Barker v. Rokosz

United States District Court

Eastern District of New York

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Carla Barker,

Plaintiff, Memorandum and Order

- against - No. 19-cr-514 (KAM) (JRC)

Izia Rokosz,

Defendant.

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Izia Rokosz,

Counter-Plaintiff,

- against –

Carla Barker, et al.,

Counter-Defendants.

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Kiyo A. Matsumoto, United States District Judge:

Plaintiff Carla Barker commenced this action against

Defendants Izia Rokosz, Janelle Defreitas, Steven Legum, Frank

Richard Hurley, Gregg Telsey, Robert Fishbein, Betty Hingle,

Royce LLC, Jackie Marketing LLC, and Lockdeco (a/k/a Lodeco)

based on an allegedly unlawful home mortgage loan on which she

defaulted. All the defendants either settled with Barker or

have been dismissed from the case except for the lender, Rokosz,

who continues to contest liability and also has counterclaimed

to foreclose on Barker’s home. Barker now moves for summary

judgment establishing Rokosz’s liability with respect to her

claims, which she also asserts as defenses to Rokosz’s

foreclosure counterclaim. Rokosz cross-moves for summary

judgment rejecting Barker’s defenses and establishing his

entitlement to foreclosure.

For the reasons below, the Court finds no genuine disputes

of material fact and grants Barker’s motion for summary judgment

with respect to all her claims except her usury claim, which is

dismissed with prejudice. The Court further denies Rokosz’s

motion for summary judgment and dismisses his foreclosure claim

with prejudice.

Background

I. Statutory Background

Barker’s claims arise under the Truth in Lending Act

(“TILA”), an amendment to TILA titled the Home Ownership and

Equity Protection Act (“HOEPA”), Section 6-l of the New York

Banking Law, and New York’s usury statute.

A. TILA and HOEPA

Congress passed TILA, 15 U.S.C. §§ 1601–67f, to “assure a

meaningful disclosure of credit terms” so “consumer[s] will be

able to compare more readily the various credit terms available”

and “avoid the uninformed use of credit.” Pub. L. No. 90-321,

82 Stat. 146; see 15 U.S.C. § 1601(a). To that end, TILA

requires creditors to disclose certain information when they

offer or extend consumer credit, including the amount financed,

itemization of the amount financed, finance charge, annual

percentage rate, payment schedule, late payment penalty, and

interest rate. See 15 U.S.C. § 1638. Congress has authorized

the Consumer Financial Protection Bureau (“CFPB”) to issue rules

to implement TILA, 15 U.S.C. § 1604(a), which are known as

“Regulation Z,” 12 C.F.R. § 1026.1(a).

HOEPA, Pub. L. No. 103-325, 108 Stat. 2190, requires

additional disclosures for high-cost mortgage loans and

restricts the terms on which such loans can be offered. See

15 U.S.C. § 1639. For example, HOEPA forbids increasing the

interest rate after default, scheduling balloon payments, paying

a contractor directly out of the loan proceeds, and excessively

financing points and fees. See id. It also requires the lender

to provide a pre-closing notice to the borrower and to receive

certification from a federally approved counselor that the

borrower received counseling with respect to the advisability of

the loan. 15 U.S.C. §§ 1639(a), 1639(u).

TILA and HOEPA apply only to “consumer credit

transactions.” 15 U.S.C. §§ 1638–39. A consumer credit

transaction is a transaction where “the party to whom credit is

offered or extended is a natural person” and “the money,

property, or services which are the subject of the transaction

are primarily for personal, family, or household purposes.”

15 U.S.C. § 1602(i). Transactions “involving extensions of

credit primarily for business” or “commercial” purposes and

transactions involving extensions of credit “to organizations”

are exempt from coverage. 15 U.S.C. § 1603(1).

B. New York Banking Law

Like HOEPA, Section 6-l of the New York Banking Law

“imposes limitations and prohibits certain ‘practices for high-

cost home loans.’” See Aries Fin., LLC v. 12005 142nd St., LLC,

7 N.Y.S.3d 372, 375 (2d Dep’t 2015) (quoting N.Y. Banking Law

§ 6-l(2)). Section 6-l similarly limits its coverage to

transactions where “[t]he borrower is a natural person.” N.Y.

Banking Law § 6-l(1)(e)(ii). It also explicitly states that it

“shall apply to any person who in bad faith attempts to avoid

the application of [the statute] by any subterfuge.” N.Y.

Banking Law § 6-l(3).

C. Usury

New York’s usury statute forbids charging, taking, or

receiving interest at a rate beyond sixteen percent per year.

N.Y. Gen. Oblig. Law § 5-501(1)–(2); N.Y. Banking Law § 14-a(1).

Usurious contracts are void under New York law. N.Y. Gen.

Oblig. Law § 5-511(1).

II. Factual Background1

This case stems from Defendant Izia Rokosz’s $450,000 loan

to Plaintiff Carla Barker (the “subject loan”) through “J&M

Holdings, Inc.,” a corporation that Rokosz required Barker to

form as a condition of issuing the loan. The subject loan was

issued through two closings that occurred on February 6, 2017,

and February 16, 2017, and was secured by a mortgage on Barker’s

home.

It is undisputed that Barker defaulted on the loan. (ECF

No. 312-2, Mem. Law Supp. Pl.’s Mot. Summ. J. (“Pl.’s Mem.”),

5.) It also is undisputed that Rokosz never attempted to comply

with TILA, HOEPA, Section 6-l of the New York Banking Law, or

New York’s usury statute in issuing the loan. (ECF No. 295,

Def.’s Resps. to Pl.’s Statement Undisputed Material Facts

(“Def.’s Counter-56.1.”), ¶¶ 100, 106–08.) The central dispute

in this case is whether those statutes apply at all because

Rokosz’s loan to Barker required the creation of a corporation

(i.e., an “organization” and not a “natural person”) that took

title to Barker’s home, signed the mortgage, and had its shares

assigned to Rokosz.

A. The Subject Loan

Since she was eleven years old, Carla Barker, a fifty-six-

1 Except as otherwise noted, the following facts are not in dispute and are

based on the parties’ statements filed pursuant to Local Civil Rule 56.1.

year-old high school graduate and home health aide, has lived in

a two-family residential home in the East Flatbush neighborhood

of Brooklyn, New York (the “subject property”). (Def.’s

Counter-56.1. ¶¶ 1–3, 31.) Barker’s mother, who owned the home,

died without a will in 2004, causing title to the home pass to

Barker and her sister, Sandra Vaughan. (Id. ¶¶ 32-33.)

Vaughan, who lived out of state, sued Barker to partition the

home and obtained a judgment against her in 2008. (Id. ¶¶ 33-

34.) Feeling pressure from the partition judgment, Barker

sought a loan to buy out her sister’s interest in the property

and remain in the home. (Id. ¶ 36.)

In 2016, after undergoing cancer treatment, becoming

unemployed, and failing to qualify for traditional financing,

Barker discussed her need for a loan with a family friend, who

put Barker in touch with Defendant Janelle Defreitas.2 (Id.

¶¶ 37–39; see ECF No. 281, 2d Am. Compl. & Jury Demand (“2d Am.

Compl.”), ¶ 22.) Defreitas spoke to a mortgage loan officer,

Defendant Robert Fishbein, about Barker’s need for a loan.

(Def.’s Counter-56.1 ¶ 43.) Fishbein contacted a “residential

mortgage loan originator,” Defendant Gregg Telsey, about

Barker’s need for financing. (Id. ¶¶ 6, 44.)

Telsey is the sole broker for Defendant Izia Rokosz, a

2 Defreitas was later convicted for her role in a mortgage fraud conspiracy.

See https://nysdoccslookup.doccs.ny.gov/ (NYSID #18G0949).

private “hard money” lender who has been in the lending business

for over forty years.3 (Id. ¶¶ 4–5, 10.) Rokosz lends to people

who want to fix up their property, rent it, and then obtain

standard home loans from banks. (Id. ¶ 54.) He prefers to lend

to business entities rather than to individual homeowners, and

most of his loans are to such entities. (See id. ¶¶ 55, 57-58.)

If a prospective borrower seeks to finance an owner-occupied

property, Rokosz may require the borrower, as he did with

Barker, to form a business entity to serve as the formal

borrower. (Id. ¶ 56.) Rokosz requires that all stock in the

business entity be assigned to him and held in escrow as further

security in case the borrower defaults. (Id. ¶ 59.)

When Telsey informed Rokosz that “a lady” wanted a loan to

fix her house, to be secured by Barker’s property, Rokosz

expressed interest. (Id. ¶¶ 45–47.) Telsey took Rokosz to

Barker’s home, where she was present, to inspect the premises,

verify the house’s existence, and assess the debt-value ratio.

(Id. ¶ 48.) After Telsey advised Fishbein that Rokosz was

interested in lending to Barker, Fishbein initiated a title

3 A “hard money” loan is a loan secured by real property where the lender

approves the borrower based on the value of the collateral rather than based

on the borrower’s creditworthiness. Troy Segal, Hard Money Loan:

Definition, Uses, and Pros & Cons, Investopedia (updated May 7, 2024),

https://www.investopedia.com/terms/h/hard_money_loan.asp

[https://perma.cc/NTE2-J9BJ]. They are considered loans of “last resort” and

typically have higher interest rates than traditional mortgages do. Id.

