United States District Court, E.D. New York
SCHWARTZ LAW GROUP PC BY: KENNETH B. SCHWARTZ, ESQ. Attorney
KNUCKLES KOMOLINSKI & ELLIOT LLP BY: JOHN E. BRIGAND!,
ESQ. Attorneys for Defendant.
MEMORANDUM AND ORDER
LEONARD D. WEXLER, UNITED STATES DISTRICT JUDGE
Wayne McCann ("McCann" or "Plaintiff)
commenced this action asserting two causes of action under
the Real Estate Settlement and Procedures Act of 1974, as
amended ("RESPA"), 12 U.S.C. § 2601 et
seq. and a New York state claim for deceptive practices
under New York General Business Law § 349. Defendant
Rushmore Loan Management Services, LLC ("Rushmore"
or "Defendant") has moved to dismiss the complaint
pursuant to Rule 12 (b)(1) and (6) of the Federal Rules of
Civil Procedure, arguing that this Court lacks subject matter
jurisdiction and that Plaintiffs claims are otherwise
precluded. Motion, Docket Entry ("DE") . For the
reasons set forth herein, Defendant's motion is granted
and the complaint is dismissed.
Factual Allegations and State Foreclosure
is the owner and titleholder of real property located at 9
Pearl Street, Glen Cove, New York (the "Property").
Complaint ("Compl.") ¶6, DE . On or about
February 13, 2006, he executed a promissory note evidencing a
loan made to him by Greenpoint Mortgage Funding Inc.
("Mortgagee") in the principal amount of $499, 000
(the "Mortgage"). Compl. ¶7. Rushmore has been
the "duly authorized servicer" of the Mortgage.
Id. According to defendant's counsel, the
Mortgage was assigned to BAC Home Loans Servicing, LP FKA
Countrywide Home Loans Servicing, LP
("BAC/Countrywide"). Declaration of John E.
Brigandi ("Brigandi Decl.") in Support of
Defendant's Motion to Dismiss Plaintiffs Complaint,
¶3, DE [9-2].
about July 28, 2009, a foreclosure action was commenced
against McCann in New York State Supreme Court, Nassau County
(the "Foreclosure Action"). Compl. ¶8.
Although the complaint does not state who commenced the
action, it was apparently brought by BAC/Countrywide, which
subsequently assigned its interest to Capital One, N.A.
McCann failed to appear in that action, and a judgment of
foreclosure of sale was issued on or about April 28, 2014.
Compl. ¶9; Brigandi Decl., Ex. D, Final Judgment for
Foreclosure and Sale dated 4/28/14 ("Judgment for
Foreclosure"). At some subsequent time, a foreclosure
sale was scheduled for May 5, 2015. Compl. ¶10.
4, 2015, the day before the sale, McCann brought a motion by
order to show cause in state court to stay the foreclosure
sale. Plaintiffs counsel submitted an affirmation in support
stating, inter alia, that on or about October 13,
2014, Rushmore notified McCann that the servicing of the loan
had been assigned to it from Bank of America, N.A.
Affirmation in Support of Kenneth B. Schwartz ("Schwartz
Aff."), of 5/4/15, Ex.C, DE [8-3]. By counsel's
affirmation, McCann asserted inter alia, that
Rushmore had "violated rather explicit provisions of
RESPA that would preclude a judicial sale in
foreclosure." Id. ¶1 (a). Plaintiff
alleged that Rushmore "[v]iolated 12 CFR 1024.41 (b)(2)
by failing to Review the Loss Mitigation Package, "
A/.¶ 8, and "[v]iolated the Prohibition On
Foreclosure Sales under 12 CFR 1024.41(g)." Id.
¶ 12. Although the foreclosure sale was held, the state
court issued a temporary restraining order to block transfer
of title pending the resolution of the motion.
Order dated August 18, 2015, the state court denied
McCann's motion to stay the foreclosure sale as he
"failed to demonstrate either a reasonable excuse or
meritorious defense to vacate his default." Order of
8/18/15, Brigandi Decl., Ex. G. McCann appealed, indicating
on his Request for Appellate Division Intervention that one
issue on appeal was whether the lower court erred by denying
his motion to stay the foreclosure sale due to
"violation of the loss mitigation provisions under
Federal Regulation X." Brigandi Decl., Ex. H. There is
no indication as to the outcome of that appeal.
Complaint in This Action
complaint in the case before this Court alleges three causes
of action. In two claims asserted under RESPA, Plaintiff
claims that Rushmore's failure to review and decide his
loss mitigation application constituted a violation of 12 CFR
1024.41 and that Rushmore further violated 12 CFR 1024.41(g)
by conducting foreclosure proceedings while that application
was pending. The third cause of action is a state law claim
for deceptive business practices.
alleges that Rushmore "as loan servicer, was duly
authorized to make all substantive decisions as to the
Foreclosure Action." Compl. ¶ 11. Plaintiff alleges
that "[n]inety days or more" prior to the
Foreclosure sale, he had submitted an application for loss
mitigation (the "Loss Mitigation Application"),
which was complete and pending. Id. ¶12. The
Complaint does not set forth the date of the submission of
the Loss Mitigation Application or any factual details
regarding the application. Despite the pendency of the
application, the foreclosure sale was scheduled and held.
result of the alleged RESPA violations, Plaintiff claims to
have suffered two measures of actual damages: "damages
to his credit and reputation as the result of the Foreclosure
Sale" and emotional distress "from having [his]
personal residence sold in the ...