Estate of Russell E. Morgan Sr. et al v. BWW Law Group, LLC et al

Filing 69

MEMORANDUM OPINION. Signed by Magistrate Judge Charles B. Day on 7/2/2019. (jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
(SOUTHERN DIVISION)
ESTATE OF RUSSELL MORGAN, et al.,
Plaintiffs,
v.
BWW LAW GROUP, LLC, et al.,
Defendants.

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Civil Action No. CBD-18-170

MEMORANDUM OPINION
Before the Court is Defendants BWW Law Group, LLC, Rushmore Loan Management,
and U.S. Bank National Association’s Motion to Dismiss Second Amended Complaint or, in the
alternative, for Summary Judgment (“Defendants’ Motion”)(ECF No. 49). The Court has
reviewed Defendants’ Motion and the memoranda related thereto. No hearing is deemed
necessary. Local Rule 105.6 (D. Md.). For the reasons set forth below, the Court GRANTS IN
PART AND DENIES IN PART Defendants’ Motion.
I.

Motion to Dismiss Standard of Review

Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it
fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, No. RDB-12-237,
2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule’s purpose “is to test the sufficiency
of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the
applicability of defenses.” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th
Cir. 2006)). In doing so, the Court must keep in mind the requirements of Fed. R. Civ. P. 8, Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009),
when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must

contain “a short and plain statement of the claim showing that the pleader is entitled to relief,”
Fed. R. Civ. P. 8(a)(2), and must state “a plausible claim for relief,” as “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice,”
Iqbal, 556 U.S. at 678–79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from
Iqbal and Twombly).
“A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. At this stage of the proceedings, the Court must accept the well pled facts
alleged in complaint as true. See Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir. 2011).
II.

Motion for Summary Judgment Standard of Review

A Court may grant summary judgment, Awhen the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.@ Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Felty v.
Graves-Humphreys, 818 F.2d 1126, 1128 (4th Cir. 1987).
The Court must view facts and all reasonable inferences in favor of the nonmoving party
in order to ascertain whether a genuine issue of material fact exists. Pulliam Inv. Co. v. Cameo
Properties, Inc., 810 F.2d 1282, 1286 (4th Cir. 1987); Ross v. Communications Satellite Corp.,
759 F.2d 355, 364 (4th Cir. 1985).
However, the mere existence of some disputed facts does not automatically foreclose
summary judgment. Thompson Everett, Inc. v. National Cable Advertising L.P., 57 F.3d 1317,
1322 (4th Cir. 1995). AFactual disputes that are irrelevant or unnecessary will not be counted.@
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Rather, the disputed facts must be

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Amaterial to an issue necessary for the proper resolution of the case,@ and Athe quality and
quantity of evidence offered to create a question of fact must be adequate to support a jury
verdict.@ Thompson, 57 F.3d at 1323.
The burden of demonstrating that no genuine issue of fact exists and that one is entitled to
judgment as a matter of law is on the moving party. Barwick v. Celotex Corp., 736 F.2d 946,
958 (4th Cir. 1984). The ultimate question is whether a reasonable fact finder could return a
verdict for the non-movant or whether the movant, at trial, would be entitled to judgment as a
matter of law. See, Celotex, 477 U.S. at 327; Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir.
1991).
III.

The Court Will Not Convert the Motion to Dismiss into a Motion for
Summary Judgment.

The Court is of the view that it is premature to consider Defendants’ alternative pleading
seeking summary judgment. Converting a motion to dismiss into a motion for summary
judgment is not appropriate where a party has not had the opportunity to conduct reasonable
discovery. Gay v. Wall, 761 F.2d 175, 178 (4th Cir. 1985). Typically, summary judgment
should be denied “where the nonmoving party has not had the opportunity to discover
information that is essential to his opposition.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250 n.5 (1986).
Despite this black letter law, the non-moving party has an affirmative obligation to
overcome the motion couched in the alternative: there must be a representation of the need to
obtain discovery. A Rule 56 affidavit should be filed when facts are unavailable to the nonmoving party. This affidavit should articulate the areas where reasonable discovery is likely to
bear fruitful information that may defeat the motion for summary judgment. Fed. R. Civ. P.
56(d) (“If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot
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present facts essential to justify its opposition” then the court may defer or deny the motion,
allow discovery, or make any other appropriate order.”) Harrods Ltd. v. Sixty Internet Doman
Names, 302 F.3d 214 (4th Cir. 2002).
Plaintiffs have followed the letter of the law here. Plaintiffs have provided the necessary
affidavit in support of their need to obtain discovery which they reasonably contend is in the
exclusive control of Defendants. Decl. of Counsel in Supp. of Pls.’ Mot. to Allow Time for
Disc. Under Rule 56(d). ECF No. 52-1. Upon reviewing this submission, the Court is persuaded
that this supporting affidavit is not mere boilerplate, but substantively addresses a laundry list of
areas for needed discovery. Accordingly, the Court will not consider Defendants’ Motion for
summary judgment, nor consider materials outside of the Second Amended Complaint (“SAC”).
IV.

