LOUIS POLLAK, United States District Judge
In this action to effectuate rescission of a mortgage and loan transaction and to recover damages, plaintiff Patricia Smith alleges that defendant EquiCredit Corporation ("EquiCredit") and defendant Gelt Financial Corporation ("Gelt") induced plaintiff to borrow an excessive and unwarranted amount of money, imposed substantial fees that were illegal and improper, and failed to give various disclosures prior to the consummation of the loan transaction in violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq., the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, et seq., the Home Ownership Protection Act ("HOEPA"), 15 U.S.C. § 1639, et seq., and various Pennsylvania statutes and common law. Presently before the court is EquiCredit's motion to dismiss only those claims brought under RESPA (count I), TILA (count II), and HOEPA (count IV) pursuant to Federal Rule of Civil Procedure 12(b)(6). EquiCredit exempts from its motion to dismiss the plaintiff's rescission-related claims under TILA (count II) and HOEPA (count IV). For the following reasons, EquiCredit's motion will be denied.
BACKGROUND
For the purpose of considering the defendant's motion to dismiss, the facts pleaded by Ms. Smith, the non-moving party, are accepted as true and all reasonable inferences arising from these facts are drawn in her favor. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990).
On May 1, 2000, Ms. Smith responded to telephone solicitations and approached defendant Gelt, a mortgage brokerage corporation, for a $2,000 loan to do emergency plumbing work in her home. (See Compl. ¶ 1, 8, 15, 20, 45). At the time, Ms. Smith was still paying a monthly mortgage payment of $238.00 on a loan that she had had procured through Gelt less than two years earlier. (See Compl. ¶ 47). For this second loan, Gelt referred Ms. Smith to EquiCredit, a subprime lender that specializes in making loans to consumers with below average credit histories. (See Compl. ¶¶ 8, 48, 51, 52). Ms. Smith, who suffers from a disability related to a diagnosis of paranoid schizophrenia, had perfect credit at the time of her contact with EquiCredit. (See Compl. ¶¶ 43, 44). Since EquiCredit acquired a copy of Ms. Smith's Social Security award letter and her previous loan information prior to the loan request, EquiCredit was aware of Ms. Smith's financial status; EquiCredit therefore knew that plaintiff only applied for a $2,000.00 loan, that her monthly mortgage payment was $238.00, and that plaintiff's only source of income was a monthly Social Security disability check in the amount of $423.00. (See Compl. ¶¶ 43, 45, 50, 51, 64, 65).
EquiCredit rejected plaintiff's loan application for the amount of $2,000. (See Compl. ¶ 51). Without notifying the plaintiff of this rejection, EquiCredit and Gelt then re-offered Ms. Smith a new loan in the amount of $30,100, with an annual interest rate of 12.70% and with an immediate cash payment of $7,294.00. (See Compl. ¶¶ 51, 52, 53). Ms. Smith apparently agreed to the terms of this new loan. (See Compl. ¶¶ 52, 53, 55). Prior to the May 22, 2000 closing date of the loan, however, EquiCredit and Gelt unilaterally reduced the loan amount to $26,100.00, increased the annual interest rate to 15.10%, and limited the immediate cash payment to Ms. Smith to the amount of $250.00. (See Compl. ¶¶ 57, 70, 71). Under the terms of this new agreement, colloquially called a balloon loan, a final payment of $23,944.09 was due on June 1, 2015 (See Compl. ¶ 70). Neither EquiCredit nor Gelt notified Ms. Smith about these changes prior to settlement. (See Compl. ¶¶ 57, 74, 75, 76, 83). Moreover, neither EquiCredit nor Gelt notified Ms. Smith prior to settlement that the settlement charges incorporated within the loan and imposed upon plaintiff included both a broker fee and a "yield spread premium," which was a referral fee paid by EquiCredit to Gelt and which Ms. Smith alleges was a kickback in consideration for the excessive interest rate incurred by her. (See Compl. ¶¶ 71, 73).
On May 22, 2000, the closing date of the loan, Ms. Smith received notice of the changes in the terms of the loan through the distribution of a new loan agreement; this new loan agreement reduced the loan from $30,100.00 to $26,100.00, overstated the plaintiff's monthly income by $322.35.00, and failed to list any deductions or living expenses paid monthly by plaintiff. (See Compl. ¶ 63). Ms. Smith informed EquiCredit's closing agent that she did not want to consummate the loan because she could not afford the monthly payment and because there was no substantial cash payment to establish a reserve to help her make monthly payments. (See Compl. ¶ 60). In response, EquiCredit's settlement agent informed plaintiff verbally that the monthly payment would be reduced after settlement. (See Compl. ¶ 62). Based upon this representation, Ms. Smith subsequently executed a mortgage and note granting EquiCredit a security interest in her home. (See Compl. ¶ 68). It was only at this time that Ms. Smith received her first TILA disclosure statement, which included the yield spread premium, the payment of EquiCredit's attorney's fees during closing, and various other sums within the amount financed that allegedly should have been included as part of the pre-paid finance charge. (See Compl. ¶¶ 83, 84). Ms. Smith never received a written contract explaining the broker fees or the increased interest rate. (See Compl. ¶¶ 16, 72, 75).
