Poorman et al v. Servbank

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
NICOLAS POORMAN, et al.,
Plaintiffs,
v. 	Case Number 2:23-cv-3945
Judge Edmund A. Sargus, Jr.
Magistrate Judge Elizabeth P. Deavers
SERVBANK, et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court on four Motions to Dismiss filed by Defendants:
Servbank’s Motion to Dismiss Plaintiffs’ Second Amended Complaint (ECF No. 47), Linda
Case’s Motion to Dismiss Plaintiffs’ Second Amended Complaint (ECF No. 53), The Money
Source, Inc.’s (“TMS”) Motion to Dismiss Plaintiffs’ Second Amended Complaint (ECF No.
54), and Defendants Servbanc Holdco Inc. (“Holdco”) and Stavros Papastavrou’s Joint Motion to
Dismiss Plaintiff’s Second Amended Complaint (ECF No. 55). These Motions are ripe for
review. For the reasons stated below, all the Motions to Dismiss are GRANTED in part and
DENIED in part. Additionally, the Court DENIES as moot Defendants’ Motion to Strike (ECF
No. 63.)
BACKGROUND
Plaintiffs Nicolas and Kayla Poormans’ home in Circleville, Ohio is subject to a
promissory note and mortgage. (Second Am. Compl. (“SAC”), ECF No. 38, ¶¶ 7, 17.) Servbank
currently services the note, but it was previously serviced by TMS. (Id. ¶¶ 7, 10.) The claims in
this case stem from a series of communications between Plaintiffs and TMS and Servbank that
occurred between 2022 and 2024. (See id.)
I. 	Factual Background
Plaintiffs’ home was subject to a foreclosure proceeding in the Pickaway County Court of
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Common Pleas. (SAC, ¶ 23.) The communications at issue began in August 2022 when Plaintiffs
submitted a loan modification application to TMS by email. (Id. ¶¶ 23–24.) Plaintiffs allege that
TMS failed to provide timely written acknowledgment that their application was complete, as
required by law, so they mailed TMS a notice of error (“NOE”). (Id. ¶ 30.) Around the same
time, Plaintiffs also sent TMS two requests for information (“RFI”), seeking specific information
regarding their loan modification application. (Id. ¶¶ 25–28.) According to Plaintiffs, TMS failed
to timely acknowledge and respond to the NOE and RFIs. (Id. ¶¶ 29, 36–37.) Additionally, they
allege that TMS’s untimely response to the NOE contained false information regarding the date
that the loan modification application was received and an alleged response that TMS sent to
Plaintiffs. (Id. ¶¶ 33–35.)
In October 2022, Plaintiffs received a loan modification offer that contained a trial
payment plan, which they completed in the following months. (Id. ¶¶ 41–42.) On February 13,
2023, Plaintiffs received permanent loan modification documents from TMS. (Id. ¶ 59.) They
executed and returned the documents to TMS on March 2, 2023. (Id.) The next day, Plaintiffs
received a letter stating that TMS is being “rebranded” to Servbank effective April 1, 2023, and
that many aspects of the loan servicing would remain the same. (Id. ¶¶ 44, 47.)
On March 31, 2023, Plaintiffs attempted to make a payment in accordance with the loan
modification, but TMS refused payment and stated that the loan modification had been
cancelled. (Id. ¶ 60.) According to TMS, it was cancelled because executed loan modification
documents were sent one day late. (Id. ¶ 62.) Believing their loan modification was wrongfully
terminated, Plaintiffs sent TMS a second NOE. (Id. ¶ 63.) Because TMS allegedly failed to
timely acknowledge and respond to the second NOE, Plaintiffs sent a third NOE, which TMS
also allegedly failed to timely acknowledge and respond to. (Id. ¶¶ 71–74, 96–97.) On May 30,
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2023, Plaintiffs received two responses to their second NOE—an acknowledgement and a
substantive response. (Id. ¶¶ 76–77, 85.) Because of the dates and information in the letters,
Plaintiffs allege that the letters contained either false or misleading information about the date
the second NOE was received and TMS and Servbank being separate companies. (Id. ¶ 81–82,
88–89, 92.)
Plaintiffs submitted a second loan modification application on May 30, 2023, and
received a permanent loan modification offer on June 7, 2023. (Id. ¶¶ 95, 98.) According to the
accompanying letter, Plaintiffs were to execute and return the documents to Servbank within 14
days after receiving them. (Id. ¶ 101.) Plaintiffs returned the executed documents 14 days later,
on June 21, 2023. (Id. ¶ 103.) Two days later, Servbank mailed Plaintiffs a notice stating their
loan was past due and in default. (Id. ¶ 108.) On June 28, 2023, Plaintiffs sent a third RFI
inquiring whether the loan modification documents were finalized. (Id. ¶ 103.) They allege that
Servbank failed to timely acknowledge and respond to the third RFI, and that the eventual,
untimely response contained false information. (Id. ¶¶ 106, 111, 116.)
Plaintiffs attempted to make a payment on June 30, 2023, per the modified loan payment
plan, but Servbank rejected the payment. (Id. ¶ 109.) A Servbank employee informed them that
their loan modification plan was cancelled because their modification documents were sent late.
(Id. ¶ 117.) According to the employee, the executed documents were due 14 days after they
were mailed, not 14 days after they were received. (Id.) Because of this, Plaintiffs sent a third
NOE, which they allege Servbank failed to timely acknowledge or respond to. (Id. ¶¶ 119–21,
125, 127.) They also assert that the untimely responses contained false or inaccurate information.
