Jackson v. Rushmore Loan Management Services

UNITED STATES BANKRUPTCY COURT

DISTRICT OF MASSACHUSETTS

EASTERN DIVISION

)

In re: ) Chapter 13

) Case No. 10-11716-MSH

KIMMY R. JACKSON, )

)

Debtor )

)

)

KIMMY R. JACKSON, )

)

Plaintiff ) Adversary Proceeding

) No.18-01162-MSH

v. )

)

RUSHMORE LOAN MANAGEMENT )

SERVICES, )

)

Defendant )

MEMORANDUM OF DECISION

ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

The defendant in this adversary proceeding, Rushmore Loan Management Services, has

moved for summary judgment on all three counts of the complaint filed byKimmy R. Jackson,

the debtor in the main case and the plaintiff here.After a hearing on the motion and

consideration of the parties’ oral and written submissions, I will, for the reasons explained

below, grant the defendant’s motion and enter judgment in favor of Rushmore on all counts of

the complaint.

Facts

The following facts are taken from the undisputed allegations in the complaint and the

statement of factsand affidavit insupport of Rushmore’s motion for summary judgment.1 Ms.

Jackson, who owns condominium unit 316 at 700 N. Wellman Avenue inNorth Chelmsford,

Massachusetts, borrowed money and granted her lender a first mortgage on her unit sometime

prior to 2018. Rushmorebecame the servicer of her mortgageloan around May 1, 2018. Prior to

that time,Capital One had been Ms. Jackson’s mortgage loan servicer.While Capital One was

the loan servicer, Ms. Jackson submitted a loan modification application with respect to her loan.

Capital One responded to the application by letter dated January 11, 2018,requesting more

information. The letter stated:“Please send us the requested information by February 10, 2018,

or your request for assistance will be closed for incompleteness.” In her unverified complaint

here, Ms. Jackson alleges that she submitted the requested information and never received

further correspondence from Capital One.Capital One’s records,apparently transferred to

Rushmore when it became the new servicer, reflected that Jacksonin fact did not provide all the

requested documents,and on April 10, 2018, Capital One determined thatdue to her incomplete

application, no loss mitigation option was available to Ms. Jackson.

After Rushmore became the servicer of Ms. Jackson’s mortgage loan, itsent her three

lettersalong with forms and applications advising Ms. Jackson of Rushmore’s borrower

assistance and loss mitigation options. The letters were sentonMay 5, 9, and 15, 2018,

respectively.

1 As the plaintiff failed to timely file and serve a statement as to those material facts, if any,

which she believed were in dispute and which created a genuine issue to be tried, Rushmore’s

stated facts are deemed admitted for purposes of its motion for summary judgment. See MLBR

7056-1 (adopting D. Mass. L.R.56.1).

Ms. Jackson did not respond to any of Rushmore’s letters offering assistance. Instead, on

May 26, 2018,Ms. Jackson’s attorneysent a letter to Rushmore askingthe following questions:

1. Who was the prior servicer?

2. When was servicing transferred?

3. What is the current principal balance?

4. What is the amount of the current monthly payment, itemized into principal,

interest and escrow (if applicable)?

5. Is this loan owned by any governmental agency such as HUD, FNMA or

FHLMC?

6. What loan modification options does Ms. Jackson have?

Rushmore acknowledged receipt of the letter on June 7, 2018,and followedupby mailing Ms.

Jackson on June 15, 2018,her “customer account activity statement”containing her loan

payment history.On October 24, 2018,slightly more than five months after becoming her

mortgage servicer, Rushmore notified Ms. Jackson that the servicing of her mortgagewasbeing

transferred to another servicer.The last day Rushmore serviced Ms. Jackson’s loan was

November 12, 2018.

Ms.Jackson, who filed a petition for relief under chapter 7of the Bankruptcy Code in

this Court in February 2010 and converted her case to one under chapter 13 in January 2013,

initiated this adversary proceeding in October of2018. In her complaint,she assertedclaims

against Rushmore for violations of the federal Real Estate Settlement Procedures Act (RESPA)

(count I), violations of various federal regulations and state laws (count II), andbreaches of

contract (count III).

