Weiner v. Rushmore Loan Management Services, LLC et al
Filing
17
District Judge Timothy S. Hillman: DECISION AND ORDER entered granting in part and denying in part 7 Motion to Dismiss for Failure to State a Claim. (Castles, Martin)
Case 4:17-cv-40144-TSH Document 17 Filed 08/15/18 Page 1 of 8
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
____________________________________
EUGENE WEINER,
)
)
Plaintiff,
)
)
v.
)
C.A. No. 17-40144-TSH
)
RUSHMORE LOAN MANAGEMENT )
SERVICES, LLC and MTGLQ
)
INVESTORS, LP,
)
)
Defendants.
)
____________________________________)
DECISION AND ORDER ON DEFENDANTS MOTION TO DISMISS
(Doc. No. 7)
August 15, 2018
HILLMAN, D.J.
Eugene Weiner (“Plaintiff”) brings this action against MTGLQ Investors, L.P.
(“MTGLQ”) and Rushmore Loan Management Services, LLC (“Rushmore”)(collectively
referred to as “Defendants”) arising from the foreclosure of Plaintiff’s property in Fitchburg,
Massachusetts (the “Property”) and the Defendants conduct prior to foreclosure. The Plaintiff
alleges four counts in his complaint: violation of the Fair Debt Collection Practices Act
(FDCPA) (Count I); violation of Mass. Gen. Laws ch. 93A (Count II) and; declaratory judgment
(Counts III and IV). The Defendants bring this motion pursuant to Fed. R. Civ. P. 12(b)(6).
Background
Plaintiff took out a mortgage secured by the Property (the “Mortgage”), owned by
MTGLQ. Rushmore services the Mortgage. On June 27, 2017, prior to the foreclosure sale on
Case 4:17-cv-40144-TSH Document 17 Filed 08/15/18 Page 2 of 8
August 14, 2017, the Defendants sent a letter to Plaintiff offering a loan modification (the
“Letter”). The Letter, in relevant part, states:
Congratulations! We are excited to make you an offer for a modification program
that is designed to make your mortgage payments more affordable and help you
keep your home.
TO ACCEPT THIS OFFER
Provide documentation of your monthly income and expense information. If your
mortgage payment to monthly income ratio is less than 35% and your total
monthly expenses (including your mortgage payment) to monthly income ratio is
less than 55%; you will be provided with modification terms, a three month trial
plan with a new principal balance of $125,000 and an estimated payment of
$857.60. If you make all three payments successfully, we will permanently
modify your loan!
TIME IS OF THE ESSENCE
This modification program is based upon a valuation dated 05/16/2017… In the
event we have not heard from you within 60 days from the date of this offer, you
still may be eligible for this program; however a new valuation will be required.
The estimate amount of debt forgiveness may change. All other terms of this
offer would remain applicable.
…..
WHAT IF MY PROPERTY IS SCHEDULED FOR A FORECLOSURE
SALE?
• In general, we will not evaluate a Borrower Assistance Application that is
submitted shortly before a scheduled foreclosure sale date. This means
that, in general, in order for your Application to be evaluated, your
completed Borrower Assistance Application must be received by
Rushmore:
….
•
o For all other loans: at least 38 calendar days prior to the scheduled
foreclosure sale date
If a foreclosure sale is pending but there is no specific date scheduled for
the sale, a court with jurisdiction over the foreclosure or a public official
charged with carrying out the sale may not halt the sale even if we approve
you for a foreclosure alternative prior to the sale.
(Doc. No. 8; Exhibit 10).
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Case 4:17-cv-40144-TSH Document 17 Filed 08/15/18 Page 3 of 8
Plaintiff submitted an application for the loan modification offered in the Letter on
August 1, 2017, via first class mail. On August 21, 2017, Plaintiff contacted Defendants and was
informed that no application had been received. 1 On August 22, 2017, Plaintiff submitted
another application to accept the loan modification offered in the Letter (the “Application”). The
Application was received by Defendants on August 24, 2017, 58 days after the Letter was sent.
Standard
To survive a Rule 12(b)(6) motion to dismiss, the complaint must allege “a plausible
entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007). Detailed factual
allegations are not required however, the complaint must set forth “more than labels and
conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555. The
court must accept the factual allegations as true and draw all reasonable inferences in favor of the
plaintiff. Langadinos v. American Airlines, Inc., 199 F.3d 68, 68 (1st Cir. 2000). A complaint
should only be dismissed where the well-pleaded facts do not “possess enough heft to show that
plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharms., LLC, 521 F.3d 76, 84 (1st Cir.
2008)(citation omitted).
