Weiner v. Rushmore Loan Management Services, LLC et al

Filing 57

District Judge Timothy S. Hillman: ORDER AND MEMORANDUM entered denying 37 Motion for Partial Summary Judgment and denying 42 Motion for Summary Judgment. (Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________________
)
EUGENE WEINER,
)
CIVIL ACTION
Plaintiff,
)
NO. 4:17-40144-TSH
)
RUSHMORE LOAN MANAGEMENT
)
SERVICES, LLC & MTGLQ INVESTORS, )
LP,
)
Defendants.
)
______________________________________ )
ORDER AND MEMORANDUM ON PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT AS TO LIABILITY AND DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT (Docket Nos. 37 & 42)
December 5, 2019
HILLMAN, D.J.
Eugene Weiner (“Plaintiff”) brings this action against MTGLQ Investors, L.P.
(“MTGLQ”) and Rushmore Loan Management Services, LLC (“Rushmore”) (collectively,
“Defendants”), alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692e, and the Massachusetts Consumer Protection Act (“MCPA”), M.G.L. c. 93A, § 2. Plaintiff
moves for summary judgment on liability. (Docket Nos. 37). Defendants cross-move for summary
judgment on liability and damages. (Docket No. 42). For the following reasons, the Court denies
both motions.
Background
In 2003, Plaintiff financed his purchase of property in Fitchburg, Massachusetts (the
“Property”), by borrowing $124,000.00 from Countrywide Home Loans, Inc. (Docket Nos. 401, 40-2, 40-3, 45 at 12–25). Plaintiff initially paid $684.73 a month on his mortgage, but he
modified the terms of the loan in 2010 and 2014 to reduce his monthly payments. (Docket No.

45 at 27–37). Plaintiff does not recall making any payments after January 1, 2015 and does not
contest that he defaulted on the loan. (Docket No. 46 at 8).
The mortgage was assigned to MTGLQ on August 18, 2016. (Docket No. 41-5).
MTGLQ hired Rushmore to service the loan, and on August 30, 2016, Rushmore sent Plaintiff a
mortgage statement showing an outstanding balance of $16,072.18. (Docket No. 45 at 39–43).
A few months later, MTGLQ commenced a Servicemembers Civil Relief Act (“SCRA”) action
in the Massachusetts Land Court to foreclose on Plaintiff’s property. (Docket No. 45 at 45).
Chief Justice Cutler issued an SCRA judgment on June 20, 2017. (Docket No. 45 at 45).
On June 27, 2017, Rushmore mailed Plaintiff a letter offering him a potential loan
modification plan (the “June Letter”). (Docket Nos. 40-7, 45 at 52–76). In relevant part, the
June Letter 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?

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•

•

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 complete 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.

(Docket Nos. 40-7 at 1, 21; 45 at 52, 72) (emphasis in original).
On July 17, 2017, MTGLQ mailed Plaintiff notice that the Property was scheduled for a
foreclosure sale on August 14, 2017. (Docket Nos. 40-8, 45 at 78–83). MTGLQ also published
notice in the Sentinel and Enterprise on July 24, July 31, and August 7. On August 14, 2017,
MTGLQ purchased the Property via foreclosure deed for $133,000.00.
Plaintiff tried to mail a loan modification application to Rushmore on August 1, 2017, but
it was not delivered due to an invalid address. (Docket No. 40-9 at 1). On August 21, 2017,
Plaintiff called Rushmore to obtain the correct mailing address. (Docket No. 41-3). During the
call, a Rushmore representative informed Plaintiff that it would be pointless to apply for a loan
modification because the Property had sold. (Docket No. 41-3 at 66–67). Plaintiff nonetheless
mailed a second application, which Rushmore allegedly received on August 24, 2017.
When Rushmore did not modify his loan in accordance with the offer in the June Letter,
Plaintiff filed a complaint in state court on October 3, 2017. Defendants removed the case to this
Court on November 3, 2017 (Docket No. 1), and the parties filed cross-motions for summary
judgment on September 23, 2019 (Docket Nos. 37 & 42).
Legal Standard
Under Federal Rule of Civil Procedure 56, a court “shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled to
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judgment as a matter of law.” An issue is “genuine” when a reasonable factfinder could resolve it
in favor of the nonmoving party. Morris v. Gov’t Dev. Bank of Puerto Rico, 27 F.3d 746, 748 (1st
Cir. 1994). A fact is “material” when it may affect the outcome of the suit. Id.
When ruling on a motion for summary judgment, “the court must view the facts in the light
most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.”
Scanlon v. Dep’t of Army, 277 F.3d 598, 600 (1st Cir. 2002) (citation omitted).
Discussion
1. FDCPA Claim
To establish a claim under the FDCPA, a plaintiff must show “(1) that she 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’Connor v. Nantucket Bank, 992 F. Supp. 2d 24, 30 (D. Mass. 2014) (quoting Som v. Daniels
Law Offices, P.C., 573 F.Supp.2d 349, 356 (D. Mass. 2008)).
The parties disagree over whether Rushmore qualifies as debt collector. Under the
FDCPA, a “debt collector” is “any person who uses any instrumentality of interstate commerce
or the mails in any business the principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be
owed or due another.” 15 U.S.C. § 1692a(6). Rushmore, a business specializing in mortgage
servicing, undoubtedly meets these criteria. Yet, Rushmore contends that, because its actions
relate to enforcement of its security interest in the Property rather than collection of the debt, it is
excluded from the scope of “debt collector” under the Supreme Court’s recent decision in
Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019). Rushmore misconstrues the
import of Obduskey. Obduskey holds that “those who engage in only nonjudicial foreclosure