Plaintiffs’ Fair Debt Collection Protection Act Claims.

Defendants challenge Plaintiffs’ Fair Debt Collection Act (“FDCPA”) claims on several
levels. The FDCPA can be found at 15 U.S.C. § 1692 et. seq. (1997).
A.

The Cure Amount and the Ability to Foreclose.

Plaintiffs contend that
[o]n October 18, 2018, Rushmore sent Plaintiff a
Notice of Intent to Foreclose, which overstated the
cure amount as $135,402.75 . . . . The claimed cure
amount was nearly $12,000 more than the amount
claimed due in the August mortgage statement.
Because the monthly payment was only $2,521.11
and only two months had elapsed before Rushmore
claimed the amount increased by $12,000,
Rushmore knew the amount stated in the Notice of
Intent was patently false.
SAC ¶ 56. Furthermore, Plaintiffs assert that “Rushmore violated §1692e(2),(5)&(10) by
misrepresenting and/or falsely representing in the Notice of Intent from October 2018 that US

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Bank, Rushmore or BWW the cure amount and misrepresenting that they could foreclose on
Plaintiff’s Property.” SAC ¶ 61.
Defendants argue that these statements are not sufficient to make a plausible claim that
the cure amount reflected in the Notice of Intent to Foreclose (“NOI”) was false. Defendants
state that Plaintiffs have failed to plead specific facts to show that the stated amount is false.
Regarding the cure amount, the Court at this stage of the proceedings is not inclined to
consider Defendants offer of additional facts beyond the four corners of the SAC. As stated by
Plaintiffs, a two-month failure to make monthly payments of less than $2600 per month, should
not equate to a nearly $12,000 bonus. Plaintiffs’ claim is plausible and satisfies the dictates of
Fed. R. Civ. P. 8.
B.

Plaintiffs Do Not Have to Satisfy the Heightened Pleading
Requirement of Fed. R. Civ. P. 9(b).

Defendants suggest that Plaintiffs must satisfy the higher burden set by Fed. R. Civ. P.
9(b). The Court respectfully disagrees. While there are decisions in different federal courts
which support the views of both parties, the Court finds most persuasive the reasoning of Neild
v. Wolpoff & Abramson, LLP, 453 F. Supp. 2d 918 (E.D. Va. 2006). In Neild, the court noted
that the issue appeared to be one of first impression in the Fourth Circuit. Even within the
Fourth Circuit there have been federal courts that look to whether the gravamen of the offense is
fraud and requiring more specific pleading even if the claim is not technically labeled as such.
Id. at 923. Yet, when looking to Virginia’s common law fraud claims, which are very akin to
those in Maryland, the court noted several meaningful distinctions from an FDCPA claim. These
distinctions under the FDCPA include: 1) no need to prove reliance on a false representation; 2)
no need to show actual damages; and, 3) no need to show scienter. Id. Similarly, this Court
ruled long ago that “the FDCPA is a strict liability statute.” Spencer v Hendersen-Webb, Inc., 81
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F. Supp. 2d 582, 590 (D. Md. 1999). Accordingly, the “gravamen” of a FDCPA claim is not
fraud, and Plaintiffs are not required to satisfy Fed. R. Civ. P. 9(b). Here it appears that there
was more than a doubling of potential amounts due. The Court is persuaded that Plaintiffs have
satisfied the pleading requirements of Fed. R. Civ. P. 8.
C.

Default and the Holder of the Note.

Defendants additionally seek dismissal claiming the SAC is defective when asserting that
Rushmore lacked authority to enforce the loan through foreclosure while at the same time
acknowledging in paragraph 18 that the mortgage loan had been declared in default. Plaintiffs
contend in paragraph 18 that Nationstar declared the default, and here argue that this was no
acknowledgement of default, merely Nationstar’s declaration. Furthermore, Plaintiffs make
clear that the reason Defendants lacked authority to foreclose is because Rushmore was not the
holder of the Note. SAC ¶ 59. To this argument, Defendants remain silent in their reply
briefing.
A person obligated on a promissory note is known as the “maker” of the note. Under
Maryland law, the maker must pay the obligation to “a person entitled to enforce the instrument
or to an indorser who paid the instrument . . . .” Md. Code Ann., Com. Law, §3-412 (LexisNexis
2013 Repl. Vol.). Generally, a promissory note may be enforced by the “holder” of the note or a
nonholder who has the rights of a holder or a person entitled to enforce the note under special
circumstances recognized by statute. Md. Code Ann., Com. Law, §3-301 (LexisNexis 2013
Repl. Vol.). Accordingly, a “holder” is the person in possession of a note that is payable to
bearer or to an identified person that is a person in possession. Md. Code Ann., Com. Law, §1201(b)(21)(i) (LexisNexis 2013 Repl. Vol.). “Thus, the person in possession of a note, either

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specially indorsed to that person or indorsed in blank, is a holder entitled generally to enforce
that note.” Deutsche Bank Nat. Trust Co. v. Brock, 430 Md. 714, 729-30 (2013).
Plaintiffs correctly observe that the existence of default is not dispositive. The additional
concern is the proper entity to receive payment. Plaintiffs contend that Rushmore is not a proper
holder of the note. In fact, Plaintiffs contend that none of the defendants are proper holders and
demand proof of such. Furthermore, mere possession of the note is not sufficient to be a holder
entitled to payment. A holder entitled to payment must also have a note that is properly
endorsed. Anderson v. Burson, 424 Md. 232, 247 (2011). Plaintiffs have sufficiently alleged a
violation of this prong of the FDCPA.
D.