(Id. ¶¶ 124, 129.) Plaintiffs mailed a fourth NOE because of the untimely responses to the third
NOE. (Id. ¶ 130.) They allege that Servbank failed to timely acknowledge and respond to the
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fourth NOE. (Id. ¶¶ 132–33.)
Plaintiffs submitted a third loan modification application and fifth RFI in December
2023. (Id. ¶¶ 136, 138.) Servbank timely responded to these communications (Id. ¶¶ 137, 141–
42.) In February 2024, Plaintiffs received, executed, and returned the new loan modification
documents. (Id. ¶¶ 143, 145.) The third loan modification offer contained different terms than the
first two loan modification offers. (Id. ¶ 144.) On March 11, 2024, Plaintiffs sent a fifth RFI
requesting the fully executed loan modification documents. (Id. ¶ 146.) Servbank timely
acknowledged this request, and Plaintiffs subsequently received the fully executed loan
modification paperwork. (Id. ¶¶ 148–50.)
In total, Plaintiffs allege that Defendants failed to timely acknowledge and/or respond to
four NOEs (Id. ¶¶ 184–85); two RFIs (Id. ¶¶ 176–77); and two loan modification applications.
(Id. ¶¶ 195–200). They also allege that at least nine of Defendants’ communications contained
false, misleading, or deceptive information. (Id. ¶ 205.)
II. 	Procedural History
Plaintiffs filed this lawsuit in November 2023. (ECF No. 1.) Their first complaint brought
five claims against Servbank: three for violations of the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. §§ 2601 et seq., intentional fraudulent misrepresentation, and negligent
misrepresentation. (Id.) Servbank filed a motion to dismiss one of the RESPA claims and the
negligent misrepresentation claim. (ECF No. 17.) The Court denied the motion to dismiss and
permitted Plaintiffs to amend their complaint to correct a typographical error. (ECF No. 26.)
Plaintiffs subsequently filed the First Amended Complaint. (ECF No. 34.)
While conducting discovery, Plaintiffs learned that Servbank asserts to be a separate
entity from TMS. (ECF No. 27, PageID 945–46.) Due to this new information, Plaintiffs sought
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leave to file a Second Amended Complaint to add new parties and claims. (Id. PageID 950–51.)
The Court granted leave. (ECF No. 37.) The Second Amended Complaint brings claims against
Servbank and four other defendants: (1) TMS; (2) Holdco, which Plaintiffs allege is the parent
company of TMS and Servbank; (2) Stavros Papastavrou, who Plaintiffs allege is the owner of
Holdco; and (3) and Linda Case, a Servbank employee. (SAC, ¶¶ 13, 15–16.) The Second
Amended Complaint contains eight claims: three for RESPA violations, intentional fraudulent
misrepresentation, negligent fraudulent misrepresentation, civil conspiracy, a Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961, et seq., claim, and an
Ohio Corrupt Practices Act (“OCPA”), Ohio Rev. Code § 2923.31, et seq., claim. (See id.) The
tort claims are against all Defendants. (See id.) The RESPA, RICO, and OCPA claims are
against all Defendants except Ms. Case. (See id.)
The Second Amended Complaint alleges harm stemming from two actions: Defendants’
mismanagement of Plaintiffs’ loan modification applications and related communications and the
Defendants’ attempt at avoiding liability by holding out Servbank and TMS as separate entities.
(See id.) Plaintiffs assert that they have suffered the following harms:
(a) increased fear distress over the possibility of losing their home in a foreclosure
sale; (b) an increase in the amount of attorneys’ fees they have had to pay; (c) a loss
of opportunity as the new modification included a partial claim where $37,365.53
would bear no interest, (d) additional expenses as the arrears have continued to rise
to a level that they would not have arisen to had Defendant not wrongfully rejected
[the first two loan modification applications], (e) costs associated with obtaining
money orders and mailing documents repeatedly (f) postage paid for having to send
NOEs that would not have been necessary had Defendant responded to the RFIs
properly; (g) the potential loss of their home valued at over $212,000 according to
Zillow.com; and (i) the cost necessary to serve this Complaint.
(Id. ¶ 171.)
Defendants filed four Motions to Dismiss seeking dismissal of all of Plaintiff’s claims.
(ECF Nos. 47, 53, 54, 55.) Plaintiffs responded to Defendants’ motions (ECF Nos. 48, 59) and
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Defendants replied (ECF Nos. 51, 62).
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for “failure
to state a claim upon which relief can be granted.” “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. at 663 (clarifying plausibility standard from Twombly). In ruling
on a motion to dismiss, the Court “must take all the factual allegations in the complaint as true,”
but it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id.
(quoting Twombly, 550 U.S. at 555) (internal quotations omitted).
The court “may consider the Complaint and any exhibits attached thereto, public records,
items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss
so long as they are referred to in the Complaint and are central to the claims contained
therein.” Bassett v. Nat'l Collegiate Ath. Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).
ANALYSIS
Defendants move to dismiss all of Plaintiffs’ claims. In deciding these Motions to
Dismiss, the Court will consider the Second Amended Complaint and its exhibits, as well as the
four motions to dismiss, two responses in opposition, and two replies in support, but no other
documents filed on the docket given that a Rule 12(b)(6) motion tests the sufficiency of the
pleadings. The Court notes that the briefs submitted by the parties span over 250 pages, mostly
consisting of conclusory and repetitive arguments that often lack legal support. As this litigation
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proceeds, the parties are reminded that they must abide by this Court’s Local Civil Rules. Local
Civil Rule 7.2(a) states that “All motions and applications tendered for filing shall be
accompanied by a memorandum in support thereof that shall be a brief statement of the grounds,
with citation of authorities relied upon.” S.D. Ohio Civ. R. 7.2(a)(1) (emphasis added).
