# WATSON-DAVIS v. WILLIAMS

> District Court, M.D. North Carolina · October 16, 2023

URL: https://www.frixlaw.com/law-library/cases/10254434

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** October 16, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10254434

## How later opinions describe it (automated extraction)

- holding that three year limit acts as “absolute time limit” and “time period [of three years] is typically not tolled for any reason”

## Opinion text

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...)
2
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
4
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).
8
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.
9

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10254434. Public record. Not legal advice.