The opinion of the court was delivered by: Honorable Jerome B. Simandle
SIMANDLE, District Judge:
This matter is before the Court on the motion for summary judgment of Defendant NovaStar Mortgage, Inc. [Docket Item 67.] Plaintiff Barbara Johnson alleges a foreclosure rescue scam in which she was lured into two sale transactions of her house that she believed would keep her in her home, but resulted in her losing her home to foreclosure and being evicted. This Court previously denied Defendant NovaStar's motion to dismiss for lack of standing and for failure to state a claim. See Johnson v. NovaStar Mortgage, Inc., 698 F. Supp. 2d 463 (D.N.J. 2010). [Docket Items 35 & 36.] Defendant NovaStar now moves for summary judgment against Plaintiff's claims for rescission under the Truth-in-Lending Act ("TILA") and for relief under the New Jersey Consumer Fraud Act ("CFA") and for civil conspiracy. Defendant argues that Plaintiff's right to rescission under the TILA ended in 2008 when her house was sold in a sheriff's sale, and that Plaintiff fails to point to an issue of material fact regarding Defendant NovaStar's liability under the CFA, or conspiracy liability.
For the reasons stated below, the Court will grant Defendant's motion because the Court concludes that Plaintiff's right to rescission under TILA expired at the sale of Plaintiff's house, and further that Plaintiff fails to point to a dispute of fact regarding Defendant's conspirator or vicarious liability for the acts of the other Defendants in this action.
The following facts are taken from the Parties' statements of undisputed facts that are properly supported in the record or not otherwise disputed on this motion. Where facts are disputed between the parties, the Court will identify the dispute.
Plaintiff originally purchased her house in Sicklerville, New Jersey, in the mid-1990s. Def. Ex. C, Johnson Dep. at 13:2-19; Def. Ex. K, Dallah Dep. at 27:19-28:2. Sometime in 2005, Plaintiff fell behind on her mortgage payments, because injuries and other occupational disruptions prevented her from working as a foster parent, which was her sole source of income. Johnson Dep. at 15:4-21; Dallah Dep. at 19:18-23:8. Plaintiff learned from a friend about Defendant Rick Mason, who did business as Innovative Mortgage Solutions. Johnson Dep. at 20:8-16. Mason recommended that Plaintiff sell her house to her daughter, Ravenda Dallah, in order to "cash out" the equity in the property which she could then use to pay the new mortgage loan that Dallah would obtain, eventually allowing Plaintiff to improve her own credit score sufficient to allow her to repurchase the house in her own name. Id. at 20:17-21:21.
Plaintiff accepted Mason's plan. On June 7, 2005, Plaintiff attended a closing with her daughter at Trinity Insurance Abstract, LLC, at which lender New Century (not a party to the instant action) closed a loan of $175,000 of which Plaintiff received roughly $20,000. Id. 21:22-24:24; Def. Ex. D, HUD-1 Settlement Sheet. At the closing, Plaintiff signed over the deed to her daughter. Def. Ex. E, 2005 Deed.
After the sale, Plaintiff remained in the home with her daughter. See Dallah Dep. 40:9-23. Mason had told Plaintiff that after approximately six months of paying the new mortgage on the house, Plaintiff would be able to refinance the mortgage in her own name. Johnson Dep. 25:11-14. However, by the time the $20,000 from the 2005 transaction ran out, and Plaintiff was again unable to make mortgage payments, she had not yet refinanced the house in her own name. Id. 26:3-23. As a result, Plaintiff reached out again to Mason, who proposed yet another "sale," this time to an "investor," named Terence Ward, once again in anticipation of Plaintiff eventually repurchasing the home in her own name. Id. 26:21-29:13. Prior to the second transaction, Mason promised Johnson that Ward would sign a letter promising to sell the house back to Plaintiff at some point in the future, but Mason never made good on this promise. Id. 32:25-33:4. As with the first transaction, the parties to the 2006 transaction anticipated that Plaintiff would pay the mortgage payments on the new loan. Id. 30:1-22, 35:11-13. Innovative (presumably through Mason) represented to Plaintiff that if she successfully made payments on the new mortgage for "three to four months," then Innovative would refinance the mortgage in Plaintiff's name. Id. 35:23-36:1.
The transaction took place on June 23, 2006, with Dallah "selling" the house to Ward for a contract sale price of $238,000. Def. Ex. F, HUD-1 Settlement Sheet. Defendant Innovative Mortgage Solutions was listed as the mortgage lender in the transaction, Ravenda Dallah as the seller, and Terence Ward as the borrower. Id. A down payment of $12,150 from the borrower is listed on the settlement sheet. Id.
Plaintiff received cash from the transaction sufficient to allow her to make payments on the new mortgage for three to four months, but the amount she received was considerably less than the $43,421.94 listed as "Cash to seller" on the HUD-1 settlement sheet. Johnson Dep. 37:5-10; Dallah Dep. 59:3-60:6; Def. Ex. F.
Innovative later assigned the Ward loan to Defendant NovaStar on July 5, 2006. Def. Ex. I, Notice of Assignment; Pl. Ex. 1, Purchase Worksheet. Prior to purchasing the Ward loan from Innovative, NovaStar took certain steps to verify the identity of Ward, the borrower, and his ability to pay back the mortgage, such as verifying his social security number and his employment. Pl. Ex. 7, Novalinq Conversation Log. However, NovaStar did not verify the source of the $12,150 down payment or that it had been paid prior to purchasing the loan from Innovative. Id.; Pl. Ex. 9, Ward Loan Application.
The record is not entirely clear as to whether Plaintiff initially sent her mortgage payments to Terence Ward, or directly to NovaStar. Dallah says that the payments were initially sent to Ward, while Plaintiff only describes sending payments to NovaStar. Dallah Dep. 73:16-74:12; Johnson Dep. 42:8-23. The record is clear, however, that Plaintiff sent approximately nine mortgage payments directly to NovaStar, the last being paid on January 8, 2007. Pl. Ex. 11. Eventually, after Plaintiff stopped paying the mortgage, NovaStar initiated foreclosure proceedings, naming as defendants Terrence Ward and Ravenda Dallah, but apparently not Plaintiff Barbara Johnson. Def. Ex. L, Indenture. A judgment of foreclosure was entered on November ...