The Court first addresses Defendants’ arguments that relate to multiple claims, then
proceeds to address the arguments against Plaintiffs’ claims.
I. 	Heightened Pleading Standard
Claims of fraud are subject to a heightened pleading standard under Federal Rule of Civil
Procedure 9(b), which requires a plaintiff to “state with particularity the circumstances
constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To accomplish this, a plaintiff must “(1)
specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker,
(3) state where and when the statements were made, and (4) explain why the statements were
fraudulent.” New London Tobacco Mkt., Inc. v. Ky. Fuel Corp., 44 F.4th 393, 411 (6th Cir. 2022)
(quoting Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008)).
The Second Amended Complaint alleges that at least nine of Defendants’
communications contained fraudulent misrepresentations:
• 	April 1, 2023 Loan Modification named Servbank as the lender rather than TMS,
even though no assignment had transferred the loan from TMS to Servbank. Plaintiffs
contend this was fraudulent because, if the two companies are distinct entities,
Servbank never acquired the loan and could not be the lender. (SAC, ¶¶ 210–13.)
• 	March 3, 2023 Letter claiming that TMS was “rebranding” as Servbank. This is
allegedly fraudulent if TMS and Servbank are separate entities. (Id. ¶¶ 221–25.)
• 	May 23, 2023 Letter that gave Plaintiffs 14 days to return the executed offer.
Plaintiffs allege this was false because they mailed the executed offer within 14 days
but were later told it was late. (Id. ¶¶ 227–32.)
• 	October 27, 2022 Letter that claimed that Plaintiffs’ second loan modification
application was not received until September 2, 2022 and that a missing-documents
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letter was sent on September 7, 2022. Plaintiffs contend that documents received in
discovery prove that information to be false. (Id. ¶¶ 242–58.)
• 	May 25, 2023 Letter that falsely stated the date on which Plaintiffs’ second NOE was
received, as proven by a tracking receipt from USPS. (Id. ¶¶ 261–66.)
• 	May 19, 2023 Letter that was allegedly backdated to show that it was sent within
RESPA’s timing requirements for such responses. (Id. ¶¶ 269–72.)
• 	July 7, 2023 Letter that allegedly falsely claimed that Plaintiffs’ third RFI was sent to
the wrong address. Plaintiffs allege that they always sent communications to the
correct address. (Id. ¶¶ 275–77.)
• 	November 14, 2023 Letter that falsely characterized the denial of Plaintiffs’ second
loan modification application as a disengagement. (Id. ¶ 205.)
• 	November 17, 2023 Letter that falsely claimed that Plaintiffs’ fourth NOE was sent to
the wrong address. (Id.)
Given the detailed allegations regarding these communications, the Court finds that
Plaintiffs have satisfied the heighted pleading standard on their fraud claims. Accordingly, all
arguments made by Defendants that Plaintiffs have not met the heightened pleading standard for
fraud are not well taken.
II. 	Relationship Between Servbank and TMS
Plaintiffs contend that “there exists a genuine issue of material fact as to whether TMS
and Servbank are the same or different entities, and a 12(b)(6) Motion to Dismiss is not the
proper tool to resolve the factual dispute.” (ECF No. 48, PageID 2595.) The Court agrees.
The Second Amended Complaint asserts that Plaintiffs initially believed that Servbank
and TMS were the same entity for a number of reasons: (1) a letter from TMS stating that it was
“rebranding” as Servbank (SAC, ¶¶ 222–24); (2) Servbank has the same address as TMS (Id.
¶¶ 49, 216–17); (3) loan modification documents name Servbank as the owner of the loan despite
the fact that an assignment of the loan to Servbank never took place (Id. ¶¶ 211–13, 218–19); and
(4) Servbank responded to communications addressed to TMS after the “rebrand.” (Id. ¶ 263.)
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Plaintiffs later learned, in discovery, that Servbank and TMS purport to be separate companies.
(Id. ¶¶ 12, 154; ECF No. 38-1, PageID 2148–67.) Plaintiffs allege that if Servbank and TMS are
not the same company, then their representations prior to this lawsuit were false. (Id. ¶¶ 156–57.)
If they are the same company, Plaintiffs allege that Defendants are lying in order to avoid
liability in this lawsuit. (Id. ¶ 158.)
The relationship between Servbank and TMS is unclear to the Court at this stage of
litigation. Accordingly, the Court declines to address arguments made by Defendants that center
on conclusions about the relationship between Servbank and TMS.
III. 	Liability of Holdco and Mr. Papastavrou
Additionally, Plaintiffs pursue claims against Holdco and Mr. Papastavrou under a theory
of principal liability arising from an alleged agency relationship with Servbank and TMS. (See
SAC.) Defendants argue that Plaintiffs insufficiently plead an agency relationship between
Servbank/TMS and Holdco and Mr. Papastavrou. Specifically, they argue that Plaintiffs fail to
plead facts showing that Servbank and TMS had express authority from Holdco and Mr.
Papastavrou to send the communications at issue in this case. (Servbank Mot., ECF No. 47,
PageID 2582; TMS Mot., ECF No. 54, PageID 2650; Holdco and Papastavrou Mot., ECF No.
55, PageID 2670–71.)
Under Ohio law,1 an agency relationship may be established by actual authority, “where
a consensual relationship exists between the agent and principal,” or apparent authority, where a
principal’s conduct leads a third party to reasonably believe that an agency relationship exists.
