WATSON-DAVIS v. WILLIAMS

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

JANELLE NICOLE WATSON-DAVIS, )

)

Plaintiff, )

)

v. ) 1:23CV318

)

JASON WILLIAMS, et al., )

)

Defendants. )

MEMORANDUM OPINION, RECOMMENDATION, AND ORDER

OF UNITED STATES MAGISTRATE JUDGE

This case comes before the undersigned United States

Magistrate Judge on Plaintiff’s Application to Proceed in District

Court Without Prepaying Fees or Costs (Docket Entry 1) (the

“Application”), filed in conjunction with her pro se Complaint

(Docket Entry 2). For the reasons that follow, the undersigned

will grant the Application for the limited purpose of recommending

dismissal of this action.

RELEVANT STANDARDS

“The federal in forma pauperis statute, first enacted in 1892

[and now codified at 28 U.S.C. § 1915], is intended to guarantee

that no citizen shall be denied access to the courts solely because

[her] poverty makes it impossible for [her] to pay or secure the

costs.” Nasim v. Warden, Md. House of Corr., 64 F.3d 951, 953 (4th

Cir. 1995) (en banc) (internal quotation marks omitted).

“Dispensing with filing fees, however, [is] not without its

problems. . . . In particular, litigants suing in forma pauperis

d[o] not need to balance the prospects of successfully obtaining

relief against the administrative costs of bringing suit.” Nagy v.

Federal Med. Ctr. Butner, 376 F.3d 252, 255 (4th Cir. 2004). To

address this concern, the in forma pauperis statute provides that

“the [C]ourt shall dismiss the case at any time if the [C]ourt

determines that . . . the action . . . fails to state a claim on

which relief may be granted.” 28 U.S.C. § 1915(e)(2)(B)(ii).

A plaintiff “fails to state a claim on which relief may be

granted,” id., when the complaint does not “contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that

is plausible on its face,’” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (emphasis added) (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007)). “Where a complaint pleads facts that are

merely consistent with a defendant’s liability, it stops short of

the line between possibility and plausibility of entitlement to

relief.” Id. (internal quotation marks omitted). This standard

“demands more than an unadorned, the-defendant-unlawfully-harmed-me

accusation.” Id. In other words, “the tenet that a court must

accept as true all of the allegations contained in a complaint is

inapplicable to legal conclusions. Threadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id.1 Similarly, a court need not

1 Although “[a] document filed pro se is to be liberally

construed and a pro se complaint, however inartfully pleaded, must

(continued...)

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accept “bare assertions devoid of further factual enhancement.”

Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250,

255 (4th Cir. 2009).

BACKGROUND

Asserting claims under 15 U.S.C. § 1635(a) & (b) (Docket Entry

2 at 2)* for alleged violations of the Truth in Lending Act (the

“TILA”’), Plaintiff initiated this action against Jason Williams and

Santander Consumer USA (collectively, the “Defendants”) (id. at 1).

According to Plaintiff’s Complaint:

“[Defendants] did not provide [the] reguired forms under

[Section 1635] to [Plaintiff]. [They] did not act in accordance

with regulations of the Bureau. They failed to provide the

appropriate forms to [Plaintiff] on her right to rescind the

transaction.” (Id. at 2.) Further, “[o]nce [Plaintiff] exercised

'(,..continued)

be held to less stringent standards than formal pleadings drafted

by lawyers,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal

quotation marks and citation omitted), the United States Court of

Appeals for the Fourth Circuit has “not read Erickson to undermine

Twombly’s requirement that a pleading contain more than labels and

conclusions,” Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th

Cir. 2008) (internal quotation marks omitted) (dismissing pro se

complaint); accord Atherton v. District of Columbia Off. of the

Mayor, 567 F.3d 672, 681-82 (D.C. Cir. 2009) (“A pro se complaint

- . . ‘must be held to less stringent standards than formal

pleadings drafted by lawyers.’ But even a pro se complainant must

plead ‘factual matter’ that permits the court to infer ‘more than

the mere possibility of misconduct.’” (first quoting Erickson, 551

U.S. at 94; then quoting Iqbal, 556 U.S. at 679)).

* Docket Entry page citations utilize the CM/ECF footer’s

pagination.

her right to rescind, relief was not provided by [Defendants].”

(Id.) The Complaint requests “[e]quitable relief . . . in the

amount of $20,067” and also seeks to “[t]erminate the security

interest in said property [and to r]emove [the] account from Credit

Bureaus.” (Id. at 3.)

DISCUSSION

Under Section 1635,

in the case of any consumer credit transaction . . . in

which a security interest . . . is or will be retained or

acquired in any property which is used as the principal

dwelling of the person to whom credit is extended, the

[borrower] shall have the right to rescind the

transaction until midnight of the third business day

following the consummation of the transaction or the

delivery of the information and rescission forms required

under this section together with a statement containing

the material disclosures required under [TILA], whichever

is later, by notifying the creditor, in accordance with

regulations of the Bureau, of h[er] intention to do so.

