Boedicker v. Rushmore Loan Management Services, LLC
2:16-cv-02798
D. Kan.Apr 20, 2017Background
- Plaintiffs (Douglas and Serenity Boedicker) fell behind on their mortgage and sought loss mitigation from servicer Rushmore Loan Management Services, LLC.
- Rushmore sent a January 2016 Reinstatement Payment Plan with inconsistent stated arrearages; Equifax reported a different past-due amount shortly after.
- Plaintiffs submitted a loss mitigation application (LM #1). Rushmore used an income figure different from plaintiffs’ submission to deny HAMP eligibility due to debt-to-income ratio.
- Rushmore offered a September 2016 “Trial Modification Agreement” with specified trial payments but no clear permanent-modification terms; plaintiffs did not tender payment pending clarification.
- Plaintiffs sent Notices of Error/Requests for Information seeking a ‘‘waterfall analysis’’ and clarification whether the trial plan was a forbearance or modification; Rushmore acknowledged receipt but did not provide the requested analysis or clarifying explanation.
- Rushmore sent a denial for the trial modification for failure to timely return documents and later a Notice of Acceleration; plaintiffs sued asserting RESPA, FDCPA, TILA, fraud, and breach of contract claims; Rushmore moved to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count 1: Whether §1024.41(e) bars servicer from deeming borrower to have rejected loss mitigation when trial plan lacks permanent-terms | Rushmore’s trial plan was not a true loss-mitigation option because it gave no permanent-modification terms; deeming rejection was improper | §1024.41 does not require servicers to offer any specific permanent modification or limit servicer discretion to define acceptable offers | Dismissed — plaintiffs failed to allege violation of a duty imposed by §1024.41 |
| Count 2: Whether §1024.41(c) was violated by failing to properly review a complete loss-mitigation application | Rushmore used an erroneous income figure and manipulated eligibility, failing to notify plaintiffs of all options considered | §1024.41(c) does not require notice of all options considered; no facts show failure to evaluate or to give required determination notice | Dismissed — allegations insufficient to show violation |
| Count 3: Whether §1024.35 requires Rushmore to provide requested waterfall analysis and to reasonably investigate Notices of Error | Plaintiffs alleged Rushmore failed to provide requested waterfall analysis, to investigate income discrepancy, and to clarify nature of trial plan | Rushmore contends no obligation to provide waterfall and plaintiffs don’t specify how procedures were violated | Denied — plausible §1024.35(e) claim for failure to conduct reasonable investigation / provide required written explanation |
| Count 4: Fraudulent misrepresentation under Kansas law | Rushmore knowingly/recklessly offered a trial modification that was not a RESPA-compliant modification to deceive borrowers | Allegations are conclusory, fail to identify a false statement, intent to deceive, or justifiable reliance | Dismissed — complaint fails to plead the elements of fraud with particularity |
| Count 5: Breach of contract (servicer relationship) | Rushmore breached mortgage/servicing contract by misstating income and providing incomplete loss-mitigation responses | Rushmore disputes existence/terms of any contract with obligations alleged; plaintiffs didn’t plead formation or specific contractual promises | Dismissed — no plausible allegation of contract formation or breach of contractual promises |
| Count 6: FDCPA §§1692d/1692f (unconscionable/harassment) | Rushmore used unconscionable means by offering a coercive payment proposal disguised as modification | Plaintiffs don’t allege harassment/abuse or any §1692f enumerated acts; mere unfavorable payment offer not an unfair practice pleaded plausibly | Dismissed — insufficient facts to state FDCPA harassment or unconscionable-collection claim |
| Count 7: FDCPA §1692e (false representation of amount/status) | Rushmore reported multiple, inconsistent balances (≈$2,000 discrepancy) to plaintiffs and Equifax, materially misrepresenting debt amount | Rushmore argues discrepancy is immaterial and plaintiffs don’t show materiality under §1692e standards | Denied — plausible material misstatement that could affect consumer’s response; claim survives dismissal |
| Count 8: FDCPA §1692e(11) (required disclosure that communication is from a debt collector) | January Reinstatement Payment Plan failed to disclose it was from a debt collector | Payment Plan language and context made clear it was a debt-collection communication | Dismissed — the communication sufficiently disclosed it came from a debt collector |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading-standards for plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading-standards and facial plausibility)
- Robbins v. Oklahoma, 519 F.3d 1242 (Tenth Circuit discussion of labels-and-conclusions rule)
- Smith v. United States, 561 F.3d 1090 (accepting well-pleaded allegations at motion-to-dismiss stage)
- Alires v. McGehee, 277 Kan. 398 (elements of fraudulent misrepresentation under Kansas law)
- Stechschulte v. Jennings, 297 Kan. 2 (elements of breach of contract under Kansas law)
- Emanuel v. American Credit Exchange, 870 F.2d 805 (FDCPA context for disclosure and interpretation of collector communications)
- Powell v. Palisades Acquisition XVI, LLC, 782 F.3d 119 (materiality standard for FDCPA misstatements)
- Conteh v. Shamrock Community Association, Inc., [citation="648 F. App'x 377"] (circuit court discussion of materiality under §1692e)