Brainard v. Am. Skandia Life Assurance Corp., 432 F.3d 655, 661 (6th Cir. 2005). An actual-
1 As a federal court exercising diversity jurisdiction over state common law claims, the Court,
sitting in Ohio, applies Ohio law. See, e.g., Comm’r of Internal Revenue v. Est. of Bosch, 387
U.S. 456, 464–65, (1967).
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authority agency relationship can be established by express authority or implied authority. Id. at
661–62.
Holdco and Mr. Papastavrou cite no case law stating that an agency relationship can only
be established by pleading express authority. In their reply, they cite case law outlining the
general principles of pleading an agency relationship. (Defs.’ Second Reply, ECF No. 62,
PageID 2814–15.) They quote, “It is insufficient to merely plead the legal conclusions of
agency.” Barrett-O’Neill v. Lalo, LLC, 2014 WL 3895679, *3 (S.D. Ohio Aug. 8, 2014) (King,
M.J.) (quoting Bird v. Delacruz, 2:04–CV–661, 2005 WL 1625303 (S.D. Ohio July 6, 2005)
(Frost, J.)). “Instead, a claimant must plead facts that would support a finding that the alleged
agents had actual or apparent authority to act on behalf of another . . . .” In re Commercial
Money Ctr., Inc., No. 102CV16000, 2005 WL 2233233, *18 (N.D. Ohio Aug. 19, 2005), aff’d
sub nom. Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327 (6th Cir. 2007).
Plaintiffs have pled the following: Holdco is the parent company of Servbank and TMS
(SAC, ¶ 13); Mr. Papastavrou is the owner of Holdco (Id. ¶ 15); Servbank and TMS are under
the control and direction of Holdco and Mr. Papastavrou; (Id. ¶¶ 207, 308, 313); and Holdco and
Mr. Papastavrou are using Servbank and TMS to perpetuate fraud by obfuscating the relationship
between Servbank and TMS. (Id. ¶¶ 91– 92.) Thus, Plaintiffs have sufficiently pled facts alleging
some degree of an agency relationship to survive motion to dismiss. See Spurlark v. Dimension
Serv. Corp., No. 2:21-cv-3803, 2022 WL 2528098, at *5 (S.D. Ohio July 7, 2022) (“The
essential element of an agency relationship is the principal’s ‘right to control’ the actor.”)
(quoting Restatement (Third) of Agency § 1.01 cmt. f.)). Plaintiffs are not required to plead
express authority to sufficiently plead an agency relationship between Servbank/TMS and
Holdco and Mr. Papastavrou.
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Accordingly, Defendants’ arguments that Plaintiffs have insufficiently pled an agency
relationship are not well taken.
IV. 	Plaintiffs’ Claims
A. 	RESPA
Congress enacted the RESPA “in part to provide ‘more effective advance disclosure to
home buyers and sellers of settlement costs’ and in response to ‘abusive practices’ in the ‘real
estate settlement process.’” Mellentine v. Ameriquest Mortg. Co., 515 F. App’x 419, 424 (6th
Cir. 2013) (quoting 12 U.S.C. § 2601). Congress later expanded RESPA’s scope to include loan
servicing. Marais v. Chase Home Fin. LLC, 736 F.3d 711, 719 (6th Cir. 2013) (quoting Medrano
v. Flagstar Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012)).
RESPA imposes certain requirements on loan servicers when they receive an inquiry
from a borrower. Martini v. JPMorgan Chase Bank, N.A., 634 F. App’x 159, 163 (6th Cir. 2015).
The Consumer Financial Protection Bureau enacted Regulation X in the Code of Federal
Regulations to implement RESPA. Plaintiffs allege that Defendants, excluding Ms. Case,
violated the following Regulation X provisions:
• 	12 C.F.R. § 1024.35, which imposes certain obligations on a servicer when it
receives a Notice of Error (“NOE”). Plaintiffs allege that Defendants failed to
timely acknowledge and/or respond to their first, second, third, and fourth NOEs
(SAC, ¶¶ 184–85);
• 	12 C.F.R. § 1024.36, which imposes certain obligations on a servicer when it
receives a Request for Information (“RFI”). Plaintiffs allege that Defendants
failed to timely acknowledge and respond to their first and third RFIs (Id. ¶¶ 176–
77); and
• 	12 C.F.R. § 1024.41, which imposes certain obligations on a servicer when it
deals with loan modifications. Plaintiffs allege that Defendants improperly
handled and failed to adequately communicate with Plaintiffs concerning their
first and second loan modification applications. (Id. ¶¶ 195–200.)
Defendants argue that the RESPA claims fail because: (1) Plaintiffs fail to allege that
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they are “borrowers” under RESPA; (2) Holdco and Mr. Papastavrou are not “servicers” under
RESPA; and (3) Servbank and TMS are separate companies and cannot be liable for each other’s
actions. The Court addresses each argument.
1. 	Whether Plaintiffs Are “Borrowers”
RESPA grants a private right of action to “borrowers.” 12 U.S.C. § 2605(f) (“Whoever
fails to comply with any provision of this section shall be liable to the borrower . . . .”). But
RESPA does not define “borrower.” See 12 U.S.C. § 2602. The Sixth Circuit defines “borrower”
as “someone who is personally obligated on a loan—i.e., someone who is actually borrowing
money.” Keen v. Helson, 930 F.3d 799, 800 (6th Cir. 2019).
Defendants argue that Plaintiffs fail to allege that they are “borrowers” under RESPA.
(Servbank Mot., PageID 2579; TMS Mot., PageID 2647.) They assert that the only such
allegation in the Second Amended Complaint is a legal conclusion that relies on a nonexistent
definition in RESPA. (Servbank Mot., PageID 2579; TMS Mot., PageID 2647.) They also
highlight that Plaintiffs have not provided the promissory note and mortgage showing that they
are borrowers. (Servbank Mot., PageID 2579; TMS Mot., PageID 2647.)