Because such loans are considered riskier than traditional loans, they are

typically issued by individuals and private companies rather than by banks.

order for the property. (Id. ¶ 49.) Telsey then informed

Fishbein that Rokosz was interested in making the loan, but only

if a business entity took title to the property to serve as the

formal borrower. (Id. ¶ 50.) Fishbein advised Defreitas of

that condition, and Defreitas so advised Barker. (Id. ¶¶ 52–

53.) Defreitas then incorporated J&M Property Holdings, Inc.,

on January 13, 2017, to purchase Barker’s property from Barker

and Vaughan and to borrow money from Rokosz. (Id. ¶¶ 61–65,

68.) The “J&M” name apparently derived from Defreitas’s first

initial and Barker’s middle initial. (See ECF No. 292-1,

Defreitas Dep. 66:14–19.) J&M has no identified purpose other

than borrowing funds from Rokosz and has never held any assets

other than Barker’s property. (Def.’s Counter-56.1 ¶¶ 67, 70.)

B. The Closings and Distribution of the Proceeds

Defreitas contacted Defendant Frank Richard Hurley, a

criminal defense attorney with no apparent real estate

experience, to represent Barker in the loan closing. (See id.

¶¶ 28, 87–88.) Hurley agreed to represent Barker and understood

she was seeking to refinance the property where she lived. (Id.

¶ 88.) He was not aware of J&M’s existence or the structure of

the loans before closing. (Id. ¶ 89.) Neither he nor Barker

were provided any of the closing documents to review before the

closings occurred. (Id. ¶¶ 91–97.) On the day of the first

closing, Hurley sent Barker a letter stating, “DO NOT BORROW

FROM THIS PRIVATE LENDER.” (ECF No. 302, Pl.’s Counterstatement

Material Facts (“Pl.’s Counter-56.1”), ¶¶ 26–27.)

Before the closings, Rokosz did not request, obtain, or

review a loan application or any other documents from Barker,

either in her individual capacity or in her capacity as J&M’s

president. (Def.’s Counter-56.1 ¶¶ 71–74.) He also had not

reviewed Barker’s finances or J&M’s finances. (Id. ¶¶ 75–76.)

Rokosz never provided any notices, disclosures, or other

documents setting forth the amount financed, finance charges,

points and fees, payment schedule, or annual percentage rate of

the loan beyond what was already stated in the closing

documents. (Id. ¶¶ 97, 100.)

At a February 6, 2017, closing, Rokosz issued a $330,000

mortgage loan secured by Barker’s home. (Id. ¶ 111.) At the

closing, Rokosz’s attorney, Defendant Steven Legum, provided the

closing documents, which he had prepared, (id. ¶¶ 24–25, 84,

113, 115), and explained the documents to Hurley, who

interpreted Legum’s explanations for Barker, (id. ¶ 114). The

closing documents included:



a deed signed by Barker (individually) and Vaughan

transferring the subject property to J&M in exchange

for ten dollars;



a corporate resolution signed by Barker (as J&M’s

president and secretary) authorizing J&M to borrow

$330,000 from Rokosz in exchange for a security

interest in the subject property;



a mortgage note signed by Barker (as J&M’s president)

promising to pay Rokosz a principal sum of $330,000;



a mortgage signed by Barker (as J&M’s president)

securing a sum of $330,000 against the subject

property;



an escrow agreement between J&M as borrower (signed by

Barker as J&M’s president), Rokosz as lender, and

Legum as escrow agent;



a correction of errors statement signed by Barker (as

J&M’s president and secretary) authorizing Rokosz to

execute any new documents or make corrections as he

deemed necessary;



an assignment and security agreement signed by Barker

(individually and as J&M’s president) and Legum (as

escrow agent) assigning all Barker’s interest and

stock in J&M to Rokosz;



a fund disbursements sheet signed by Barker

(individually) and another party purporting to be

Rokosz;4



a promissory note signed by Barker (individually)

promising to pay Telsey and Fishbein a principal sum

of $10,000 for closing fees and providing that any

default under this note would also be a default on the

mortgage loan; and



a guarantee signed by Barker (individually)

guaranteeing J&M’s obligations in the principal amount

of $330,000.

(Id. ¶ 115; Pl.’s Counter-56.1 ¶ 17; see ECF Nos. 293-41,

293-66, 293-48, 293-37, 293-67, 293-68, 293-54, 293-72, 293-69,

300-4.)

Ten days later, at a second closing on February 16, 2017,

Rokosz issued a $120,000 mortgage loan to J&M, also secured by

4 The parties dispute whether Rokosz’s signatures on the fund disbursements

sheets were genuine. (See Def.’s Counter-56.1 ¶¶ 117.)

Barker’s home. (Def.’s Counter-56.1 ¶ 116.) The closing

documents included a similar corporate resolution, note,

mortgage, escrow agreement, correction of errors statement,

assignment and security agreement, fund disbursement sheet, and

guarantee. (Id. ¶ 117; see ECF Nos. 293-56, 293-55, 293-38,

293-58, 293-61, 293-60, 293-57, 293-59.)

The $450,000 total subject loan provided for a fixed

interest rate of twelve percent and monthly interest-only

payments of $4,500, with the entire principal and interest due

after a year. (Def.’s Counter-56.1 ¶¶ 121–23.) In the event of

a default, Rokosz could increase the interest rate to the

maximum rate permitted by law. (Id. ¶ 124.)

The loan proceeds were distributed as follows:



$150,000 was paid to Vaughan to settle the partition

dispute;



$92,557.37 was paid to Defendant Lockdeco, a purported

contractor engaged by Defreitas, for anticipated

repair work on the subject property;



$71,126.85 was paid to New York City to satisfy

property tax liens;



$60,192.68 was retained in escrow by Legum as

additional security for Rokosz in case Barker

defaulted;



$40,289.68 was paid to EastCor Land Services for title

company services and title insurance;



$14,926.67 was paid to Fishbein through Defendant

Jackie Marketing LLC, a company owned by Fishbein’s

wife, for Fishbein’s involvement in the transaction;



$8,713.33 was paid to Telsey through Defendant Royce

LLC, an entity exclusively owned and controlled by

Telsey that he used as an income pass-through vehicle,

for Telsey’s involvement in the transaction;



$6,500 was paid to Legum for his legal services on

behalf of Rokosz;



$3,000 was paid to Hurley for his legal services on

behalf of Barker;



$1,193.42 was paid to Rokosz for interest accrued on

the loan between the first and second closings;



$1,000 was paid to Defendant Betty Hingle for her

services as a closing agent.



$350 was paid to Ronald Ifraimov for his services as a

closing agent; and



$150 was paid to New York State for child support;

(Def.’s Counter-56.1 ¶¶ 7–8, 19, 127–37, 139, 143.) None of

this money was paid directly to J&M.

C. Barker’s Default

In April 2017, two months after the closings, Telsey left a

note for Barker at the subject property advising her that she

missed her first payment. (Id. ¶ 166.) The next month, Telsey

texted Barker asking for proof of insurance. (Id. ¶ 167.) Two

days later, Legum mailed a letter to Barker, dated May 18, 2017,

declaring that Barker had defaulted on the subject loan and

failed to maintain property insurance. (Id. ¶ 168.) The letter

further advised that Rokosz was accelerating the debt and

demanding immediate payment in full. (Id.) Finally, the letter

advised that J&M’s shares, which Legum held in escrow, would be

released to Rokosz and that Rokosz now owned J&M. (Id.)

In November 2017, J&M filed two eviction petitions against

Barker in state court. (Id. ¶ 169.) The state court dismissed

the petitions on July 10, 2018, and Rokosz filed a notice of

appeal on July 27, 2018. (Id.; see ECF No. 293-16, Notice of

Appeal.) Rokosz never perfected the appeal, however, and the

appeal was dismissed on February 19, 2019. See Order of

Dismissal, J&M Props. Holdings, Inc. v. Barker,

No. 2018-01732-KC (N.Y. App. Term Feb. 19, 2019).

III. Procedural Background

A. Preliminary Injunction

Several events in 2017 and 2018 prompted Barker to commence

this action. First, in the summer of 2017, two men entered

Barker’s house through her unlocked door while she was in her

backyard and told her that she did not own the house and had to

leave. (ECF No. 2 pp. 102–12, Decl. C. Barker Supp. Order Show

Cause, ¶ 38.) On at least two other occasions in the spring or

summer of 2018, men came to Barker’s house to tell her they

owned the property and that Barker was trespassing. (Id. ¶ 39.)

Then, in July 2018, someone placed a “For Sale” sign on Barker’s

property. (Id. ¶ 40.) In October 2018, a man with a key to

Barker’s house unlocked the bottom lock on her front door and

was prevented from entering only by Barker’s deadbolt. (Id.

¶ 41.) Through the door, he told Barker that he was advised the

house was available for rent and that he had rented her upstairs

unit. (Id.) Finally, on December 22, 2018, a fire broke out in

Barker’s home, forcing Barker and her son to temporarily live

with friends and relatives. (Id. ¶ 44.) After the fire, Barker

worried that her home was not secure from intruders due to her

and her son’s absence and the damage the fire did to the house’s

windows and doors. (Id. ¶ 45.) She also feared Rokosz or his

agents would capitalize on her absence to initiate another

housing court proceeding or claim she abandoned her interest in

the property. (Id.)

