Neto v. Rushmore Loan Management Services, Inc. et al
MEMORANDUM OPINION (c/m to Plaintiff 3/7/17 sat). Signed by Judge Deborah K. Chasanow on 3/7/2017. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Civil Action No. DKC 16-1056
RUSHMORE LOAN MANAGEMENT
SERVICES, INC., et al.
Presently pending and ready for resolution in this consumer
lending case are motions to dismiss filed by Defendant Alba Law
Group, P.A. (“Alba”) (ECF No. 5) and Defendant Rushmore Loan
Management Services, Inc. (“Rushmore”) (ECF No. 9).
have been briefed, and the court now rules, no hearing being
Local Rule 105.6.
For the following reasons,
the motions to dismiss will be granted.
(“Plaintiff”) agreed to a note and deed of trust with Wells
Fargo Bank, N.A. (“Wells Fargo”).
(ECF No. 1 ¶ 2).
eventually defaulted on his loan, and in 2012 Wells Fargo or its
agents initiated foreclosure proceedings in the Circuit Court
for Prince George’s County, Maryland.
(ECF Nos. 1 ¶ 2; 5-3, at
The facts outlined here are set forth in the complaint or
judicially noticeable court documents. The facts are construed
in the light most favorable to Plaintiff.
During the foreclosure proceedings, Wells Fargo assigned
the deed of trust to US Bank National Association (“US Bank”).
Plaintiff’s mortgage servicer as a result of this assignment.
(Id. ¶ 4).
The complaint is not clear as to when Alba, a law
group that specializes in debt collection and litigation, became
involved, but, at some point, Alba began working with Rushmore
to litigate the foreclosure and debt collection. (Id. ¶¶ 66,
After Rushmore became the servicer of his mortgage loan,
Plaintiff requested an application for loan modification.
Plaintiff’s agent then submitted Plaintiff’s application
and began negotiating for a loan modification with Rushmore.
(Id. ¶¶ 20-22).
On April 8, 2015, a Rushmore representative
called Plaintiff and notified him that his loan modification
contacted Rushmore seeking an explanation for the denial of the
Plaintiff had never submitted any bank statements to Rushmore, a
Rushmore representative initially told Plaintiff’s agent that
the loan modification had been denied because of information in
his bank statements.
(Id. ¶ 29).
The following day, however,
because the amount of Plaintiff’s “good faith down payment” was
insufficient to offer a loan modification.
(ECF Nos. 1 ¶ 31; 1-
1, at 2).
modification, Plaintiff had filed bankruptcy proceedings in 2013
in the U.S. Bankruptcy Court for the District of Maryland, which
led to an automatic stay in the foreclosure proceedings.
No. 1 ¶¶ 20, 39).
On June 5, 2015, the bankruptcy court removed
the stay in the foreclosure proceedings and allowed Rushmore to
move forward toward foreclosure.
(Id. ¶ 39).
Rushmore completed the foreclosure sale.
On September 15,
(Id. ¶ 40).
filing deadline, (2) vacate the sale, and (3) stay or dismiss
the foreclosure proceedings (the “Motion to Vacate Sale”).
In it he raised several purported violations of the
Real Estate Settlement and Procedures Act (“RESPA”), 12 U.S.C. §
2601, et seq., including failure to provide accurate information
under 12 C.F.R. § 1024.40(b)(1), failure to implement proper
1024.38(b)(2)(v), violations of the “dual tracking” prohibition
in section 1024.41(g), and inadequate denial disclosure under
(ECF No. 5-5, at 17, 19, 20, 22).
31, 2016, the circuit court denied Plaintiff’s motion, finding
there was “no good cause to excuse the untimeliness [because
(ECF No. 5-6).
On April 8, 2016, Plaintiff filed the instant action.
In his nine claims, he raises the same four violations
of RESPA (Counts I-IV); claims for negligence (Count V) and
Consumer Debt Collection Act (Count VII), the Maryland Consumer
Practices Act (Count IX).
Plaintiff alleges violations
by Rushmore in all nine counts, and Alba’s participation in, and
liability for, Counts VI, VII, and IX.
pending motion to dismiss on May 3.