The Amount of Interest Due.

Defendants challenge Plaintiffs’ pleading regarding the prong of the FDCPA which
prohibits an attempt to collect by misrepresentation any interest that is claimed due. Plaintiffs’
pleading states that “Rushmore violated §1692e(2),(10) and f(1) by misrepresenting and/or
falsely representing the amount of interest that could be assessed on the loan.” SAC ¶ 62.
Defendants attack this averment by noting that Plaintiffs do “not plead facts establishing what
the correct interest rate is, what the interest rate charged by Rushmore was, and why Rushmore’s
interest rate was incorrect. Without these facts, Plaintiffs’ claim is conclusory and not viable.”
Defendants’ Motion 4. As stated earlier, the criticisms raised by Defendants might be more
persuasive if Plaintiffs were obligated to satisfy the heightened pleading requirements of Fed. R.
Civ. P. 9(b). Since this claim is governed by Fed. R. Civ. P. 8, the Court is satisfied that
Plaintiffs have pled sufficient facts to place Defendants on fair notice of the claim.

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E.

Awareness of Plaintiffs Being Represented by Counsel.

Plaintiffs allege that Rushmore violated the FDCPA by
sending debt communications – June and July 2018 letters, August
2018 mortgage statement, and October 2018 Notice of Intent –
directly to Plaintiff after June 5, 2018, at which time Plaintiffs’
counsel entered an appearance in Plaintiffs’ lawsuit against
Rushmore and the defendants, and the Defendant [Rushmore]
became aware that Plaintiffs were represented by an attorney with
respect to the subject mortgage debt.
SAC ¶ 64.
The FDCPA generally prohibits a debt collector from communicating directly with a
consumer if said collector has actual knowledge that the consumer is represented by counsel, and
if the debt collector knows of or can readily ascertain the attorney’s contact information. 15
U.S.C. 1692c(a)(2). Plaintiffs do not suggest that they provided a direct communication to
Rushmore to advise of counsel’s involvement. Plaintiffs’ view that Rushmore was on notice of
their legal representation is tethered to the electronic filing with the Court of the appearance of
counsel. This method of notification is sufficient, but only for a portion of Plaintiffs’ proposed
timeline
Plaintiffs filed an amended complaint with the Court on June 5, 2018. ECF No. 10.
Interestingly however, Plaintiffs did not seek the issuance of a summons regarding Rushmore
until July 18, 2018. ECF No. 17. There is nothing set forth in the SAC to infer that Rushmore
was aware of the involvement of counsel or even of the filing of a complaint before it was
actually served. The earliest date of Rushmore’s knowledge that could be inferred from the court
filings is July 25, 2018, a date which Rushmore concedes it participated in a telephone
conference with the Court regarding the case. ECF No. 19. Accordingly, the only
communications from Rushmore to Plaintiffs that are potentially actionable are those which post-

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date July 25, 2018. The SAC identifies debt communications allegedly occurring in August and
October 2018.
1.

The August 2018 Mortgage Statement.

Regarding the August 2018 mortgage statement, Rushmore brings to light the conflicting
obligations imposed on mortgage loan servicers under federal law. While the Real Estate
Settlement Procedures Act, 12 U.S.C. §2605 et seq. (“RESPA”) and the Truth in Lending Act,
15 U.S.C. §1601 et seq., (“TILA”) require Rushmore to send certain communications to a
consumer, the FDCPA has a provision giving the consumer the power to prohibit the same. The
“cease communications” provision of the FDCPA is found at 15 U.S.C. § 1692c(c).
Rushmore points out the role that the Consumer Financial Protection Bureau (“CFPB”)
has come to play in this area of consumer rights versus notifications required by law. Rushmore
relies upon a bulletin issued by the CFPB which relates to occasions when a consumer has
provided a “cease communication” instruction to a servicer. In that instance, the CFPB has
determined that continued deliveries by the servicer of periodic statements of the outstanding
debt for each billing cycle does not violate the FDCPA. Furthermore, this advisory opinion
provides a reminder that “no liability arises under the FDCPA for an act done or omitted in good
faith in conformity with an advisory opinion of the CFPB” while the opinion is in effect. CFPB
Bulletin 2013-12, October 15, 2013, 2013 WL 9001249.
Rushmore makes a point by comparison. Namely, if it is not a violation of the FDCPA
for a servicer to continue to comply with certain obligations under the rules and regulations
applicable to RESPA and TILA when a consumer by express authority has directed such
communications to cease; then sending such notifications in the absence of a cease
communications notice likewise should not be actionable.

