United States District Court, N.D. Mississippi, Oxford Division
MEMORANDUM OPINION AND ORDER
before the Court is defendant HSBC USA, N.A., as Trustee for
the Structured Rate Mortgage Loan Trust Pass Through
Certificates 2005-21's ("HSBC") Motion for
Summary Judgment . In the alternative of summary
judgement, the Defendants move the court to limit the
Plaintiffs damages to the statutory damages provided in 15
USC § 1640(a)(2)(A). Plaintiff Bernal Smith
("Smith") responded in opposition to the motion,
and HSBC filed a reply. Having reviewed these submissions,
along with relevant authorities and evidence, the Court is
now prepared to rule.
22, 2005, Bernal E. Smith and Twanda Peete-Smith executed a
Deed of Trust in favor of Mortgage Electronic Registration
Systems, Inc., as nominee for SouthStar Funding, LLC.
Following several assignments, HSBC was assigned the Deed of
Trust on January 12, 2015.
April 20, 2015, Smith filed a complaint in the Chancery Court
of DeSoto County alleging, among other causes of action,
HSBC's violation of 15 USC § 1641(g), a statutory
requirement that an assignee give notice to the borrower when
it acquires a deed of trust. On July 18, 2016, HSBC removed
to this Court. On December 28, 2016, Smith filed his
Amended Complaint alleging HSBC's violation of
only § 1641(g) and its accompanying regulation 12 CFR
§ 226.39. Smith requests actual damages, statutory
damages, and attorney fees pursuant to 15 USC §
1640(a)(1)-(a)(3). On June 2, 2017, HSBC filed the present
motion, arguing that the filing of Smith's complaint
exceeded the one year statute of limitations found in §
1640(e). In the alternative, HSBC argues that Smith has
failed to adequately plead or support a claim for actual
damages, and his recovery should be limited to statutory
damages permitted in § 1640(a)(2)(A). Smith filed a
response to the motion, and HSBC filed a reply. Upon due
consideration of the parties' arguments, along with
relevant authorities, and for the reasons set forth
hereinafter, the Court finds that the primary motion is not
well-taken and should be denied. Further, the Court finds
that the alternative motion is well-taken and should be
granted with modification.
RULE 56 STANDARD
judgment is proper "if the movant shows that there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Fed.R.Civ.P.
56(a). A genuine dispute of material fact exists "if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
91 L.Ed.2d 202 (1986). At the summary judgment stage, the
court must "draw all reasonable inferences in favor of
the nonmoving party, and it may not make credibility
determinations or weigh the evidence." Reeves v.
Sanderson Plumbing Prods., 530 U.S. 133. 150, 120 S.Ct.
2097, 147 L.Ed.2d 105 (2000). Once the moving party shows
there is no genuine dispute as to any material fact, the
nonmoving party "must come forward with specific facts
showing a genuine factual issue for trial." Harris
ex rel. Harris v. Pontotoc Cty. Sch. Dist., 635 F.3d
685, 690 (5th Cir. 2011). "[A] party cannot defeat
summary judgment with conclusory allegations, unsubstantiated
assertions, or 'only a scintilla of evidence.'"
Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337,
343 (5th Cir. 2007) (quoting Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)). However,
"[s]ummary judgment is  improper where the court
merely believes it unlikely that the non-moving party will
prevail at trial." U.S v. Miss. Dep't of Pub.
Safety, 309 F.Supp.2d 837, 840 (S.D.Miss. 2004) (citing
Nat'l Screen Serv. Corp. v. Poster Exch., Inc.,
305 F.2d 647, 651 (5th Cir. 1962)).
Smith's claim is not barred by the statute of
asserts a default letter sent on August 1, 2013, describing
Smith's creditor as "SARM 2005-21" placed Smith
on notice that his Deed of Trust had been assigned to SARM
2005-21. HSBC asserts that this default letter is proof that
an assignment to SARM 2005-21 occurred more than one year
ago, and therefore, Smith's claim is barred by the one
year statute of limitations set forth in § 1640(e).