On January 25, 2019, Barker filed her Complaint and a

proposed temporary restraining order, which the Court signed and

issued with modifications. (ECF No. 1, Compl. & Jury Demand

(“Compl.”); ECF No. 2 pp. 1–2, Order Show Cause Prelim. Inj. &

TRO.; ECF No. 5, Order Show Cause Prelim. Inj. & TRO.) The

parties then stipulated to a preliminary injunction on

February 1, 2019, which remains in force, prohibiting Rokosz or

his agents from exercising any interest in the subject property,

transferring any claimed interest or ownership in J&M, or

attempting to collect the subject loan from Barker. (See ECF

No. 15, Stip. Prelim. Inj.)

B. Settlements with Other Defendants

Barker’s original Complaint asserted claims against Rokosz

for violations of TILA, HOEPA, Section 6-l of the New York

Banking Law, and New York’s usury statute. (Compl. ¶¶ 126–81.)

She also asserted a claim under Section 349 of the New York

General Business Law against Rokosz, Defreitas, Legum, Hurley,

Telsey, Fishbein, and Hingle and a claim under the Racketeer

Influenced and Corrupt Organizations Act (“RICO”) against all

those defendants plus Royce, Jackie Marketing, Lockdeco (a/k/a

Lodeco), and nominal John Doe defendants. (Id. ¶¶ 182–219.)

On February 22, 2019, Barker voluntarily dismissed her

claims against Hingle. (ECF No. 18.) Barker settled her claims

against Fishbein and Jackie Marketing and then dismissed her

claims against them on August 23, 2019. (ECF No. 89.)

The Court dismissed Barker’s Section 349 and RICO claims

for failure to state a claim on January 2, 2020. (ECF No. 119,

Mem. & Order.) Barker then amended her complaint on March 24,

2021, omitting Hurley as a defendant and re-pleading her

Section 349 and RICO claims. (ECF No. 174, 1st Am. Compl. &

Jury Demand.) Rokosz, Legum, Telsey, and Royce answered the

Amended Complaint, (ECF Nos. 178–79, 181), and Rokosz brought a

counterclaim against Barker for foreclosure, joining as counter-

defendants J&M, the New York State Department of Taxation and

Finance, and the New York City Environmental Control Board (ECF

No. 181; see Order, June 7, 2021 (granting Rokosz’s motion to

join counter-defendants)).

Barker notified the Court on March 17, 2022, that she

settled with Telsey and Royce, (ECF No. 243, Mar. 17, 2022, Ltr.

from K. Richman & B. Luu), and she dismissed her claims against

them on April 12, 2022, (ECF No. 254). Barker and Legum settled

in a conference before Magistrate Judge Cho on May 2, 2022,

(Minute Entry, May 2, 2022), and those parties filed their

stipulation of dismissal on August 12, 2022, (ECF No. 267).

Meanwhile, Defreitas failed to respond to the Amended

Complaint, and the Clerk of Court entered a certificate of her

default on March 24, 2022. (ECF No. 245, Cert. Default.)

Because Defreitas had been incarcerated from October 2018 to

July 2021 for her role in a mortgage fraud conspiracy, see

https://nysdoccslookup.doccs.ny.gov/ (NYSID #18G0949), and was

proceeding pro se, the Court vacated her default on October 11,

2022, (ECF No. 274, Order). Barker and Defreitas notified

Magistrate Judge Cho at a January 26, 2023, hearing that they

had settled, (Minute Entry, Jan. 26, 2023), and they filed their

stipulation of dismissal on February 2, 2023, (ECF No. 279).

C. Barker’s Remaining Claims Against Rokosz

On February 6, 2023, Barker filed the operative Second

Amended Complaint, which omits her Section 349 and RICO claims

and omits Lockdeco and the Does as defendants, thus leaving

Rokosz the only remaining defendant. (See 2d Am. Compl.)

Rokosz answered the Second Amended Complaint and re-pleaded his

foreclosure counterclaim against Barker and the other counter-

defendants on March 8, 2023. (ECF No. 285, Answer with

Countercls. (“Answer”).) Barker and Rokosz unsuccessfully

attempted to settle several times. (See ECF Nos. 49, 70, 193;

Minute Entry, June 28, 2022; Minute Entry, July 26, 2022; Minute

Entry, Aug. 22, 2022; Minute Entry, Sept. 21, 2022; Minute

Entry, Mar. 17, 2023.) Finally, on March 31, 2023, the parties

submitted a status report stating that they did not believe

further settlement efforts would be productive. (ECF No. 288,

Mar. 31, 2023, Ltr. from M. Litrownik & J. Doberman.)

On May 30, 2023, the parties requested a pre-motion

conference to move for summary judgment on their respective

claims and counterclaim. (ECF No. 291, May 30, 2023, Ltr. from

B. Luu; ECF No. 297, May 30, Ltr. from J. Doberman.) After a

June 15, 2023, pre-motion conference where the Court advised the

parties of the risks of pressing forward, (see Minute Entry,

June 15, 2023), the parties filed the instant cross-motions for

summary judgment, which were fully submitted on September 11,

2023, (ECF No. 312, Sept. 11, 2023, Ltr. from B. Luu; ECF

No. 316, Sept. 11, 2023, Ltr. from J. Doberman).

Legal Standard

Summary judgment is proper when there are no genuine

disputes of material fact and the undisputed facts entitle the

moving party to judgment as a matter of law. Fed. R. Civ. P.

56(a). A factual dispute is “genuine” if a reasonable jury

could return a verdict for the non-moving party. Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is

“material” if it might affect the outcome of the case under the

governing law. Id. In resolving a motion for summary judgment,

the court views the evidence in the light most favorable to the

non-moving party and draws all reasonable inferences in the non-

moving party’s favor. Bart v. Golub Corp., 96 F.4th 566, 567

(2d Cir. 2024).

The party moving for summary judgment has the initial

burden to show that there are no genuine disputes of material

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

Where the non-moving party would have the burden of proof at

trial, its burden at the summary judgment stage is only to

“point out” that there is insufficient evidence to create a

genuine dispute of material fact. Id. at 325. Where the moving

party would have the burden of proof at trial, however, its

burden at the summary judgment stage is to submit evidence

conclusively establishing the absence of any genuine disputes of

material fact. Albee Tomato, Inc. v. A.B. Shalom Produce Corp.,

155 F.3d 612, 618 (2d Cir. 1998); Gov’t Emps. Ins. Co. v.

Jacobson, No. 15-cv-7236 (ERK) (RML), 2021 WL 2589717, at *8

(E.D.N.Y. June 24, 2021). If the moving party meets that

burden, the non-moving party must respond by submitting its own

evidence sufficient to create a genuine dispute of material fact

in order to avoid summary judgment and proceed to trial. Souza

v. Exotic Island Enters., Inc., 68 F.4th 99, 108 (2d Cir. 2023).

Discussion

Barker moves for summary judgment on her TILA, HOEPA,

Section 6-l, and usury claims, (Pl.’s Mem. 30.) Rokosz does not

dispute that he did not comply with the substantive requirements

of TILA, HOEPA, Section 6-l, or the usury statute. (Def.’s

Counter-56.1 ¶¶ 71–76, 97–108.) Rather, he argues that he was

not required to do so because those statutes do not apply to the

subject loan. (ECF No. 313, Mem. Law Opp’n Pl.’s Mot. Summ. J.

(“Def.’s Opp’n”), 7–24.) Thus, for Barker to prevail on her

motion, she has the burden to produce evidence conclusively

establishing a lack of genuine disputes of material fact that

the relevant statutes apply. See Albee Tomato, 155 F.3d at 618.

Rokosz cross-moves for summary judgment on his foreclosure

claim. (ECF No. 316-2, Mem. Law Supp. Def.-Counterclaimant’s

Mot. Summ. J. (“Def.’s Mem.”), 18.) Barker does not dispute

that the common law elements of foreclosure, on which Rokosz

would have the burden of proof at trial, are satisfied. (Pl.’s

Counter-56.1 ¶¶ 14, 16, 30, 32, 44, 46.) Rather, she raises her

own claims as defenses to Rokosz’s foreclosure claim. (ECF

No. 317-1, Mem. Law Opp’n Def.’s Mot. Summ. J. (“Pl.’s Opp’n”),

6–30.) At trial, Barker would have the burden of proof to

establish these defenses. See Red Tree Invs., LLC v. Petróleos

de Venezuela, S.A., 82 F.4th 161, 171 (2d Cir. 2023). Thus, for

Rokosz to prevail on his motion, he has the initial burden to

“point out” that there is an absence of evidence to support

Barker’s defenses. See Celotex, 477 U.S. at 325. If Rokosz

clears that threshold, the burden shifts to Barker to produce

sufficient evidence to create a genuine dispute of material fact

and avoid summary judgment. See Souza, 68 F.4th at 108.

I. TILA and HOEPA

Rokosz’s primary argument that TILA and HOEPA do not apply

to the subject loan is that the subject loan was not a “consumer

credit transaction.” (Def.’s Opp’n 7–17.) He also argues that

HOEPA does not apply because the subject loan was not a “high-

cost mortgage,” that Barker’s damages claim is time barred, and

that Rokosz was not a “creditor.” (Id. 17–19.)