Positions of the Parties

Ms. Jackson argues that Rushmore had a duty to respond to each of the questionsin her

May 26thletter and failed to do so.Furthermore,she claimsthat Capital One never completed

the disposition of her loan modification application and that Rushmore,as its successor servicer,

had a duty to do so and failed to carry out that duty.This conduct, Ms. Jackson asserts, gives rise

to the violations and breaches alleged in the three counts of hercomplaint.

Rushmore responds that Capital One closed Ms. Jackson’s loan modification application

due to her failure to submit all the documents requested by Capital Oneand thus there was no

active loan modification process in existence at the time Rushmore became Ms. Jackson’s loan

servicer.While Rushmoreconcedesthat itdid owe duties to Ms. Jacksonunder federal and state

law,itinsiststhat it complied with all its duties.What’s more,Rushmoremaintainsthat even if it

had failed to comply,Ms. Jackson suffered no damage as a result and,therefore,cannot prevail

onher claimsin any event.Finally, Rushmore asserts there were no contracts under which Ms.

Jackson would have a right to bring a claim against it for a breach.

Summary Judgment Standard

Summary judgment must be granted“ifthe movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a); see also Fed. R. Bankr. P. 7056(applying Rule 56 to adversary proceedings). A

dispute is “genuine” when “supported by such evidence that ‘a reasonable jury, drawing

favorable inferences,’ could resolve it in favor of the nonmoving party.” Triangle Trading Co. v.

Robroy Indus., Inc., 200 F.3d 1, 2 (1st Cir. 1999) (quoting Smith v. F.W. Morse & Co., 76 F.3d

413,428 (1st Cir. 1996)). Adisputedfact is “material” if its resolutionin the nonmovant’s favor

could affect the suit’s outcomeupon applying applicable law.McCarthy v. Nw. Airlines, Inc., 56

F.3d 313, 315 (1st Cir. 1995). The moving party “bears the initial responsibility of informing the

[trial] court of the basis for its motion and identifying those portions of ‘the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if

any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the nonmovant to “‘present

definite, competent evidence to rebut the motion.’” Pagano v. Frank, 983 F.2d 343, 347 (1st Cir.

1993) (quoting Mesnick v. Gen.Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)).

Discussion

At the hearing on Rushmore’s motion for summary judgment, Ms. Jackson’s attorney

incorrectly argued that Rushmore bore the burden of proof in the summary judgment process.2 It

is a settled rule, however, that“[o]n issues where the nonmovant bears the ultimate burden of

proof at trial, he may not defeat a motion for summary judgment by relying upon evidence that is

‘merely colorable’ or‘not significantly probative.’” Pagano, 983 F.2d at 347 (quoting Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 249-50(1986)). “As to issues on which the nonmovant has

the burden of proof, the movant need do no more than aver ‘an absence of evidence to support

the nonmoving party’s case.’” Mottolo v. Fireman’s Fund Ins. Co., 43 F.3d 723, 725 (1st Cir.

1995) (quoting Celotex, 477 U.S.at 325); see also Fed. R. Civ. P. 56(c)(1)(B) (permitting

moving party to show that fact cannot be genuinely disputed by “showing . . . that an adverse

party cannot produce admissible evidence to support the fact”).

Count I

Count I of the complaint alleges that Rushmore violated RESPA by failing to adequately

respond to Ms. Jackson’s May 26, 2018 letter.RESPA is a consumer protection statute that,

among other things,requires the servicer of a federally relatedmortgage loan to respond to

certain borrower requests for information relating to the servicing of such a loan if the request is

2 This may explain why Ms. Jackson failed to conduct discovery in this proceeding or to timely

submit a response to Rushmore’s statement of material facts.

a “qualified written request” (QWR), as defined in the statute, 12 U.S.C. § 2605(e)(1).3 See also