Alba filed its
(ECF No. 5).
responded May 19 (ECF No. 7), and Alba replied June 3 (ECF No.
Rushmore filed its motion to dismiss on July 7.
Plaintiff responded to that motion on July 25 (ECF No. 10),
and Rushmore replied on August 11 (ECF No. 13).
Standard of Review
The purpose of a motion to dismiss under Rule 12(b)(6) is
to test the sufficiency of the complaint.
Presley v. City of
Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).
need only satisfy the standard of Rule 8(a), which requires a
“short and plain statement of the claim showing that the pleader
is entitled to relief.”
still requires a ‘showing,’ rather than a blanket assertion, of
entitlement to relief.”
544, 555 n.3 (2007).
Bell Atl. Corp. v. Twombly, 550 U.S.
That showing must consist of more than “a
formulaic recitation of the elements of a cause of action” or
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted).
complaint must be considered as true, Albright v. Oliver, 510
construed in the light most favorable to the plaintiff.
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783
(4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d
unsupported legal allegations need not be accepted.
Charles Cty. Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989).
Iqbal, 556 U.S. at 678, as are conclusory factual allegations
Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see
also Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009).
“[W]here the well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct, the complaint has
alleged, but it has not ‘show[n] that the pleader is entitled to
Thus, “[d]etermining whether a complaint states a
plausible claim for relief will . . . be a context-specific task
experience and common sense.”
held to a less stringent standard than pleadings drafted by
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quoting
Estelle v. Gamble, 429 U.S. 97, 106 (1976)); Haines v. Kerner,
404 U.S. 519, 520 (1972).
Liberal construction means that the
court will read the pleadings to state a valid claim to the
extent that it is possible to do so from the facts available; it
does not mean that the court should rewrite the complaint to
include claims never presented.
1128, 1132 (10th Cir. 1999).
Barnett v. Hargett, 174 F.3d
That is, even when pro se litigants
are involved, the court cannot ignore a clear failure to allege
facts that support a viable claim.
Weller v. Dep’t of Soc.
Servs., 901 F.2d 387, 391 (4th Cir. 1990); Forquer v. Schlee, No.
(citation and internal quotation marks omitted) (“[E]ven a pro
se complaint must be dismissed if it does not allege a plausible
claim for relief.”).
standing in this case by arguing that he is alleging statutory
violations without reference to a particularized concrete harm.
“fraudulent denial” of his application for loan modification,
and that “but for this fraudulent denial, Plaintiff would have
received a modification of his loan and would not have lost the
value of his investment in the home made over the eleven year
period since 2004,” which he estimates to be more than $30,000.
(ECF No. 1 ¶ 42).
This alleged harm is sufficient to meet the
injury requirement under the standing doctrine.
Defendants next argue that Plaintiff’s claims are barred
under the Rooker-Feldman doctrine.
(ECF Nos. 5, at 4-7; 9-1, at
Under the Rooker-Feldman doctrine, federal courts lack
judicial determinations made in state courts.
Appeals v. Feldman, 460 U.S. 462 (1983);
Trust Co., 263 U.S. 413 (1923).
See D.C. Court of
Rooker v. Fidelity
“[J]urisdiction to review such
ultimately, the United States Supreme Court.”
Plyler v. Moore,
129 F.3d 728, 731 (4th Cir. 1997); see 28 U.S.C. § 1257(a).
Accordingly, Rooker-Feldman bars “cases brought by state-court
losers complaining of injuries caused by state-court judgments
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544
U.S. 280, 284 (2005).
“Courts have consistently applied the
Nott v. Bunson, No. WMN-09-2613, 2009
WL 3271285, at *2 (D.Md. Oct. 9, 2009) (citing Poydras v. One
West Bank, No. 9–11435, 2009 WL 1427396 (E.D.Mich. May 20, 2009)
(collecting cases)); see also Ogunsula v. Holder, No. GJH-151297,
foreclosure on and eviction from her home, her claim is not
appropriately brought in this Court.”).
In recent years, the Supreme Court has sought “to refocus
lower courts that had extended the Rooker-Feldman doctrine ‘far
beyond the contours of the Rooker and Feldman cases . . . .’”
Smalley v. Shapiro & Burson, LLP, 526 F.App’x 231, 237 (4th Cir.