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Again however, Plaintiffs’ contention is not that Rushmore is liable for sending the
periodic statement. Plaintiffs contend that the violation here is that Rushmore should have sent
the statement to Plaintiffs’ counsel. To this argument, Rushmore cites Vitullo v. Mancini, 684 F.
Supp. 2d 747 (E.D. Va. 2010). There the consumer contended that the direct communication
was prohibited as the servicer was aware of the representation by counsel. The court granted the
motion to dismiss as the servicer was merely complying with the notice obligations of state law.
Plaintiffs respond by relying upon Foster v. Green Tree Servicing, LLC, Case No. 8:15cv-1878-T-27MAP, 2017 WL 5151354 (M.D. Fl. Nov. 3, 2017). Like the court in Vitullo, the
Foster court dealt directly with the § 1692c(a) no direct contact with the consumer provision.
The consumers in Foster tried to distinguish a § 1692c(a) claim from a § 1692c(c) claim, and the
applicability of the CFPB Bulletin. The court’s reasoning however, was not driven by this
distinction. In ruling on the motion for summary judgment filed by the servicer, the court
observed that the consumers “also persuasively argue that [the servicer’s] billing statements
include debt collection language that is not required by either TILA or Regulation X or Z.” Id. at
*6. It was the inclusion of this additional language that overcame the servicers motion.
As noted by Rushmore here, Plaintiffs have not alleged that the August 2018 mortgage
“statement included extraneous debt collection attempts” or other information not required by the
TILA. Accordingly, the Court is persuaded that Plaintiffs have not sufficiently pled a plausible
cause of action regarding the August 2018 mortgage statement, as this statement was required to
be provided by federal law, the CFPB opinion provides reasonable guidance, and Plaintiffs have
failed to adequately allege debt collection activity beyond the federal notice requirement.

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2.

The October 2018 Notice of Intent to Foreclose.

The activity regarding the October 2018 NOI implicates state law collection procedures.
There is clear case law in the Fourth Circuit for the proposition that “actions surrounding”
foreclosure procedures are efforts to collect on a debt and are covered by the FDCPA. Wilson v.
Draper & Goldberg, PLLC, 443 F.3d 373, 376 (4th Cir. 2006). To the extent a debt collector is
obligated to comply with state law, it must do so in a way that is consistent with the requirements
of federal law. Where a conflict remains, the federal law prevails. Goodrow v. Friedman &
MacFadyen, PA, 788 F. Supp. 2d 464, 471 (E.D. Va. 2011).
Plaintiffs allege the NOI was sent by Rushmore. Rushmore seeks to challenge the
allegation on a substantive factual level, which is not permitted within the confines of a motion
to dismiss. It is inappropriate for the Court to consider Rushmore’s argument that the NOI was
actually sent by another entity. A.S. Abell Co. v. Chell, 412 F.2d 712, 715 (4th Cir. 1969).
Plaintiffs have alleged a plausible claim as it relates to the NOI.
V.

Plaintiffs’ Maryland Consumer Debt Collection Act Claims.

Defendants seek to dismiss Plaintiffs’ Maryland Consumer Debt Collection Act
(“MCDCA”) claims on several levels. The MCDCA can be found at Md. Code Ann., Com.
Law, §14-201 et seq. (LexisNexis 2013 Repl. Vol.).
Plaintiffs allege that Defendants violated the MCDCA by several different methods,
including by trying to make wrongful collections, or asserting rights not owned, by seeking to
collect for inflated amounts, for attempting to foreclose on a promissory note unlawfully, as well
as scheduling a foreclosure sale of Plaintiffs’ property without a legal basis. SAC ¶¶68-71.
Plaintiffs also allege that as a result, Plaintiffs endured damages “including out-of-pocket costs,
fear of losing the Property, worry about where he and his brother would live, anxiety about

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losing the family home, very heavy stress, severe headaches and stomach aches, sleepless nights,
eating disorders, excessive worry, [and] mental and emotional distress.” SAC ¶78.
Defendants move to dismiss the claim on the basis that “Plaintiff has failed to plead a
sufficient factual basis, . . . failed to plead that the loan is invalid, and failed to plead proximately
caused damages.” Defendants’ Motion 7.
Plaintiffs must “set forth factual allegations tending to establish two elements: (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.” Cole v.
Federal Nat’l Mortg. Ass’n, Case No. GJH-15-3960, 2017 WL 623465, at *7, (D. Md. Feb. 14,
2017) (citation omitted). Stated another way, the issues are whether Defendants had the power
to collect a certain amount, and Defendants knowledge that they did not.
Unlike claims under the FDCPA, MCDCA claims are premised upon fraudulent conduct
and as such must satisfy the heightened pleading requirements of Fed. R. Civ. P. 9(b). The rule
states that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” The guiding principles for illuminating the sufficiency of
allegations that satisfy this heightened standard are stated in Harrison v. Westinghouse Savannah
River Co., 176 F.3d 776 (4th Cir. 1999). There the court pointed out that the circumstances
required to be pled are, “the time, place and contents of the false representations, as well as the
identity of the person making the misrepresentation and what he obtained thereby.” Id. at 784.
Moreover, “conclusory allegations of defendant’s knowledge as to the true facts and of
defendant’s intent to deceive” are permissible.

