Reverse mortgage servicing company Celink is seeking the dismissal of a lawsuit alleging that it had added unlawful servicing fees to reverse mortgage loans alongside now-bankrupt lender Reverse Mortgage Funding (RMF).

In response to the recent recommendation by a magistrate judge against the dismissal of Dancy-Wilkins v. Compu-Link Corporation, the servicer said that the recommendation was made on a more procedural basis rather than the actual merits of Celink’s original motion to dismiss “without prejudice” — meaning it can be refiled at a later date if granted — according to court documents reviewed by RMD.

Celink’s filing

The dispute arises from an adjacent case in which Celink is also a defendant, Shakespeare v. Live Well Financial, which alleges that companies including Celink improperly paid property taxes before they became due without legal justification or notice.

In the initial recommendation, the magistrate judge took Celink to task for failing to mention the applicability of the Shakespeare case to the Dancy-Wilkins proceeding, but Celink holds that the core merits of each case did not require it to do so, according to the filing.

“As Magistrate Judge Shields held, Shakespeare has no factual or legal relation to this matter,” Celink attorneys said in the filing. Additionally, “Celink did not violate the letter or spirit of the local rules or this Court’s prior orders. […] Celink respectfully requests that the Court sustain its objections to the report and consider the merits of its motion to dismiss.”

Lawyers for the servicer go on to say that the outcome of the Shakespeare case “will have no impact on the Shakespeare matter or vice versa,” the filing reads. “The report relies heavily on the fact that Shakespeare is ‘related’ to this case, taking Celink to task for failing to mention Shakespeare in its opening brief and thereby purportedly violating [local rules].”

Dovetailing with Shakespeare

Celink says that plaintiffs in the Shakespeare case sought to add Sheila Dancy-Wilkins and her 93-year-old mother, Flora Mayweathers — plaintiffs in the direct case — as additional plaintiffs in the Shakespeare case. However, when that was attempted, the judge denied the motion by saying that “such case may not be properly designated as related to the instant action.”

This, Celink says, helps illustrate that Shakespeare has no real impact on the Dancy-Wilkins case and that the magistrate judge should have taken these events into account when making the December recommendation.

“[T]he essential facts of the claims alleged by Shakespeare and [Dancy-Wilkins] are separate and distinct,” said Magistrate Judge Anne Shields in a separate filing, as cited by Celink’s attorneys.

Celink also says that it did not violate local rules by filing its dismissal motion “because it did not have a duty to address a case that involved unrelated factual allegations and legal issues,” the filing reads. “As […] Magistrate Judge Shields found, Shakespeare is not a ‘related case,’ and Celink, therefore, could not have violated [local rules] by failing to raise it to the Court in its opening brief seeking dismissal of the complaint.”

Last month, the AARP Foundation joined the suit on the side of the plaintiffs, saying at the time that it continues to see additional interest fees added to the “wrongfully inflated loan balance every month,” the Foundation said in its announcement.

Recent order

Another complicating factor in this case is the inclusion of RMF as a defendant. The lender’s counsel of record withdrew representation of RMF in early 2023 after its business arrangement ended with the lender following the company’s bankruptcy.

This past October, RMF’s bankruptcy plan administrator notified the court that it “does not intend to appear on behalf of RMF or file any responsive pleadings” in connection with the case.

However, plaintiffs in the Dancy-Wilkins case continue to seek documents and other information — or “discovery” in legal terms — from RMF’s bankruptcy plan administrator, and has not yet been successful. In an order filed on Tuesday, Magistrate Judge Lee Dunst said that any attempts at discovery from RMF must comply with an order issued on Dec. 8 that said plaintiffs “shall not seek any additional discovery prior to a decision by Judge Seybert on the dismissal motion” without consent of the defendant, or prior approval “of the proposed discovery by the Court.”

An earlier November order also said that “[a]ll future relief sought […] also shall address overlap, if any, with the pending Shakespeare litigation,” and that their discovery attempts “fail to comply with those aforementioned court orders.”

Plaintiffs will need to file a new, supplemental submission by Jan. 8 that complies with those prior court orders, he said.