On October 25, 2000, Ms. Smith notified EquiCredit that she wanted to rescind the loan. (See Compl. ¶ 85). EquiCredit refused to rescind the mortgage, retained its security interest in the property, and failed to return the fees and payments Ms. Smith made in conjunction with the loan. (See Compl. ¶ 86). Ms. Smith filed suit on August 24, 2001. (See Compl. ¶ 1).
Ms. Smith seeks to rescind the mortgage and recover damages under RESPA, 12 U.S.C. § 2601, et seq. (count I), TILA, 15 U.S.C. § 1601, et seq. (count II), and HOEPA, 15 U.S.C. § 1639, et seq. (count IV). EquiCredit has moved to dismiss count I, count II (except the rescission claim), and count IV (except the rescission claim) pursuant to Federal Rule of Civil Procedure 12(b)(6), contending that plaintiff's claims are time-barred by the applicable statute of limitations. Ms. Smith has responded to EquiCredit's motion and EquiCredit has filed a reply.
LEGAL STANDARD
In considering EquiCredit's motion to dismiss, this court must "accept as true the factual allegations in the complaint and all reasonable inferences that can be drawn from them." Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). Dismissal is only appropriate when the plaintiff can prove no set of facts that would entitle her to the relief requested. See Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Trump Hotels Casino Resorts, Inc. v. Mirage Resorts, Inc., 140 F.3d 478, 483 (3d Cir. 1998).
DISCUSSION
The plaintiff's claims under RESPA, TILA (excepting the rescission claim), and HOEPA (excepting the rescission claim) are governed by a one-year statute of limitations. See RESPA, 12 U.S.C. § 2614; TILA, 15 U.S.C. § 1640(e); HOEPA, 15 U.S.C. § 1639 (amending TILA and therefore governed by the TILA statute of limitations). Since the alleged violations central to this motion occurred before or on May 22, 2000, the date of the consummation of the loan, the one-year statute of limitations pertaining to the non-rescission related claims expired prior to the filing of suit on August 24, 2001. See Oldroyd v. Assoc. Consumer Discount Co., 863 F. Supp. 237, 240 (E.D.Pa. 1994) (holding that the statute of limitations for a TILA action runs from the date when the defendant failed to make the requisite disclosures).
Plaintiff alleges that EquiCredit's failure to act within twenty days of notification of rescission constituted an independent TILA violation under 15 U.S.C. § 1635(f). (See Pl.'s Rsp. at 5). The plaintiff contends that this claim for damages under TILA must survive because the violation occurred on or about November 14, 2000, less than one year prior to the commencement of the suit. (See Pl.'s Rsp. at 5). EquiCredit reiterates in its reply memorandum that it is not seeking the dismissal of Ms. Smith's rescission-related claims under TILA or HOEPA, and therefore, does not seek to dismiss this claim for monetary relief because it stems from the request for rescission. (See Def.'s Repl. at 6).
The plaintiff, however, contends that RESPA's, TILA's, and HOEPA's one-year statutory bar should be equitably tolled because EquiCredit engaged in deception, conspiracy, and unfair practices. (See Pl.'s Rsp. at 4). In particular, plaintiff alleges that defendants conspired to induce her to borrow amounts in excess of what she requested and could afford, that defendants engaged in an illegal kickback scheme as evidenced by the referral fee, and that defendants failed to disclose the referral fee and legal fees until settlement and never disclosed the increased interest rate. (See Compl. ¶¶ 3, 17, 71, 72, 93, 98). Furthermore, plaintiff claims that she consummated the contract only upon the promise of EquiCredit's agent that her monthly payment would be reduced following the loan closing. (See Compl. ¶ 61). According to plaintiff, this form of fraudulent concealment actively prevented her from discovering the wrongful conduct and therefore from bringing suit within the one-year period. (See Pl.'s Rsp. at 4).
Defendant EquiCredit does not question the applicability of the doctrine of equitable tolling to RESPA, TILA, and HOEPA, but instead contends that the doctrine should not be applied in this case. The defendant emphasizes that the plaintiff had notice of the alleged wrongful conduct at the time of the closing. (See Def.'s Rpl. at 1, 3). The defendant further argues that even if the plaintiff did not have notice of the wrongful conduct, the plaintiff failed to exercise reasonable diligence to investigate and to bring her claims prior to the expiration of the one-year limitation period. (See Def.'s Rpl. at 5).