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To the extent that Defendants object to a failure “to plead that the loan is invalid,” said
objection has no substance. Plaintiffs correctly rely upon a recent decision from this Court.
Defendants confuse the validity of a debt, and the methods one
takes to collect that debt. “Section 14–202(8) only makes
grammatical sense if the underlying debt, expressly defined to
include an alleged debt, is assumed to exist, and the specific
prohibitions are interpreted as proscribing certain methods of debt
collection rather than the debt itself.”
Cezair v. JPMorgan Chase Bank, N.A., Civ. A. No. DKC 13-2928, at *10 (2014 WL 4295048
(D. Md. Aug. 29, 2014) (citations omitted). Plaintiffs’ election not to plead that the debt was
“invalid” is of no moment here. Plaintiffs’ dispute centers on the amount of debt that they allege
Defendants had no right to seek.
A few of the factual underpinnings for Plaintiffs’ claims are set forth in some detail in the
SAC ¶¶ 32-38. In these sections alone, Plaintiffs articulate the claimed wrongful action of
Defendants in terms of inflated and improper amounts being sought by category and amounts;
the filing, service and scheduling of a foreclosure action seeking illegal amounts, and the reasons
why Plaintiffs believe the activities were illegal. Plaintiffs have alleged sufficient detail to
satisfy Rule 9(b). The time, place, and contents of the false representations are provided, as well
as the identities of the responsible entities. The SAC further alleges in ¶¶ 68, 70-71, and 75-76
the requisite knowledge and intent to deceive by Defendants.
When considering the averment in the SAC ¶ 56, the Court is similarly persuaded that
Plaintiffs have met the requirements to survive Defendants’ Motion. As stated earlier, a twomonth failure to make monthly payments of less than $2600 per month, should not equate to a
nearly $12,000 bonus. This satisfies the need to allege damages proximately caused. The
particulars of the other damage claims can be addressed as the case proceeds through discovery
and motions practice. Equally, Plaintiffs claim that “Defendants sought to foreclose on the
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property when they knew no right existed.” SAC ¶¶ 70-71. Accepting the well pled facts as
true, Plaintiffs have set forth a viable claim. As stated by this Court earlier, “Plaintiff has set
forth sufficient allegations tending to establish that Defendants did not possess the right to collect
the amount of debt sought and attempted to collect the debt knowing that they lacked the right to
do so.” Cole, at *8.
VI.

Plaintiffs’ Maryland Consumer Protection Act Claims.

Defendants seek to dismiss Plaintiffs’ Maryland Consumer Protection Act (“MCPA”)
claim against Rushmore and US Bank. The MCPA can be found at Md. Code Ann., Com. Law,
§13-101 et seq. (LexisNexis 2013 Repl. Vol.).
Plaintiffs contend that correspondence dated July 15, 2017, April 9, 2018 and April 30,
2018 was sent to Defendants and Defendants provided no response. SAC ¶ 82. Defendants’
view is that Plaintiffs state a different position in SAC ¶ 40.
Plaintiffs indicate that there is no semantic trickery, for the SAC ¶ 40 makes clear that as
for the July 2017 letter, Rushmore sent a letter of acknowledgement “dated” July 2017, but that
Plaintiffs “did not receive . . .[it] near that date. SAC ¶ 40. Accordingly, Plaintiffs believe the
letter was not mailed in a timely fashion. Plaintiffs also assert that the letter of
acknowledgement was not responsive but merely a promise to respond. Plaintiffs make a similar
contention regarding Plaintiffs’ letter of April 9, 2018.
As for the April 30, 2018 letter, Defendants do not identify areas in the SAC where
Plaintiffs allegedly concede receipt of an appropriate response. Accordingly, this objection is of
no moment.
Defendants also argue that assuming Plaintiffs have standing to pursue claims under the
MCPA, other concerns unique to the MCPA make their claims subject to dismissal. A proper