FDCPA (Count I)
The Plaintiff alleges that the Letter sent by the Defendants violated the FDCPA. See 15
U.S.C. §1692. To establish a valid claim under the FDCPA, a plaintiff must show: “(1) that [he]
was the object of collection activity arising from consumer debt, (2) defendants are debt
collectors as defined by the FDCPA, and (3) defendants engaged in an act or omission prohibited
by the FDCPA.” O’Conner v. Nantucket Bank, 992 F. Supp. 2d 24, 30 (D. Mass. 2014)(citations
and quotations omitted). For purposes of this motion, the Defendants do not dispute the first two
1
Plaintiff never received a returned “undeliverable” application.
3
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elements. Therefore, I focus on whether the Letter was false, deceptive, or misleading in
violation of the FDCPA.
A violation of the FDCPA occurs when a debt collector uses “any false representation or
deceptive means to collect or attempt to collect any debt.” Oberther v. Midland Credit Mgt., Inc.,
45 F. Supp. 3d 125, 128 (D. Mass. 2014). “[A] representation from a debt collector is deceptive
when it can be reasonably read to have two or more different meanings, one of which is
inaccurate.” Id. at 128-29 (quoting Waters v. Kream, 770 F. Supp. 2d 434, 436 (D. Mass.
2011)(citation and quotation omitted)). When analyzing an FDCPA claim, “a collection letter is
to be viewed from the perspective of the hypothetical unsophisticated consumer” in order to
“protect[ ] ‘all consumers, including the inexperienced, the untrained and the credulous.’”
Pollard v. Law Office of Many L. Spaulding, 766 F.3d 98, 103-04 (1st Cir. 2014)(quoting Taylor
v. Perrin, Landy, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997)(citation omitted)).
“Even so, the standard remains an objective one, which preserves an element of reasonableness.”
Id. at 104. If the court finds that the consumer read the collection letter in a “chimerical or
farfetched” manner, the defendant will not be liable. Id.
The parties dispute the terms of the offer of a loan modification provided in the Letter.
The Defendants argue that they are not liable because the Plaintiff’s reading of the Letter was
incorrect. See Oberther v. Midland Credit Mgmt. Inc., 45 F. Supp. 3d 125, 131 (D. Mass. 2014)(a
“consumer’s incomplete or incorrect reading of a debt collection letter” does not make the debt
collector liable). Defendants argue that the Letter clearly states that the May 16, 2017 valuation
expires after 60 days and not that the offer for a loan modification would remain open for 60
days. Defendants argue that this reading of the Letter was clear absent express language
promising to keep the offer open for 60 days and because the Letter stated that time was of the
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essence, clarified that there was a 38-day deadline for any scheduled foreclosure sale, and that a
pending foreclosure sale would not be halted even if no foreclosure date had been scheduled. I
disagree.
The Letter could also reasonably be interpreted to mean that if you meet the eligibility
requirements under “TO ACCEPT THIS OFFER”, and provide documentation to support your
eligibility, “you will be provided with modification terms”.(emphasis added). However, if no
application is received within 60 days, you may still be eligible but the offer contained in the
Letter is terminated until a new valuation occurs. In other words, it was reasonable to read the
Letter as an offer that gave the Plaintiff 60 days to apply for the loan modification, which was
based on the May 16, 2017 valuation. In the event Plaintiff did not apply within those 60 days,
he may still be eligible but would have to wait for a further valuation.
The 38-day deadline for foreclosure sales does not provide clarity to rectify the above
interpretation. The Defendants sent Plaintiff the Letter on June 27, 2016. Notice of the August
14, 2017, foreclosure sale occurred on July 24, 2017. This means that if the 38-day deadline
applied, it was impossible for Plaintiff to meet it. The language in the Letter was not clear
enough for a hypothetical unsophisticated consumer to understand that a 60-day offer was
revoked and a new deadline, which had already lapsed, was triggered upon notice of a
foreclosure sale.
Accordingly, the Plaintiff has alleged a plausible claim that the Letter was false,
deceptive, or misleading in violation of the FDCPA and the Defendants motion to dismiss is
denied as to Count I.
Chapter 93A (Count II)
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For the reasons stated above, the Letter was unfair and/or deceptive in violation of Mass.
Gen. Laws ch. 93A and the Defendant’s motion to dismiss Count II is denied. See McDermott v.
