Opinion
C. A. 2:22-04358-RMG-MHC
12-20-2023
Willie Carlton Kemmerlin, Ella Mae Kemmerlin, Plaintiffs, v. Robert R. Hill, Jr.; Cheryle Mollycheck; Nickie Griffith, Defendants.
REPORT AND RECOMMENDATION
MOLLY H. CHERRY, UNITED STATES MAGISTRATE JUDGE.
This action was initially filed by pro se Plaintiff Willie Carlton Kemmerlin (Mr. Kemmerlin). Under 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.), pretrial proceedings in this action have been referred to the assigned United States Magistrate Judge.
In the Complaint, Mr. Kemmerlin also purported to assert claims on behalf of his mother Ella Mae Kemmerlin (Ms. Kemmerlin). A Proper Form Order, that also gave notice of material deficiencies in the Complaint, was issued on February 24, 2023. See ECF No. 7. On March 24, 2023, Mr. Kemmerlin and Ms. Kemmerlin filed an Amended Complaint in which both of these Plaintiffs are proceeding pro se. ECF No. 10.
A Second Proper Form Order was issued on August 3, 2023. Plaintiffs filed proper form documents and this case is now in substantially proper form.
I. BACKGROUND
Defendants, who appear to be current or former employees of South State Bank, are former or current CEO Robert R. Hill, Jr. (Hill), Loan Operation Manager Nickie Griffith (Griffith), and Loan Operation Manager Cheryle Mollycheck (Mollycheck). Plaintiffs allege that their basis for federal court jurisdiction is federal question. They claim that Defendants have violated 12 C.F.R. §§ 226.19(a)(1)(i) and 226.18(a), (c)(ii), (j), (m), and (t). ECF No. 10 at 3.
In the original Complaint, Plaintiff Mr. Kemmerlin appeared to be attempting to bring claims under the Fair Credit Billing Act, 15 U.S.C. §§ 1666 to 1666j; the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p; 42 U.S.C. § 1983; and various criminal statutes. See ECF No. 1. Plaintiffs have not raised these claims in their Amended Complaint.
Plaintiffs' statement of claim is that:
Robert R. Hill Jr. refused to acknowledge any correspondences we sent to him. On 10/06/2022 Nickie Griffith sent a letter DBA South State Bank stating she would investigate but nothing was done. In the month of October Cheryl harassed with phone calls threatening to litigate.ECF No. 10 at 5 (errors in original). As relief, Plaintiffs request:
Property located at 548 Cumming's chapel road Ridgeville South Carolina 29472 USA, $500 per non-disclosure violation, all payments and interest made on account after violations were made. We are asking x5 in punitive damages.Id. (errors in original).
Plaintiffs appear to be attempting to allege claims under the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667f. They reference paperwork that appears to have been given to Ms. Kemmerlin when she was loaned money by First Federal Savings & Loan Association of Charleston (First Federal) on April 7, 2006, for the purchase of a mobile home (Property). Plaintiffs submitted copies of a Consumer Security Agreement, a Promissory Note, a Disclosure Statement, and an Agreement to Provide Insurance. These documents all list Ms. Kemmerlin as borrower,list First Federal as lender, and are dated April 7, 2006. ECF No. 10-4. Plaintiffs also attached a printout of a purported history of the bank (from an unknown source) in which First Federal's status is listed as “Absorption - Without Assistance” and “Inactive” as of July 23, 2013, with South State Bank listed as the successor bank. South State Bank's status is listed as “Merger - Without Assistance” and “Inactive” as of June 8, 2020, with SouthState Bank listed as the successor bank. See ECF No. 10-3.
Mr. Kemmerlin is not listed on any of this paperwork and there is no indication that he was a borrower or an owner at the time the loan was executed. See ECF No. 10-4.
Mr. Kemmerlin's interest in the Property is unclear from the Amended Complaint and the exhibits submitted by Plaintiffs. However, records from a breach of contract and claim and delivery action (case number 2023-CP-18-00448) brought in November 2023 by SouthState Bank National Association (SBNA) in Dorchester County against Ms. Kemmerlin and Mr. Kemmerlin indicates that Mr. Kemmerlin was added as an owner of the Property in October 2012. See Dorchester County First Judicial Circuit Public Index, https://publicindex.sccourts.org/Dorchester/ PublicIndex/PISearch.aspx [search listed case number] (last visited Dec. 18, 2023).