O’Connor v. Nantucket Bank, 992 F.Supp.2d 24, 34 (D. Mass. 2014) (discussing RESPA

requirements). A QWR is a written correspondence that “enables the servicer to identify[]the

name and account of the borrower” and presents the reasons for the borrower’s belief “that the

account is in error” or otherwise requests information and “provides sufficient detail to the

servicer regarding [the]information sought.” 12 U.S.C. § 2605(e)(1)(B). RESPA defines a

“servicer” as “the person responsible for servicing of a loan (including the person who makes or

holds a loan if such person also services the loan).” Id. § 2605(i)(2). A servicer whoreceives a

QWR must acknowledge receipt of the QWR within five business days and respond to the QWR

“with a written explanation or clarification” within thirty business days. Id.§ 2605(e). The

servicer’s response must inform the borrower of any appropriate corrections to her account or

state “the reasons for which the servicer believes the account of the borrower is correct” after

investigating the issue. Id.§ 2605(e)(2). Alternatively, the response may explain “why the

information requested is unavailable or cannot be obtained by the servicer” after aninvestigation.

Id.

Toprevail on her count I claim, Ms. Jackson must show: (1) that Rushmore failed to

comply with RESPA’s QWR rules; and (2) that she suffered actual damages as a consequence of

Rushmore’s failure. SeeGaydos v. Bank of America, N.A., No. 1:17-cv-10246-ADB, 2019 WL

3 Ms. Jackson asserts, and Rushmore does not dispute, that Rushmore is a “servicer” of a

“federally related mortgage loan” as defined by RESPA. See 12U.S.C. §§ 2605(i)(2), 2602(1).

To qualify as a “federally related mortgage loan” the loan must be “secured by a first or

subordinate lien on residential real property”and have some relation to a federal agency or

certain mortgage associations,or it must have been made by a “creditor,” as defined in the Truth

in Lending Act, § 1602(f) of Title 15. 12U.S.C. § 2602(1).

404031, at *4 (D. Mass. Jan. 30, 2019). Here I need not address the first requirement because

Ms. Jackson fails the second.

Towithstand adefendant’smotion for summary judgment involving a claimed violation

of RESPA such as the one here, a plaintiff must demonstrate“a specific pecuniary loss and

identify how the purported RESPA violation caused that loss.” See id. at *4 (citing Foregger v.

Residential Credit Sols., Inc., No. 12-11914-FDS, 2013 WL 6388665, at *4 (D. Mass.Dec. 5,

2013)); Bulmer v. MidFirst Bank, FSA, 59 F. Supp. 3d 271, 279 (D. Mass. 2014).Liability for

statutory damages, which can include damages due to “a pattern or practice of noncompliance

with the requirements” of RESPA,specifically requires that the plaintiff sustain an actual injury.

See 12 U.S.C. §2605(f)(1); Diedrich v. Ocwen Loan Servicing, 839 F.3d 583, 589 (7th Cir.

2016). It is the plaintiff’s burden to establish that a claimedinjury was proximately caused by a

violation of RESPA. Holland v. EMC Mortg. Corp. (In re Holland),CaseNo. 04-18099-JNF,

Adv.No. 06-1418, 2008 WL 4809493, at *9 (Bankr. D. Mass. Oct. 30, 2008).

In her unverified complaint, Ms. Jackson asserts vague and speculative damages related

to Rushmore’s conduct. These include “expenses for attorney fees relating to the inquires,

postage, time lost from work, damage to her credit rating, the possibility of fees and costs

improperly or unreasonably charged to her account by Rushmore, and emotional distress in the

form of unreasonable [sic] fear of foreclosure.” Ms. Jackson did nothing to clarify her damage

claim in response to Rushmore’s motion for summary judgment. She did not file any affidavits

or other documents to support the existence or extent ofthese alleged injuries.

“‘To survive summary judgment, the nonmoving party must show evidence sufficient to

establish every element that is essential to [her] claim and for which [she]will bear the burden of

proof at trial.’” Diedrich, 839 F.3d at 591 (quoting Life Plans, Inc. v. Sec. Life of Denver Ins.

