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Stephen Chohrach, et al v. Bank of America

June 11, 2012

STEPHEN CHOHRACH, ET AL.,
PLAINTIFFS,
v.
BANK OF AMERICA, N.A., ET AL,
DEFENDANTS.



The opinion of the court was delivered by: Dennis L. Beck United States Magistrate Judge

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT (Document 34)

On April 16, 2012, Defendants Bank of America, N.A., and BAC Home Loans Servicing, Inc., filed this motion for summary judgment. The matter was heard on June 1, 2012, before the Honorable Dennis L. Beck, United States Magistrate Judge.*fn1 Andrew Noble appeared on behalf of Bank of America, N.A., and BAC Home Loans Servicing, Inc.. John Sargetis appeared on behalf of Plaintiffs Stephen Chohrach and Donna Chohrach ("Plaintiffs").

BACKGROUND

Plaintiffs filed this action in Stanislaus County Superior Court on September 21, 2010, against Defendants Bank of America, N.A., BAC Home Loans Servicing, Inc., and C&M McGee, Inc. On October 29, 2010, Defendants Bank of America, N.A. ("BofA"), and BAC Home Loans Servicing, Inc. ("BAC"), removed the action on the basis of federal question jurisdiction. The action concerns a $908,000 mortgage loan made by BofA to Plaintiffs in December 2006. Plaintiffs allege causes of action under the Real Estate Settlement Procedure Act ("REPSA"), the Truth In Lending Act ("TILA") and California law.

On April 16, 2012, BofA and BAC (collectively "Defendants") filed this motion for summary judgment. Plaintiffs opposed the motion on May 5, 2012, and Defendants filed their reply on May 18, 2012.

The pre-trial and trial dates have been vacated.

UNDISPUTED FACTS

On November 8, 2006, Plaintiffs' mortgage broker, Timothy Darcey, submitted an application to BofA on Plaintiffs' behalf. Deposition of Timothy Darcey ("Darcey Dep."), 178:15-180:16; Declaration of Andrew Noble ("Noble Dec."), Exh. 10. The loan application stated that the loan was a refinance in the amount of $908,000. The application also listed the "loan plan" as "NET 5 INTEREST ONLY ARM - NEP." The maturity term was 360 months, with an amortized term of 300 months. Noble Dec., Exh. 10.

BofA approved the loan on November 30, 2006. The approval describes the "loan type" as "NET 5 NO HLV NO CONV NON CONF," in the amount of $908,000. The loan was a refinance with a term of 360 years. The approval letter was faxed to Mr. Darcey. Darcey Dep., 180:18-182:21; Noble Dec., Exh. 1.

BofA drafted loan documents for a 30 year loan of $908,000. The final loan terms offered to Plaintiffs include a 5 year 6.5% fixed rate that began adjusting once every year in 2012. Plaintiffs are not required to repay principal for the first 10 years and there is no prepayment penalty. Darcey Dep. 185:8-23; Noble Dec., Exh. D and E.

BofA sent the loan documents to an escrow agent that was selected by Plaintiffs' broker to close the loan. Darcey Dep., 185:24-186:11.

Plaintiffs executed the Adjustable Rate Note and Deed of Trust at closing on December 2, 2006. Noble Dec., Exh. D and E; Deposition of Stephen Chohrach ("S. Chohrach Dep."), 79:16-80:1. Plaintiffs received copies of the Note and Deed of Trust at Closing. Chohrach Dep., 90:10-25, 91:17-92:24.

Approximately a day or two after closing, Mr. Chohrach went through the documents Plaintiffs received and discovered that the loan was not the 30 year fixed rate that they believed they had obtained. S. Chohrach Dep., 96:20-97:25; Declaration of Donna Chohrach ("D. Chohrach Dec.,") ¶¶ 3-4. Mr. Chohrach saw the interest only term and contacted Mr. Darcey. S. Chohrach Dep., 96:20-97:25; D. Chohrach Dec., ¶ 4. Until that time, Plaintiffs believed they had signed a 30 year fixed interest rate loan. S. Chohrach Dep., 78:1-9.

Plaintiffs received and signed two copies of the Notice of Right to Cancel on December 6, 2006. The deadline to cancel was listed as December 9, 2006. Deposition of Donna Chohrach ("D. Chohrach Dep."), 109:1-110:18; Noble Dec., Exh. F and J.

Plaintiffs decided not to cancel the loan transaction. D. Chohrach Dep., 82:19-84:7 This action was filed on September 21, 2010.

LEGAL STANDARD

Summary judgment is appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.Celotex Corp. v. Catrett, 477 U.S. 317 (1986). "If the party moving for summary judgment meets its initial burden of identifying for the court those portions of the material on file that it believes demonstrates the absence of any genuine issues of material fact," the burden of production shifts and "the non moving party must set forth, by affidavit or as otherwise provided in Rule 56, 'specific facts showing that there is a genuine issue for trial.'" T.W. Electric Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987)(quoting Fed.R.Civ.P. 56(e)). As to the specific facts offered by the nonmoving party, the court does not weigh conflicting evidence, but draws all inferences in the light most favorable to the nonmoving party. Id. at 630-31.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e);Matsushita, 475 U.S. at 586 n.11. The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv.,809 F.2d at 630, and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine ...


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