Mr. Kemmerlin asserts that he is an owner and submitted a copy of an electric bill and a tax bill receipt (ECF No. 10-5), but failed to provide further proof of ownership. However, as discussed below, it appears that Mr. Kemmerlin was added as an owner in 2012.
This Court may take judicial notice of factual information located in postings on government websites. See Tisdale v. South Carolina Highway Patrol, No. 0:09-1009-HFF-PJG, 2009 WL 1491409, at *1 n. 1 (D.S.C. May 27, 2009), aff'd, 347 Fed.Appx. 965 (4th Cir. 2009); In re Katrina Canal Breaches Consol. Litig., No. 05-4182, 2008 WL 4185869, at * 2 (E.D. La. Sept. 8, 2008) (noting that courts may take judicial notice of governmental websites including other courts' records).
A Certificate of Title, listing Ms. Kemmerlin as owner and First Federal as lienholder, was issued by the Department of Motor Vehicles of the State of South Carolina on May 29, 2006. Exhibit B to 2023-CP-1800448. On October 15, 2012, Ms. Kemmerlin signed a document titled “Third Party Grant to Security Interest” in which she requested that First Federal add Mr. Kemmerlin as an owner to the Property, subject to security interests of the lender. Mr. Kemmerlin signed the Third Party Grant to Security Interest in which he also “acknowledge[d] receipt of a completed copy of th[e] note, disclosure and security agreement.” Exhibit C to case number 2023-CP-1800448. A refiling of the Certificate of Title with the Department of Motor Vehicles of the State of South Carolina, listing Ms. Kemmerlin and Mr. Kemmerlin as owners of the Property and First Federal Bank as lienholder, was issued on November 5, 2012. Ex. D to 2023-CP-1800448.
In an affidavit in the claim and delivery action, Mary Pickett, Vice President SAM Consumer Resolutions Officer for SBNA, states that:
on or about April 5, 2012, First Federal Savings & Loan Association of Charleston changed its name to First Federal Bank. Thereafter, on or about June 30, 2014, SCBT changed its name to South State Bank. On or about June 8, 2020, South State Bank merged with and into CenterState Bank, N.A. (“CenterState”), with CenterState surviving the merger; CenterState changed its name to South State Bank, N.A. Effective November 5, 2021, South State Bank, N.A., changed its name to SouthState Bank, National Association, the present lien holder....See 2023-CP-18-00448, Pickett Affidavit filed November 15, 2023.
Ms. Kemmerlin filed an “Affidavit of Truth” (Affidavit) with the Amended Complaint. She asserts that it was never disclosed in the paperwork that SouthState Bank was the lender/creditor and the paperwork did not mention it having a security interest in the loan, the itemization of the amount financed should have included the amount credited to the consumer's account with the creditor, the creditor failed to deliver disclosures within the required time, the company failed to disclose the “total sale price,” and the creditor failed to disclose a statement that there was no guarantee the consumer can refinance the transaction to lower the interest rate or periodic payments. ECF No. 10-2 at 2-3.
Although the Affidavit refers to “We Ella Mae Kemmerlin and Willie Carlton Kemmerlin,]” it is only signed by Ms. Kemmerlin. Mr. Kemmerlin signed as a witness, not as an affiant. See ECF No. 10-2 at 1, 3-4.
II. STANDARD OF REVIEW
This case is before the Court for pre-service review. See 28 U.S.C. § 1915(e)(2)(B); In re Prison Litigation Reform Act, 105 F.3d 1131, 1134 (6th Cir. 1997) (pleadings by non-prisoners should also be screened). Under established local procedure in this judicial district, a careful review has been made of the pro se Amended Complaint herein pursuant to the procedural provisions of § 1915, and in light of the following precedents: Denton v. Hernandez, 504 U.S. 25 (1992); Neitzke v. Williams, 490 U.S. 319 (1989); Haines v. Kerner, 404 U.S. 519 (1972); and Todd v. Baskerville, 712 F.2d 70 (4th Cir. 1983).
Section 1915 permits an indigent litigant to commence an action in federal court without paying the administrative costs of proceeding with the lawsuit. However, to protect against possible abuses of this privilege, the statute allows a district court to dismiss the case upon a finding that the action “is frivolous or malicious,” “fails to state a claim on which relief may be granted,” or “seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B). A finding of frivolousness can be made where the complaint “lacks an arguable basis either in law or in fact.” Denton v. Hernandez, 504 U.S. at 31. Hence, under § 1915(e)(2)(B), a claim based on a meritless legal theory may be dismissed sua sponte. Neitzke v. Williams, 490 U.S. at 327.