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proceedings,” e.g., a law firm managing the foreclosure process for a mortgage servicer, “are not
debt collectors within the meaning of the Act.” Id. at 1038 (emphasis added). Rushmore,
however, did not “only” participate in the nonjudicial foreclosure proceedings; it also serviced
Plaintiff’s mortgage. Rushmore therefore does not fall within the scope of Obduskey.
The parties also disagree on whether Defendants engaged in an act prohibited by the
FDCPA. Plaintiff asserts that the June Letter contained a “false, deceptive, or misleading
representation . . . in connection with the collection of any debt.” See § 1692e. “Under the
FDCPA, 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.’” Waters v. Kream, 770 F.
Supp. 2d 434, 436 (D. Mass. 2011) (quoting Russell v. Equifax A.R.S., 74 F.3d 30, 35 (2d Cir.
1996)). When analyzing an FDCPA claim, courts view representations “from the perspective of
the hypothetical unsophisticated consumer.” Pollard v. Law Office of Many L. Spaulding, 766
F.3d 98, 103 (1st Cir. 2014). This is an objective standard that “protects ‘all consumers,
including the inexperienced, the untrained and the credulous.’” Id. (quoting Taylor v. Perrin,
Landy, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997) (citations omitted)). But it
retains “an element of reasonableness.” Id. at 104. A defendant will not be liable if the
consumer’s interpretation of a representation is “chimerical or farfetched.” Id.
Applying this standard, the Court determines that the June Letter was deceptive under the
FDCPA. The June Letter provides that, “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.” (Docket No. 40-7 at 1). An unsophisticated consumer could reasonably
interpret this statement to imply that, if he provides documentation that he meets the eligibility
requirements within 60 days, he will receive modification terms, i.e., that the June Letter

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contains an offer giving Plaintiff 60 days to accept. (Docket No. 17 at 4–5). Defendants contend
that this offer was not misleading, deceptive, or false because the 60-day window began on May
16, 2017, when the valuation occurred, and expired before MTGLQ sent notice of the
foreclosure sale. The June Letter, however, fails to specify that May 16 is the date of the offer.
It merely states that “[t]his modification program is based upon a valuation dated 05/16/2017.”
(Docket No. 40-7 at 1) (emphasis added). Given that the letter itself was sent on June 27, 2017,
an unsophisticated consumer could reasonably believe the “date of this offer” is June 27. See
Waters, 770 F. Supp. 2d at 437 (“Under the generally approved standard, a ‘least sophisticated
consumer’ is not obliged to closely parse the words of a communication in order to divine its
meaning. . . . The substance of the communication, read as a whole, matters more than its
linguistic construction.”). Thus, the June Letter is deceptive under the FDCPA. See id. at 436.
A genuine dispute of material fact exists, however, as to whether the June Letter was sent
“in connection with the collection of any debt.” See § 1692e; see also Ruth v. Triumph
Partnerships, 577 F.3d 790, 798 (7th Cir. 2009) (noting that “whether a communication was sent
‘in connection with’ an attempt to collect a debt is a question of objective fact”). In
“determining whether a communication is ‘in connection with the collection of any debt,’
[courts] look to the language of the communication in question—specifically to statements that
demand payment and discuss additional fees if payment is not tendered.” Farquharson v.
Citibank, N.A., 664 F. App’x 793, 801 (11th Cir. 2016); see also Lucas v. New Penn Fin., LLC,
No. 17-CV-11472-ADB, 2019 WL 404033, at *5 (D. Mass. Jan. 31, 2019) (“Communications
that address a borrower’s loss mitigation application and do not demand payment may, under
some circumstances, not be connected to the collection of a debt.”). “[T]he purpose and context