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assessment of the argument to come requires a brief history lesson. Procedurally speaking,
Plaintiffs filed a Complaint (ECF No. 1) which was dismissed without prejudice. Plaintiffs were
eventually permitted to file their First Amended Complaint (ECF No. 9) and then a Corrected
First Amended Complaint (“CFAC”) (ECF No. 10). After Defendants expressed a number of
perceived deficiencies in the CFAC, orally and in writing, it was during a telephone conference
with the Court that Plaintiffs expressly declined to make further amendments. Instead, Plaintiffs’
counsel decided to address any issues after Defendants’ motion to dismiss was filed. After
Defendants filed their motion to dismiss, Plaintiffs elected not to address the matters directly, but
instead sought and received permission to file the SAC, which was filed on January 4, 2019.
On January 18, 2019, Defendants filed the present motion for the purpose of dismissing
the SAC. It is here where things get interesting. Defendants’ arguments regarding the MCPA
claim asserted in the SAC are limited to two pages. Defendants’ Motion 7-8. Defendants assert
objections to claims related to correspondence from Plaintiffs and Rushmore’s responses thereto.
Neither in this particular section, nor elsewhere in Defendants’ Motion, are more specific
concerns raised regarding the MCPA.
Admittedly, Defendants use boilerplate language from the outset of their motion in an
attempt to globally incorporate every argument ever raised about the First or Second Amended
Complaints.
Defendants rely upon their previously filed Memorandum of Law
in Support of Defendants’ Motion to Dismiss, or, in the
Alternative, for Summary Judgment along with all attachments
thereto, filed herein at ECF 37. Defendants also rely upon their
previously filed Memorandum of Law in Support of Opposition to
Motion for Leave to file a Second Amended Complaint, filed
herein at ECF 40.

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Defendants’ Motion 1. A reliance on this technique here is troubling. For most of Defendants’
Motion, they take the time to articulate the areas of continuing dispute and to specifically
incorporate certain arguments. On these occasions, Defendants make clear that they wish to
incorporate arguments made in a previous filing with the Court. This is permissible. The only
concern is whether fair notice is given.
By way of example, Defendants provided clear notice when making arguments against
the MCDCA claim. “Plaintiff’s amendment to his MCDCA claim alleges Defendants violated §
14-202(8) by attempting to collect ‘an inflated cure amount.’ SAC at ¶ 69. The reasons argued
for dismissal of this claim in the First Memorandum also apply to this amendment.” Defs.’
Suppl. Mem. 7 (ECF No. 49-1). Defendants use the same technique for arguments against the
FDCPA claim.
Plaintiff, however, still fails to plead sufficient facts to make it
plausible the NOI’s stated cure amount was false for the reasons
explained in Defendants’ Memorandum of Law in Support of
Opposition to Motion for Leave to File a Second Amended
Complaint (the “Opposition Memorandum”) filed at ECF 40,
which has been incorporated herein by reference.
Defs.’ Suppl. Mem. 3.
Where this specificity is not provided, it provides neither the Court nor Plaintiffs with
clarity regarding Defendants’ position. Sadly, Defendants toggle between clarity and obscurity,
and when they do so, they do so at their own risk. The Court accepts the incorporations by
reference when done with clarity, and similarly rejects the assertion in other instances. One such
instance, is where Defendants make arguments against the MCPA claim. Defendants fail to
incorporate with clarity or specificity. Therefore, the Court will only address the arguments
raised in Defendants’ Motion.

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On this remaining canvass, Defendants arguments raised in their reply briefing, lose all
hope of persuasiveness. Plaintiffs address each of the arguments specifically raised or referred to
by Defendants regarding the exchanges of correspondence under the MCPA. The Court will not
allow Defendants to lull Plaintiffs into a shadow argument not specifically raised or referred to in
Defendants’ Motion.
The resulting image, is that Defendants are raising new arguments not previously
advanced in the motion to dismiss the SAC. To permit this would deprive Plaintiffs of an
opportunity to address the matters under the rules of the Court, as Plaintiffs are limited to their
briefing in opposition unless special permission is granted by the Court. The Court will not
consider new arguments raised for the first time in Defendants’ reply briefing regarding the
MCPA. Plaintiffs’ MCPA claim survives the motion to dismiss.
VII.

Plaintiffs’ Real Estate Settlement Procedures Act Claim.

Defendants seek to dismiss Plaintiffs’ Real Estate Settlement Procedures Act (“RESPA”)
claim against Rushmore. RESPA can be found at 12 U.S.C. §2605 et seq. (2014).
Plaintiffs contend the following.
95.

Plaintiff’s letters dated October 26, 2016, July 15, 2017,
April 9, 2018, April 30, 2018 and May 30, 2018, contained
Plaintiff’s name and account number, was written on a
piece of paper that was not from Nationstar or Rushmore,
pertained to the loan or the servicing of the loan, and
notified Nationstar of an error or requested information
from it.

96.

