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Munoz v. Rushmore Management Loan Services LLC

United States District Court, S.D. Ohio, Western Division

November 21, 2017

Luz G. Munoz, Plaintiff,
Rushmore Management Loan Services LLC, Defendant.



         Pending 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.

         I. Background

         In 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”)

         By 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., ¶ 10.

         The 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.

         In 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.

         In June 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.

         Rushmore 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.

         From 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.

         On 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.

         In 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 Servicing. Id.

         Munoz's 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.

         The 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 ...

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