A. Consumer Credit Transaction

The relevant provisions of TILA apply only to a “consumer

credit transaction.” See 15 U.S.C. §§ 1638(a). HOEPA applies

only to a “high-cost mortgage,” which itself is a “consumer

credit transaction” secured by the consumer’s “principal

dwelling” where the annual percentage rate of the transaction

exceeds a certain threshold. See 15 U.S.C. §§ 1639, 1602(bb).5

5 The cross-references in Section 1639(a) are to Section 1602(aa), which

originally was the provision of TILA that defined “high-cost mortgage.”

Since then, Congress renumbered the definitions in Section 1602 such that

“high-cost mortgage” is now defined at Section 1602(bb). See Pub. L.

No. 111-203, 124 Stat. 2107. The Court considers Section 1639(a)’s continued

Thus, TILA and HOEPA apply to the subject loan only if the

subject loan was a ”consumer credit transaction.”

The adjective “consumer” characterizes a credit transaction

as a transaction where “the party to whom credit is offered or

extended is a natural person” and “the money, property, or

services which are the subject of the transaction are primarily

for personal, family, or household purposes.” 15 U.S.C.

§ 1602(i). Rokosz contends that the subject loan was not a

consumer credit transaction on the grounds that (1) the loan was

extended to J&M, which is an “organization” and not a “natural

person,” and (2) the loan was not made for personal, family, or

household purposes. (Def.’s Opp’n 7–17.)

1. Party to Whom Credit was Offered or Extended

Rokosz argues that J&M’s corporate status should “end [the]

inquiry” as far as Barker’s TILA and HOEPA claims are concerned.

(See Def.’s Opp’n 7.) That would be correct if the undisputed

facts established that J&M was “the party to whom credit [was]

offered or extended.” See 15 U.S.C. § 1602(i). There is no

dispute that J&M is a corporation, (see ECF No. 292, Pl.’s

Statement Undisputed Material Facts (“Pl.’s 56.1”), ¶ 60), and a

corporation is not a “natural person” under TILA, 15 U.S.C.

§§ 1602(d), 1602(e). If “the party to whom credit is offered or

reference to Section 1602(aa) to be an error and construes Section 1639(a)

instead to refer to Section 1602(bb).

extended” is not a “natural person,” the subject transaction is

not a “consumer credit transaction,” see 15 U.S.C. § 1602(i),

and the relevant provisions of TILA and HOEPA do not apply to

that transaction, see 15 U.S.C. §§ 1638–39. The “party to whom

credit is offered or extended” and the “purpose” of the

transaction are two distinct elements of TILA’s definition of

“consumer”; if either is not met, the transaction is not a

“consumer credit transaction.” Am. Express Co. v. Koerner,

452 U.S. 233, 242 (1981). Considering the entire factual

record, however, there is no genuine dispute that Rokosz

“extended credit” to Barker in her personal capacity merely

conditioned on a corporate entity receiving the funds and Rokosz

holding its shares as further collateral. There is no evidence

in the record that J&M served any purpose beyond an attempt by

Rokosz to skirt statutory protections against predatory lending.

Rokosz essentially argues for an evidentiary rule that “the

party to whom credit is offered or extended,” see 15 U.S.C. §

1602(i), is always the party whose name appears on the face of

the mortgage. But TILA’s plain text imposes no such rule.

Unlike TILA’s definition of “creditor,” which instructs courts

to ascertain “the person to whom the debt . . . is initially

payable” by looking to “the face of the evidence of

indebtedness,” TILA’s definition of “consumer” does not

similarly specify what evidence the court should consider to

determine “the party to whom credit is offered or extended.”

Compare 15 U.S.C. § 1602(g) with 15 U.S.C. § 1602(i). The words

“offered” and “extended” are not defined in TILA, see generally

15 U.S.C. § 1602, nor do they have settled technical meanings in

the context of credit, see, e.g., Extension, Offer, Black’s Law

Dictionary (11th ed. 2019). Thus, the Court interprets

“offered” and “extended” in accordance with their “ordinary or

natural meaning[s].” See United States v. McCray, 7 F.4th 40,

45–46 (2d Cir. 2021) (quoting Smith v. United States, 508 U.S.

223, 228 (1993)). The most relevant dictionary definition of

both “extend” and “offer” in the credit context is “to make

available.” See Extend, Merriam-Webster, https://www.merriam-

webster.com/dictionary/extend [https://perma.cc/3JXC-72RW]

(defining word in context of “extending credit to customers”);

Offer, Merriam-Webster, https://www.merriam-

webster.com/dictionary/offer [https://perma.cc/B8AB-K4GS]; see

also Extend credit to, Dictionary.com,

https://www.dictionary.com/browse/extend-credit-to

[https://perma.cc/58AK-N3P6] (defining the idiom “extend credit

to” as to “permit someone to owe money,” using the verb “extend

in the sense of ‘offer’ or ‘provide’”). Here, Barker and J&M

each reasonably could be viewed as the party to whom credit was

“made available” or “provided” depending on how broadly or

narrowly one defines the relevant transaction, so the phrase

“the party to whom credit is offered or extended” in TILA’s

statutory definition of “consumer” is “ambiguous as applied to

the claims in this case.” See In re Med Diversified, Inc.,

461 F.3d 251, 255 (2d Cir. 2006).

Accordingly, the Court looks to TILA’s “broader context and

primary purpose” for guidance. See Clemente v. Lee, 72 F.4th

466, 472 (2d Cir. 2023) (quoting Gordon v. Softech Int’l, Inc.,

726 F.3d 42, 48 (2d Cir. 2013)). TILA’s purpose is to “assure a

meaningful disclosure of credit terms so that the consumer will

be able to compare more readily the various credit terms

available” and “avoid the uninformed use of credit.” 15 U.S.C.

§ 1601(a). As the Senate Committee on Banking and Currency

reported in explaining why organizational borrowers are exempt

from coverage, “[m]ost businesses or corporations are in a good

position to judge the relative worth of alternative credit plans

and by and large do not require the special disclosure

protections provided by [TILA].” S. Rep. No. 90-392, at 7

(1967). And as the Second Circuit elaborated, Congress thought

“[c]orporate debtors” were “sufficiently able to satisfy

[TILA’s] goal of utilizing credit in an ‘informed’ manner . . .

so that mandatory disclosure requirements were not warranted for

that genre of credit transaction.” Am. Airlines, Inc. v. Remis

Indus., Inc., 494 F.2d 196, 199 (2d Cir. 1974) (quoting

15 U.S.C. § 1601).

This context cuts against finding “the party to whom credit

is offered or extended” to be an organization where that

organization is created at the lender’s behest as a condition of

transacting with the individual borrower and serves no

discernible function other than evading TILA and other

regulations that protect consumers. The otherwise uninformed

consumer who Congress sought to protect by enacting TILA does

not somehow become more informed just because the lender

requires him or her to interact with the lender through a

corporate intermediary. TILA is premised on a legislative

judgment that the ordinary consumer is insufficiently informed

to engage in credit transactions without receiving the

disclosures that TILA provides. It makes no sense to hold that

the same consumer can make an informed decision about whether to

structure a credit transaction to avoid TILA and thereby forego

the very disclosures that TILA assumes the consumer needs in

order to become informed. See Taub v. World Fin. Network Bank,

950 F. Supp. 2d 698, 703 (S.D.N.Y. 2013) (explaining that “the

purpose of TILA is to allow borrowers to compare available

credit and billing terms before entering into a contract”)

(emphasis added). For a court to conclude that credit was

“offered” or “extended” to a corporation such that TILA’s

obligations do not apply, the corporation must serve at least

some function beyond simply permitting the lender to avoid the

disclosure obligations. A contrary reading of TILA would

greenlight an obvious method for lenders to circumvent the

statute and “eviscerate the protection” that it creates. See

Rodriguez v. Branch Banking & Tr. Co., 46 F.4th 1247, 1257

(11th Cir. 2022) (applying presumption against ineffectiveness

to reject bank’s interpretation of state banking regulation).

TILA is a remedial statute that courts must construe

liberally “from the vantage point of a hypothetical average

consumer – a consumer who is neither particularly sophisticated

nor particularly dense.” Karakus v. Wells Fargo Bank, N.A.,

941 F. Supp. 2d 318, 330 (E.D.N.Y. 2013) (quoting Palmer v.

Champion Mortg., 465 F.3d 24, 28 (1st Cir. 2006)). Accordingly,

other courts applying that liberal construction in deciding

whether the statute applied to a given transaction have looked

to the substance rather than form of the transaction while

considering all the surrounding factual circumstances. See,

e.g., Oas v. Rama Cap. Partners, LLC, No. 20-cv-1634 (MCS)

(ADS), 2020 WL 7786546, at *3 (C.D. Cal. Nov. 18, 2020) (finding

defendant’s “self-serving efforts to nominally assign the loan a

‘business purpose’ to circumvent” TILA did not defeat

plaintiff’s allegations “suggesting that the loan was not used

as such”); Brooks v. BC Custom Constr., Inc., No. 18-cv-717

(YY), 2019 WL 3763769, at *9 (D. Or. May 21, 2019) (concluding

that plaintiffs stated a TILA claim by alleging that “while the

loan was formally a commercial loan, it was in substance a

residential mortgage loan”), R&R adopted, 2019 WL 3502907

(D. Or. Aug. 1, 2019); Sweiss v. Ramadani, No. 15-cv-8150 (AJS),

2016 WL 492370, at *4 (N.D. Ill. Feb. 9, 2016) (“Viewing the

transaction as a whole, the Court finds that the transaction had

a primarily consumer nature within the meaning of TILA.”). It

would contravene that liberal construction for a court to

examine only the mortgage and note in deciding whether a

corporation or individual was “the party to whom credit is

offered or extended” while ignoring all other relevant factual

context.

