedings in New Jersey Superior Court, Burlington County, Chancery Division. Plaintiffs filed the present action against Defendants alleging violations of the Truth in Lending Act ("TILA"), 15 U.S.C.A. § 1601, et seq., and seeking rescission of the mortgage and statutory damages. Presently before the Court is Defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and Plaintiffs' cross-motion for a Stay of the foreclosure proceedings.
The Court has considered the written submissions of the parties and heard oral argument on these matters on the record on March 2, 2011. For the reasons stated on the record that day, as well as those that follow, the Court will deny the motion to dismiss and stay the present federal action pending resolution of the foreclosure action in the New Jersey Superior Court.
Plaintiffs refinanced their mortgage with Defendants in early 2008. They have since rescinded their mortgage but Defendants have not honored the rescission. Plaintiffs allege that Defendants violated TILA by providing inaccurate, backdated versions of the mandatory Notices of Right to Cancel ("NORTCs") and by failing to honor their notice of rescission.
The Lockwoods began the process of refinancing their Browns Mill, New Jersey home in late 2007 with Nationstar. Compl. at ¶¶ 13-15. A closing date was set for January 8, 2008, but during this meeting the Lockwoods refused to sign the loan documents because the terms were inconsistent with earlier representations of Nationstar. Id. at ¶¶ 16-20. Importantly, the Lockwoods contend that a female agent of Nationstar attended the January 8, 2008 meeting and that the closing did not take place on that date. Id.
On January 10, 2008, a male agent for Nationstar went to the Lockwoods' home with revised loan documents, including a revised HUD-1, dated January 10, 2008 that reflected the agreed upon terms of the loan. See Compl., Ex. A HUD-1 form. The male agent for Nationstar directed the Lockwoods to leave the spaces for the date blank. The Lockwoods obliged and as a result claim that they signed the Truth In Lending Disclosure Statement and the NORTC without acknowledging the date of their signatures on those forms. See Compl. at¶¶ 21-27. The Lockwoods expressly dispute signing any documents on January 8, 2008, including the Mortgage. Id. at ¶¶ 18-20.
If the Lockwoods are believed, and considering the print date of some of the documents brought to the January 10, 2008 meeting, it is possible that the Defendants backdated the documents. See Compl., Ex. A HUD-1 form, dated January 10, 2008. The upshot is a reduction in the three day cancellation period provided under TILA and Regulation Z. Because the documents were dated for January 8, 2008, rather than January 10, 2008, the Lockwoods only had until January 11, 2008 to exercise their right to cancel, when they should have had until January 14, 2008. Id. at ¶ 31. Defendants also disbursed the proceeds of the loan before midnight on January 14, 2008; before the three business day cancellation period expired under the Lockwoods' theory. Id. at ¶ 34.
On April 19, 2008, Tracey Lockwood was in a serious car accident. She subsequently lost her job and the Lockwoods fell behind on their mortgage payments. See Cert. of Andrew Milz, Esq., Ex. A. In October of 2009, Defendants sued the Lockwoods in foreclosure in the New Jersey Superior Court, Burlington County, Chancery Division ("the foreclosure action"). In that case, the Lockwoods plead as an affirmative defense all defenses available under TILA. Defendants moved to strike the Lockwoods' Answer and the parties briefed the issues. Then, the Lockwoods sent a rescission letter to Defendants, but the rescission was denied. Compl. at ¶ 41.
Following a denial of their request to rescind, the Lockwoods instituted the present action in this Court. In the meantime, the state court denied Nationstar's motion to strike the Answer. The parties debate whether the state court analyzed or even addressed the Lockwoods' TILA affirmative defense. The Lockwoods claim that there has been no discovery in state court related to their TILA affirmative defense, largely because at the time that it plead the affirmative defense, the basis for the federal TILA action had not accrued because Defendants had not yet denied rescission. As of the date of the hearing in this matter, no trial date has been set in the foreclosure action.
Both parties have asked for a stay. Defendants ask for a stay of these proceedings in the event the Court denies the motion to dismiss. Plaintiffs not only oppose the motion to dismiss, but also ask for the Court to Stay the foreclosure action in state court. These issues will be addressed in turn.
A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts, taken as true, fail to state a claim. Fed. R. Civ. P. 12(b)(6). When deciding a motion to dismiss pursuant to Rule 12(b)(6), ordinarily only the allegations in the complaint, matters of public record, orders, and exhibits attached to the complaint, are taken into consideration.*fn2 See Chester County Intermediate Unit v. Pa. Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990). It is not necessary for the plaintiff to plead evidence. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). The question before the Court is not whether the plaintiff will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (2007). Instead, the Court simply asks whether the plaintiff has articulated "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
"A claim has facial plausibility*fn3 when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. - - - , 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). "Where there are well-pleaded factual allegations, a court should assume their veracity and then ...