Raciti v. Rushmore Loan Mgmt. Servs., LLC

Decision Date28 August 2019
Docket NumberCivil Action No.: 18-14869 (FLW) (LHG)
Citation412 F.Supp.3d 462
Parties Frank C. RACITI, Darlene A. Raciti, individually and on behalf of all others similarly situated, Plaintiffs, v. RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Defendant.
CourtU.S. District Court — District of New Jersey

Subhan Tariq, The Tariq Law Firm, Brooklyn, NY, for Plaintiffs.

Aileen E. Mctiernan, Joseph Nicholas Froehlich, Locke, Lord, LLP, New York, NY, for Defendant.

WOLFSON, Chief Judge:

This matter comes before the Court on a Motion to Dismiss by Defendant Rushmore Loan Management Services, LLC ("Rushmore" or "Defendant"), pursuant to Federal Rule of Civil Procedure 12(b)(6), and Rushmore's Motion to Strike the Class Action Allegations pursuant to Rule 12(f). Plaintiffs Frank C. Raciti and Darlene A. Raciti ("Plaintiffs") filed a complaint, individually and on behalf of putative class members, wherein they allege that Rushmore misrepresented the legal status of Plaintiffs' debt by seeking to collect payments on a mortgage that had been discharged in bankruptcy, in violation of the Fair Debt Collection Practices Act ("FDCPA") and the Fair Credit Reporting Act ("FCRA"). For the reasons set forth below, the Court GRANTS Rushmore's Motion to Dismiss, and Rushmore's Motion to Strike is DENIED as moot.


The following facts are taken from the Complaint and taken as true for the purposes of this motion. Plaintiffs are residents of New Jersey, where this action arose. Complaint. ("Compl."), at ¶ 1. Rushmore is a residential mortgage servicer with its principal places of business in Irvine, California, Dallas, Texas, and San Juan, Puerto Rico. Plaintiffs allege that Rushmore is a debt collector under the FDCPA. Id. at ¶ 3. In 2014, Plaintiffs filed for bankruptcy listing Capital One, N.A. as a creditor holding a secured claim. The nature of the claim was listed as a third mortgage on a home located at 61 Readington Road, Whitehouse Station, NJ, the value of which was listed as $275,000.00. The mortgage was a debt owed jointly by Plaintiffs and the property was allegedly surrendered1 and vacated by Plaintiffs shortly after the time of their bankruptcy filing. Id. at ¶ 22. On September 17, 2015, the United States Bankruptcy Court for the District of New Jersey ordered that Plaintiffs were entitled to a discharge of their debts. Id. at ¶ 24.

On November 14, 2017, after Plaintiffs had allegedly vacated the home, Plaintiffs received a notice from Capital One, N.A. informing them that the servicing of their home loan was assigned, sold, or transferred from Capital One, N.A., to Rushmore. Id. at ¶ 25. On November 22, 2017, Plaintiffs received a notice of assignment from Rushmore. The notice informed Plaintiffs that the servicing of their mortgage loan and the right to collect payments from Plaintiffs had been assigned, sold, or transferred from Capital One, N.A. to Rushmore. Id. at ¶ 27. On December 21, 2017, Plaintiffs received a second notice letter from Rushmore. The letter stated the amount of Plaintiffs' debt was $28,942.00. Id. at ¶ 30. Rushmore's second letter also provided that Plaintiffs' monthly payment amount was $220.02. Id. at ¶ 31.

On January 17, 2018, Frank Raciti was allegedly contacted by Rushmore via telephone. At that time, Mr. Raciti was allegedly asked to verify that he had recently made a payment of $900.00 toward the loan at issue that had been previously discharged in bankruptcy. Plaintiff allegedly informed Rushmore that he had not made any payments and that he no longer had an attachment to the mortgaged property associated with that loan. Id. at ¶ 32. On May 29, 2018, after allegedly informing Rushmore that they no longer had attachments to the mortgaged property, Plaintiffs received a third notice, containing a home equity line of credit statement from Rushmore regarding the mortgage loan that had been discharged in bankruptcy. The statement noted that a minimum payment of $9,773.18 was due on June 25, 2018. Id. at ¶ 34.