Marcus, Errico, Emmer & Brooks, P.C., 775 F.3d 109, 123 (1st Cir. 2014)(“the FDCPA
establishes that an unfair debt collection act in violation of the FDCPA is a per se violation of the
FTC Act. And because Massachusetts has ‘wholly incorporated’ the FTC Act and its
interpretation into state consumer protection law, a violation of the FDCPA not only per se
violates the FTC Act, it also constitutes a per se Chapter 93A violation.”). 2
Declaratory Judgment (Counts III & IV)
The Plaintiff seeks a declaratory judgment that the foreclosure sale was void because
Defendants failed to comply with Mass. Gen. Laws ch. 244, §§35B and 35C. Mass. Gen. Laws
ch. 244, § 35B(f) provides, in relevant part:
Prior to publishing a notice of a foreclosure of a sale…the creditor, or if the
creditor is not a natural person, an officer or duly authorized agent of the creditor,
shall certify compliance with this section in an affidavit…The creditor, or an
officer or duly authorized agent of the creditor, shall record this affidavit with the
registry of deeds for the county or district where the land lies. 3
In December 2016, Rushmore as power of attorney (“POA”) for MTGLQ, signed two
affidavits certifying compliance with §§35B and 35C (the “Affidavits”). The Affidavits were
recorded in the Worcester Northern Registry of Deeds (the “Worcester Registry”) in January
2017. However, the Affidavits reference a POA document recorded in the Middlesex South
Registry of Deeds (the “Middlesex Registry”), not the Worcester Registry. The Plaintiff’s argue
that because of this, the Defendant’s failed to strictly comply with §35B and §35C and lacked
2
Because I find that the Complaint adequately alleges a violation of the FDCPA and such a violation gives rise to a
per se violation of Chapter 93A, for purposes of this motion I do not further analyze the merits of this claim
independent of the FDCPA violation.
3
The relevant part of Mass. Gen. Laws ch. 244 § 35C(b) states the same language but replaces “section” with the
term, “subsection”. In an effort to be minimize duplicity, the statutes are analyzed together for purposes of this
motion.
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standing to foreclose. Plaintiff asserts that the laws regarding the acknowledgment and recording
of deeds also applies to powers of attorney. See Mass. Gen. Laws ch. 183, § 32. Deeds “shall not
be valid…unless it…is recorded in the registry of deeds for the county or district in which the
land to which it relates lies.” Mass. Gen. Laws ch. 183, § 4. Therefore, it is Plaintiff’s assertion
that because the POA referenced in the Affidavits was recorded in the Middlesex Registry, not
the Worcester Registry, the Affidavits were not duly executed.
However, a separate document granting Rushmore POA for MTGLQ from 2014 through
2017 was recorded in the Worcester Registry at the time the Affidavits were signed and
recorded. See (Doc. No. 8; Exhibit 8)(“This Power of Attorney shall be effective commencing on
May 1, 2014, and shall remain in full force and effect until the earlier of three (3) years after the
date written below…”). 4 Therefore, Rushmore, acting under the authority of an effective POA
recorded in the Worcester Registry, complied with §§35B and 35C. The reference to a different
POA not registered in the Worcester Registry does not invalidate the authority granted under a
valid POA registered in the Worcester Registry. See Clockedile v. U.S. Bank Trust, N.A., 189 F.
Supp. 3d 312, 315 (D. Mass. 2016) (the assignment, which referenced an expired power of
attorney, was not void because there was a valid power of attorney at the time of the assignment
granting the defendant legal authority to foreclose). Accordingly, the foreclosure sale was not
void and the Complaint fails to state a claim for Counts III and IV. 5
Conclusion
4
As a public record, this document may be considered by the Court. O'Rourke v. Hampshire Council of
Governments, 121 F. Supp. 3d 264, 276 (D. Mass. 2015)(official public records are an exception to the rule that
courts may not consider documents “outside of the complaint, or not expressly incorporated therein”)(quoting
Watterson v. Page, 897 F. 2d 1,3 (1st Cir. 1993). “When a written instrument contradicts allegations in the
complaint to which it is attached, the exhibit trumps the allegations.” Id. (quoting Yacubian v. United States, 750
F.3d 100, 108 (1st Cir. 2014)).
5
The Court does not take a position on the Plaintiff’s argument that strict compliance with §§35B and 35C is
required because the Court finds that in this case, the Defendants strictly complied with the statutes by having an
effective POA recorded in the Worcester Registry at the time the signed Affidavits were recorded there.
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Case 4:17-cv-40144-TSH Document 17 Filed 08/15/18 Page 8 of 8
For the reasons stated above, the Defendants Motion to Dismiss (Doc. No. 8) is granted
in part, denied in part. The Motion is denied as to Counts I and II and granted as to Counts III
and IV. The Court did not consider the exhibits attached to the Memorandum in Support of
Plaintiff’s Opposition (Doc. No. 10) and the Defendants request that they be stricken is denied as
moot.
SO ORDERED.
/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE
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