In Ramadan v. The Chase Manhattan Corp., the Court of Appeals for the Third Circuit held that the one-year statute of limitations pursuant to § 1640(e) of TILA is subject to equitable tolling. 156 F.3d 499, 504 (3d Cir. 1998). The Court reasoned that absent Congressional intent to establish a jurisdictional time limitation, as evidenced by an explicit link between expiration of jurisdiction and the expiration of the statute of limitation within a particular statutory scheme, equitable tolling will be read into the statute. Id. at 504. Since Congress did not provide explicitly that the one-year statute of limitations within RESPA is jurisdictional, the logic of Ramadan requires equitable tolling principles to apply. See Solar v. Millennium Fin. Inc., No. CIV.A. 01-CV-4327, 2002 WL 1019047, at *2 (E.D.Pa. 2002) (Green, S.J.) (holding that equitable tolling applies to RESPA, TILA, and HOEPA). Accordingly, equitable tolling may be used to freeze the limitation bars within RESPA, TILA, and HOEPA.
Since the plaintiff's RESPA, TILA, and HOEPA claims are all governed by a one-year statute of limitation period, which began running for each claim on or before May 22, 2000, the equitable tolling arguments can be addressed together rather than independently. Equitable tolling freezes "the statute of limitations from running when the date on which the claim accrued has already passed." Lake v. Arnold, 232 F.3d 360, 370 (3d Cir. 2000). The doctrine permits a court "to extend a statute of limitations on a case-by-case basis to prevent inequity." Colletti v. N.J. Transit Corp., 2002 WL 1769006 (3d. Cir. 2002) [unpublished opinion] (quoting Warren v. Garvin, 219 F.3d 111, 113 (2d Cir. 2000)). Although the United States Court of Appeals for the Third Circuit cautions that the doctrine of equitable tolling must be used sparingly "to guard against possible misuse," Seitzinger v. Reading Hosp. Med. Ctr., 165 F.3d 236, 240 (3d Cir. 1999), this caution should not enfeeble the primary function of the doctrine, which is to "prevent a party from profiting from its own wrongdoing." Lake, 232 F.3d at 370 (citing Oshiver v. Levin, Fishbein, Sedran Berman, 38 F.3d 1380, 1388 (3d Cir. 1994).
Equitable tolling may be appropriate in three general scenarios: (1) when the defendant has actively misled the plaintiff respecting the facts which comprise the plaintiff's cause of action; (2) when the plaintiff in some extraordinary way has been prevented from asserting her rights, or (3) when the plaintiff has timely asserted her rights in the wrong forum. U.S. v. Midgley, 142 F.3d 174, 179 (3d Cir. 1998) (quoting Kocian v. Getty Refining Mktg. Co., 707 F.2d 748, 753 (3d Cir. 1983)). Equitable tolling is therefore "appropriate in order to avoid unjust results where there has been fraudulent concealment." Solar v. Millenium Fin., Inc., No. CIV.A. 01-CV-4327, 2002 WL 1019047, at *2 (E.D.Pa. 2002). Furthermore, to meet the standard of equitable tolling, a plaintiff must demonstrate that she "exercised reasonable diligence in investigating and bringing the claims." Miller v. New Jersey Dep't of Corrections, 145 F.3d 616, 618-19 (3d Cir. 1998); see also U.S.J.D.M. Materials Co. v. Fireman's Fund Ins. Co., No. CIV. A. 98-CV-5186, 1999 WL 94614, at *2 (E.D.Pa. 1999).
In evaluating the merits of the plaintiff's equitable tolling argument, this court is struck by the similarity between this case and Solar v. Millenium Fin., Inc., 2002 WL 1019047 (E.D.Pa. 2002). In Solar, a plaintiff suffering from a learning disability brought damages and rescission claims against EquiCredit under RESPA, TILA, and HOEPA. Id. at *1. Plaintiff alleged that EquiCredit, through the solicitations of a mortgage brokerage corporation, deceived plaintiff into applying for a substantial loan, denied this loan without notifying plaintiff, offered a second loan with an increased sum and interest rate, and then, after the closing of the second loan, required plaintiff to refinance this second loan because of a discrepancy between her signature on the loan documents and her signature on her identification. Id. The refinanced loan documents again increased the fees charged and the interest rate. Id. The refinanced loan documents also overstated plaintiff's monthly income, failed to list any deductions or living expenses paid monthly by plaintiff, and included kickback fees to the mortgage brokerage corporation that brokered the deal. Id. When plaintiff requested that EquiCredit rescind the loan and terminate the security interest in plaintiff's home, EquiCredit refused. Id.
