The Plaintiff’s failure to explain how discrepancies in charges on a HUD-1 and TILA disclosures related to the cost of credit doomed Plaintiff’s TILA rescission action

In Bonte v. U.S. Bank, N.A., No. 09-2455 (7th Cir., October 19, 2010), the plaintiff’s asserted that there were misstated charges on the TIL disclosure and the HUD-1 settlement statement, both of which were attached to the complaint. The disputed charges related to the disbursement of the loan proceeds including the payoff of other mortgages, misstated property taxes, title insurance, ARM endorsement, recording service fees, courier fees and settlement fees. They alleged that these charges caused a discrepancy which affected the APR, the amount financed, and finance charge entitling the them to rescind the loan. The defendant moved to dismiss the complaint on the grounds that, even if true, the misstated charges were not material disclosure as defined by TILA. The plaintiffs never cogently responded to the defendant’s motion by showing how the allegedly misstated charges were related to the finance charge, the APR, and the amount financed. Instead, they only generally argued that the complaint properly alleged a TILA violation because the mere allegation that there were discrepancies constituted a satisfactory short and plain statement of the claim as required under Fed. R. Civ. P. 8(a)(2). The district court was not convinced and dismissed the complaint. The Seventh Circuit affirmed. The Court agreed that the complaint appeared on its face to be plausible. And while it is true that it itemized ten material and substantial errors the Plaintiffs could not explain how a single charge related to the cost of credit. The court was not obliged to accept these conclusions of law especially in light of the defendant’s convincing analysis that the charges were exempt. The plaintiff’s refused to substantively answer this argument lead the Court to conclude that the facts pled could not result in any plausible relief. The Court also observed that although TILA is to be construed liberally in favor of consumers, liberal construction does not establish that the allegations in the complaint were enough to raise a right to relief above the speculative level, under _Bell Atlantic Corp. v. Twombly_, 550 U.S. 544, 555 (2007).

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