Co., 800 F.3d 343, 349 (7th Cir. 2015)). This means that Ms.Jackson had the burden to “come

forward with evidence sufficient to support an award actual of damages to pursue [her] RESPA

claim[].” Id.Based on the record,there is no evidence that costs were improperly or

unreasonably charged to her account. Ms. Jacksondid not file an affidavit containing evidence of

time lost from work, damage to her credit rating, or emotional distress, let alone a causal

connection between any of theseinjuries and Rushmore’s QWR response (assuming without

deciding that it was inadequate).See Gaydos, 2019 WL 404031, at *4 (“Although Plaintiff

makes a general allegation that he suffered lost wages, attorney’s fees, other expenses, and

emotional distress related to the fear of losing his home as a result of the RESPA violations, that

allegation lacks the requisite specificity and fails to assert a causal connection to an identified

RESPA violation.”(citation omitted));Hopson v. Chase Home Fin.LLC, 14 F.Supp.3d 774,

788 (S.D. Miss. 2014) (“Plaintiffs allege generally that they have sustained a reduction in

property value, harm to their credit scores, the threat of foreclosure and mental and emotional

distress damages. Yet there is nothing in the complaint to link any of these alleged damages to

Chase’s alleged violation of RESPA.”).

Ms. Jackson alleges damages for attorney’s fees relating to the preparation of her inquiry

and the postage for sending it.Butpreparation costs, “are not actual damages under RESPA

because RESPA requires the damages to flow as a result of the violation.” Giordano v. MGC

Mortg., Inc., 160 F.Supp.3d 778, 782 (D.N.J. 2016) (collecting cases).The language of the

statue allowing recovery for “any actual damages to the borrower as a result of the failure,”

precludes the recovery forcosts related to preparing the initial QWR. 12 U.S.C. §2605(f)(1)(A)

(emphasis added).Ms. Jackson wouldhave borne the cost of preparing the initial QWR

regardless of whether Rushmore had responded properly. See Giordano, 160 F.Supp.3d at 782

(“Expenses that would be incurred regardless of a violation do not occur ‘as a result’ of the

violation.”).But see In re Bryce, 491 B.R. 157, 181 (Bankr. W.D. Wash. 2013) (finding “[t]he

actual damages for the RESPA violations are the amount paid by the Plaintiffs to [their attorney]

to prepare the Qualified Written Request, or $180”).

Furthermore, attorney’s fees related to litigating acase donot constitute actual damages

under RESPA.They areseparately authorized under § 2605(f)(3) which provides that “in the

case of any successful action under this section, the costs of the action, together with any

attorneys fees incurred in connection with such action as the court may determine to be

reasonable under the circumstances” shall be awarded in addition to other damages. 12 U.S.C. §

2605(f)(3) (emphasis added); see alsoMoore v. Wells Fargo Bank, N.A., 908 F.3d 1050, 1060

(7th Cir. 2018) (concluding that including attorney’s fees in actual damages “would render §

2605(f)(3) superfluous”).Thus,Ms. Jackson’seligibility to collect attorney’s fees is predicated

upon her succeedingin her claims against Rushmore, which for the reasons previously noted will

not occur.Ms. Jackson’s count I claims cannot withstand Rushmore’s motion for summary

judgment.

Count II

In count II of her complaint,Ms. Jackson alleges that Rushmore violated both federal

regulations promulgated under RESPAandMassachusetts law.

The Consumer Financial Protection Bureau (CFPB) promulgated “Regulation X”

pursuant toRESPA.4 12 C.F.R.§§1024.1-1024.41. Inthis regulation, the CFPBlaid out

procedures a servicer must follow after receiving an application by a borrower for a loan

modification or loss mitigation.See12 C.F.R.§ 1024.41. In her complaint, Ms. Jackson asserts

without detail that Rushmore did not comply fully with RegulationX.Providing more context in

her opposition to Rushmore’s motion for summary judgment,albeit in unsworn argument, she

alleges thatRushmore had a duty to complete the processing of her loanmodificationapplication

to Capital Onewhen it succeeded Capital One as her loan servicerand failed to do so.See 12

C.F.R. § 1024.41(k).