The creditor shall clearly and conspicuously disclose, in

accordance with regulations of the Bureau, to any

[borrower] in a transaction subject to this section the

rights of the [borrower] under this section. The

[borrower] shall also provide, in accordance with

regulations of the Bureau, appropriate forms for the

[borrower] to exercise h[er] right to rescind any

transaction subject to [Section 1635].

15 U.S.C. § 1635(a) (emphasis added).

Section 1635 thus provides “an unconditional right to rescind

for three days, after which [the borrower] may rescind only if the

lender failed to satisfy [Section 1635]’s disclosure requirements.”

Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259, 262

(2015). However, “[e]ven if a lender never makes the required

disclosures, the right of rescission shall expire three years after

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the date of consummation of the transaction or upon the sale of the

property, whichever comes first.” Id. (internal quotation marks

and emphasis omitted). Finally, “[w]lhen [a borrower] exercises

h[er] right to rescind under [Section 1635(a), s]he is not liable

for any finance or other charge, and any security interest given by

the [borrower] . . . becomes void upon such a rescission.” 15

U.S.C. § 1635(b).

I. Disclosure Challenge

To begin, the Complaint asserts that Defendants “did not

provide [the] required forms under [Section 1635(a)] to

[Plaintiff] . . .on her right to rescind the transaction” and “did

not act in accordance with regulations.” (Docket Entry 2 at 2.)

Importantly, however, the Complaint fails to specify whether the

relevant transaction created a security interest in Plaintiff’s

“principal dwelling,” 15 U.S.C. § 1635(a). (See Docket Entry 2 at

1-3.)? Although the Complaint seeks to “[t]erminate [the] security

> The relevant regulation defines “dwelling” as “a residential

structure that contains one to four units,” which can include a

“mobile home . . . if it is used as a residence.” 12 C.F.R.

§ 226.2(a) (19). However, the Complaint specifies that “Plaintiff

resides” at a residential street address. (Docket Entry 2 at 1; see

also id. at 3.) The Complaint also contains no indication that the

relevant property involves a mobile home. (See id. at 1-3.) To

the contrary, the Complaint’s references to “Mark Ficken Ford

Lincoln” (id. at 1) suggest that this matter may involve an

automobile. Importantly, courts have consistently rejected the

proposition that Section 1635 applies to vehicles. see, e€.g.,

Hudson v. Scharf, No. ¢c21-5827, 2022 WL 1227111, at *2-3 (W.D.

Wash. Apr. 25, 2022) (“[T]he consumer transaction [plaintiff] seeks

to rescind is a vehicle purchase that does not have any alleged

(continued...)

interest in said property” (id. at 3), it does not identify “said

property” (id.). (See id. at 1-3.) Because the Complaint fails to

allege the creation of a security interest in a qualifying

residence (see id.), Plaintiff’s Section 1635(a) claim fails. See

Igbal, 556 U.S. at 679 (“While legal conclusions can provide the

framework of a complaint, they must be supported by factual

allegations.”). The Court should therefore dismiss Plaintiff’s

Section 1635(a) claim pursuant to 28 U.S.C. § 1915(e) (2) (B) (11).

II. Post-Rescission Challenge

The Complaint’s failure to establish the relevant property as

a principal dwelling necessarily precludes Plaintiff’s claim under

Section 1635(b), which provides for certain relief “[w]Jhen a

[borrower] exercises h[er] right to rescind under [Section

°(...continued)

connection to his principal dwelling, [and thus] he cannot state a

claim for relief under [S]lection 1635 of TILA.”); Davis v.

Bridgecrest Acceptance Corp., No. 4:21-cv-0554, 2022 WL 1087207, at

*3 (W.D. Mo. Apr. 11, 2022) (dismissing Section 1635 claim when

“the underlying loan created a security interest in [plaintiff’s]

vehicle, not his primary residence”); Washington v. Pacific Credit

Exch., No. 21-cv-02374, 2021 WL 5868981, at *4 (N.D. Cal. Nov. 17,

2021) (holding that Section 1635 “does not apply to the car loan at

issue”), recommendation adopted, 2021 WL 5865531 (N.D. Cal. Dec.

10, 2021); Walker v. United States Bank, No. 3:21-cv-0758, 2021 WL

5701498, at *3 (N.D. Tex. Nov. 1, 2021) (“[A] Chevrolet

Silverado . . . does not qualify as a “principal dwelling’ under

[Section 1635].”), recommendation adopted, 2021 WL 5630922 (N.D.