This Court is required to liberally construe pro se complaints, which are held to a less stringent standard than those drafted by attorneys. Erickson v. Pardus, 551 U.S. 89, 94 (2007); King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016). Nonetheless, the requirement of liberal construction does not mean that the Court can ignore a clear failure in the pleading to allege facts which set forth a claim cognizable in a federal district court. See Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990); see also Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (outlining pleading requirements under Rule 8 of the Federal Rules of Civil Procedure for “all civil actions”).
III. DISCUSSION
A. Failure to State a Federal Claim
Plaintiffs generally appear to allege that Defendants violated TILA because the paperwork given to Ms. Kemmerlin by the lender First Federal before or at the time of the execution of the loan (April 7, 2006) violated 12 C.F.R. §§ 226.18(a), 226.18(m) 226.18(c)(ii), 226.19(a)(1)(i), 226.18(j), and 226.18(t). ECF No. 10 at 3. However, to support these allegations, Plaintiffs have merely alleged that Defendant Hill refused to acknowledge any correspondence sent to him on an unspecified date; Defendant Griffith allegedly sent a letter on October 6, 2022, stating she would perform an investigation but nothing was done; and in the month of October (the year is not stated, but presumably in 2022) Defendant Mollycheck “harassed with phone calls threatening to litigate.” None of these allegations include any facts to state a claim under the cited TILA provisions as to these individual Defendants. Additionally, it is unclear that any of these Defendants were employed by First Federal during the time Ms. Kemmerlin applied for credit or at the time the loan was executed. Ms. Kemmerlin's Affidavit contains no allegations against these Defendants. See ECF No. 10-2. Thus, Plaintiffs fail to state a claim because they have alleged nothing to indicate when and how each of these Defendants allegedly violated TILA. See, e.g., Elsman v. Standard Fed. Bank, 46 F. App'x. 792, 799-800 (6th Cir. 2002) (complaint that “contains only the summary conclusion that the defendants' actions violated the TILA ... [and] makes no attempt ... to present any facts concerning the elements required to prove violation ... does not adequately plead any actionable claim”); Seldon v. Home Loan Servs., Inc., 647 F.Supp.2d 451, 462 (E.D. Pa. 2009) (“Because plaintiffs' claim rests on a bald conclusion of law concerning defendants' alleged failure to disclose the amount financed, plaintiffs have failed to set forth a claim of a TILA violation on this basis[.]”).
Moreover, Plaintiffs fail to state any claim under the cited TILA provisions. TILA serves to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to [her] and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a); see Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998). In the Amended Complaint, Plaintiffs merely list sections of TILA, but have provided no facts as to how any of those provisions were allegedly violated. In her Affidavit, Plaintiff Kemmerlin recites provisions of TILA, and then merely alleges in a conclusory fashion that the provisions were violated without providing facts as to how these provisions were supposedly violated.
Plaintiffs have not asserted any facts to indicate that these individual Defendants, rather than the bank, are allegedly liable under TILA. TILA applies only to an “individual or business that offers or extends credit,” and defines a creditor as a “person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments ... and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.” 12 C.F.R. § 226.2(17)(i). Plaintiffs have not alleged any facts to indicate that these individuals themselves extended credit (rather than the bank extending credit) or that the obligation was initially payable to any of the named Defendants. Even if Plaintiffs were to allege that these Defendants were involved and to allege facts to establish individual liability, Plaintiffs fail to state a claim as discussed below.
Nor have Plaintiffs alleged facts to indicate that any of the Defendants is the alter ego of the creditor or other factors to support corporate veil-piercing.
Ms. Kemmerlin appears to argue there was a violation of 12 C.F.R. § 226.18 (a) because “[a]ccording to the paperwork it was never DISCLOSED that SOUTHSTATE BANK was in fact the LENDER/CREDITOR nor did it mention them having a SECURITY INTEREST in my loan.” ECF No. 10-2 at 1. She claims SouthState Bank “has been collecting payment from us since the beginning of consummation of the contract without disclosing their security interest” and that the merger did not occur until almost 7 years later such that they were not a successor until 7 years later. ECF No. 10-2 at 1-2.