Rushmore submitted unrebutted factual material establishing that Capital One had

completed its disposition of Ms. Jackson’s loan modification application by determining that she

was not eligible due to her failure to submit all the necessary documentation requested. As

discussed with regard to count I, however, it isn’t necessary to delve into Rushmore’s conduct

regarding its predecessor’s handling of Ms. Jackson’s loan modification application because Ms.

Jackson has not carried her burden on claiming damages. Subsection (a) of § 1024.41 of

Regulation X states: “Aborrower may enforce the provisions of this section pursuant to section

4 During the first year of the Trump Administration in 2017, CFPB acting director and vocal

critic of the agency, Mick Mulvaney, changed the Bureau’s name to the Bureau of Consumer

Financial Protection. But like the spectacularly unsuccessful attempt to re-brand Coca Cola

“New Coke” back in the 1980s, the new name simply would not catch on. Finally, a year after

the name change, Mulvaney’s successor, Kathy Kraninger, citing costs, operational challenges

and the effect on the stakeholders, dropped the rebranding effort. While its legal name remains

the Bureau of Consumer Financial Protection, the agency decided to continue to call itself by the

name we all know, the Consumer Financial Protection Bureau. Renae Merle, The CFPB tried to

change its name. Here’s why it’s giving up, Wash. Post (Dec. 19, 2018, 1:47 PM),

https://www.washingtonpost.com/business/2018/12/19/cfpb-tried-change-its-name-heres-why-

its-giving-up/.

6(f) of RESPA (12 U.S.C. [§] 2605(f)).” 12 CFR § 1024.41(a). In other words, the same two-part

test outlined above for making out a claim for a RESPA violation is required to establish a claim

for violating Regulation X. Since the second part of that test is proximate injury and Ms. Jackson

has failed to present a specific, causally connected claim for any injury, her cause of action for

Rushmore’s violating Regulation X can no more withstand a motion for summary judgment than

can her RESPA claim.

Within the same count, Ms. Jackson has alleged that Rushmore violated sections 35Band

35Cof chapter 244 of the Massachusetts General Laws.5 Pursuant to § 35B(b), “[a] creditor shall

not cause publication of notice of a foreclosure sale . . .upon certain mortgage loans unless it has

first taken reasonable steps and made a good faith effort to avoid foreclosure.” Mass. Gen. Laws

ch. 244,§35B(b). Section 35B subsection(c) requires, “for certain mortgage loans, the creditor

shall send notice, concurrently with the notice required by subsection (g) of section 35A, of the

borrower’s rights to pursue a modified mortgage loan.” Mass. Gen. Laws ch. 244,§35B(c). The

notice required by § 35A(g) is the notice that a creditor intends to accelerate payment of the

unpaid balance of a mortgage loan after a triggering event, such as a default. Mass. Gen. Laws

ch. 244,§35A(a).6

In its motion for summary judgment, Rushmore makes two arguments for why it cannot

be held liable under count II of the complaint for violations of the Massachusetts statutes.First,

Rushmore points out that it never published a notice of foreclosure sale or sent Ms. Jackson an

5 I assume Ms. Jackson is arguing that Rushmore violated both sections 35B and 35C, although

her complaint does no more than cite the sections.

6 Section 35A of Chapter 244 was amended, effective inJanuary 2016,such that the contents of

subsection (g) are now reflected in subsection (a). See Bank of New York Mellon v. Morin, 136

N.E.3d 396, 404 n.5 (Mass. App. Ct. 2019) (citing 2010 Mass. Acts 1102,1107-1112).

acceleration notice and thus could not have violated § 35B. Second, Rushmore notes that it could

not have taken the steps required in § 35B(b) because Ms. Jackson never submitted the

informationit would need in order to do so. Ms. Jackson never responded to any of the three

separate communications from Rushmore in May 2018 informing her about the availability of

loan modification or borrower assistance services.

