Civil Practice: Bankruptcy: Mary Hall decision

Opinion Digest

Banks And Banking

Incompetence Of Borrower - Rescission Of Note And Mortgage

Where, following a bank’s foreclosure on a debtor’s mortgage, the debtor’s plaintiff son, acting as the debtor’s legal guardian, has brought an action seeking to rescind the mortgage (and related promissory note) on the ground that the debtor lacked legal competence at the time of the loan transaction, this court finds that a summary judgment motion filed by the bank must be denied as to the rescission claim, as a genuine issue of material fact exists concerning the debtor’s competence.

As to other claims asserted by the plaintiff, the court rules that the plaintiff (1) acted too late to assert the debtor’s right to redeem the property and (2) has not alleged specific violations of the Truth in Lending Act that would entitle the debtor to damages under that statute. Accordingly, the defendant bank’s motion for summary judgment is denied as to the issue of whether the note can be rescinded based upon the debtor’s incompetence and is allowed with respect to the issues of redemption and truth in lending.

In Re: Hall, Mary (Lawyers Weekly No. 03-057-95) (23 pages) (Feeney, J.) Galen Gilbert for the debtor and the plaintiff guardian; Robert E. Richards for defendant Financial Enterprises Corporation (Case No. 95-14062-JNF; Adversary Proceeding No. 95-1436-JNF).

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