Rokosz responds that TILA’s liberal construction cannot

“expand the class of financing recipients Congress has

delineated,” citing a “plethora of case law” rejecting TILA

claims where the borrower was an organization. (Def.’s Opp’n 7–

9.) As Barker correctly notes in her reply, Rokosz’s

description of the relevant case law is overstated. (See ECF

No. 314-1, Reply Mem. Law Further Supp. Pl.’s Mot. Summ. J.

(“Pl.’s Reply”), 4–5.) Rokosz acknowledges, for example, that

at least one other district court allowed a TILA claim to

proceed where “the loan was given to . . . a business entity”

that the defendant “required them to form . . . to serve as the

formal recipient of the funds.” (See Def.’s Opp’n 10–11);

LSREF3 Sapphire Tr. 2014 v. Barkston Props., LLC, No. 14-cv-7968

(JLA), 2016 WL 302150, at *6 (N.D. Ill. Jan. 25, 2016) (assuming

for purposes of motion to dismiss that “the loan was only

formally a commercial loan and was in substance a personal,

consumer loan”). Rokosz attempts to distinguish that case on

the ground that it was “decided on the very deferential motion

to dismiss standard which credits the plaintiff’s factual

allegations,” (Def.’s Opp’n 11), but that distinction concerns

only what evidence is needed to establish a claim, not whether a

TILA claim necessarily fails as a matter of law whenever a

business entity’s name appears on the mortgage irrespective of

the circumstances under which the entity was created.6

Rokosz correctly notes that another district court and a

state trial court confronting similar fact patterns looked no

further than the loan documents themselves to determine that

TILA’s organizational borrower exemption applied. See B&B Cap.

Grp. 26 LLC v. CTG Holding Grp. LLC, No. 2021-018519-CA-01

(VVD), 2022 Fla. Cir. LEXIS 1169, at *3 (Fla. Cir. Ct. Mar. 7,

2022) (dismissing TILA claim where plaintiffs alleged defendant

6 Rokosz notes that the court in Sapphire apparently “declined to spot or

address the issue of the non-application of TILA to a loan to a corporate

borrower, and it is unknown if the defendant there formally argued it as a

basis for dismissal.” (Def.’s Opp’n 11.) Although the court did not

bifurcate its analysis of the borrower’s identity and the loan’s purpose, see

Sapphire, 2016 WL 302150, at *5–6, the defendant unquestionably raised the

borrower’s identity as a separate argument in its motion to dismiss, see

Pl.’s Mem. Law at 11, Sapphire, No. 14-cv-7968, ECF No. 57 (“Further,

Barkston LLC, is considered an ‘organization’ under 15 U.S.C. § 1602(d) and

thus any loan made to Barkston is exempt from statutory protection.”) (citing

15 U.S.C. § 1603(1)).

“required” that residential property be transferred to

corporation “in an effort to circumvent TILA”); Selman v. Manor

Mortg. Co., 551 F. Supp. 345, 347 (E.D. Mich. 1982) (concluding

that because subject loan “was concededly to a corporation, at

least in form,” plaintiffs did “not state a claim under TILA,”

despite defendants “requir[ing] that they incorporate as a

condition to the loan”). In the “absence of higher authority in

this circuit” or persuasive in-circuit district court decisions

relevant to the interpretive question, however, see Flynn v.

Morgan Guar. Tr. Co. of N.Y., 463 F. Supp. 676, 677 (E.D.N.Y.

1979), and for the reasons already explained, the Court

disagrees that its consideration is so limited.

The other cases Rokosz cites, (see Def.’s Opp’n 7–8), are

materially distinguishable because they all concerned loans to

pre-existing organizations that served discernible business

functions separate from the loan transactions themselves, see

Marathon Funding Servs., Inc. v. Berg, No. 19-cv-828 (JCC),

2020 WL 5759784, at *2 (W.D. Wash. Sept. 28, 2020) (dismissing

TILA claim where “loan was to a corporation for business

purposes”); Timber Doodle Glade Equity Venture, LLC v. D.E. Shaw

Laminar Lending, Inc., No. 06-cv-799 (WDM) (CBS), 2007 WL

2009723, at *1, 5 (D. Colo. July 6, 2007) (rejecting plaintiffs’

“remarkable position” that loan to companies who owned

properties in Aspen, Colorado, was “made ‘in actuality’” to

individual plaintiff who used properties as his residence,

finding plaintiffs bound by their previous representation to

bankruptcy court that “the financing was not for personal use by

an individual consumer”); Prifti v. PNC Bank, N.A.,

No. 01-cv-1163 (LAR), 2001 WL 1198653, at *1 (E.D. Pa. Oct. 9,

2001) (dismissing TILA claim where plaintiff obtained credit for

“his business, . . . a retail general merchandising

corporation”). None of these authorities support the Court

ignoring all factual context beyond the mortgage and note.

The undisputed evidence permits no reasonable inference

other than that Rokosz “extended credit,” as TILA understands

that phrase, to Barker in her personal capacity. Rokosz became

interested in issuing the subject loan to Barker when his broker

told him that “a lady” wanted a loan to fix her house. (Def.’s

Counter-56.1 ¶¶ 45–47.) Rokosz then visited Barker’s home while

she was there to assess whether he wanted to issue the loan.

(Id. ¶ 48.) J&M came into existence only because Rokosz

communicated to Barker (through several of his co-defendants)

that the loan was conditional on Barker’s agreement to form a

business entity to take title to her home. (Id. ¶¶ 50–53, 62–

65, 68.) After Defreitas incorporated J&M, Barker and her

sister “sold” the home to J&M for nominal consideration. (Id.

¶ 116; see ECF No. 293-41.) It is undisputed that J&M has no

other identified business purpose, served no discernible

bargained-for benefit to Barker, and has never held any assets

other than Barker’s home. (See Def.’s Counter-56.1 ¶¶ 61, 67,

70.) Rokosz cited no evidence that J&M had any directors or

officers other than Barker herself. J&M never even received any

loan proceeds, as all the funds were paid to third parties

except the amount that was paid back to Rokosz himself. (Id.

¶¶ 128–29.) When Barker defaulted on the subject loan, Rokosz’s

broker and attorney contacted Barker personally about the

default. (Id. ¶¶ 165–68.) Rokosz then initiated eviction

proceedings against Barker personally. (Id. ¶ 169.)

Rokosz suggests alternative inferences, but he fails to

support them with evidence. First, Rokosz argues without

citation that “there are very real and legitimate reasons

companies like [J&M] are formed all the time,” such as “tax

planning, estate planning, asset protection, [and] limited

liability.” (Def.’s Opp’n 23.) Even if that may be true of

many loan transactions in general, Rokosz offered no evidence

that it was true of this specific transaction. Without at least

some deposition testimony or other evidence indicating Barker

sought to achieve one of these business goals through J&M’s

incorporation, he is left with “[c]onclusory allegations,

conjecture, and speculation,” which are “insufficient to create

a genuine issue of fact” and survive summary judgment. See

Bustamante v. KIND, LLC, 100 F.4th 419, 432 (2d Cir. 2024)

(quoting Shannon v. N.Y.C. Transit Auth., 332 F.3d 95, 99

(2d Cir. 2003)).

Second, Rokosz argues in a footnote that he transacts with

business entities rather than with individuals because he

“sometimes feels bad exercising lender’s remedies against

individual borrowers.” (Def.’s Opp’n 22 n.11; see also ECF

No. 292-1 pp. 210–94 (“Rokosz Dep.”), 62:2–3 (testifying this is

“the only reason” he prefers transacting with businesses).)

That explanation makes no sense – at least in the instant case –

because Barker for all intents and purposes was J&M, and Rokosz

offered no explanation why he felt less “bad” exercising his

remedies against her in her corporate capacity than in her

personal capacity. After all, Rokosz sued Barker in her

personal capacity when he attempted to evict her from her

childhood home. See Order of Dismissal, J&M Props. Holdings,

Inc. v. Barker, No. 2018-01732-KC (N.Y. App. Term. Feb. 19,

2019).

More importantly, regardless of whether the “sometimes

feels bad” explanation makes sense, it is irrelevant. Whatever

impact J&M’s presence might have had on Rokosz emotionally,

there was no reason to create J&M from Barker’s perspective

other than that Rokosz told her to. Barker did not, for

example, take out a loan through a pre-existing, profit-

generating business to pay personal debts. See, e.g., Prifti,

2001 WL 1198653, at *3. Nor did she merely use her residence to

secure a loan made “to a corporation for business purposes.”