In opposingRushmore’s motion for summary judgment, Ms. Jackson asserts that

Rushmore’s argument that it never undertook foreclosure activity “is irrelevant because

Rushmore does not point to anything in the statute that makes the [loan]modification provision

applicable only in the context of an active foreclosure.” Ms. Jackson clearly ignores the plain

language of the statute: “a creditor shall not cause publication of notice of aforeclosure sale. . .

unless it has first taken reasonable steps and made a good faith effort to avoid foreclosure,”

Mass. Gen. Laws ch. 244,§35B(b) (emphasis added).If there is no publication of such notice,

logicallythere can be no violation of this subsection. This statute imposes certain duties on

creditors if they wish to undertake certain actions, the duties are not blanket requirements

applicable to all mortgage holders.Cf.Bank of New York Mellon v. Morin, 136N.E.3d 396, 404

(Mass. App. Ct. 2019) (discussing events that trigger duties and obligations under § 35B).

Ms. Jackson has not alleged, nevermind provided evidentiary quality material to

establish,that Rushmore published anotice of a foreclosure sale orin any way advancedthe

foreclosureprocess. Therefore,Rushmore could not have violated §35B(b) of chapter 244.

With respect to § 35B(c), that section only comes into play if the servicer sends notice of

the lender’s intent to accelerate the debt upon a default. Rushmore maintains and Ms. Jackson

has not disputed that Rushmore never sent such a notice. Accordingly, there cannot have been a

violation of § 35B(c).

It is unclear whether Ms. Jackson is also arguing Rushmore violated § 35C of chapter

244, as in both her complaint and opposition to summary judgment she failed to provide

specificsas to which sections of chapter 244Rushmore allegedly violated. Subsection (b) of §

35C provides that “[a] creditor shall not cause publication of notice offoreclosure” if it knows

that the mortgagee is not the note holder or the agent of the note holder. Mass. Gen. Laws ch.

244,§ 35C(b). Subsection (c) provides that a creditor violates chapter 244 if it imposes “the cost

of correcting, curing, or confirming documentation” on a third party if the curative actions had to

be “taken because a foreclosure was commenced without the creditor’s possession of a valid,

written, signed and dated assignment.” Mass. Gen. Laws. ch. 244,§ 35C(c). Subsection (d)

prohibits a creditor from making false statements to a court related to foreclosure or compliance

with chapter 244. Mass. Gen. Laws. ch. 244,§ 35C(d). Lastly, subsections (e) and (f) provide

that a borrower should not be charged “for goods not rendered or services not performed in

connection with a foreclosure” and that individuals shall only accept fees for services actually

performed. Mass. Gen. Laws. ch. 244,§ 35C(e)-(f).

To the extent that § 35C required Rushmore to have initiated a foreclosure or loan

acceleration as a precondition to the statute’s applicability, Rushmore did not violate that section

as neither action was attempted or threatened. Tothe extent that § 35C does not require any

foreclosure or acceleration action, there has been no evidentiary quality showingon the record

here to support a violation or that Rushmore caused the type of harm this statute seeks to prevent.

Rushmore is entitled to summary judgment in its favor on count II of Ms. Jackson’s

complaint.

Count III

In count IIIof her complaint, Ms. Jackson brings a breach of contract claim against

Rushmore. Although not clearly pleaded, it seems that Ms. Jackson is arguing that Rushmore’s

failure to comply with RESPA and failure to act in good faith or deal fairly with her constituted a

breach of its duty under Ms. Jackson’s promissory note and mortgage. Even thoughRushmore

was not a party to these contracts, Ms. Jackson seeks to hold it liable because Rushmore was the

noteholder/mortgagee’s agent.

Under Massachusetts law, to succeed on a claim for breach of contract,a plaintiff must

prove that a valid contract existed between the parties, that the plaintiff was able to perform

under the contract, that the defendant breached its duties, and that the breach caused the plaintiff

damage. See Bose Corp.v. Ejaz, 732 F.3d 17, 21 (1st Cir. 2013) (citing Singarella v. City of

Boston,173 N.E.2d 290, 291 (Mass. 1961)). Neither party can be a stranger to the contract. Put

another way, apart from a few narrow exceptions, there must be privity between the plaintiff and

the alleged breaching party. See Mellen v. Whipple, 67 Mass. 317, 321 (1854) (“The rule is

sometimes thus expressed: there must be a privity of contract between the plaintiff and

defendant, in order to render the defendant liable to an action, by the plaintiff on the contract.”).

