Contee v. Rushmore Loan Mgmt. Servs.

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KENNETH L. CONTEE On his behalf and on behalf of three Classes of similarly situated persons Plaintiff, v. RUSHMORE LOAN MANAGEMENT SERVICES LLC And U.S. BANK NATIONAL ASSOCIATION, • NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE FOR RMTP TRUST, SERIES 2021 BKM-TT Defendants.

CIVIL No. 23-0588-BAH

United States District Court, D. Maryland

September 19, 2024

MEMORANDUM OPINION

BRENDAN A. HURSON UNITED STATES DISTRICT JUDGE

Plaintiff Kenneth L. Contee, on his own and on behalf of three classes of similarly situated persons, brought suit against Rushmore Loan Management Services LLC and U.S. Bank National Association in its capacity as trustee for RMTP Trust (collectively "Defendants") alleging violations of the Maryland Consumer Debt Collection Practices Act, Md. Code Ann., Com. Law § 14-201 et seq. ("MCDCA"), the Maryland Consumer Protection Act, Md. Code Ann., Com. Law § 13-301 et seq. ("MCPA"), and the Federal Debt Collection Practices Act, 25 U.S.C. § 1692 et seq. ("FDCPA"). ECF 15. Pending before the Court is Defendant Rushmore's Motion to Dismiss Counts I and II of the Plaintiffs Amended Complaint (the "Motion"). ECF 21. Plaintiff filed an opposition, ECF 22, and Defendant filed a reply, ECF 23. All filings include memoranda of law and exhibits.^[1] The Court has reviewed all relevant filings and finds that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). Accordingly, for the reasons stated below, Defendant's Motion is GRANTED in part and DENIED in part.

I. BACKGROUND^[2]

Contee essentially alleges that Rushmore's practice of charging "recoverable corporate advances" in a vague and confusing manner violates both state law as well as federal debtor protection laws. ECF 15, at 22 ¶ 23, 25 ¶ 82. He brings both counts solely against Defendant Rushmore on his behalf as well as on behalf of a putative class of similarly situated individuals.^[3] Id. Though the Amended Complaint contains several other claims, Rushmore moves to dismiss only Counts I and II, so only the conduct pertaining to those claims is discussed supra. ECF 21, at 1.

In October 2016, Contee executed a mortgage agreement with Atlantic Coast Mortgage, LLC in the amount of $434,137. ECF 22-2, at 3, at 12.^[4] A year later, Wells Fargo Bank, NA.

("Wells Fargo") was assigned the deed of trust and note and became the servicer of the mortgage; on March 1, 2021, Rushmore became the servicer of the mortgage, and the deed of trust was assigned from Wells Fargo to U.S. Bank National Trust, solely in its capacity as a trustee for the RMAC Trust. ECF 15, at 15 ¶¶ 26-27. The deed of trust was assigned twice more, on June 7 and November 4, 2021, to U.S. Bank National Trust solely in its capacity as trustee for the RMTP Trust and then to Rushmore Loan Management Services, LLC, respectively. Id. at 11 ¶¶ 28-29.

On January 31, 2018, Wells Fargo initiated foreclosure proceedings against Contee after he experienced a reduction in household income and subsequently fell behind on his mortgage payments. ECF 15, at 11 ¶ 30. The foreclosure case was initially dismissed on March 22, 2019 for lack of prosecution, though the court later vacated the dismissal and stayed the case pending resolution of Contee's bankruptcy petition, which he had filed on June 5, 2018. ECF 22-2, at 17, at 25. Rushmore became the servicer of Contee's mortgage on March 1, 2021, during the time he was in default on the loan and engaged in bankruptcy proceedings. ECF 15, at 10 ¶ 27. Contee alleges that Rushmore, as servicer of the mortgage, engaged in a variety of unlawful conduct, including refusing to accept distributions from Contee's Chapter 13 Trustee and charging sums Contee did not owe.^[5] Id: at 12 ¶ 34, at 13 ¶ 39-42.

The issue currently before the Court concerns Contee's allegation that Rushmore is improperly charging him a fee of $2,606.40 for "recoverable corporate advances." ECF 15, at 14 ¶ 46. $2,515.00 of this sum was allegedly incurred by Wells Fargo as prior servicer of the mortgage but Contee maintains that he paid that amount in full when he settled his bankruptcy case. Id. A loan payment ledger for the mortgage, included in the parties Joint Record, indicates that on December 18, 2017, Contee incurred $720 in attorney's fees and $300 in title costs, while on January 30 and'31, 2018, he incurred $475 in filing fees and court costs, $60 in recording fees, and $960 in attorney's fees. ECF 22-2, at 32. Added together, this would appear to comprise the total of $2,515 that Rushmore claims Contee owes from the time Wells Fargo serviced the loan. Id. at 67.