2013) (unpublished opinion) (quoting Exxon, 544 U.S. at 283).
The United States Court of Appeals for the Fourth Circuit has
since emphasized that preclusion doctrines, not Rooker-Feldman,
should be applied unless the state court proceedings were the
Charles Cty., Md., 827 F.3d 314, 320 (4th Cir. 2016); Smalley,
526 F.App’x at 237 and n.2.
As the Fourth Circuit recently
principles and the Rooker-Feldman doctrine
address the tension between two concurrent,
independent suits that results when the two
suits address the same subject matter,
claims, and legal principles.
appealing a state court judgment to the
Supreme Court under 28 U.S.C. § 1257(a) has
been sidetracked by an action filed in a
district court specifically to review that
state court judgment.
Thus, if a plaintiff
in federal court does not seek review of the
state court judgment itself but instead
“presents an independent claim, it is not an
jurisdiction that the same or a related
question was earlier aired between the
parties in state court.”
Thana, 827 F.3d at 320 (citations omitted).
Here the relevant
state court judgment is the foreclosure and sale of Plaintiff’s
Although Defendants argue that Plaintiff is
merely mounting a collateral attack on the foreclosure sale,
Plaintiff maintains that “the state court judgment is not the
source of the injury” here; rather, the injury he alleges is
that Defendants “knowingly and intentionally” violated RESPA.
denial” of his loan modification and the corresponding monetary
(ECF No. 1 ¶ 42).
Because the harm alleged is
distinct from the foreclosure judgment, Plaintiff’s claim is not
barred under the Rooker-Feldman doctrine.
RESPA “is a broad remedial statute intended to provide American
consumers with more information about the real estate settlement
charges caused by certain abusive practices.’”
Farber v. Brock
& Scott, LLC, No. TDC-16-0117, 2016 WL 5867042, at *3 (D.Md.
codified at 12 C.F.R. §§ 1024.1–1024.41.
Plaintiff alleges that
Rushmore failed to provide accurate information under Regulation
X, section 1024.40(b)(1) (Count I); violated the “dual tracking”
inadequate denial disclosures under section 1024.41(d) (Count
III); and failed to implement proper loss mitigation evaluation
policies under section 1024.38(b)(2)(v) (Count IV).
(ECF No. 1
Defendants argue that res judicata applies to Counts I-IV
because Plaintiff raised these same issues in the Motion to
Vacate Sale in the foreclosure case.
(ECF Nos. 5, at 7 n.3; 9-
arising out of the same transaction and asserting breach of the
Mcghee v. JP Morgan Chase Bank, N.A., DKC-12-3072,
2013 WL 4495797, at *4 (D.Md. Aug. 20, 2013) (citing Nilsen v.
City of Moss Point, Miss., 701 F.2d 556, 563 (5th Cir. 1983)).
The principle of res judicata encompasses two concepts: claim
preclusion and issue preclusion, or collateral estoppel.
(citing Allen v. McCurry, 449 U.S. 90, 94 (1980)).
A court may consider the affirmative defense of res
judicata and documents from the underlying case on a motion to
Andrews v. Daw, 201 F.3d 521, 524 n.1 (4th Cir. 2000)
(“Although an affirmative defense such as res judicata may be
raised under Rule 12(b)(6) only if it clearly appears on the
face of the complaint, when entertaining a motion to dismiss on
the ground of res judicata, a court may take judicial notice of
facts from a prior judicial proceeding when the res judicata
defense raises no disputed issue of fact.”); Lara v. Suntrust
Mortgage Inc., No DKC-16-0145, 2016 WL 3753155, at *1 n.1, *6
(D.Md. July 14, 2016) (considering “relevant documentation
regarding the Property and the foreclosure proceeding and sale”
attached by Defendants to a motion to dismiss to substantiate a
claim of res judicata); Green v. Wells Fargo Bank, N.A., 927
F.Supp.2d 244, 246 n.2 (D.Md. 2013).