Defendants Nationstar and Rushmore violated 12 U.S.C.
§2605(e)(1)(A)&(2)(A)-(C) by failing to acknowledge
receipt of Plaintiff’s written inquiries within 5 days, and
failing take appropriate action, including conducting a
reasonable investigation of Plaintiff’s inquiry and
correcting any errors that were reasonably discoverable,
and conducting a reasonable investigation and providing

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the Plaintiff with her requested information or an
explanation of why the information was not available.
SAC ¶¶ 95-96. Plaintiffs further state that Rushmore failed to notify Plaintiffs that it acquired
the servicing of the loan within 15 days as required, failed to provide Plaintiffs with the identity
of the true owner of the loan within 10 days of Plaintiffs’ request as required, and that Rushmore
failed to respond within 7 days of Plaintiffs’ inquiry regarding the payoff balance, improper fees
or charges and foreclosure as required.
Defendants attack these claims by asserting that Plaintiffs fail to plead facts to show that
the referenced correspondence constitute “Qualified Written Requests” (“QWR”) under RESPA,
and that Plaintiffs fail to plead facts to show that these letters were not duplicative requests for
information already provided. Moreover, while somewhat inartfully done, Defendants rely in
part on their motion to dismiss Plaintiffs’ First Amended Complaint.1 The Court will consider
the earlier motion to dismiss in its discussion of each letter identified.
A.

Plaintiffs’ Letter of October 26, 2016.

Plaintiff states that on October 26, 2016, he wrote “Rushmore a letter that requested a
mortgage payoff statement for September 22, 2013 and November 30, 2016” and that Rushmore
did not respond. SAC ¶¶ 28-29. Defendants contend that Rushmore was not required to respond
because: 1) the request did not pertain to the servicing of a mortgage loan; and 2) Rushmore was
not the loan servicer in 2013. Plaintiffs have provided no further argument regarding these
points.

1

Defendants specifically refer to their memorandum in support of their earlier filed motion
to dismiss. “See First Memorandum at ¶6.b.” Defs.’ Suppl. Mem. 8. This was identified as
“Defendants’ Memorandum of Law in Support of Defendants’ Motion to Dismiss, or, in the
Alternative, for summary Judgment (the ‘First Memorandum’), filed at ECF 37.” Defs.’ Suppl.
Mem. 2. Plaintiffs erroneously refer to another document which Defendants do not rely upon
with specificity in this section.
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Defendants provide authority for the notion that requesting a payoff is not considered
“servicing” under RESPA. Tanasi v. CitiMortgage, Inc., 257 F. Supp. 3d 232 (D. Conn. 2017)
indicates, “[a] payoff statement does not relate to a borrower’s periodic payments and is not
necessary for routine servicing, but rather for paying the loan in full. Such a request does not
relate to ‘servicing’ under RESPA.” Id., at 264 (citation omitted). Additionally, the SAC
suggests that “Rushmore issued correspondence” indicating it had acquired the loan for servicing
in June 2016. SAC ¶ 23. There is no indication that Rushmore was the servicer in 2013. These
twin reasons, and the absence of argument from Plaintiffs, provide justification for the Court’s
decision to GRANT Defendants’ Motion as to the letter of October 26, 2016.
B.

Plaintiffs’ Letter of July 15, 2017.

Plaintiffs allege that in their letter of July 15, 2017 they sought the following: 1)
clarification on a disputed interest rate on the mortgage statement; 2) the interest assessed on the
loan; 3) the expenses and other items. SAC ¶ 39. In light of these requests, the July 15 letter
qualifies as a QWR. Under the RESPA rules, Rushmore was required to provide in writing
acknowledgement of the July 15 letter within five business days of receiving it. 12 U.S.C. §
2605(e)(1)(A).
Defendants suggest that they provided a timely response. The SAC indicates that
Defendants responded by letter dated July 25, 2017. SAC ¶ 40. Without providing more,
Plaintiffs state that the letter was not received “near that date.” As Plaintiffs enjoy a viewing of
the allegations in a light most favorable to them, the Court accepts Plaintiffs view. Plaintiffs
have set forth sufficient allegations to pursue this claim. Accordingly, the Court will not
entertain here, the other concerns regarding the July 15, 2017 letter.

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C.

Plaintiffs’ Letter of April 9, 2018.

Plaintiffs allege that on April 9, 2018, they wrote to Rushmore regarding its failure to
respond to a settlement offer and were now seeking a response within 15 days. SAC ¶ 45.
While Rushmore responded, it allegedly did not provide “a full and complete response.” SAC
47. Defendants assert that the letter “is not alleged to relate to servicing of the loan.” Defs.’
Suppl. Mem. 8.
While Defendants are correct that the April 9 letter does not indicate that it relates to
“servicing,” that is not the end of the inquiry. The CFPB is empowered to issue regulations,
rules and interpretations in order to give full effect to RESPA. In doing so, it has issued
Regulation X which obligates Rushmore to provide reasonable responses to properly formulated
“Requests For Information” (“RFIs”). 12 C.F.R. § 1024.36. The subject areas covered by RFIs
is broad, but not unlimited. Here, the limitation is dispositive. A settlement demand is not a
RFI. It seeks no information about the account, whether servicing or otherwise. Plaintiffs’
reliance on Colson v. Wilmington Savings Fund Society, Case No. 17-11387, 2018 WL 4658997
(E.D. Mich. Sept. 28, 2018) and Tanasi do not advance the argument. Plaintiffs have provided
no authority to support the notion that a settlement offer equates to a RFI requiring a response
under Regulation X. Defendants Motion as to this correspondence is GRANTED.2
D.