Tex. Nov. 30, 2021); Jennings v. Santander Consumer USA, Civ.

Action No. 21-02468, 2021 WL 6845248, at *2 n.2 (W.D. Tenn. Sept.

21, 2021) (“It is doubtful that a standard passenger car could ever

be covered by § 1635.”), recommendation adopted, 2022 WL 386094

(W.D. Tenn. Feb. 8, 2022); McCray v. Jefferson Chevrolet Co., Inc.,

No. 17-cv-12058, 2018 WL 1964674, at *4 (E.D. Mich. Apr. 26, 2018)

(“[Section] 1635[ is Ja section about home mortgages ... .”).

1635] (a),” 15 U.S.C. § 1635(b). Moreover, even setting aside this

deficiency, Plaintiff’s rescission-relief claim independently lacks

sufficient factual detail to state a viable claim. In this regard,

the Complaint only asserts that Plaintiff “exercised her right to

rescind” and “[r]jelief was not provided by [Defendants].” (Docket

Entry 2 at 2.) As an initial matter, the Complaint contains no

facts regarding Plaintiff’s alleged exercise of her right to

rescind or her timely exercise of that right. (See id. at 1-3.)

In particular, the Complaint says nothing regarding the timing or

nature of the disputed interactions. (See id.) As noted, TILA

provides either a three-day or three-year window for rescission,

dependent on whether a creditor provides the required disclosures.

See 15 U.S.C. § 1635(a); see also Jones v. Saxon Mortg., Inc., 537

F.3d 320, 327 (Ath Cir. 1998) (holding that three year limit acts

as “absolute time limit” and “time period [of three years] is

typically not tolled for any reason”); Bradford v. HSBC Mortg.

Corp., 799 F. Supp. 2d 625, 633 (E.D. Va. 2011) (dismissing TILA

claims as time-barred), reconsideration denied, 838 F. Supp. 2d 424

(E.D. Va. 2012). Here, the Complaint lacks any indication of the

timing of Plaintiff’s alleged “exercise [of] her right to rescind”

(Docket Entry 2 at 2). (See id. at 1-3.)

To exercise the right to rescind, a borrower must

“communicat[e] in writing to her creditor her intention to

rescind.” Gilbert v. Residential Funding LLC, 678 F.3d 271, 277

(4th Cir. 2012). Additionally, “[t]he right to rescind or exercise

of the right to rescind is not the same as full rescission, which

contemplates a full unwinding of the transaction and a return to

the status quo prior to the transaction.” Baker v. Bank of Am.,

N.A., No 5:13-cv-92, 2014 WL 298909, at *4 (E.D.N.C. Jan. 27, 2014)

(internal quotation marks omitted). “The security interest,

therefore, only becomes void upon full rescission.” Id.

To accomplish full rescission, “more is required” than “merely

communicating in writing to [a creditor that a borrower] inten[ds]

to rescind.” Gilbert, 678 F.3d at 277. “Either [the creditor]

must acknowledge that the right of rescission is available and the

parties must unwind the transaction amongst themselves, or [the

borrower] must file a lawsuit so that the court may enforce the

right to rescind.” Id. (internal quotation marks and brackets

omitted). The Complaint fails to plausibly allege that Plaintiff

properly notified Defendants of her intent to rescind or that

Defendants acknowledged any right of rescission. (See Docket Entry

2 at 1-3.) “As such, Plaintiff’s allegations [against Defendants]

do not rise above the level of mere speculation.” Studivent v.

Lankford, No. 1:10cv144, 2010 WL 1568451, at *2 (M.D.N.C. Apr. 16,

2010), recommendation adopted, 2012 WL 1205722 (M.D.N.C. Apr. 11,

2012). Accordingly, the Court should dismiss any rescission-

related claims against Defendants for failure to state a claim upon

which relief may be granted. See 28 U.S.C. § 1915(e)(2)(B)(ii).

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CONCLUSION

This action fails to state a viable claim.

IT IS THEREFORE ORDERED that Plaintiff’s Application (Docket

Entry 1) is GRANTED FOR THE LIMITED PURPOSE OF ALLOWING THE COURT

TO CONSIDER A RECOMMENDATION OF DISMISSAL.

IT IS RECOMMENDED that this action be dismissed pursuant to 28

U.S.C. § 1915(e)(2)(B)(ii) for failing to state a claim.

IT IS ORDERED that Plaintiff shall file any motion to amend

the Complaint by October 30, 2023.4

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

October 16, 2023

4 Although Plaintiff could potentially cure some of the

identified deficiencies by amending her Complaint, it appears

unlikely that she could ever satisfy the principal dwelling

element; nonetheless, the allowance for an opportunity to amend

will resolve all doubt before the Court acts on the recommendation

of dismissal.

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