Notice pleading requires plaintiffs to plausibly allege facts that allow the court to draw
reasonable inferences that the defendant is liable. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A
comprehensive reading of the Second Amended Complaint plainly shows that Plaintiffs are
“borrowers” under RESPA. Plaintiffs own a home that is subject to a promissory note and a
mortgage. The home was in foreclosure, so they applied for a loan modification. Plaintiffs’ first
loan modification application initiated a series of communications between them and the loan
servicers—communications that are now at the root of this lawsuit. Moreover, some of
Defendants’ own documents, attached as exhibits to the Complaint, name Nicolas and Kayla
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Poorman as “borrower.” (See, e.g., ECF No. 83-3, PageID 2348.)
Defendants argue that even if Nicolas Poorman is a “borrower,” Kayla Poorman is not,
because she did not sign the promissory note. (Servbank Mot., PageID 2579; TMS Mot., PageID
2647; Holdco and Papastavrou Mot., PageID 2668–70.) Neither Party has provided an executed
copy of the promissory note. The Court cannot consider a document that has not been provided
to it.
Upon review of the Second Amended Complaint and the documents attached thereto, the
Court finds that Plaintiffs have sufficiently pled that both Nicolas and Kayla Poorman are
“borrowers” to survive a motion to dismiss.
2. 	Whether Holdco and Mr. Papastavrou Can Be Liable Under RESPA
Holdco and Mr. Papastravou argue that they had no obligation to respond Plaintiffs’
communications regarding Plaintiffs’ loan because they are not “servicers.” (Holdco and
Papastavrou Mot., PageID 2668.) Under RESPA, a “servicer” is a “person responsible for
servicing a loan.” 12 U.S.C. § 2605(i)(2). “Servicing” means “receiving any scheduled periodic
payments from a borrower.” Id. § 2605(i)(3). The provisions that Defendants have allegedly
violated impose certain obligations on servicers—for example: “A servicer shall comply with the
requirements of this section for any written notice from the borrower . . . .” 12 C.F.R.
§ 1024.35(a).
Plaintiffs do not allege that Holdco and Mr. Papastravou are “servicers.” Instead, they
assert that Holdco and Mr. Papastravou can be liable as principals of Servbank and TMS. (Pls.’
Second Resp., ECF No. 59, PageID 2786–77.) They provide cases where courts have imposed
liability on a principal under RESPA for a servicer’s actions. See Rouleau v. US Bank, N.A., No.
14-CV-568-JL, 2015 WL 1757104 (D.N.H. Apr. 17, 2015); Feldmann v. Lakeview Loan
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Servicing LLC, No. C20-580 MJP, 2021 WL 1627048 (W.D. Wash. Apr. 27, 2021); but see
Guzman v. USAA Fed. Sav. Bank, No. 3:23 CV 1193, 2024 WL 1973096, at *10 (N.D. Ohio
May 3, 2024) (declining to “wade into the vicarious liability split at this time”); Christiana Tr. v.
Riddle, 911 F.3d 799, 801, 804–06 (5th Cir. 2018) (declining to impose RESPA vicarious
liability on the principal). As such, Holdco and Mr. Papastavrou’s argument that they are not
servicers misses the mark.
Defendants also argue that Plaintiffs fail to sufficiently plead an agency relationship to
establish RESPA vicarious liability. (Servbank Mot., PageID 2582–83; TMS Mot., PageID
2650.) As discussed above, the Court finds that Plaintiffs have sufficiently pled an agency
relationship to survive a motion to dismiss. Thus, Plaintiffs’ RESPA claims against Holdco and
Mr. Papastravou based on an agency relationship are also sufficiently pled to survive a motion to
dismiss.
3. 	Distinction Between TMS and Servbank
Servbank argues that it cannot be liable for TMS’s communications. (Servbank Mot.,
PageID 2581.) TMS argues that it cannot be liable for Servbank’s communications. (TMS Mot.,
PageID 2649.) As stated above, the Court finds that there are genuine issues of material fact
regarding the relationship between Servbank and TMS. Thus, the Court declines to address these
arguments, and the same arguments being made with respect to other claims, at this stage of the
litigation.
For the reasons stated above, Defendants’ Motions to Dismiss Plaintiffs’ RESPA claims
are DENIED.
B. 	Fraudulent Misrepresentation
Plaintiffs allege that all five Defendants negligently or intentionally made material
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fraudulent misrepresentations in their communications for “the purpose of manipulating
Plaintiffs during their time of crisis in order to obtain a financial windfall and/or to shield
themselves from liability.” (SAC, ¶¶ 204, 281.) They assert that at least nine of Defendants’
communications contained false, misleading, or deceptive information. (Id. ¶ 205.)
Servbank moved to dismiss Plaintiffs’ negligent fraudulent misrepresentation claim in its
first motion to dismiss. (ECF No. 17.) The Court denied that motion. (ECF No. 26.) Servbank
now moves to dismiss the intentional misrepresentation claim. (Servbank Mot., PageID 2582–
85.) TMS, Holdco, Mr. Papastavrou, and Ms. Case move to dismiss both the intentional
fraudulent misrepresentation claim and the negligent fraudulent misrepresentation claim. (TMS
Mot., PageID 2649–53; Holdco and Papastavrou Mot., PageID 2670–76; Case Mot., ECF No.
53, PageID 2632–39.)
