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Keywords

contractlawsuitplaintiffdefendantjurisdictionpleamotionmotion to dismiss
plaintiffdefendantjurisdictionpleamotionwill

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Mitchell v. Kurkowski, Not Reported in Fed. Supp., 2022 WL 17176888

Facts

In August 2017, Adam Mitchell made an offer to purchase a house in Maple Grove, Minnesota, which was accepted by the sellers. Unable to secure financing, he entered into a rental agreement with the sellers and later met Daniel Kurkowski from Kurko Homes, who provided funding by purchasing the property and selling it to Mitchell on a contract for deed. Mitchell alleged that the defendants failed to provide required disclosures under TILA and charged excessive fees, leading to the lawsuit.

Mitchell, a Minnesota resident, wanted to buy a house in Maple Grove, Minnesota in August 2017. He made an offer of $372,500 on a residential property and his offer was accepted by the sellers. Mitchell, however, failed to secure financing to buy the property, but the sellers agreed to rent it to him while he sought financing.

Issue

Did the defendants qualify as creditors under the Truth in Lending Act, and if not, should the court exercise supplemental jurisdiction over the state law claims?

Did the defendants qualify as creditors under the Truth in Lending Act, and if not, should the court exercise supplemental jurisdiction over the state law claims?

Rule

The TILA defines a 'creditor' as a person who regularly extends consumer credit and is the person to whom the debt arising from the consumer credit transaction is initially payable. To qualify, a creditor must have extended credit secured by a dwelling more than five times in a year or originated two or more high-cost mortgages in a relevant 12-month period.

The TILA defines a 'creditor' as a person who both (1) regularly extends consumer credit … and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable.

Analysis

The court found that the complaint did not adequately allege that any individual defendant was a TILA creditor or that the defendants could be considered collectively. The allegations regarding the number of transactions were insufficient to meet the TILA's definitions, and the court could not infer that the defendants operated as a single creditor enterprise based on the provided facts.

The Complaint neither adequately alleges Defendants can be considered collectively, nor that any individual Defendant engaged in transactions sufficient to meet the definition of “creditor” under the TILA, the Complaint fails to adequately allege any Defendant is a TILA creditor.

Conclusion

The court granted the motion to dismiss the TILA claim and declined to exercise supplemental jurisdiction over the state law claims, resulting in their dismissal as well.

The Court will, therefore, dismiss the TILA claim against the Defendants who filed this Motion.

Who won?

Defendants prevailed in the case because the court found that the plaintiff failed to adequately plead that they were creditors under the TILA, leading to the dismissal of the claims.

Defendants prevailed in the case because the court found that the plaintiff failed to adequately plead that they were creditors under the TILA, leading to the dismissal of the claims.

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