TILA • Notice of Right to Cancel • Presumption of Delivery • “Self-Serving” Testimony

In re Gisondi, PICS Case No. 14-0355 (E.D. Pa. Feb. 20, 2014) Pratter, J. (8 pages).

Homeowner failed to rebut presumption that notices of right to cancel loan were delivered as required under Truth in Lending Act. Order affirmed.

In 2006, Gisondi refinanced her home through defendant bank. Three years later, she filed an adversary action in bankruptcy, seeking to rescind the loan and claiming that she never received copies of the notice of right to cancel, as required by the Truth in Lending Act.

At the summary judgment stage, bank presented a signed acknowledgment by Gisondi that she received her notices of right to cancel, and testimony from its employee (bank policy requires that borrowers receive a copy of all closing documents at closing) and the closing agent (he always left a copy of all closing documents with borrower at closing, Gisondi specifically asked for a copy to give to her attorney, and only he and Gisondi were present at closing). Gisondi submitted an affidavit stating that she did not receive any closing documents. She contradicted closing agent’s testimony by stating that her nephew was present at closing, and that she did not have an attorney at that time. The U.S. Bankruptcy Court for the Eastern District of Pennsylvania denied summary judgment.

At trial, Gisondi again testified that, although she signed an acknowledgment of receipt of the notices of right to cancel, she did not recall actually receiving those documents and she searched but was unable to find them. Gisondi conceded that she did have an attorney at the time of closing, but that he was representing her on a different matter. She admitted that her nephew was at her house but couldn’t recall whether he stayed for the closing. (Closing agent testified that he left before closing began.)

Finding Gisondi’s testimony not credible and “self-serving,” the bankruptcy court held that Gisondi had not rebutted the presumption that she received of receipt of the notices of right to cancel and granted judgment in favor of bank.

Gisondi appealed, claiming that bankruptcy court erred when it found that she failed to rebut the presumption. The United States District Court for the Eastern District of Pennsylvania affirmed.

TILA and its implementing regulations require, inter alia, that lenders provide borrowers with two copies of a notice of right to cancel. A borrower may rescind a transaction covered by the statute within three days of settlement or within three days of receipt of the notices, whichever is later. If the notices are never delivered, the right to rescind expires three years after the transaction is consummated.

Under TILA, a signed acknowledgement of receipt of the notices of right to cancel creates a rebuttable presumption that the notices were delivered. Here, Gisondi undisputedly signed such an acknowledgement. However, she argues that she rebutted this presumption through her testimony. (See Cappuccio v. Prime Capital Funding LLC, 649 F.3d 180, 189-90 (3d Cir. 2011) (borrower’s testimony alone was sufficient to rebut presumption of receipt of notices in TILA action seeking recession even where testimony is “self-serving”). However, the term “self-serving” refers to a witness whose testimony supports its own legal claim or interest. It does not include testimony that is “serf-serving” in the sense that it is uncorroborated, contradictory or otherwise not credible. Therefore bankruptcy court did not commit an error of law inholding that Gisondi failed to rebut the presumption of receipt of notices of the right to cancel, when it also found that Gisondi’s testimony was “inconsistent and self-serving.”