Hunte v. Rushmore Loan Management Services, LLC

Background

Esther Hunte, proceeding without a lawyer, sued Rushmore Loan Management Services, LLC under the Real Estate Settlement Procedures Act, a federal law governing parts of the mortgage-settlement and servicing process, and Regulation X, its implementing regulations. Hunte alleged that her loan servicer engaged in “dual tracking”—moving forward with foreclosure while simultaneously working with a borrower to avoid foreclosure—after she submitted a complete loss-mitigation application.

The court had previously denied Rushmore’s motion for summary judgment because Rushmore did not comply with a local rule, while allowing Rushmore to file a motion for judgment on the pleadings. Rushmore then filed the motion addressed in this opinion.

Rushmore’s Arguments

Rushmore asked for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The court applies the same standard to that motion as to a motion claiming that a complaint fails to state a legally sufficient claim. At this stage, the court accepts well-pleaded factual allegations as true and asks whether they plausibly support relief.

Rushmore argued that the court should not consider Hunte’s opposition because it was filed less than twelve hours late and contained unsworn factual statements. The court found the delay excusable and concluded that it could consider the submission, particularly because Hunte was representing herself and the motion concerned whether her allegations were plausible, not whether she had already offered trial-ready evidence.

Rushmore also argued that Hunte had not alleged enough facts about Rushmore’s own conduct. The court acknowledged that most of Hunte’s allegations concerned Nationstar. But the court concluded that it was plausible, based on the allegations and authorities cited, that Rushmore could have assumed liability for certain claims when it took over servicing the loan. Whether such successor liability exists under the circumstances is fact-dependent and could not properly be resolved from the pleadings alone.

Rushmore further argued that claim preclusion, issue preclusion, and judicial estoppel barred Hunte’s claim. The court rejected those arguments. It explained that a dual-tracking claim generally does not become ripe until foreclosure has occurred or the borrower has otherwise suffered the relevant harm, so the claim could not necessarily have been brought during the earlier foreclosure proceeding. The court also noted that the earlier court had not actually decided the dual-tracking issue. As to judicial estoppel, Rushmore did not show that Hunte had adopted inconsistent positions in the two proceedings.

Finally, Rushmore argued that the claim was filed too late. Regulation X claims under the relevant provision of the settlement law generally must be filed within three years of the violation. The court found that Rushmore had not shown on the pleadings that the limitations period had expired. The parties disputed when the dual-tracking violation occurred, including whether it arose when Nationstar filed a second motion for summary judgment in December 2019 or at another point in the foreclosure process.

Ruling

Judge Kenneth M. Karas denied Rushmore’s Rule 12(c) motion for judgment on the pleadings. The court did not decide whether Rushmore is ultimately liable or whether Hunte will prevail on her claim. It decided only that Hunte’s allegations were sufficient to continue past this pleading stage and that Rushmore’s procedural defenses could not resolve the case on the existing pleadings.

The clerk was directed to terminate the pending motion, and the court scheduled a status conference for April 3, 2024.