Kuhl v. U.S. Bank Trust National Association

Background

Jonathan Kuhl, proceeding without a lawyer, sued U.S. Bank Trust National Association, acting solely as owner trustee for Legacy Mortgage Asset Trust 2018GS-1; MTGLQ Investors, LP; and Rushmore Loan Management Services LLC. He asserted claims under the Truth in Lending Act against U.S. Bank and MTGLQ, and state-law claims against Rushmore.

Kuhl alleged that his mortgage was assigned to MTGLQ in April 2018 and then to U.S. Bank in February 2019, without the notices required by the Truth in Lending Act. He also alleged that after a February 2019 fire damaged his property and injured him, the property insurer sent $151,877 to Rushmore. Kuhl alleged that Rushmore released only $25,000 to him, despite an agreement to release additional funds as repairs progressed, and that he lost anticipated income because he could not use his garage-workshop.

Court’s Analysis

Rushmore argued that the court lacked diversity jurisdiction because Kuhl had not plausibly alleged more than $75,000 in controversy. The court rejected that argument. Kuhl alleged that Rushmore retained insurance proceeds, that he lost at least $50,000 in anticipated income, and that he sought additional payments and damages. The court held that these allegations were enough to presume that the amount in controversy exceeded $75,000. It also held that later payments by Rushmore did not change the jurisdictional amount because jurisdiction is measured when the lawsuit is filed.

Rushmore also argued that Kuhl failed to state claims for breach of fiduciary duty and equitable relief. The court declined to consider letters and process guidelines submitted by Rushmore because they were not incorporated into, or integral to, the complaint. Liberally construing the complaint, the court held that Kuhl plausibly alleged that Rushmore owed him fiduciary duties concerning escrowed insurance proceeds and failed to release promised funds. The court also found that the complaint plausibly alleged a breach-of-contract claim, even though Kuhl had not separately labeled that claim as a cause of action.

The court dismissed the Truth in Lending Act claim against MTGLQ because the alleged assignment occurred in April 2018, Kuhl filed suit more than one year later, and he alleged no facts supporting equitable tolling beyond the alleged nondisclosure itself. The court did not dismiss the Truth in Lending Act claim against U.S. Bank. Kuhl alleged that the assignment to U.S. Bank occurred in February 2019 and that he did not receive the required notice within thirty days. The court refused to consider a notice letter submitted by U.S. Bank because it was not part of, or integral to, the complaint. At the motion-to-dismiss stage, the court accepted Kuhl’s allegations as true.

Ruling

The court granted MTGLQ’s motion to dismiss. It denied U.S. Bank’s and Rushmore’s motion to dismiss. Kuhl’s claims against U.S. Bank and Rushmore therefore remained pending, and the court directed those defendants to answer the complaint by October 12, 2020. The clerk was directed to terminate MTGLQ as a defendant and to terminate the two motions. The court also denied permission to appeal without paying filing fees, certifying that an appeal would not be taken in good faith.