Indeed, Rushmore claimed this amount on both the March 11, 2021 and May 28, 2021 mortgage statements that it sent to Contee. ECF 22-2, at 41. Contee alleges that on July 26,2021, "he sent a detailed letter to Rushmore explaining that he paid the exact amount in arrearage that Rushmore and the [bankruptcy court told him to pay, and he could not be behind on his payments." ECF'15, at 15 ¶ 48. Six months later, after Rushmore had failed to fix the alleged billing errors oh Contee's statements, Contee filed a complaint with the Consumer Financial Protection Bureau "stating the Rushmore is erroneously billing him for a delinquency despite paying on time and curing the full arrearage deficiency in a chapter 13 bankruptcy." Id. ¶ 49. Throughout this time, Rushmore continued to charge not only the original corporate advance fees, but additional fees in the amount of $75, $15, and $1.40, which it described on Contee's August 2021 statement as being due for "attorney fees" and "foreclosure costs," bringing the total claimed to $2,606.40. ECF 22-2, at 47.

In response to additional communication from Contee, Rushmore sent correspondence on July 26, 2022 alleging that under the terms of the mortgage agreement, the "[recoverable [c]orporate [a]dvance [b]alance includes the amounts the lender has advanced to protect its interest in the property" including the cost of "property inspections, property preservation, and legal counsel to protect its security interest." ECF 15, at 17 ¶ 54; see also ECF 22-2, at 67. In the same letter, Rushmore provided a generalized breakdown of alleged fees, noting charges of $75, $960, and $720 in "foreclosure fees" and $1.40, $15, $60, $475, and $300 in "foreclosure costs." ECF 22-2, at 71.

Rushmore again included a charge for "recoverable corporate advances" in the amount of $2,606.40 on Contee's August 15, 2022 statement. ECF 22-2, at 57. Contee argues that Rushmore's practice of billing fees under the line item "recoverable corporate advances" prevented him from assessing the validity of the claimed debt and violates the FDCPA, MCDCPA, and MCPA. ECF 15, at 23-24 ¶¶74-78.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) governs dismissals for failure to "state a claim upon which relief can be granted." In considering a motion under this rule, courts discount legal conclusions stated in the complaint and "accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court then draws all reasonable inferences in favor of the plaintiff and considers whether the complaint states a plausible claim for relief on its face. Nemet Chevrolet, Ltd. V. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009). "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.

"The complaint must offer 'more than labels and conclusions' or 'a formulaic recitation of the elements of a cause of action[.]'" Swaso v. Onslow Cnty. Bd. Of Educ, 698 Fed.Appx. 745, 747 (4th Cir.2017) (quoting Bell Ad. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). At the same time, a "complaint will not be dismissed as long as [it] provides sufficient detail about [the plaintiffs] claim to show that [the plaintiff] has a more-than-conceivable chance of success on the merits." Owens v. Bait. City State's Attys Off., 767 F.3d 379, 396 (4th Cir. 2014).

If a complaint allegation sounds in fraud, it must also meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) in order to survive a motion to dismiss. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784, 789 (4th Cir. 1999). Rule 9(b) requires plaintiffs to "state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). In order to satisfy this standard, plaintiffs "must, at a minimum, describe 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." United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008). Courts in the District of Maryland have consistently held,that FDCPA and related claims do "sound in fraud" for the purposes of 9(b) requirements.^[6] See, e.g., Flournoy v. Rushmore Loan Mgmt. Serv., LLC, No. 8:19-cv-00407-PX, 2020 WL 1285504, at *4 (D. Md. Mar. 17, 2020), and Bowman v. Select Portfolio Servicing, Inc., 704 F.Supp.3d 633, 640 (D. Md. 2023). Accordingly, this Court follows suit.

III. ANALYSIS

A. FDCPA Claims

Congress enacted the FDCPA for the purposes of eliminating "abusive, deceptive, and unfair debt collection practices." 15 U.S.C. § 1692. Section § 1692e forbids the use of "false, deceptive, or misleading representation" in the collection or attempted collection of any debt. Whether a statement is false misleading, or deceptive for the purposes of the FDCPA is determined according to the standard of the "least sophisticated consumer." Russell v. Absolute Collection Serv, Inc., 763...