United States District Court, S.D. Ohio, Western Division
Luz G. Munoz, Plaintiff,
Rushmore Management Loan Services LLC, Defendant.
ENTRY AND ORDER GRANTING PARTIAL MOTION TO DISMISS
FOR FAILURE TO STATE A CLAIM, (ECF. 6), AND GRANTING
PLAINTIFF'S MOTION TO FILE SUR-REPLY (ECF 15).
M. ROSE UNITED STATES DISTRICT JUDGE
before the Court are Defendant Rushmore Management Loan
Services LLC's Partial Motion to Dismiss Plaintiff Luz G.
Munoz's Complaint for Failure to State a Claim, ECF 13,
and Plaintiff's Motion to File Sur-Reply. ECF 15.
Plaintiff's Motion to File Sur-Reply, ECF 15, is
GRANTED. The Complaint charges Defendant
with six claims: defamation, breach of contract, breach of an
implied covenant of good faith and fair dealing, and
violations of the Fair Debt Collection Practices Act
(“FDCPA”), the Real Estate Settlement Procedures
Act (“RESPA”) and the Truth in Lending Act
(“TILA”). (Doc. 1). Defendant's motion seeks
to dismiss all but the breach of contract and RESPA claims,
not so much for failure to state a claim, but as barred by
the statute of limitations.
2000, Plaintiff Luz G. Munoz executed a fixed rate consumer
note in the principal amount of $102, 320.50 in favor of
National City Bank (“NCB”). Complaint Ex. A, p.
1, ¶ B. To secure repayment of the note, Munoz executed
a mortgage, giving NCB a security interest in 3955 Klepinger
Road, Dayton, Ohio 45416 (“Property”).
Id., ¶¶ A and B. (“Mortgage, ”
collectively with the Note, the “Loan”)
April 1, 2012, Quantum Mortgage Servicing was servicing the
loan and Arch Bay Holdings LLC owned it. Complaint,
¶¶ 7-9 and Ex. A. To resolve an ongoing adversary
case in a prior bankruptcy proceeding, Munoz entered into a
Settlement Agreement and Release of Claims, with Quantum
Mortgage Servicing and Arch Bay Holdings. The agreement
constituted a loan and applied to subsequent agents or
assignees, including Rushmore and BOC. Id., ¶
parties agreed that Munoz would execute a Loan Modification
Agreement reducing the unpaid principal balance on the Note
and extending the maturity date. Complaint ¶ 11 and Ex.
A., p. 2, ¶ A. They also agreed that Munoz would
continue to pay on a payment plan with Montgomery County to
bring the Property's taxes current. Complaint Ex. A, p.
2, ¶ I.
August 2012, Quantum transferred servicing of the loan to
Rushmore. Complaint, ¶ 15. In December 2012, Munoz's
counsel contacted Rushmore about allegedly inaccurate
information Rushmore was providing regarding the unpaid
principal balance for the loan, inaccurate reporting of late
payments made on the loan in 2012 and inaccurate reporting of
delinquent escrow balances and corporate advance amounts.
Id., ¶ 16. On January 17, 2013, Rushmore
responded and included a payment history for the loan, which
said that the unpaid principal balance was $66, 150, the
escrow balance was $0, there were no corporate advances or
other amounts owed and Plaintiff's January 2013 payment
had not been received. Id., ¶ 18 and Ex. B.
2013, Munoz received a letter from Rushmore that the Loan was
in default and that amounts were owed to bring the Loan
current. Complaint, ¶¶ 19-20. Munoz's counsel
wrote to Rushmore both before and after receiving the notice
of default. Munoz asserted that the escrow account for her
loan was incorrect, that she had made all required monthly
mortgage payments since execution of the Loan Modification
Agreement, that her account should not be listed in
bankruptcy as she received a discharge and that the reopened
bankruptcy was resolved by execution of the Agreement. Munoz
asserted that any issue with the property taxes was because
Rushmore improperly paid the taxes, even though the Agreement
called for Munoz to pay them in the Agreement and because the
monthly payment on the loan may have been increased without
accounting for increased escrow requirements without her
knowledge. Complaint, ¶ 21.
responded, requesting proof that Munoz had made all monthly
mortgage payments, while allegedly not responding to the
request to resolve any discrepancy or shortage in the
Loan's escrow account. Complaint, ¶¶ 22-23.
August 2013 to August 2014, Munoz alleges she continued to
make her monthly mortgage payment, believing she was current.
Complaint, ¶ 24. In August 2015, Munoz asked Rushmore
for a payoff statement for the Loan, at which point Rushmore
informed Munoz that the unpaid principal balance was $48,
978.18, and that Munoz owed the following: $2, 200 for an
escrow shortage, $573.03 for late charges, $8, 475.24 for
corporate advances, $16.50 for property inspection fees, and
$573.03 for interest through October 31, 2015. Complaint,
¶ 26 and Ex. C.
October 21, 2015, Munoz sent Rushmore a letter she alleges
was a Notice of Error requesting a payoff statement for the
loan, and alleging errors on the loan including failure to
record payments made in August and September 2015,
“[m]isapplication of payments as to principal, interest
and escrow”; “[e]xcessive charges continue to be
listed with corporate advances identified to the loan account
of over $8, 475.24”; payments recorded late; imposition
of corporate advances that were waived by the Loan
Modification Agreement; untimely transfer of information
during the transition from Quantum to Rushmore; and failure
to send Munoz monthly billing statements. Complaint, ¶
27 and Ex. D.
November 2015, Rushmore sent correspondence to Munoz stating
the loan was delinquent and that Rushmore may pursue
foreclosure if the default was not cured by making certain
payments. Complaint, ¶¶ 33-34. A letter dated
January 14, 2016, informed Munoz that Rushmore was
transferring servicing of the Loan to Select Portfolio
December 4, 2015 letter disputed Munoz's default and
noted the “numerous errors” that were in the
October 21 letter. On January 19, 2016, Rushmore responded,
saying that it is “in response to your correspondence,
dated December 4th, 2015[.]” Complaint Ex. E.
January 19, 2016, Rushmore letter explained it investigated
the issues and did not identify any errors. Complaint Ex. E.
Rushmore claimed that it:
did receive an attempted payment for this loan on August 31,
2015 (check #126 in the amount of $906.61). This payment was
returned on the same date, due to an incorrect payee.
Rushmore could not have applied the payment to Luz
Munoz's account due to the payee issue. No other ...