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of the communications—viewed objectively—are important factors as well.” Gburek v. Litton
Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010).
Here, the language and context of the June Letter are ambiguous. On the one hand, the
June Letter does not demand payment or reference any other document that demands payment. 1
It merely offers a modification plan, and many courts have found that an offer for a loan
modification, standing alone, is not collection activity. See Muathe v. Wells Fargo Bank, N.A.,
No. 18-2064-CM-TJJ, 2019 WL 635407, at *5 (D. Kan. Feb. 14, 2019) (holding “that
communications regarding loan modification or loss mitigation are not related to debt collection
and therefore do not fall under the protections of the FDCPA”); see also Marshall v. Deutsche
Bank Nat’l Tr. Co., No. 4:10CV00754-BRW, 2011 WL 345988, at *3 (E.D. Ark. Feb. 1, 2011)
(finding that “letters regarding loan modification were attempts to restructure the debt instrument
and lower the payments, not a demand for payment,” and therefore could not establish a
violation of the FDCPA), aff’d, 445 F. App’x 900 (8th Cir. 2011). Nothing, moreover, compels
Plaintiff to act on the offer in the June Letter. It is not tied to any ongoing discussion regarding
Plaintiff’s financial situation, and although it provides favorable terms, Plaintiff could ignore the
June Letter and “the loan would stay exactly as it were . . . .” See Farquharson, 664 F. App’x at
801.
On the other hand, the letter references Plaintiff’s “current mortgage situation,” i.e., his
default, and a notice at the end of the attached application states that Rushmore “is attempting to

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Plaintiff contends that the June Letter was “plainly sent in connection with the collection
of a debt” even though it “did not seek to collect an immediate payment” because Rushmore only
offered the modification for the purposes of collecting future payments. (Docket No. 38 at 13).
But the logic behind this premise risks sweeping every loan communication under the umbrella
of “in connection with debt collection.” Every loan communication, even a statement, is
ultimately made in the hopes of collecting future payments on debt.
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collect a debt.” Docket No. 40-7 at 2, 25; see also Farquharson, 664 F. App’x at 802
(emphasizing that the communication “did not state that Bank of America was trying to collect a
debt” despite identifying Bank of America as a debt collector). This information suggests that
the “animating purpose” of the letter is “to induce payment by the debtor.” See Grden v. Leikin
Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir. 2011). The letter also mentions “other
alternatives” to modification, e.g., “short sale” or “deed in lieu of foreclosure.” In Gburek, the
Seventh Circuit found that a similar communication referencing the debtor’s default and
“foreclosure alternatives” was an “opening communication in an attempt to collect Gburek’s
defaulted home loan—by settlement or otherwise.” 614 F.3d at 386.
Given this record, reasonable jurists could disagree as to whether Rushmore’s offer was
made in connection with the collection of debt. The Court therefore denies the parties’ crossmotions for summary judgment.
2. MCPA Claim
Section 2(a) of Chapter 93 of the Massachusetts General Laws makes unlawful “[u]nfair
methods of competition and unfair or deceptive acts or practices in the conduct of any trade or
commerce.” “Conduct is ‘deceptive’ when it has ‘the capacity to mislead consumers, acting
reasonably under the circumstances, to act differently from the way they otherwise would have
acted.’” Okoye v. Bank of New York Mellon, No. CIV.A. 10-11563-DPW, 2011 WL 3269686, at
*6 (D. Mass. July 28, 2011) (quoting Aspinall v. Philip Morris Cos., 442 Mass. 381, 396 (Mass.
2004)). An intent to deceive is not required. Maillet v. ATF-Davidson Co., 407 Mass. 185, 193
(1990).
The Court determined above that the June Letter has the capacity to mislead a
hypothetical unsophisticated consumer. The Court, however, declines to find it deceptive as a

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matter of law under the MCPA. Reasonable jurists could disagree about whether the June Letter
would have led a reasonable consumer to act differently, i.e., whether it could reasonably lead a
consumer to abstain from challenging a foreclosure sale that he otherwise would have disputed
during the 60-day offer period. The Court therefore denies the parties’ motions for summary
judgment. See Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 563 (2008) (noting that
“whether a particular set of acts, in their factual setting, is unfair or deceptive is a question of
fact,” although “the boundaries of what may qualify for consideration as a c. 93A violation is a
question of law” (quoting Schwanbeck v. Federal–Mogul Corp., 31 Mass. App. Ct. 390, 414
(1991)).
3. Damages
Defendants contend that Plaintiff’s MCPA claim fails because he has not established
entitlement to economic damages. The Court disagrees. Plaintiff seeks damages associated with
the foreclosure of his home, and reasonable jurists could disagree as to whether the foreclosure
occurred because of the deception 2 or because Plaintiff failed to act on the July 17, 2017, notice
of foreclosure. The Court thus denies Defendants’ motion for summary judgment on damages.
Conclusion
For the reasons stated above, the Court denies Defendants’ motion for summary
judgment (Docket No. 42) and denies Plaintiff’s motion for summary judgment (Docket No. 37).
SO ORDERED
/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE

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Plaintiff contends that he could have filed for bankruptcy to prevent foreclosure if he had
known the offer did not remain open through the scheduled foreclosure sale.
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