Servbank and TMS argue that Plaintiffs fail to show that they relied on the alleged
misrepresentations and that the injuries they suffered were proximately caused by the reliance.
(Servbank Mot., PageID 2583; TMS Mot., PageID 2651–53.) In Ohio, justifiable reliance is an
essential element of both intentional misrepresentation and negligent misrepresentation. Delman
v. City of Cleveland Heights, 534 N.E.2d 835, 838 (Ohio 1989); Williams v. Aetna Fin. Co., 700
N.E.2d 859, 868 (Ohio 1998).
The Court has previously determined that Plaintiffs sufficiently pled “justifiable reliance
on Servbank’s representations since they followed Servbank’s instructions, and as a result
suffered economic losses.” (ECF No. 26, PageID 942.) The same can be said for TMS because
Plaintiffs have alleged it also serviced their loan, and the relationship between TMS and
Servbank has not been determined. Accordingly, Servbank’s and TMS’s Motions to Dismiss the
fraudulent misrepresentation claims are DENIED.
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As for Holdco and Mr. Papastavrou, the Second Amended Complaint alleges that
Servbank and TMS are agents of Holdco and Mr. Papastavrou and are vicariously liable for the
alleged fraudulent misrepresentation of their agents. (SAC, ¶ 207.) Holdco and Mr.
Papastavrou’s first argument is that Plaintiffs fail to sufficiently plead an agency relationship.
(TMS and Papastavrou Mot., PageID 2670–71.) The Court has already discussed this issue above
and found that Plaintiffs sufficiently pled an agency relationship.
Holdco and Mr. Papastavrou next argue that Holdco and Mr. Papastavrou cannot be
liable because they do not have a direct-customer relationship with Plaintiffs and “Ohio law
maintains that a negligent misrepresentation claim requires at least some level of a direct
relationship between a plaintiff and defendant.” (Id. PageID 2675.) Holdco and Mr. Papastavrou
provide no support for this argument. They misstate this Court’s previous holding that “Ohio law
permits a negligent misrepresentation claim where the plaintiff making claim is a direct customer
of the defendant.” (ECF No. 26, PageID 941 (emphasis added).) to argue that a direct
relationship is required for negligent misrepresentation. That is not the law. As the Court stated
in that same opinion, Ohio’s definition of negligent misrepresentation allows for recovery from
“[o]ne who, in the course of his business, profession, or employment, or in any other transaction
in which he has a pecuniary interest.” (Id. PageID 939 (emphasis added).) In Ohio, a principal
may be liable for the tort of negligent misrepresentation for the acts of its agent. See McCarthy,
Lebit, Crystal & Haiman Co., L.P.A. v. First Union Mgt., Inc., 622 N.E.2d 1093, 1106–07 (Ohio
Ct. App. 1993) (finding genuine issues of material fact in a negligent misrepresentation claim
where “[defendant’s] agent supplied [plaintiff] with false information”). As the parent company
and owner of Servbank and TMS, Holdco and Mr. Papastavrou have a pecuniary interest in
Servbank’s and TMS’s business. Thus, they may be liable for negligent misrepresentation.
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Accordingly, Holdco and Mr. Papastavrou’s arguments regarding the fraudulent
misrepresentation claims are not well taken.
Regarding Ms. Case, the Second Amended Complaint alleges that Ms. Case is an agent
of Servbank, TMS, Holdco, and Mr. Papastavrou, and that she assisted in perpetuating fraud by
sending Servbank’s and TMS’s communications to Plaintiffs and affirming Servbank’s discovery
responses that declare that Servbank and TMS are not the same entity. (SAC, ¶¶ 205, 208.) Ms.
Case makes a multitude of arguments that the fraudulent misrepresentation claims against her
should be dismissed: that she did not make any representations to Plaintiffs; that Plaintiffs fail to
allege reliance and harm from that reliance; that Ms. Case is immune from civil suit for
defamatory remarks and false testimony; that Plaintiffs fail to allege that Ms. Case had authority
from Holdco or Mr. Papastavrou to send communications to Plaintiffs; and that Plaintiffs fail to
allege that they are direct customers of Ms. Case. (Case Mot., PageID 2632–39.) Though
voluminous, Ms. Case’s arguments are either inapplicable or unsupported by law. Accordingly,
the Court declines to consider them at this point. See McPherson v. Kelsey, 125 F.3d 989, 995–
96 (6th Cir. 1997) (“Issues adverted to in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived. It is not sufficient for a party to mention a
possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones.”)
(quoting Citizens Awareness Network, Inc. v. U.S. Nuclear Reg. Comm’n, 59 F.3d 284, 293–94
(1st Cir. 1995)).
In conclusion, Defendants’ Motions regarding Plaintiffs’ negligent and fraudulent
misrepresentation claims are DENIED.
C. 	Civil Conspiracy
In their civil conspiracy claim, Plaintiffs assert that all Defendants “maliciously acted in
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concert to perpetuate fraud in order to shield themselves from liability from violation of federal
law” and “to maximize profits by stringing Plaintiffs along in the loss mitigation process to gain
greater monetary benefits.” (SAC, ¶ 305.)
In Ohio, civil conspiracy is “a malicious combination of two or more persons to injure
another in person or property, in a way not competent for one alone, resulting in actual
damages.” Williams, 700 N.E.2d at 868 (quoting Kenty v. Transamerica Premium Ins. Co., 650
N.E.2d 863, 866 (Ohio 1995)).