However, the Corporate Assignment of Deed of Trust recorded
in the DeSoto County Chancery Court states "Date of
Assignment: January 12th, 2015." [44-4, page 2].
attempts to reconcile these conflicting dates by explaining
"transfers of mortgages do not always appear on the
record when they occur if a deed of trust is held by a
nominee or agent . . ." indicating that the assignment
actually occurred prior to August 1, 2013, but wasn't
recorded until January 12, 2015. [45, page 3]. HSBC also
cites Miss. Code Ann. § 89-5-37 as evidence that the
assignment may not be entered on the record when it actually
occurred. Section 89-5-37 provides an exemption to deed of
trust disclosures where the beneficiary of the deed of trust
is represented by a trustee, such as HSBC. However, this
exemption applies to the duty to disclose to the clerk of the
chancery court a new beneficiary to a deed of trust. Title 15
§ 1641(g) is dependent not upon a state-mandated duty to
disclose but upon the mere occurrence of an assignment.
HSBC is not exempt from disclosure because HSBC is not
"disclosed as beneficiary in the mortgage or deed of
trust." Miss. Code Ann. § 89-5-37; see Burton
v. Nationstar Mortg., L.L.C., 642 F.App'x 422, 425
(5th Cir. 2016) (holding Mortgage Electronic Registration
Systems, Inc. (MERS Corp.) can assign a deed of trust to
other MERS members and not be required to record the
assignment because MERS Corp. still holds the deed of trust
in the public records). MERS is listed on the instant Deed of
Trust, but HSBC does not allege that it or any other
intermediate assignee is a MERS member. The Court notes that
all assignees to this Deed of Trust must be MERS members to
create a chain of assignment totally exempt from disclosure
under § 89-5-37. Therefore, HSBC is obligated to
disclose its assignment of the Deed of Trust. In fact, HSBC
did so on January 12, 2015.
applicable statute of limitations states an action must be
brought "within one year from the date of the occurrence
of the violation." 15 USC § 1640(e). The question
remaining is when did the "violation" occur, and if
the violation occurred before the January 12, 2015
assignment, should the statute of limitations be tolled in
light of HSBC's tardy disclosure of the assignment. The
violation occurred when HSBC failed to give notice 30 days
after the date of assignment or transfer. See 15 USC
§ 1641(g); 12 CFR § 226.39(b). The "date of
transfer" is described as "either the date of
acquisition recognized in the books and records of the
acquiring party, or the date of transfer recognized in the
books and records of the transferring party." 12 CFR
§ 226.39(b)(2). The only record that could match this
description is the Corporate Assignment of Deed of Trust
attached to HSBC's Motion. [44-4]. The Assignment clearly
states "Date of Assignment: January 12th, 2015."
[44-4, page 2]. Without further evidence of a date of
acquisition "recognized in the books" of HSBC or
the entity which assigned the Deed of Trust to HSBC, the
Court can only conclude that the "date of transfer"
was January 12, 2015.
of the date of transfer, the clear intent of 15 USC §
1641(g) and 12 CFR § 226.39 is to give the borrower
notice as to which entity holds his or her rights and
responsibilities concerning payment, payment disputes, and
rights of rescission. See 12 CFR §
226.39(d)(3). The policy goal of TILA can only be achieved if
the borrower has a fair opportunity to seek redress for the
lender's failure to give this notice. The Court cannot
say that Smith was put on notice of the assignment merely by
receiving a default letter describing his creditor as
"SARM 2005-21." The policy goal can only be
achieved if notice is given upon the filing of the
assignment. Until the assignment is of record, the statute of
limitations cannot logically or legally obtain. Therefore,
regardless of the true date of assignment, the statute of
limitations did not begin to run until the assignment was
recorded with the Chancery Court of DeSoto County.
that the Plaintiff filed this suit within one year of the
filing of the Assignment on January 12, 2015, the suit is
timely and proper. Therefore, ...