For each transaction, the creditor shall disclose “[t]he identity of the creditor making the disclosures.” 12 C.F.R. § 226.18(a). Plaintiffs have submitted copies of paperwork dated April 7, 2006, indicating that the lender listed in the Consumer Security Agreement, Promissory Note, and Disclosure Statement was First Federal Savings & Loan Association of Charleston. ECF No. 1 at 4. However, Plaintiffs have alleged no facts to support any assertion that this was not the creditor at the time the disclosures were made and the loan was executed. Additionally, the Consumer Security Agreement provides that the word “Lender means First Federal Savings & Loan Association of Charleston, its successors and assigns.” The words ‘successors or assigns' means any person or company that acquires any interest in the Note.” ECF No. 10-4 at 3 (emphasis added). The Promissory Note provides that the terms of the note “shall inure to the benefit of Lender and its successors and assigns.” ECF No. 10-4 at 4 (emphasis added).
In her Affidavit, Ms. Kemmerlin appears to assert that Defendants violated § 226.18(m) because they did not disclose that the creditor would acquire a security interest in the Property. This provision provides that the creditor shall disclose “[t]he fact that the creditor has or will acquire a security interest in the property purchased as part of the transaction, or in other property identified by item or type.” 12 C.F.R. § 226.18(m). Contrary to Ms. Kemmerlin's assertion, the copy of the Consumer Security Agreement specifically provides that a security interest was granted in the “Grant of Security Interest” portion of the agreement and provides a description of the Property, including the serial number of the Property and its location. ECF No. 10-4 at 1. The Promissory Note provides that it “is secured by the following collateral described in the security instrument listed herein: a mobile home described in a Consumer Security Agreement dated April 7, 2006.” ECF No. 10-4 at 4.
Ms. Kemmerlin alleges that the amount credited to the consumer's account with the creditor was not disclosed in violation of 12 C.F.R. § 226.18(c)(iii). ECF No. 10-2 at 2. The Disclosure Statement contains an “Amount Financed Itemization” indicating that $50,572.00 was paid on Ms. Kemmerlin's behalf to Sangaree Homes and other charges were financed ($15.00 Title Fee and $1,054.00 Hazard Insurance premium) for a total of $51,641.00 financed. It was also disclosed that there was $140.00 in prepaid finance charges ($14.50 flood certification fee, $.50 census tract, and $125.00 processing fee) for a Note Principal amount of $51,781.00 (which matches the Principal Amount of the Promissory Note of $51,781.00). ECF No. 10-4 at 11; see also ECF No. 10-4 at 4. Ms. Kemmerlin has not alleged that there was any “amount credited to the consumer's account with the creditor” that is unaccounted for by the disclosures.
4. 12 C.F.R. § 226.19(a)(1)(i)
Ms. Kemmerlin alleges that the creditor failed to deliver the required disclosures under § 226.19(a)(1)(i). This regulation, in pertinent part, provides that:
In a mortgage transaction subject to the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) that is secured by the consumer's dwelling, other than a home equity line of credit subject to § 226.5b or mortgage transaction subject to paragraph (a)(5) of this section, the creditor shall make good faith estimates of the disclosures required by § 226.18 and shall deliver or place them in the mail not later than the third business day after the creditor receives the consumer's written application.12 C.F.R. § 226.19(a)(1)(i). Here, as noted above, Plaintiffs have alleged no facts to indicate that Defendants are creditors under TILA and Plaintiffs have alleged no facts as to when the creditor received Ms. Kemmerlin's application.
Ms. Kemmerlin alleges that the company should have disclosed the “total sale price” using that term and a descriptive explanation. ECF No. 4 at 2. Plaintiffs fail to state a violation of § 226.18(j) because, even if they can show that Defendants are creditors, they have alleged no facts to indicate that this was a “credit sale.” Section § 226.18(j) provides:
Total sale price. In a credit sale, the total sale price, using that term, and a descriptive explanation (including the amount of any downpayment) such as “the total price of your purchase on credit, including your downpayment of $.” The total sale price is the sum of the cash price, the items described in paragraph (b)(2), and the finance charge disclosed under paragraph (d) of this section.12 C.F.R. § 226.18(j) (emphasis added). A credit sale, as defined in Regulation Z, means a sale in which the seller is a creditor. 12 C.F.R. § 226.2(a)(16). However, there is no indication that any of the Defendants (or even First Federal, South Bank, SouthBank, or SBNA) is a seller. See 12 C.F.R. § 226.2(a)(16); see also Williams v. Mortg. Elec. Registration Sys., No. CV H-06-2997, 2007 WL 9735978, at *10 n. 56 (S.D. Tex. May 10, 2007), report and recommendation adopted, 2007 WL 9735979 (S.D. Tex. June 13, 2007) (noting that § 226.18(j) did not apply to the relevant transaction because it did not appear that the contract constituted a “credit sale” as defined in Regulation Z). Here, here is no indication that the lender was the seller (instead it appears that Sangaree Holmes was the seller of the Property) such that they have alleged facts to indicate that the transaction was a credit sale subject to § 226.18(j).