Defendants argue that the intracorporate conspiracy doctrine precludes Plaintiffs’ civil
conspiracy claim because Plaintiffs allege that all Defendants are members of a single collective
entity. (Servbank Mot., PageID 2586; TMS Mot., PageID 2653–54; Holdco and Papastavrou
Mot., 2676–77; Case Mot., PageID 2640.) Under the intracorporate conspiracy doctrine,
“individuals acting in their capacities of the same entity . . . cannot conspire with each other.”
Blick v. Ann Arbor Pub. Sch. Dist., 105 F.4th 868, 887 (6th Cir. 2024). See also Innovative
Architectural Planners, Inc. v. Ohio Dep't of Admin. Servs., 2024-Ohio-824, 239 N.E.3d 942,
955 (Ohio Ct. App. 2024). This is because, “[w]hen two agents of the same legal entity make an
agreement in the course of their official duties . . . their acts are attributed to their principal . . .
[and] there has not been an agreement between two or more separate people.” Innovative
Architectural Planners, Inc., 239 N.E.3d at 955 (quoting Ziglar v. Abbasi, 582 U.S. 120, 153
(2017)).
Plaintiffs allege that Holdco is the parent company of Servbank and TMS, that Mr.
Papastavrou is the owner of Holdco, and that Ms. Case is an employee of Servbank. (SAC,
¶¶ 15–16, 55, 92, 206.) Although Plaintiffs plead that the relationship between Servbank and
TMS is unclear, Plaintiffs also plead that all Defendants are members of one corporate entity
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owned by Mr. Papastavrou. (See id.) Thus, accepting the allegations in the Second Amended
Complaint as true, Defendants cannot conspire with each other, and Plaintiffs’ civil conspiracy
claim fails.
Accordingly, Defendants’ Motions as to Plaintiffs’ civil conspiracy claims are
GRANTED.
D. 	Racketeer Influenced and Corrupt Organizations Act
Plaintiffs bring a federal claim under RICO against all Defendants except Ms. Case,
alleging that they engaged in a pattern of fraud by sending fraudulent communications via the
United States Postal Service. (SAC, ¶¶ 308–09, 313–14.)
The RICO criminal statute makes it “unlawful for any person employed by or associated
with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce,
to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through
a pattern of racketeering activity.” 18 U.S.C. § 1962(c). The statute provides a civil remedy to
“[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. §] 1962.”
18 U.S.C. § 1964(c). “[T]o state a civil RICO claim, a plaintiff must allege (1) two or more
predicate racketeering offenses, (2) the existence of an enterprise affecting interstate commerce,
(3) a connection between the racketeering offenses and the enterprise, and (4) injury by reason of
the above.” Grow Michigan, LLC v. LT Lender, LLC, 50 F.4th 587, 594 (6th Cir. 2022).
Defendants argue that Plaintiffs fail to sufficiently plead an “enterprise.” (Servbank Mot.,
2587; TMS Mot., PageID 2656–57; Holdco and Papastavrou Mot., PageID 2679–81.) They
assert that “simply naming related entities” is insufficient to plead a RICO claim. (TMS Mot.,
PageID 2657; Holdco and Papastavrou Mot., PageID 2680.) And that “Plaintiffs fail to allege
any roles or relationships between [the Defendants] with any particularity” and instead rely on
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“overly-broad generalizations of ownership and control.” (Holdco and Papastavrou Mot., PageID
2680; see also Servbank Mot., PageID 2587 (“Yet not a single alleged bad actor is identified as
the “enterprise” that engaged in the conduct . . .”).)
Plaintiffs contend that they have sufficiently pled an “association-in-fact enterprise” as
that term is defined in Boyle v. United States, 556 U.S. 938 (2009). “An association-in-fact
enterprise is simply a continuing unit that functions with a common purpose.” Boyle, 556 U.S. at
948. It must have “at least three structural features: a purpose, relationships among those
associated with the enterprise, and longevity sufficient to permit these associates to pursue the
enterprise’s purpose.” Id. at 946. “A properly pled RICO claim must cogently allege activity that
would ‘show ongoing, coordinated behavior among the defendants that would constitute an
association-in-fact.’” Begala v. PNC Bank, Ohio, Nat. Ass’n, 214 F.3d 776, 781 (6th Cir. 2000)
(quoting Frank v. D'Ambrosi, 4 F.3d 1378, 1386 (6th Cir.1993)). A list of entities allegedly
comprising the enterprise is insufficient and the “complaint must contain facts suggesting that
the behavior of the listed entities is ‘coordinated’ in such a way that they function as a
‘continuing unit.’” Id. (quoting Frank, 4. F3d at 1386).
The Second Amended Complaint alleges an organizational structure that satisfies the
criteria outlined in Boyle. Specifically, it alleges that Mr. Papastavrou is the owner of Holdco,
Servbank and TMS, that Holdco is the parent company of Servbank and TMS, and that Servbank
and TMS are directed and controlled by Holdco and Mr. Papastavrou. (SAC, ¶¶ 15, 308.) This
alleged structure goes beyond the insufficient allegation considered in Begala, where the plaintiff
merely named a number of allegedly affiliated entities without offering any context into how
they operated or coordinated. Begala, 214 F.3d at 780–82. Here, Plaintiffs sufficiently plead that
Servbank, TMS, Holdco, and Mr. Papastavrou comprise a continuing unit that functions with a
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common purpose, as required for an association-in-fact enterprise.
Defendants next argue that Plaintiffs’ RICO claim is insufficient because they fail to
show that they relied on the allegedly fraudulent communications. (Servbank Mot., PageID
2588; TMS Mot., PageID 2657; Holdco and Papastavrou Mot., PageID 2681.) First, the Court
has determined that Plaintiffs have sufficiently pled reliance. Second, reliance is not an element
of a RICO claim. The Supreme Court has held that “a plaintiff asserting a RICO claim predicated
on mail fraud need not show, either as an element of its claim or as a prerequisite to establishing
proximate causation, that it relied on the defendant’s alleged misrepresentations.” Bridge v.