See, e.g., Berg, 2020 WL 5759784, at *2. Nor is there any

suggestion Barker intended to leverage J&M’s corporate status to

achieve some tax benefit or other business benefit. See, e.g.,

Timber Doodle, 2007 WL 2009723, at *5. The only function J&M

served from Barker’s perspective was to satisfy a lender’s

condition for her to obtain a personal loan. The statutory

protections TILA and HOEPA offer do not disappear in that

circumstance.

2. Primary Purpose

Despite the Court’s finding that TILA’s “natural person”

requirement is satisfied in the instant case, the subject loan

still cannot be considered a “consumer credit transaction”

unless the “money, property, or services which [were] the

subject of the transaction [were] primarily for personal,

family, or household purposes.” See 15 U.S.C. § 1602(i). TILA

exempts transactions “primarily for business” or “commercial”

purposes from coverage. 15 U.S.C. § 1603(1).

The undisputed evidence establishes that the primary

purpose of the subject loan was personal. The subject property

is Barker’s childhood home, in which she has resided since she

was a young girl. (Def.’s Counter-56.1 ¶¶ 1–2.) It is a “two-

family residential dwelling,” (id. ¶ 31), but there is no

evidence that any room was ever rented out. There also is no

dispute that Barker sought to use the subject loan proceeds to

buy out her sister’s interest in the subject property and remain

in the home due to pressure from the partition judgment her

sister obtained against her. (Id. ¶¶ 34, 36.) The parties

agree that part of the loan proceeds satisfied property tax

liens and paid for anticipated repair work on the property.

(Id. ¶¶ 127, 137.) Barker’s only previous occupation was

working as a home health aide. (Id. ¶ 3.) There is no evidence

in the record whatsoever that Barker actually rented out the

property or how much profit she would have made had she rented

it out. Based on this record, there is no reasonable dispute

that the primary purpose of the subject loan was for Barker to

continue residing in her personal home. See Tower v. Moss,

625 F.2d 1161, 1166–67 (5th Cir. 1980) (reversing summary

judgment for defendant and finding primary purpose of loan

personal where plaintiff, “a single, relatively uneducated woman

in her sixties,” sought loan to perform repairs on house she

“resided in . . . until she was grown” and return to residing

there after her mother passed away and title passed to her).

Rokosz argues in response that Barker intended to rent out

rooms in her house after repairing it, but in support of his

argument, he cites only irrelevant paragraphs of his Rule 56.1

statement and allegations in the Second Amended Complaint that

he may not rely on at the summary judgment stage. (See Def.’s

Opp’n 5, 14–17, 19 (citing Def.’s 56.1 ¶¶ 3, 9, 29–30; 2d Am.

Compl. ¶¶ 1–2, 30); Def.’s Mem. 4, 12 (same citations));

Makhnevich v. Bougopoulos, 650 F. Supp. 3d 8, 21 (E.D.N.Y. 2023)

(explaining that parties may not rely on allegations in

pleadings at summary judgment). Only in his reply in support of

his own summary judgment motion does Rokosz cite any relevant

evidence, and even then, only in a footnote.7 (See ECF No. 318,

Reply Mem. Further Supp. Def.’s Mot. Summ. J. (“Def.’s Reply”),

1 n.2.)

The evidence cited in that footnote, a single exchange from

Defreitas’s deposition, does not create a genuine factual

dispute as to the purpose of the loan. Defreitas’s testimony

amounts to speculation about how much money Barker might have

made renting out rooms, not testimony that Barker actually

intended to rent out rooms. (See Defreitas Dep. 163:17–19 (“She

was doing rooms. So, she would have make [sic] a good, um, a

good, um, change if she did rooms.”).) Although Defreitas

testified later in the exchange that Barker “was going to”

convert “the living room into a room,” (see id. 163:21–24),

after being pressed whether Defreitas actually “believe[d] that

7 There were six memoranda of law filed with respect to the instant summary

judgment motions, and Rokosz’s reply in support of his own motion was the

last of the six chronologically. Waiting until his final submission to cite

even remotely relevant evidence unfairly gave him the last word on the issue.

[Barker] intended to rent out the property to seven different

tenants,” Defreitas replied:

Not she intended. That was the only solution for her

to make this – to make this monthly payment until she

could acquire it back on her own. There was no other

way. She had to rent it out.

(See id. 163:25–164:8.) The cited exchange reflects only

Defreitas’s opinion about what Barker “had to” do with the

property, not what Barker actually did or intended to do.

Even assuming Defreitas’s testimony did evince Barker’s

intent to rent our part of her home, however, Rokosz failed to

produce evidence from which a reasonable jury could find that

the subject loan was “primarily” for a business purpose. See

15 U.S.C. § 1602(i). A homeowner’s decision to rent out part of

a home does not render a loan primarily for a business purpose

when all the “factual circumstances evaluated in their totality”

establish that the loan was for personal purposes. See Tower,

625 F.2d at 1166–67 (reversing summary judgment for lender and

finding primary purpose of loan personal despite plaintiff not

leasing house to third party and not presently residing there).

For credit extended to “acquire, improve, or maintain” an

owner-occupied rental property with fewer than four housing

units, the purpose of the loan depends on five factors:

A. The relationship of the borrower's primary

occupation to the acquisition. The more closely

related, the more likely it is to be business purpose.

B. The degree to which the borrower will personally

manage the acquisition. The more personal involvement

there is, the more likely it is to be business

purpose.

C. The ratio of income from the acquisition to the

total income of the borrower. The higher the ratio,

the more likely it is to be business purpose.

D. The size of the transaction. The larger the

transaction, the more likely it is to be business

purpose.

E. The borrower's statement of purpose for the loan.

12 C.F.R. Pt. 1026, Suppl. I, Part 1, cmts. 3(a)(5)(ii),

3(a)(3)(i).

Here, Rokosz agrees that Barker’s primary occupation,

working as a home health aide, had nothing to do with acquiring,

improving, or renting property. (Def.’s Opp’n 13.) The fact

Barker “personally manage[d] the property does not show a

business purpose where the property at issue is the home in

which [she] live[d].” See Romaker v. Crossland Mortg. Corp.,

No. 94-cv-3328 (JFG), 1995 WL 17893120, at *7 (N.D. Ill. Nov. 3,

1995). Even if the record contained evidence that Barker

intended to rent out part of her home, it contains no evidence

as to how much income Barker stood to make from doing so, and

Rokosz may not simply speculate in lieu of producing such

evidence. See Bustamante, 100 F.4th at 432. As to the size of

the transaction, courts have found combined loans amounting to

$450,000 “weigh[ed] in favor of a personal purpose,” see, e.g.,

Cox v. LB Lending, LLC, No. 17-cv-1580 (JGB), 2017 WL 6820171,

at *6 (C.D. Cal. Nov. 16, 2017), though that size alone is not

necessarily determinative. Finally, as to Barker’s statement of

purpose for the loan, Barker attested that she “sought a loan to

buy out” her sister’s interest in the subject property so she

“could continue living there,” (ECF No. 293-1, Decl. Carla

Barker Supp. Pl.’s Mot. Summ. J., ¶ 6), and Rokosz submitted no

document in which she contradicted that statement, such as a

loan application stating that the loan was for business

purposes, see Gilliam v. Levine, 562 F. Supp. 3d 614, 619

(C.D. Cal. 2021) (finding primary purpose commercial where

borrower completed loan application stating property was an

“investment” property).

In sum, Barker’s undisputed evidence establishes that she

sought the subject loan to remain living in her childhood home.

In response, Rokosz offered only equivocal and speculative

testimony from Defreitas as evidence that Barker intended to

rent out part of the home, which does not create a genuine

factual dispute as to whether the subject loan had a business

purpose. Even if it did, Rokosz submitted no evidence from

which a jury could reasonably find that any relevant factor –

other than possibly the size of the loan – weighed in favor of

finding a primarily business purpose. Accordingly, the

undisputed facts establish that the primary purpose of the

subject loan was personal. Because the subject loan was made to

a natural person primarily for personal purposes, it was a

consumer credit transaction to which TILA applied.

B. High-Cost Mortgage

As explained above, HOEPA applies only to “high-cost

mortgages,” which are “consumer credit transactions” secured by

the consumer’s “principal dwelling” where the annual percentage

rate of the transaction exceeds a certain threshold. See

15 U.S.C. §§ 1639, 1602(bb). Rokosz appears to dispute that

HOEPA applies solely on the ground that the subject loan was not

a consumer credit transaction, and he does not appear to dispute

that the principal dwelling and cost threshold elements of

Barker’s HOEPA claim are met. (Def.’s Opp’n 19.) Because the

Court has found no genuine dispute that the subject loan was a

consumer credit transaction, (supra I.A), the Court will only

address the principal dwelling and cost threshold elements here.

The undisputed facts establish that the subject loan was

secured by Barker’s principal dwelling, the subject property.

TILA defines “dwelling” to include a “residential structure”

containing “one to four family housing units.” 15 U.S.C. §

1602(w). A “consumer can have only one principal dwelling at a

time,” and a “vacation or other second home,” for example, is

not a principal dwelling. 12 C.F.R. Pt. 1026, Supp. I, Part 1,

cmt. 2(a)(24)(3).

At the February 6, 2017, closing, Barker provided photo

identification listing the subject property as her residential

address, which “Rokosz or his agents” collected and photocopied.

