“A fact is material if—taken as true—it would affect the outcome of the case under governing law.”
How later courts described this case
- “A fact is material if—taken as true—it would affect the outcome of the case under governing law.”
- “a plaintiff must allege that the defendant engaged in an unlawful practice that caused an ascertainable loss to the plaintiff.”
Written by the judges who cited it.
The opinion
NOT FOR PUBLICATION
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
STEVEN R. FARRINGTON, HONORABLE KAREN M. WILLIAMS
Plaintiff,
Civil Action
v.
No. 20-4432 (KMW-AMD)
FREEDOM MORTGAGE CORPORATION,
OPINION
Defendant.
Appearances:
Cary L. Flitter, Esquire
Jody Thomas Lopez-Jacobs, Esquire
Andrew M. Milz, Esquire
FLITTER MILZ, P.C.
1814 East Route 70
Suite 350
Cherry Hill, NJ 08003
Counsel for Plaintiff Steven R. Farrington
Joshua M. Link, Esquire
Dinsmore & Shohi LLP
100 Berwyn Park, Suite 110
850 Cassatt Road
Berwyn, PA 19312
Counsel for Defendant Freedom Mortgage Corporation
WILLIAMS, District Judge:
OPINION
I. INTRODUCTION
This matter comes before the Court on the Motion for Summary Judgment (“MSJ”) [ECF
No. 86] filed by Defendant Freedom Mortgage Corporation (“Defendant” or “Freedom”) in
connection with Plaintiff Steven Farrington’s (“Plaintiff” or “Farrington”) allegations that
Freedom: (1) violated the Fair Credit Reporting A ct (“FCRA”), (2) breached its contract with
Plaintiff, (3) violated the Real Estate Settlement and Procedures Act (“RESPA”), (4) breached its
duty of good faith and fair dealing, and (5) violated the New Jersey Consumer Fraud Act
(“NJCFA”). Also before the Court is the Cross-Motion for Summary Judgment (“Cross-MSJ”)
[ECF No. 90] filed by Farrington as to the FCRA claim only. Both Motions are opposed. For
the reasons articulated below, Defendant’s MSJ is granted in part and denied in part. Plaintiff’s
Cross-MSJ is denied.1
II. BACKGROUD
A. PROCEDURAL HISTORY
On April 17, 2020, Farrington filed a five-count Complaint against Freedom.2 Compl.,
ECF No. 1. On July 22, 2020, Freedom filed a Motion to Dismiss, which was ultimately denied.
Thus, all five Counts remain. In denying the Motion to Dismiss, Judge Bumb ordered the parties
to address why the case should not be transferred to the United States District Court for the District
of Colorado. Order, ECF No. 43, Feb. 25, 2021. Freedom filed its Answer [ECF No. 49] on
March 19, 2021. Based on the responses from the parties, Judge Bumb declined to transfer the
case to the District of Colorado. Text Order, ECF No. 52, April 21, 2021. On February 25,
2022, Freedom filed this MSJ and, thereafter, Farrington filed a Cross-MSJ; both Motions are
opposed. These Motions are ripe for disposition.
1 This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.
2 The causes of action alleged are as follows: (1) Count I: Fair Credit Reporting Act; (2) Count II: Breach of Contract;
(3) Count III: Real Estate Settlement and Procedures Act; (4) Count IV: Breach of Good Faith and Fair Dealing; and
(5) Count V: New Jersey Consumer Fraud Act.
2
B. FACTUAL BACKGROUND3
Farrington is a resident of the state of Colorado (and has been at all times pertinent to this
litigation). SMF ¶ 1. On August 1, 2011, Farrington obtained a $305,094 mortgage loan
(“Note”) from Mortgage Investor’s Corporation secured by realproperty known as 42900 County
Rd. 125, Deer Trail, CO 80105 (“Property”). SMF ¶ 2. The P roperty included approximately
60 acres of land, a home, a large barn, and outbuildings. SMF ¶ 2. The Note was a VA loan and
secured by a Deed of Trust executed on the same day (Note and Deed of Trust referred to
collectively as “mortgage documents”). SMF ¶ 3. The Note required Farrington to make
monthly mortgage payments on the first of every month. SMF ¶ 4.
The Deed of Trust set forth rights and duties between the parties. As relevant here, the
Deed of Trust provides for how insurance proceeds would be handled in the event of an insurance
loss. SMF ¶ 8. Specifically, the Deed of Trust states, in pertinent part, [u]nless the Lender and
Borrower otherwise agree in writing, any insurance proceeds . . . shall be applied to restoration or
3 For ease of reference, the Court will cite to court documents relating to these motions as follows:
• “Compl.” refers to the Com plaint [ECF No. 1]
• “MSJ” refers to Freedom’s Motion for Summary Judgment [ECF No. 86]
• “Def.’s Br.” refers to Freedom’s Brief in Support of the Motion for Summary Judgment [ECF No. 86-2]
• “SMF” refers to Freedom’s Statement of Material Facts Not in Dispute [ECF No. 86-3]
• “Def.’s Ex. __” refers to Freedom’s Exhibits A through T [ECF Nos. 86-4 through 86-20]
• “Cross-MSJ” refers to Farrington’s Cross-Motion for Summary Judgment [ECF. No. 90]
• “Pl.’s Opp’n Br.” refers to Farrington’s Opposition to Freedom’s Motion for Summary Judgment and the
Memorandum in Support of Farrington’s Cross-Motion for Partial Summary Judgment [ECF No. 90-2]
• “RSMF” refers to Farrington’s Response to Defendant’s Statement of Materials Facts Not in Dispute [ECF
No. 90-3]
• “Pl.’s Ex. __” refers to Farrington’s Exhibits 1 through 20 [ECF Nos. 90-5 through 90-24]
• “SSMF” refers to Farrington’s Supplemental Statement of Materials Facts [ECF No. 90-3]
• “Def.’s Reply Br.” refers to Freedom’s Reply Brief in Support of its Motion for Summary Judgment and
Response in Opposition to Plaintiff’s Cross-Motion for Summary Judgment [ECF No. 94]
• “RSSMF” refers to Freedom’s Response to Plaintiff’s Supplemental Statement of Material Facts [ECF No.