On May 30, 2018, Plaintiffs received a fourth letter from Rushmore. In this forth letter, Rushmore informed Plaintiffs that they were responsible for paying the delinquency property tax against the property securing the referenced loan. The loan to which the letter referred was the mortgage that had been discharged in bankruptcy. Id. at ¶ 35. Furthermore, on or around June 11, 2018, Mr. Raciti accessed a copy of his credit report, which revealed that Defendant had made inquiries into Plaintiff's credit information on two occasions.

The purpose of the requests is listed on his report as account review. Id. at ¶ 37.

On October 10, 2018, Plaintiffs brought this putative class action against Rushmore. The Complaint asserts seven causes of action against Rushmore, including: (1) violation of 15 U.S.C. § 1692(e)(2)(A) ; (2) violation of 15 U.S.C. § 1692(e)(10) ; (3) violation of 15 U.S.C. § 1692(f) ; (4) violation of 15 U.S.C. § 1681(b) ; (5) contempt; (6) negligent infliction of emotional distress; and (7) declaratory judgment. Plaintiffs claim that Rushmore violated the FDCPA because it misrepresented the legal status of Plaintiffs' debt by seeking to collect payments on a mortgage that had been discharged in bankruptcy and sent correspondence containing a minimum payment amount. Id. at ¶ 47. Furthermore, Plaintiffs claim that Rushmore violated the FCRA when Rushmore performed a pull of Mr. Raciti's credit information because Rushmore was not engaged in a transaction with Plaintiffs and did not have a legitimate business need to conduct an inquiry into Mr. Raciti's credit. Id. at ¶ 72.

In the instant matter, Rushmore moves to dismiss Plaintiffs' Complaint in its entirety and moves to strike Plaintiffs' class action allegations. Rushmore argues that it is not a debt collector under the FDCPA because Plaintiffs have not sufficiently alleged that Rushmore's principal purpose is debt collection for another entity. In addition, Rushmore contends that because it had a credit transaction relationship with Plaintiffs, it had a permissible purpose for obtaining credit information under 15 U.S.C. § 1681b(a)(3)(A)-(F).

I. Standard of Review

Under Fed. R. Civ. P. 12(b)(6), a complaint may be dismissed for "[f]ailure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When reviewing a motion to dismiss on the pleadings, courts "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. Cnty. of Allegheny , 515 F.3d 224, 233 (3d Cir. 2008) (quotations omitted). Under this standard, the factual allegations set forth in a complaint "must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Indeed, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "[A] complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to ‘show’ such an entitlement with its facts." Fowler v. UPMC Shadyside , 578 F.3d 203, 211 (3d Cir. 2009).

However, Rule 12(b)(6) only requires a "short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. The complaint must include "enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips , 515 F.3d at 234 (citation and quotations omitted); Covington v. Int'l Ass'n of Approved Basketball Officials , 710 F.3d 114, 118 (3d Cir. 2013) ("[A] claimant does not have to set out in detail the facts upon which he bases his claim. The pleading standard is not akin to a probability requirement; to survive a motion to dismiss, a complaint merely has to state a plausible claim for relief." (citation and quotations omitted)).

Under the current pleading regime, when a court considers a dismissal motion, three sequential steps must be taken: first, "it must take note of the elements the plaintiff must plead to state a claim." Connelly v. Lane Constr. Corp. , 809 F.3d 780, 787 (3d Cir. 2016) (quotations omitted). Next, the court "should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. (quotations omitted). Lastly, "when there are well-pleaded factual allegations, the court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. (quotations and brackets omitted).


Rushmore moves to dismiss Plaintiffs' FDCPA claims on the basis that it does not satisfy the statutory definition of a debt collector. Rushmore argues that Plaintiffs merely claim that Rushmore is a debt collector under the FDCPA but do not sufficiently allege facts to support that claim. The Third Circuit has long recognized that the provisions of the FDCPA "generally only apply to ‘debt collectors.’ " Pollice v. National Tax Funding, L.P. , 225 F.3d 379, 403 (3d Cir. 2000) (citing Pettit v. Retrieval Masters Creditors Bureau, Inc. , 211 F.3d 1057, 1059 (7th Cir. 2000) ). "Debt collector" is defined under the statute as:

any person: (1) ‘who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts’ ...; or (2) ‘who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another[.]

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