Ms. Jacksonasserts that as agent for her lender, Rushmore can be sued for breach of the

note and mortgage. In support, she marshals a single legal authority—CWCapital Asset Mgmt.,

LLC v. Chicago Props., LLC, 610 F.3d 497 (7th Cir. 2010).In that decision,the court considered

whether a servicer hadstanding to sue, in its own name, a borrower to enforce a note and collect

payments on behalf of the lender.This is a question entirely different from the one here which

boils down to whether a borrower may sue a servicer for breaches of the note and mortgage.

CWCapitaloffers Ms. Jackson no assistance.

Agency law developed to provideinnocent third parties an avenue to hold principals

accountable for the harm caused by their agents.Merrimack Coll.v. KPMG LLP,108 N.E.3d

430,438 (Mass. 2018).Thus,a principal may be held liable for breachesof a contract which his

agent enters into with a third party.Id.Ms. Jackson offers no legal authority, however,to support

her turning agency law on its head by attempting to hold an agent (Rushmore) liable for breaches

of a contract between the agent’s principal (the lender) and a borrower (Ms. Jackson).

Courts have consistently held that there is no contractual privity between a borrower and

a loan servicer with respect to a note and mortgage, and,therefore,the borrower cannot prevail

against the servicer on a breach of contract claim.See Mazzei v. Money Store, 308 F.R.D. 92,

109 (S.D.N.Y. 2015) (“A significant majority of courts have concluded that loan servicers are

not in privity of contract with mortgagors where the servicers did not sign a contract with the

mortgagors or expressly assume liability.”); Edwards v. Ocwen Loan Servicing, LLC, 24 F.

Supp. 3d 21, 28 (D.D.C. 2014) (“Judges around the country . . . have held that a loan servicer, as

a lender’s agent, has no contractual relationship or privity with the borrower and therefore cannot

be sued for breach of contract.”). If, however, the borrower can show that a lender validly

assigned some or all of its contractual obligations to the loan servicer, the borrower can sue the

servicer if it violates the terms of that part of the mortgage contract. See In re Ocwen Loan

Servicing, LLC Mortg. Servicing Litig., 491 F.3d 638, 645 (7th Cir. 2007). As Ms. Jackson has

not alleged, never mind offered any supporting evidence, that Ms. Jackson’s lender assigned any

of its contractual obligations to Rushmore, she has no privity with Rushmore as to her note and

mortgage and, therefore, cannot prevail on her breach of contractclaim.And again, the record

does not contain any evidence that Ms. Jackson suffered damages based on any alleged breaches.

As there is no contract between the parties, and no damages shown, I will grant summary

judgment in favor of Rushmore as to count HI of the complaint.

Conclusion

Defendant’s motion for summary judgment will be granted as to all counts. A separate

order consistent with this memorandum shall enter.

Dated: November 2, 2020 By the Court,

Melvin S. Hoffman

U.S. Bankruptcy Judge

Counsel Appearing: David G. Baker, Esq.

Boston, MA

for the plaintiff Kimmy R. Jackson

Jennifer J. Normand, Esq.

David M. Rosen, Esq.

Rosen Legal, LLC

Waltham, MA

for the defendant Rushmore Loan Management Services, LLC

16

UNITED STATES BANKRUPTCY COURT

DISTRICT OF MASSACHUSETTS

EASTERN DIVISION

)

In re: ) Chapter 13

) Case No. 10-11716-MSH

KIMMY R. JACKSON, )

)

Debtor )

□□

)

KIMMY R. JACKSON, )

)

Plaintiff ) Adversary Proceeding

) No. 18-01162-MSH

v. )

)

RUSHMORE LOAN MANAGEMENT )

SERVICES, )

Defendant

ORDER ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

Tn accordance with the memorandum of decision issued today, the defendant Rushmore

Loan Management Services’ motion for summary judgment (ECF No. 33) is granted as to all

counts.

Dated: November 2, 2020 By the Court,

Melvin S. Hoffman

U.S. Bankruptcy Judge