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McCann v. Rushmore Loan Management Services, LLC

United States District Court, E.D. New York

March 16, 2017

WAYNE MCCANN, Plaintiff,
v.
RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Defendant.

          SCHWARTZ LAW GROUP PC BY: KENNETH B. SCHWARTZ, ESQ. Attorney for Plaintiff.

          KNUCKLES KOMOLINSKI & ELLIOT LLP BY: JOHN E. BRIGAND!, ESQ. Attorneys for Defendant.

          MEMORANDUM AND ORDER

          LEONARD D. WEXLER, UNITED STATES DISTRICT JUDGE

         Plaintiff 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") [9]. For the reasons set forth herein, Defendant's motion is granted and the complaint is dismissed.

         I. BACKGROUND

         A. Factual Allegations and State Foreclosure Action[1]

         McCann is the owner and titleholder of real property located at 9 Pearl Street, Glen Cove, New York (the "Property"). Complaint ("Compl.") ¶6, DE [1]. 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].

         On or 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.

         On May 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.

         By 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.

         B. Complaint in This Action

         The 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.

         Plaintiff 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.

         As a 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 ...


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