Section 226.18(b)(2) indicates that the amount finance is calculated, amount other things, by “[a]dding any other amounts that are financed by the creditor and are not part of the finance charge[.]”
“Regulation Z implements the Truth in Lending Act[.]” Johnson v. Navy Fed. Credit Union, No. 122CV01451PTGLRV, 2023 WL 6964052, at *1 n. 1 (E.D. Va. Oct. 20, 2023).
Ms. Kemmerlin alleges that Defendants violated § 226.18(t) because the creditor did not “disclose a statement that there is no guarantee the consumer can refinance the transaction to lower the interest rate or periodic payments[.]” However, that provision was not contained in the version of this Regulation that was in effect at the time Ms. Kemmerlin took out her loan and was given the disclosures and other documents in 2006. The provision did not become effective until October 25, 2010, with compliance optional until January 30, 2011. See 75 FR 58470-01, 2010 WL 3712601.
The statute currently provides that “the creditor shall disclosure a statement that there is no guarantee the consumer can refinance the transaction to lower the interest rate or periodic payments.” 12 C.F.R. § 226.18(t).
B. Statute of Limitations
Even if Plaintiffs have stated a claim against a named Defendant or Defendants, such claim(s) are barred by the applicable statute of limitations. TILA has a one-year statute of limitations. See 15 U.S.C. § 1640(e) (action may be brought “within one year from the date of the occurrence of the violation”); Rogers v. Pulliam Motor Co., No. 3:05-2002JFABM, 2007 WL 1290545, at *1 (D.S.C. Apr. 30, 2007) (citing 15 U.S.C. § 1640(e)); Stevens v. Rock Springs Nat'l Bank, 497 F.2d 307, 309 (10th Cir. 1974) (holding that § 1640(e) “is both a grant of subject matter jurisdiction and a statement of limitations”). At most, there is a three-year statute of limitations with respect to violations of Section 1639, 1639(b) or 1639(c). 15 U.S.C. § 1640(e).
The date of the occurrence of the violation is the date on which the borrower accepts the creditor's extension of credit. At the latest, this appears to be the date the loan closed. See, e.g., Harris v. Sand Canyon Corp., 274 F.R.D. 556 (D.S.C. 2010) (finding that the date the loan closed constituted “the consummation of the transaction and, accordingly, the date of the alleged violation”); Suggs v. M & T Bank, 230 F.Supp.3d 458, *466 n. 9 (E.D. Va.) (noting that any violation would have occurred when the loan originated and that “TILA triggers, not tolls, the statute of limitations); see also Betancourt v. Countrywide Home Loans, Inc., 344 F. S 1253, 1258 (D. Colo. 2004) (the “date of the occurrence” triggering the statute of limitation “date of closing” of the loan). Thus, based on the Ms. Kemmerlin's Affidavit (in which she that the “contract” started with First Federal on April 7, 2006 - ECF No. 10-2 at 1) documents Plaintiffs submitted (the Consumer Security Agreement, Promissory No Disclosure Statement all indicating a loan date of April 7, 2006), the date of occurrence alleged TILA violation is April 7, 2006. Thus, Plaintiffs' TILA claims are barred by the app statutes of limitations because the date of any alleged TILA violation was April 7, 2006, w three years before this action was filed.
The statute of limitations may be raised sua sponte. See Shoop v. Deutsche Bank Nat'l 465 Fed.Appx. 646, 647 (9th Cir. 2012) (affirming district court's sua sponte dismissal o plaintiffs' TILA claims based on a statute of limitations); Walters v. Indus. & Com. Bank of China Ltd., 651 F.3d 280, 293 (2d Cir. 2011) (court may dismiss action on limitations grounds sua sponte where the facts supporting the statute of limitations defense are set forth in the papers the plaintiff submitted).
IV. RECOMMENDATION
Based on the foregoing, it is recommended that the Court dismiss this action with pr without further leave to amend, and without issuance and service of process.
See Britt v. DeJoy, 45 F.4th 790 (4th Cir. 2022) (noting that “when a district court dismisses a complaint or all claims without providing leave to amend ... the order dismissing the complaint is final and appealable”).
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); See Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. \0 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).