Plaintiff raised his RESPA arguments as defenses rather than
counterclaims in the foreclosure case, Defendants’ res judicata
arguments are best viewed under the rubric of issue preclusion,
which “bars a party from re-litigating an issue that he or she
has already litigated unsuccessfully in another action.”
v. HSBC Bank USA, N.A., No. RWT-09-2904, 2011 WL 382371, at *3
(D.Md. Feb. 3. 2011) (quoting Culver v. Md. Ins. Comm’r, 175
Md.App. 645, 653 (2007)).
In Maryland, issue preclusion has
four elements: “(1) the issue decided in the prior adjudication
must have been identical to the one in the present action; (2)
there must have been a final judgment on the merits in the first
action; (3) the party against whom the plea is asserted must
have been a party to the prior adjudication; and (4) the party
against whom the plea is asserted must have been given a fair
opportunity to be heard on the issue.”
DeCosta v. U.S. Bancorp,
No. DKC 10-0301, 2010 WL 3824224, at *6 (D.Md. Sept. 27, 2010)
(citing Culver, 175 Md.App. at 657).3
Plaintiff does not dispute the first and third elements of
Rather, he admits that the Motion to Vacate
Sale was “based upon Defendant Rushmore’s failure and refusal to
comply with a number of loss mitigation rules and regulations
Maryland law applies because “a federal court must give to
a state-court judgment the same preclusive effect as would be
given that judgment under the law of the State in which the
judgment was rendered.”
Migra v. Warren City School Dist. Bd.
of Educ., 465 U.S. 75, 81 (1984).
which are indeed the subject of the instant action.”
7, at 4).
He argues instead that the second element of issue
preclusion has not been met.
Plaintiff contends that the court
“denied the motion as an insufficient basis” for excusing his
untimeliness, and therefore its decision was based on procedural
grounds, not the merits.
(Id. at 5).
He also suggests that he
was not given a full and fair opportunity to litigate these
Although Plaintiff is correct that the court announced its
incorrect that the court did not provide him a full and fair
opportunity to litigate the issues or that it did not address
the merits of his arguments.
The court’s docket and order show
that the motion was fully briefed by the parties; his opponent
(ECF Nos. 5-3, at 3; 5-6 (court’s memorandum and
Plaintiff applies the res judicata standard for claim
preclusion to his “full and fair opportunity” arguments.
No. 7, at 5-6).
He argues that that he could not have raised
these issues as counterclaims in the foreclosure proceedings
because he was limited by Maryland Rule 14-211 which prescribes
the limited means in which a borrower may challenge a
The doctrine of issue preclusion does
not require that the duplicated legal issues be claims or
counterclaims, as the doctrine of claim preclusion does, so
these arguments are inapplicable here.
Rule 14-211 did not
prevent Plaintiff from making the same RESPA arguments in his
Motion to Vacate Sale as he does here.
specifically stated that Plaintiff had “fail[ed] to identify any
legitimate procedural irregularity regarding the September 18,
untimeliness, the circuit court found that his motion did not
“state a valid defense or present meritorious argument.”
Plaintiff attempts to overcome these findings by arguing that
the circuit court’s determination that his arguments were not
meritorious “is not to say that the underlying facts presented
in support thereof were not meritorious or true.”
(ECF No. 7,
Plaintiff’s hair-splitting reference to the underlying
facts does not affect the applicability of issue preclusion here
asserting breach of the same duty.”
The state court appears to
have considered the merits of Plaintiff’s arguments, even if it
At least some of Plaintiff’s arguments would have been
rejected because, inter alia, no private cause of action exists
for the RESPA violations he alleged.
See Agomuoh v. PNC
Financial Services Group, No. GJH-16-1939, 2017 WL 657428, at
*10 (D.Md. Feb. 16, 2017) (finding that no private cause of
action existed under § 1024.38 and § 1024.40 and citing cases).
See generally Schmidt v. Pennymac Loan Services, LLC, 106
F.Supp.3d 859, 867-71 (E.D.Mich. 2015) (describing the RESPA
statute in the U.S. Code and the recent history of Regulation
Accordingly, res judicata applies to Plaintiff’s RESPA claims,
and they will be dismissed.
Plaintiff’s Other RESPA-Based Claims
Several of Plaintiff’s other claims rely on the underlying
RESPA violations as a foundation.
Because these claims cannot
proceed in the face of the state court’s ruling on Plaintiff’s
Motion to Vacate Sale, these claims will also be dismissed.