Phoenix Bond & Indem. Co., 553 U.S. 639, 661 (2008).
Defendants’ arguments that Plaintiffs’ RICO claim is insufficiently pled fail.
Accordingly, their Motions regarding RICO are DENIED. The Court notes that additional or
differently developed arguments may have warranted a different outcome. The Court’s analysis,
however, is limited to the arguments presented by Defendants.2
E. 	Ohio Corrupt Practices Act
Plaintiffs also bring a claim under the Ohio state-law equivalent of RICO, the OCPA,
against all Defendants except Ms. Case for engaging in a pattern of fraud and sending fraudulent
communications via the United States Postal Service. (SAC, ¶¶ 313–14.) The Second Amended
Complaint incorrectly refers to the Ohio Corrupt Activity Act as “Racketeer Influenced and
Corrupt Organizations Act (R.I.C.O.) O.R.C. § 2923.” (See id.)
Defendants first argue that Plaintiffs fail to specify which section of Ohio Revised Code
2 The Sixth Circuit has made clear that district courts must follow “the principle of party
presentation,” which means that the courts must “rely on the parties to frame the issues for
decision and assign to courts the role of neutral arbiter of matters the parties present.” In Re
Chrysler Pacifica Fire Recall Prods. Liab. Litig., 143 F.4th 718, 725 (6th Cir. 2025) (quoting
Greenlaw v. United States, 554 U.S. 237, 243 (2008)).
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§ 2923 they present their claim, thus not providing Defendants a fair notice of the claim.
(Servbank Mot., PageID 2589–90; TMS Mot., PageID 2659; Holdco and Papastavrou Mot.,
PageID 2682.) The Court acknowledges that the Second Amended Complaint does not properly
name the OCPA or provide the full citation. But “[t]he failure in a complaint to cite a statute, or
to cite the correct one, in no way affects the merits of the claim.” Knapp v. City of Columbus, 93
F. App’x 718, 720 (6th Cir. 2004) (quoting Albert v. Carovano, 851 F.2d 561, 571 n.3 (2d Cir.
1988)). It is apparent that Defendants received sufficient notice that Plaintiffs’ claim is under the
OCPA because Defendants’ Motions make arguments against the claim that reference and cite
the OCPA. Thus, Plaintiffs’ imprecise referral to the OCPA in the Second Amended Complaint
is not fatal.
Defendants next argue that the OCPA claim fails because Plaintiffs fail to allege at least
one predicate act that is not mail fraud. (Servbank Mot., PageID 2590; TMS Mot., PageID 2660;
Holdco and Papastavrou Mot., PageID 2683.) To bring a civil claim under the OCPA, the claim
must include “at least one predicate act that is not a form of securities fraud, mail or wire fraud,
or the interstate transportation of stolen property or securities.” Bradley v. Miller, 96 F. Supp. 3d
753, 774 (S.D. Ohio 2015) (Black, J.) (quoting Baker v. Pfeifer, 940 F. Supp. 1168, 1181 (S.D.
Ohio 1996) (Black, J.). See also Ohio Rev. Code § 2923.34(A). The Court has concluded above
that Plaintiffs sufficiently pled fraudulent misrepresentation. Thus, viewing the Second Amended
Complaint in a light most favorable to Plaintiffs, the Court also finds that the Plaintiffs have
sufficiently pled a predicate act of fraud that is separate from mail fraud. In other words, the
Plaintiffs have sufficiently pled that Defendants engaged in fraudulent misrepresentation and
used the United States Postal Service to further the fraud.
The Court finds that Plaintiffs have sufficiently pled their OCPA claim to survive a
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motion to dismiss. Accordingly, Defendants’ Motions regarding the OCPA are DENIED. As
with the RICO claim, the Court analyzed only the arguments presented by Defendants and
different arguments may have resulted in a different outcome.
CONCLUSION
For the reasons stated above, (ECF No. 47) Servbank’s Motion to Dismiss is GRANTED
in part and DENIED in part; (ECF No. 54) TMS’s Motion to Dismiss is GRANTED in part
and DENIED in part; (ECF No. 55) Holdco and Mr. Papastavrou’s Motion to Dismiss is
GRANTED in part and DENIED in part; and (ECF No. 53) Ms. Case’s Motion to Dismiss is
GRANTED in part and DENIED in part. The civil conspiracy claim against all Defendants is
DISMISSED. The following claims remain:
• 	Three RESPA claims against Servbank, TMS, Holdco, and Mr. Papastavrou;
• 	Intentional fraudulent misrepresentation against all Defendants;
• 	Negligent fraudulent misrepresentation against all Defendants;
• 	RICO against Servbank, TMS, Holdco, and Mr. Papastavrou; and
• 	OCPA against Servbank, TMS, Holdco, and Mr. Papastavrou.
Further, Defendants filed a Motion to Strike the deposition transcript of Ms. Case filed on
the docket by Plaintiffs because it was filed without an errata sheet. (ECF No. 63.) Plaintiffs
have since filed supplemented the record by filing the errata sheet on the docket. (ECF No. 66.)
Accordingly, Defendants’ Motion to Strike (ECF No. 63) is DENIED as moot.
This case remains open.
IT IS SO ORDERED.
3/11/2026 	s/Edmund A. Sargus, Jr.
DATE 	EDMUND A. SARGUS, JR.
UNITED STATES DISTRICT JUDGE
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