(Def.’s Counter-56.1 ¶ 112.) Barker also provided Rokosz an

insurance binder listing the subject property as her address and

identifying the property as owner-occupied. (Id. ¶ 83.) When

Telsey and Legum contacted Barker, they did so at the subject

property. (Id. ¶¶ 166, 168.) When Barker defaulted on the

loan, Rokosz attempted to evict her from the subject property.

(Id. ¶ 169.) Further, it is undisputed that the subject

property is a “two-family residential dwelling.” (Id. ¶ 31.)

Rokosz “[d]ispute[s]” that Barker resided at the subject

property, speculating that it was “likely not actually livable”

and noting that Barker “needed to stay elsewhere at different

points.” (Id. ¶¶ 1–2.) The evidence Rokosz cites establishes

only that Barker lived with Defreitas “less than three months”

while she “[got] herself together.” (See Defreitas Dep. 57:17–

58:10.) With respect to the property’s condition, Rokosz cites

only opinion testimony from Defreitas and Telsey. (See

Defreitas Dep. 57:4–16, 78:23–79:2, 80:9–14, 81:2–22; ECF

No. 292-1 pp. 103–35, 92:13–21.) None of this evidence would

permit a reasonable jury to find that Barker principally resided

somewhere other than the subject property.

The undisputed facts also establish that the subject loan’s

cost exceeded HOEPA’s cost threshold. A first mortgage on a

consumer’s principal dwelling exceeds HOEPA’s cost threshold if

the annual percentage rate (“APR”) at the consummation of the

transaction exceeds the average prime offer rate (“APOR”) for a

comparable transaction by 6.5 percentage points. 15 U.S.C.

§ 1602(bb)(1)(A)(i)(I). Here, the parties do not dispute that

the subject loan’s APR was at least 11.71%. (Pl.’s Mem. 21–22.)

They also do not dispute that the APOR for a comparable

transaction was 3.54%. (Def.’s Counter-56.1 ¶ 125.) Thus,

there is no dispute that the subject loan’s APR exceeded the

APOR for a comparable transaction by more than 6.5%.

C. Creditor

A “creditor” is a person who “regularly extends . . .

consumer credit” and is the “person to whom the debt arising

from the consumer credit transaction is initially payable on the

face of the evidence of indebtedness,” or “if there is no such

evidence of indebtedness, by agreement.” 15 U.S.C. § 1602(g).8

A person is considered to “regularly extend” credit if he or she

originates at least one high-cost mortgage through a mortgage

broker. Id.; see 12 C.F.R. § 226.2(a)(17)(v). As explained

above, (supra I.B), the subject loan was a high-cost mortgage.

Further, it is undisputed that Rokosz originated the subject

loan through a broker. (Def.’s Counter-56.1 ¶¶ 9, 45–50, 130.)

8 As with Section 1639(a), (see supra n.5), the Court reads Section 1602(g)’s

cross-reference to “subsection (aa)” as a reference to Section 1602(bb).

It is also undisputed that Rokosz was the person to whom the

debt arising from the subject loan was initially payable on the

face of the evidence of indebtedness. (See id. ¶¶ 116–17; see

ECF Nos. 293-48, 293-37, 293-55, 293-38.) Accordingly, there is

no genuine dispute that Rokosz was a “creditor” under TILA and

HOEPA.

D. Statute of Limitations

Rokosz argues that Barker’s TILA claim is time barred to

the extent it seeks damages. (Def.’s Opp’n 18–19.) Ordinarily,

a TILA claim must be brought “within one year from the date of

the occurrence of the violation.” 15 U.S.C. § 1640(e). A HOEPA

claim, however, may be brought any time “before the end of the

[three-year] period beginning on the date of the occurrence of

the violation.” Id.; see Claude v. Wells Fargo Home Mortg., No.

13-cv-535 (VLB), 2014 WL 4073215, at *20 (D. Conn. Aug. 14,

2014) (“The statute of limitations for a HOEPA violation is

three years from the date of the occurrence of the violation.”).

The “date of the occurrence of the violation” generally means

the date on which the plaintiff entered into the loan

transaction at issue. Clement v. United Homes, LLC,

914 F. Supp. 2d 362, 369 n.3 (E.D.N.Y. 2012). Additionally, the

plaintiff’s right to rescission under both TILA and HOEPA

“expire[s] three years after the date of consummation of the

transaction.” 15 U.S.C. § 1635(f).

Here, Barker entered into the subject loan through closings

that occurred on February 6, 2017, and February 16, 2017.

(Def.’s Counter-56.1 ¶¶ 111, 116.) She filed her original

Complaint in this action on January 25, 2019, more than one year

after the alleged occurrence of the violation but less than

three years after it. (See Compl.) Thus, Barker’s damages

claim is time barred insofar as she seeks damages under

Section 1638 of TILA, but not time barred to the extent she

seeks damages based on Rokosz’s alleged violations of HOEPA, or

to the extent she seeks rescission under TILA or HOEPA.

E. Substantive Compliance

The parties agree that Rokosz did not comply with TILA’s or

HOEPA’s substantive provisions. Rokosz concedes that he did not

even attempt to provide the disclosures that TILA and

Regulation Z require, such as the amount financed, itemization

of the amount financed, finance charge, APR, payment schedule,

late payment penalty, interest rate, payment summary, and no-

guarantee-to-refinance statement. (Def.’s Counter-56.1 ¶ 108);

see 15 U.S.C. § 1638; 12 C.F.R. § 1026.18. Further, Rokosz does

not contest that the subject loan violated HOEPA’s prohibitions

on increasing the interest rate after default, scheduling

balloon payments, paying a contractor directly out of the loan

proceeds, and excessively financing points and fees. (Def.’s

Counter-56.1 ¶¶ 115, 117, 121–24, 128–37, 140–41); see 15 U.S.C.

§§ 1639(d), 1639(e), 1639(m). Nor does Rokosz dispute that he

did not provide the pre-closing notice required by HOEPA and

that he did not receive certification from a federally approved

counselor that Barker had received counseling with respect to

the advisability of the subject loan. (Def.’s Counter-56.1

¶¶ 95, 99); see 15 U.S.C. §§ 1639(a), 1639(u). The Court “need

find ‘only a single violation of the statutory requirements to

hold [a] defendant liable under TILA’” or HOEPA. See Barberan

v. Nationpoint, 706 F. Supp. 2d 408, 421 (S.D.N.Y. 2010)

(quoting Clement v. Am. Honda Fin. Corp., 145 F. Supp. 2d 206,

210 (D. Conn. 2001)). Accordingly, the undisputed facts entitle

Barker to summary judgment on her TILA and HOEPA claims.

II. New York Banking Law

Similarly to HOEPA, Section 6-l of the New York Banking Law

restricts the terms on which a “lender” may issue a “high-cost

home loan.” See N.Y. Banking Law § 6-l(2). Rokosz does not

dispute that he is a “lender” or that the subject loan was

“high-cost.” (See Def.’s Opp’n 20–24.) He also does not argue

that he complied with Section 6-l’s substantive provisions. He

disputes only that the subject loan was a “home loan.” (See

id.) As explained below, the Court finds no genuine dispute

that the subject loan was a “home loan” and thus that

Section 6-l applied to the subject loan.

A. Home Loan

The term “home loan” is defined to include a loan where

(1) the principal amount at origination does not exceed the

conforming loan size limit for a comparable dwelling as

established by the federal national mortgage association,

(2) the borrower is a natural person, (3) the debt is incurred

by the borrower primarily for personal, family, or household

purposes, and (4) the loan is secured by a mortgage on real

estate improved by a one-to-four family dwelling occupied by the

borrower as the borrower’s principal dwelling. N.Y. Banking Law

§ 6-l(1)(e).

Only the “natural person” element is at issue. Rokosz does

not dispute that the principal amount of the subject loan at

origination fell below the conforming loan size limit for a

comparable dwelling as established by the federal national

mortgage association. The general loan limit for a first

mortgage on a two-family home in the contiguous United States in

2017 was $543,000, which exceeds the $450,000 amount of the

subject loan. See Lender Letter LL-2016-05 (Nov. 23, 2016),

https://singlefamily.fanniemae.com/media/15851/display

[https://perma.cc/W5S2-7RBL]. Further, the Court already has

found no genuine dispute that the subject loan’s primary purpose

was personal, (supra I.A.2), or that the subject loan was

secured by a mortgage on real-estate improved by a two-family

home that was Barker’s principal dwelling, (supra I.B).

Rokosz argues that the statute’s “natural person”

requirement is not met because the “borrower” was J&M, a

corporation. (Def.’s Opp’n 20.) In Aries Financial, LLC v.

12005 142nd Street, LLC, 7 N.Y.S.3d 372 (2d Dep’t 2015),

however, a loan was found to be a “home loan” notwithstanding

the involvement of an intermediary business entity. Like

Barker, the borrowers transferred title to their house to a

business entity that took out a mortgage loan from the lender.

See 7 N.Y.S.3d at 901. The lender sued the borrowers to

foreclose on the mortgage after they defaulted, and the

borrowers moved for summary judgment in part based on

Section 6-l. Id. The trial court denied the motion, but the

Appellate Division reversed, reasoning that the lender had a

policy of evading prohibitions against predatory lending by

issuing loans to business entities to whom the companies’ owners

transferred their homes. Id. at 901–02. The court found that

this policy triggered Section 6-l(3), which makes Section 6-l

apply to “any person who in bad faith attempts to avoid” the

statute’s application by “subterfuge.” Id. at 902; see N.Y.