Plaintiffs’ Letter of April 30, 2018.

The details of Plaintiffs’ letter of April 30, 2018 are set forth in paragraphs 48 and 49 of
the SAC. This letter contained a long list of items that Plaintiffs sought information about,
including but not limited to, information about the Legacy Mortgage Asset Trust (“Legacy”), the

2

Though Plaintiffs failed to allege a similar concern regarding a communication of
January 16, 2018, if alleged, such a claim would be met with the same fate of the claim not being
actionable.
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identities of the owners of the loan, clarification about interest rates applied, and more. Plaintiffs
indicate that Defendants did not provide a timely or substantive response. SAC ¶¶ 51, 52.
Rushmore contends that the information requested is duplicative of a request made under
correspondence dated July 15, 2017. Rushmore asserts that it fully responded to that request in a
timely fashion, and that by doing so, it was not required to respond again.
Plaintiffs argue that “[w]hile it is true that there is some overlap between the letters dated
April 30, 2018 and July 15, 2017, the letters are not identical, and the overlapping requests are
not duplicative because the requests cover different time periods.” Pls.’ Opp’n 21. Plaintiffs
note that the original request was limited to the period leading up to July 15, 2017, and the latter
request covered the period afterward. Plaintiffs also contend that the original letter did not
provide a full response for the information sought. Plaintiffs note other differences, including
the April 2018 request for information regarding Legacy which was not in the July 2017 request.
The Court is satisfied that Plaintiffs have set forth sufficient facts in the SAC to comply
with the Federal Rules of Civil Procedure. RESPA requires a timely and substantive response to
these inquiries. As alleged, Rushmore did not, and therefore Defendants’ Motion regarding this
letter is DENIED.
E.

Plaintiffs’ Letter of May 30, 2018.

Plaintiffs allege they sent a letter to Rushmore on May 30, 2018 seeking information
regarding the “identity, address, phone number for the investor and/or owner of Plaintiff’s loan.”
SAC ¶ 51. Plaintiffs state that while they received a response in a letter dated July 17, 2018, said
letter “did not provide the phone number for the owner of the loan.” SAC ¶ 53.

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Defendants contend that the “correspondence was both not related to loan servicing and
duplicative of other previous correspondences that requested the identity of the loan’s owner.”
Defendants’ Motion 9.
Plaintiffs’ Reply by relying upon the language of the statute as summarized in the SAC as
Rushmore “failing to provide Plaintiff with the identity of the true owner of the loan within 10
business days. . . .” SAC ¶ 99. Additionally, Plaintiffs note that the original request was limited
to the period prior to July 15, 2017, and the May 2018 letter was regarding a different period.
Plaintiffs make additional arguments, but none of the comments of Plaintiffs were responded to
by Defendants in their Reply brief.
The Court is satisfied that Plaintiffs have set forth sufficient facts in the SAC to comply
with the Federal Rules of Civil Procedure. RESPA requires a timely and substantive response to
these inquiries. As alleged, Rushmore did not, and therefore Defendants’ Motion regarding this
letter is DENIED.
VIII. Plaintiffs’ Truth in Lending Act Claims.
Defendants seek to dismiss Plaintiffs’ Truth in Lending Act (“TILA”) claims against
Rushmore and US Bank. The TILA can be found at 15 U.S.C. §1601 et seq. (2010).
Plaintiffs contend the following:
111.

Rushmore and US Bank violated TILA, 15 U.S.C. §1641(f)(2) by
failing to provide the telephone number for the owner of the loan
after Plaintiff made a request for that information.

SAC ¶ 111.
Defendants contend that Plaintiffs cannot allege that they failed to provide the telephone
number for the owner of the loan after this request. Defendants state that the April 30, 2018
correspondence did not request a telephone number, but really asked for information regarding

22

Legacy. As such, Rushmore claims it was under no obligation to provide information regarding
Legacy because Legacy had no ownership interest to the loan. Defendants’ Motion 9-10.
Plaintiffs concede requesting contact information for Legacy, but note that Rushmore
identified Legacy as the owner of the loan in the SAC ¶ 46.3 Considering the matters properly
before the Court, Plaintiffs have sufficiently pled a plausible claim under TILA.4
IX.

Conclusion

For the reasons set forth above, Defendants’ Motion is GRANTED IN PART AND
DENIED IN PART.

July 2, 2019

/s/
Charles B. Day
United States Magistrate Judge

3

The Court will not consider Defendants’ arguments that are based on the motion to
dismiss the First Amended Complaint for the reasons expressed earlier. Once again, Defendants’
Motion here does not provide notice to Plaintiffs of their intent to rely on the previously filed
motion to dismiss.
4

Similarly, Defendants do not seek the dismissal of the Maryland Mortgage Fraud
Protection Act (“MMFPA”) claim, found at Md. Code Ann., Real Prop §7-401 et seq.
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