Hunte v. Rushmore Loan Management Services, LLC

Background

Esther Hunte and Jonathan Hunte sued Rushmore Loan Management Services, LLC under the Real Estate Settlement Procedures Act and its implementing regulations, known as Regulation X. They alleged that Rushmore was the mortgage servicer involved in an improper “dual tracking” violation—continuing foreclosure-related activity while a borrower’s loss-mitigation application was pending.

The complaint alleged that Esther Hunte obtained a mortgage loan in 2005, that the loan was later transferred or assigned, and that a loan-modification conference occurred in 2011. The plaintiffs also referred to an earlier federal foreclosure-related action and alleged that the loan was not modified as required by a state-court order. Rushmore moved for summary judgment.

Summary-Judgment Motion

The court denied Rushmore’s motion because Rushmore failed to comply with Local Civil Rule 56.1. That rule required Rushmore, as the moving party, to file a separate and concise statement identifying material facts that were not genuinely disputed. The court could not locate such a statement on the docket. A filing labeled as a statement of material facts was actually a copy of Rushmore’s supporting legal memorandum. The court also stated that it appeared Rushmore had not properly served a factual statement on the plaintiffs.

Because no party had provided the court with the required material facts, the court denied the summary-judgment motion for failure to comply with Rule 56.1. The court did not grant summary judgment to the plaintiffs and did not resolve the underlying RESPA claim on the merits.

Possible Pleading Defects

The court noted that Rushmore had raised serious questions about whether the amended complaint was legally sufficient. Construing the complaint liberally, the court stated that the alleged dual-tracking claim appeared deficient because the plaintiffs did not identify when they submitted a complete loss-mitigation application, a fact relevant to both the regulation’s requirements and the claim’s timeliness.

The court also explained that Regulation X’s dual-tracking prohibition is limited. It bars a servicer from moving for a foreclosure judgment or order of sale, or conducting a foreclosure sale, in specified circumstances; filing a federal court action does not inherently violate the regulation. The court further noted possible issues concerning whether Rushmore, rather than another entity identified in the complaint, was the proper defendant, and whether the plaintiffs adequately alleged actual damages caused by a RESPA violation.

The court granted Rushmore leave to file a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) within 30 days after the order was filed. The opinion did not rule on that possible motion.

Jonathan Hunte’s Standing

The court separately ruled that Jonathan Hunte lacked standing, meaning he had not shown the personal legal injury required to bring the claim in federal court. The mortgage documents identified Esther Hunte as the borrower, and Jonathan Hunte was not listed as a party to the mortgage or note. Although he signed some documents as Esther Hunte’s attorney-in-fact, the court found that he was not a borrower or otherwise obligated on the mortgage and had not shown an injury in fact.

The court also rejected any apparent attempt by Jonathan Hunte to assert Esther Hunte’s rights. It stated that he had not alleged an exception allowing him to bring another person’s claim and that Esther Hunte had not shown a hindrance to protecting her own interests. The court therefore found that Jonathan Hunte lacked standing to bring a RESPA claim and must be dismissed from the action.

Disposition

The court denied Rushmore’s Motion for Summary Judgment, directed the Clerk to terminate that motion, and directed the Clerk to terminate Jonathan Hunte from the action. The court did not terminate Esther Hunte from the case. It scheduled a status conference for May 2, 2023, and requested that Rushmore’s counsel serve Esther Hunte with a copy of the order at her current address.