Banking Law § 6-l(3). Given the absence of authority from the

New York State Court of Appeals interpreting Section 6-l(3) or

persuasive evidence why that court would disagree with the

result in Aries, the Court is bound to apply New York law as

stated by the Appellate Division in Aries. See Sleepy’s LLC v.

Select Comfort Wholesale Corp., 909 F.3d 519, 528–29 (2d Cir.

2018).

Applying Section 6-l(3) as Aries interpreted it, the Court

concludes that Section 6-l applied to the subject loan

notwithstanding J&M’s involvement in the transaction. As with

the lender in Aries, Rokosz had a policy of lending to business

entity borrowers to whom individuals transferred title to their

homes. (See Def.’s Counter-56.1 ¶¶ 55–56.) A majority of the

mortgage transactions in which Legum represented Rokosz from May

2016 to September 2019 involved the creation of a corporate or

LLC borrower formed no more than fifteen business days before

loan closing. (Id. ¶¶ 57–58.) Further, in each of these

transactions, Rokosz required that all stock in the business

entity be assigned to him and held in escrow, giving him further

security in case of a default. (Id. ¶ 59.) Rokosz followed

that policy in issuing the subject loan, as his broker

instructed Barker that in order to receive the loan, a corporate

entity had to be created to take title to her home and sign the

mortgage and note. (Id. ¶¶ 50, 115, 117.) Moreover, J&M was

incorporated only after Rokosz became interested in lending to

Barker, and Rokosz has identified no independent business

function that J&M served. (Id. ¶¶ 45–47, 50–53, 61, 67, 70.)

Thus, the undisputed evidence establishes that Rokosz employed

in all material respects the same policy that Aries held to

render Section 6-l applicable as a matter of law. Accordingly,

Section 6-l applies to the subject loan.

B. Substantive Compliance

Rokosz does not dispute that the subject loan violates

Section 6-l’s substantive provisions. The subject loan’s terms

violate Section 6-l’s prohibitions against balloon payments,

increasing the interest rate after the borrower’s default,

lending without due regard to the borrower’s ability to repay,

lending without a counseling disclosure, excessively financing

points and fees, directly paying a contractor from the proceeds

of the loan, and failing to include the statutorily required

legend on the mortgage. (See Def.’s Counter-56.1 ¶¶ 71–76, 102–

05, 115, 117, 121–24, 128–37, 140–41); N.Y. Banking Law

§§ 6-l(2)(b), 6-l(2)(d), 6-l(2)(k), 6-l(2)(l), 6-l(2)(m),

6-l(2)(n), 6-l(2-a)(a).

C. Intent

Remedies for all Section 6-l violations include actual and

statutory damages, attorney fees, and injunctive relief where

appropriate. N.Y. Banking Law §§ 6-l(7), 6-l(8), 6-l(9). If

the lender commits an “intentional violation,” however, the

“home loan agreement shall be rendered void.” See N.Y. Banking

Law §§ 6-l(10). Here, because “[Barker] established, prima

facie, that certain violations of [Section] 6-l, which appear on

the face of the loan documents, were intentional, and [Rokosz]

failed to raise a triable issue of fact in opposition,” the

undisputed facts establish an intentional violation of

Section 6-l. See VFS Lending JV II, LLC v. Krasinski,

152 N.Y.S.3d 470, 472 (2d Dep’t 2021) (affirming summary

judgment holding that lender’s violation was intentional).

III. Usury

Rokosz argues that Barker’s usury claim is preempted by the

Depository Institutions Deregulation and Monetary Control Act of

1980 (“DIDMCA”). (Def.’s Opp’n 25); see 12 U.S.C. § 1735f-7a.

Congress enacted DIDMCA’s usury preemption provision to “enhance

the stability and viability” of the national financial system

and “facilitate a national housing policy and the functioning of

a national secondary market in mortgage lending.” S. Rep.

No. 96-368, at 19 (1979). It provides that state laws “limiting

the rate or amount of interest . . . which may be charged,

taken, received, or reserved shall not apply to any loan” or

“mortgage . . . secured by a first lien on residential real

property” issued after March 31, 1980, by a “creditor” (as

defined in TILA) who makes or invests in residential real estate

loans aggregating over one million dollars per year. 12 U.S.C.

§§ 1735f-7a(a)(1), 1735f-5(b).

The Second Circuit has held that this provision of DIDMCA

applies to New York’s usury statute. Wolfert ex rel. Estate of

Wolfert v. Transamerica Home First, Inc., 439 F.3d 165, 175

(2d Cir. 2006). Further, it is undisputed that the subject loan

is a mortgage secured by a first lien on residential real

property and issued after March 31, 1980. (See Def.’s

Counter-56.1 ¶¶ 31, 111, 115–17.) Finally, the Court already

has determined that Rokosz qualifies as a “creditor” under TILA.

(Supra I.C.) Thus, the only question as to whether DIDMCA

preempts Barker’s usury claim is whether Rokosz makes or invests

in residential real estate loans aggregating over one million

dollars per year.

Rokosz has submitted a declaration based on his personal

knowledge that in 2017, the year he issued the subject loan, he

made residential real estate loans aggregating over one million

dollars per year. (ECF No. 299, Decl. Def. Supp. Mot. Summ. J.

(“Rokosz Decl.”), ¶¶ 6–9.) A lender’s unrebutted declaration

based on personal knowledge has been held sufficient to

establish the aggregate value of the lender’s loans for the

purposes of summary judgment with respect to DIDCMA preemption.

See Brown v. Invs. Mortg. Co., 121 F.3d 472, 477 (9th Cir.

1997). Because Barker has submitted no evidence contradicting

Rokosz’s declaration, the fact that Rokosz made residential real

estate loans aggregating over one million dollars per year is

deemed established.

Barker responds by citing a 1980 letter from the Federal

Home Loan Bank Board (“FHLBB”), a now-defunct federal agency

that formerly governed the Federal Home Loan Banks,9 opining that

DIDMCA’s “million dollar test” is satisfied if the lender made

or invested in one million dollars in residential real estate

loans “in the previous year or in the current calendar year

prior to the exempt loan.” See 1980 FHLBB LEXIS 124, at *1–2

(June 30, 1980). Regardless of the extent to which this letter

from an agency no longer in existence warrants judicial

deference, it does not bring Barker’s usury claim out of the

sweep of DIDMCA’s preemption clause. Rokosz’s declaration

establishes that he made over one million dollars of

“residential real estate loans in the previous year . . . prior

to the exempt loan” (i.e., February 2016 to February 2017), even

if not in the previous calendar year. Further, the FHLBB letter

does not state that it sets forth a necessary – rather than

sufficient – condition to satisfy DIDMCA’s million dollar test.

Accordingly, because Barker has failed to create a genuine

issue of material fact with respect to Rokosz’s aggregate

residential mortgage loans and does not dispute any other

factual issues as to whether DIDCMA preemption applies to her

usury claim, the Court concludes that Barker’s usury claim is

preempted under DIDMCA and grants Rokosz’s motion for summary

9 Congress restructured its regulation of the industry in 1989, replacing the

FHLBB with the Office of Thrift Supervision. First Annapolis Bancorp, Inc.

v. United States, 644 F.3d 1367, 1369 (Fed. Cir. 2011).

judgment as to that claim.

IV. Foreclosure

Under Section 1302(2) of the New York Real Property Actions

and Proceedings Law, it is a “defense to an action to foreclose

a mortgage that the terms of the home loan or the actions of the

lender” violate Section 6-l of the New York Banking Law. N.Y.

Real Prop. Acts. Law § 1302(2). Because the Court grants

Barker’s motion for summary judgment with respect to her claim

under Section 6-l of the New York Banking Law, (supra II),

Barker has established a defense to Rokosz’s foreclosure claim

as a matter of law under Section 1302(2) of the New York Real

Property Actions and Proceedings Law, see Wilmington Tr., Nat’l

Ass’n v. Newman, 201 N.Y.S.3d 506, 509 (2d Dep’t 2023)

(reversing summary judgment for lender and remanding to “vacate

. . . order and judgment of foreclosure and sale” after

borrowers “demonstrated potential merit” to their Section 6-l

defense). Accordingly, Rokosz’s foreclosure claim is dismissed

with prejudice.

Conclusion

For the reasons above, the Court grants in part and denies

in part each party’s motion for summary judgment.

Barker’s motion for summary judgment is granted with

respect to her claims under TILA, HOEPA, and Section 6-l of the

New York Banking Law. Barker’s motion is denied with respect to

her usury claim, and that claim is dismissed with prejudice.

Rokosz’s motion for summary judgment is granted with

respect to Barker’s usury defense. Rokosz’s motion is otherwise

denied, and Rokosz’s foreclosure counterclaim is dismissed with

prejudice.

The parties are directed to file a joint letter by

August 7, 2024, explaining how they intend to proceed with

respect to remedies and the existing preliminary injunction.

So ordered.

ba,

Dated: July 8, 2024 f?

Brooklyn, New York we oe e+) Ltr

Kigdla. Matsumoto

United States District Judge

Eastern District of New York

53