Like Ms. Smith, the plaintiff in Solar failed to bring her non-rescission based claims within the one-year statute of limitations, and the defendant filed a motion to dismiss. Id. at *2. In rejecting EquiCredit's motion to dismiss, the court held that the allegations in the plaintiff's complaint articulated circumstances in which "equitable tolling may be appropriate." Id. at *3. The court emphasized the relevance of three particular facts: the plaintiff's mental infirmity, which might have presented the plaintiff from understanding the intricacies of the loan agreement; the alleged false representations and failed disclosures by EquiCredit; and EquiCredit's financial exploitation of the fiduciary relationship between the plaintiff and her broker. Id. These facts implicitly satisfied both the circumstances prong and the reasonable diligence prong of the equitable tolling standard. Id.
This court finds the reasoning in Solar persuasive. As in Solar, the plaintiff presents allegations that indicate an active attempt on the part of EquiCredit both to intentionally mislead the plaintiff and to fraudulently conceal from her the facts that form the predicate for her legal claim, thereby meeting the first prong of the test. For instance, plaintiff alleges that EquiCredit's agent falsely promised at settlement to reduce the plaintiff's monthly payment, that EquiCredit never disclosed the increased interest rate and the special HOEPA form either pre- or post-settlement, and that EquiCredit failed to adequately explain the referral fee scheme, the broker fees, and the other settlement costs. (See Compl. ¶¶ 62, 72, 74, 75). Plaintiff also alleges that EquiCredit clandestinely intruded upon and tainted the borrower/broker fiduciary relationship by offering "substantial compensation, based on the amount of the loans made and the profitability of the loan in exchange for Gelt steering its clients to defendant EquiCredit to obtain their loans." (See Compl. ¶ 6). Moreover, by emphasizing in its reply that the plaintiff alleges concealment of the settlement charges and interest rate, allegations that must be accepted as true for purposes of this motion, the defendant effectively acknowledges that Ms. Smith has satisfied the first prong of the equitable tolling standard. (See Def.'s Repl. at 5).
Ms. Smith also presents allegations that, if true, demonstrate both that she exercised reasonable diligence in pursuing her claims and that, despite this diligence, she could not have brought the non-rescission related claims within one-year of the numerous violations. First, like the plaintiff in Solar, Ms. Smith alleges a substantial disability that prevented her not only from understanding the nuances of the loan agreement, but also from appreciating the statutory violations that stemmed from this agreement and from promptly taking with expedition the requisite legal steps to challenge those violations legally. (See Compl. ¶¶ 43,44). Second, Ms. Smith hired an attorney and notified EquiCredit that she wanted to rescind the loan on October 25, 2000, thereby indicating her desire to pursue diligently whatever legal claims might stem from EquiCredit's misconduct and non-disclosures. (See Compl ¶ 85). Third, also like the plaintiff in Solar, Ms. Smith trusted her fiduciary-broker (Gelt) to seek the lowest interest rate and the most suitable terms. (See Compl. ¶¶ 6, 25). Rather than securing the plaintiff's best interests, however, Gelt ignored this duty, referred the loan to EquiCredit as part of the "kickback" arrangement, and then conspired with EquiCredit to exploit the "unsophisticated" nature of Ms. Smith. (See Compl. ¶¶ 16, 18, 25, 43). Because of EquiCredit's misconduct, the person who should have protected plaintiff because of her vulnerability harmed plaintiff by exploiting her mental condition and her acute financial need. See, cf., Lake, 232 F.3d at 371 (equitable tolling appropriate where a guardian conspires to deprive a mentally incompetent person of her constitutional and civil rights).
Although the statute of limitations for consumer lending statutes would be eviscerated by the liberal application of equitable tolling, the facts alleged by Ms. Smith, if true, describe one of those unusual situations in which application of the equitable tolling doctrine is warranted. Denying equitable tolling in a situation such as Ms. Smith has alleged "would allow lenders to avoid liability through intentionally fraudulent actions using a statute designed to prohibit that same conduct." Ramadan, 156 F.3d at 502. Ms. Smith has alleged facts that, if proven, may toll the one-year statute of limitations under RESPA, TILA, and HOEPA in conformity with the remedial purposes behind these statutory schemes. Accordingly, EquiCredit's motion to dismiss count I, count II (excepting the rescission claim), and count IV (excepting the rescission claim) of plaintiff's complaint will be denied. An order to this effect accompanies this memorandum.
ORDER
AND NOW, this 4th day of October, 2002, upon consideration of defendant EquiCredit Corporation's motion to dismiss count I, count II (excepting the rescission claim), and count IV (excepting the rescission claim) of the complaint, plaintiff's response, and defendant's reply, for the reasons stated in the memorandum accompanying this order, IT IS HEREBY ORDERED that defendant's motion is DENIED.