Plaintiff’s negligence claim in Count V is premised on the
fact that Rushmore had a duty to comply with the requirements of
RESPA and breached that duty.
Because this duty and breach are
rejected as lacking merit in Plaintiff’s Motion to Vacate Sale,
issue preclusion similarly dictates that this claim fails.
(ECF No. 1 ¶ 66).
A claim of civil conspiracy
requires Plaintiff to allege: “1) A confederation of two or more
tortious act done in furtherance of the conspiracy or use of
unlawful or tortious means to accomplish an act not in itself
illegal; and 3) actual legal damage resulting to the plaintiff.”
Windesheim v. Larocca, 443 Md. 312, 347 (2015).
not a separate tort capable of independently sustaining an award
Haley v. Corcoran, 659 F.Supp.2d 714, 726 (D.Md.
Foundation, Inc., 340 Md. 176, 189 (1995)).
that Rushmore and Alba were aware of Rushmore’s RESPA violations
and pursued the foreclosure despite that knowledge.
(ECF No. 1
Because Plaintiff’s conspiracy claim is premised on
the “intentional negligence” described in Count V (id. ¶ 65),
there is no foundational tort to support an allegation of civil
See Clark v. Md. Dep’t of Pub. Safety & Corr.
substantive torts, his state law claim for civil conspiracy must
Accordingly, this claim will be dismissed as well.
The Fair Debt Collection Practices Act (“FDCPA”) protects
deceptive debt collection practices.
See United States v. Nat’l
Fin. Servs., Inc., 98 F.3d 131, 135 (4th Cir. 1996).
alleges that Defendants violated the FDCPA by proceeding to a
foreclosure sale when they were prohibited from doing so because
of the purported RESPA violations.
(ECF No. 1 ¶ 79).
court’s determination that Plaintiff’s RESPA arguments lacked
merit therefore precludes him from succeeding on this claim, and
it will be dismissed.
MCDCA and MCPA
Consumer Debt Collection Act (“MCDCA”) and the Maryland Consumer
Protection Act (“MCPA”).
(ECF No. 1 ¶¶ 69-74).
provides that in collecting or attempting to collect an alleged
including “claim[ing], attempt[ing], or threaten[ing] to enforce
a right with knowledge that the right does not exist.”
Ann., Commercial Law § 14–202(8).
To plead a claim under the
MCDCA, a plaintiff must allege show that: (1) that Defendants
did not possess the right to collect the amount of debt sought;
and (2) that Defendants attempted to collect the debt knowing
that they lacked the right to do so.
See Pugh v. Corelogic
Credco, LLC, No. DKC 13–1602, 2013 WL 5655705, at *4 (D.Md. Oct.
Courts have held that, even where there might have
been procedural defects committed under the applicable statutes
violation of the MCDCA where it is undisputed that the borrower
has defaulted on the loan.
Agomuoh, 2017 WL 657428, at *11
(dismissing MCDCA claim because plaintiffs were “undeniably in
default”); Currie v. Wells Fargo Bank, N.A., 950 F.Supp.2d 788,
802 (D.Md. 2013); Marchese v. JPMorgan Chase Bank, N.A., 917
F.Supp.2d 452, 464 (D.Md. 2013) (holding that MCDCA does not
allow “recovery based on errors or disputes in the process or
procedure of collecting legitimate, undisputed debts”); Stovall
v. SunTrust Mortg., Inc., RDB–10–2836, 2011 WL 4402680, at *9
defaulted on his loan.
(ECF No. 1 ¶ 2).
He therefore fails to
state a claim under the MCDCA.
The MCPA establishes that the violation of several other
enumerated Maryland statutes, including the MCDCA, constitutes
unfair or deceptive trade practices proscribed by the MCPA.
generally Md.Code Ann., Commercial Law § 13–301(14) (enumerating
Plaintiff’s MCPA claim was based on the
alleged MCDCA violation described above.
Because he has not
properly pleaded an MCDCA violation, his MCPA claim premised on
an MCDCA violation will also be dismissed.
For the foregoing reasons, the motions to dismiss filed by
separate order will follow.
DEBORAH K. CHASANOW
United States District Judge
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