Burress v. Freedom Mortg. Corp.

JAMES BURRESS, on behalf of himself and the putative class, Plaintiffs, v. FREEDOM MORTGAGE CORPORATION, Defendant.

No. 1:20-cv-15242

United States District Court, D. New Jersey

September 3, 2021

DAVID J. DISABATO

LISA R. CONSIDINE DISABATO & CONSIDINE LLC

ROBERT W. MURPHY (ADMITTED PRO HAC VICE)

MURPHY LAW FIRM ON BEHALF OF PLAINTIFF

MARK E. DUCKSTEIN JOSHUA N. HOWLEY SILLS CUMMIS & GROSS P.C. ONE RIVERFRONT PLAZA ON BEHALF OF DEFENDANT

OPINION

NOEL L. HILLMAN, U.S.D.J.

Plaintiff James Burress, on behalf of himself and a putative class claims that Defendant, Freedom Mortgage Company, violated Section 1683(f) of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, et seq., when it sent him mortgage statements with two conflicting amounts due on the same statement.^[1]Presently before the Court is Defendant's motion for summary judgement on the basis that Plaintiff's TILA violation claim is barred by the applicable statute of limitations. For the reasons expressed below, the Court will deny Defendant's motion.

BACKGROUND

On September 29, 2014, Defendant agreed to make a loan to Plaintiff in the principal amount of $58, 400.00, which was secured by a mortgage recorded against Plaintiff's residence. Defendant sent Plaintiff monthly mortgage statements for payment due on the first of every month.

Beginning in March 2019 and through November 2019, Plaintiff's monthly statements began showing two different amounts as due. The “amount due” printed at the top of the mortgage statement and explained in the body differed from the “amount due” written at the bottom. For example, the March 2019 monthly statement listed “$407.36” in the top right but showed “$414.72” in the pre-serrated bottom section meant for detaching and mailing to Defendant. Both amounts showed “04/01/2019” as the corresponding due date. In the middle of the statement, in a section titled “Explanation of Amount Due, ” “$407.36” is listed twice, which Defendant calculated by combining “$102.82” for “Principal, ” “$197.44” for “Interest, ” and “$107.10” for “Escrow/Impound (for Taxes and/or Insurance).” No details were provided for how Defendant arrived at the higher amount of “$414.72” printed at the statement's bottom.

Each statement from March to November 2019 contained mismatched amounts, and they did not replicate each other. While “$407.36” appeared in the top section of all the statements, the number printed in the pre-serrated bottom section varied every month. The November 2019 monthly statement, upon which Plaintiff's TILA count is based listed “$407.36” in the top right but showed “$417.60” in the preserrated bottom section meant for detaching and mailing to Defendant. Both amounts showed “12/01/2019” as the corresponding due date. In the middle of the statement, in a section titled “Explanation of Amount Due, ” “$407.36” is listed twice, which Defendant calculated by combining “$106.04” for “Principal, ” “$194.22” for “Interest, ” and “$107.10” for “Escrow/Impound (for Taxes and/or Insurance).” Again, no details were provided for how Defendant arrived at the higher amount of “$417.60” printed at the statement's bottom. (ECF 9 at 18.)

On June 8, 2020, Plaintiff sent a letter to Defendant requesting an explanation for the inconsistent statements. Defendant responded via letter dated July 13, 2020, claiming that the amounts listed on the statements “did not match because of uncollected escrow amounts” stemming from a “January 1[, ] 2019 . . . escrow analysis . . . which resulted in a lower monthly payment.” (ECF No. 16, “Exhibit L.”)

According to the Defendant, underpayments by Plaintiff in February and March triggered the initial mismatched statements. (Id.) Defendant claims that recoupment of those underpayments over the next several months led to the subsequent inconsistencies. (Id.)

Based on the statement dated “11/01/2019, ” which disclosed different amounts as due, Plaintiff filed suit against Defendant on October 30, 2020. By sending the defective statement, Plaintiff claims Defendant violated 5 U.S.C. § 1638(f) of TILA, which requires lenders and servicers to provide customers with accurate periodic statements, and is reflected in the implementing Federal Reserve Board Regulation Z: 12 C.F.R. § 1026.41(c), which requires creditors or servicers to make periodic statements “clearly and conspicuously in writing . . . in a reasonably understandable form”; and § 1026.41(d), which requires that the creditor or servicer must provide a disclosure of the “amount due, ” including the payment due date, the amount of any late payment fee, and the date upon which the fee will be imposed if payment has not been received together with the amount due.^[2] Plaintiff claims that the inconsistent mortgage statements violate these provisions as the disclosure of inconsistent figures for the “amount due” places homeowners such as Plaintiff in the unenviable position of not knowing the correct amount required to keep the mortgage current.

Plaintiff asserts that his suit is timely because TILA's one-year statute of limitations attaches to each erroneous statement. Because Plaintiff filed the present suit on October 30, 2020, which was within one year of the receipt of a violative statement on November 1, 2019, Plaintiff argues that the Court should allow the suit to proceed.

Defendant acknowledges sending Plaintiff mismatched statements but contends that the statute of limitations expired in March 2020, one year from Plaintiff's receipt of the first defective statement in March 2019. Defendant argues that because Plaintiff was on actual notice of the discrepancy in March 2019, the statute of limitations was not refreshed by the issuance of each successive statement. Defendant argues that Plaintiff's TILA must therefore be dismissed.

DISCUSSION

A. Subject matter jurisdiction

This Court has jurisdiction over Plaintiff's federal claim under 28 U.S.C. § 1331.

B. Summary Judgment Standard

Summary judgment is appropriate where the Court is satisfied that the materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, or interrogatory answers, demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed.R.Civ.P. 56(a).

An issue is “genuine” if it is supported by evidence such that a reasonable jury could return a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if, under the governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence “is to be believed and all justifiable inferences are to be drawn in his favor.” Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)(quoting Anderson, 477 U.S. at 255).

Initially, the moving party has the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the nonmoving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id. Thus, to withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict those offered by the moving party. Anderson, 477 U.S. at 25657. A party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

C. Analysis

TILA limits the time a person aggrieved under the Act may file suit. TILA provides, “any action under this section may be brought . . . within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). The present case requires the Court to decide whether an “occurrence” in the context of the facts of this transaction means only the first alleged violation in a series, or if each violative instance in that series is considered its own “occurrence.”^[3] That determination is dispositive of the issue of when the one-year statute of limitations begins to run.

The parties present competing theories for applying 15 U.S.C. § 1640(e) to the facts of this case. Defendant argues that the statute of limitations begins at the initial alleged defective statement sent to Plaintiff. According to Defendant, the statute of limitations does not refresh with any subsequent violations in the series because Plaintiff was on actual notice of a TILA violation upon receiving the initial problematic statement. Therefore, Defendant contends that Plaintiff's complaint filed on October 30, 2020, should be barred because it was brought well beyond a year from the first defective statement sent in March 2019.

Plaintiff argues the opposite position. Plaintiff claims that each defective statement represents a discrete violation of TILA with its own one-year statute of limitations. Thus, Plaintiff contends that his complaint filed on October 30, 2020, which was brought within one year from his receipt of the November 1, 2019 statement, adheres to TILA's statute of limitations.

To determine which interpretation is correct, the Court will first examine TILA's purpose. Then the Court will consider how other courts have interpreted the term “occurrence” in TILA violation cases.

I. Purpose and Interpretation of TILA

TILA is a “federal consumer protection statute, intended to promote...