United States District Court, D. New Jersey
FRANK C. RACITI, DARLENE A. RACITI, individually and on behalf of all others similarly situated, Plaintiffs,
RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Defendant.
Freda L. Wolfson U.S. Chief District Judge
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.
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
surrendered 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
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.
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.
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.
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.
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. §
Standard of Review
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 (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 (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).
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. 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)).
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 ...