94-5]
• “Def.’s Supp. Ex. __” refers to Freedom’s Exhibits A through D [ECF Nos. 94-1 through 94-4]
3
repair of the Property, if the restoration or repair i s economically feasible and Lender’s security is
not lessened.” SMF ¶ 9; RSMF ¶ 9. Moreover, the Deed of Trust provides, “[i]f the restoration
or repair is not economically feasible or Lender’s security would be lessened, the insurance
proceeds shall be applied to the sums secured by this Security Instrument . . ..” Id.
Additionally, the Deed of Trust outlines how insurance proceeds would be disbursed. The
precise language of the Deed of Trust provides:
Unless it is determined pursuant to section 5 that repair or restoration is not
economically feasible, Borrower shall promptly repair the Property if damaged to
avoid further deterioration or damage. If insurance or condemnation proceeds are
paid in connection with damage to, or the taking of, the Property, Borrower shall be
responsible for repairing or restoring the Property only if Lender has released
proceeds for such purposes. Lender may disburse proceeds for the repairs and
restoration in a single payment or in a series of progress payments as the work is
completed. If the insurance or condemnation proceeds are not sufficient to repair
or restore the Property, the Borrower is not relieved of Borrower’s obligation for the
completion of such repair or restoration.
SMF ¶¶ 10-12, Ex. C; RSMF ¶¶ 10-12. The Deed of Trust also states that the Lender is permitted
to hold insurance proceeds until it could inspect the Property to ensure that work has been
completed to the Lender’s satisfaction. SMF ¶ 10. Finally, the Deed of Trust contains an
express choice of law provision, indicating that it is governed by the law of the jurisdiction in
which the Property is located – here, Colorado. SMF ¶ 13.
Farrington’s loan was a VA loan, thus, the Note provided that regulations issued under the
VA Guaranteed Loan Authority governed the rights, duties, and liabilities of the parties to the loan
and any provisions of the Note which are inconsistent with the regulations are amended and
4
supplemented to conform to the regulations.4 SM F ¶¶ 5, Ex. B. The Federal National Mortgage
Association (“Fannie Mae” or “FNMA”) has a Servicing Guide relating to the disbursement of
insurance proceeds towards the repair of an insured loss, including servicers’ responsibilities.
SMF ¶ 14, Def.’s Ex. E; RSMF ¶ 14. The FNMA Servicing Guide provides, in pertinent part,
that, for insurance proceeds exceeding $40,000, a servicer is authorized to: release an initial
disbursement of 33 percent of insurance loss proceeds and “disburse any remaining funds based on
periodic inspections of the progress of the repair work.” Def.’s Ex. E.
Farrington’s Bankruptcy and Subsequent House Fire
On June 25, 2013, Farrington filed for Chapter 13 bankruptcy relief in the U.S. Bankruptcy
Court for the District of Colorado (“Bankruptcy Court”). SMF ¶ 17. At the time of Farrington’s
bankruptcy filing, his mortgage was being serviced by Ocwen Loan Servicing (“Ocwen”) and he
had not paid his mortgage in approximately 18 months, owing more than $30,000 in arrearages.
SMF ¶ 18-19. State-court foreclosure proceedings initiated against Farrington were stayed by the
bankruptcy filing. SMF ¶ 19. In December of 2013, the Bankruptcy Court approved a Chapter
13 Plan, which would have ultimately cured all arrears under Farrington’s mortgage. SMF ¶ 20.
In December of 2014, Farrington’s home, at the time insured by a homeowner’s insurance
policy issued by Farmer’s Insurance, was badly damaged by fire. SMF ¶¶ 21-22. Farrington
made a claim for this fire loss with Farmer’s Insurance; the claim was covered. SMF ¶¶ 21-23.
Pursuant to the terms and conditions of Farrington’s mortgage documents and the homeowner’s
4 Freedom provides that it services VA loans consistent with industry standards set forth in the FNMA Servicing
Guide. SMF ¶ 14. However, not only does Freedom fail to provide the Court with the referenced-Exhibit D (the
deposition transcript of T. Tarver), Farrington also denies Freedom’s characterization of the referenced-portion of
Tarver’s testimony, RSMF 14, Ex. 4; the Court agrees with Farrington that Freedom’s characterization misses the
mark.
5
insurance policy, the insurance proceeds of approx imately $283,000 were made payable jointly to
Farrington and Ocwen. SMF ¶ 23. Ocwen received the insurance proceeds in June of 2015.
Id.
On June 1, 2015, Farrington sought the Bankruptcy Court’s permission to modify his
Chapter 13 Bankruptcy Plan so that his mortgage arrearage would not be paid through his Chapter
13 Plan. SMF ¶ 24; RSMF ¶ 24. Farrington advised the Court that he wished to “negotiate a
settlement with Creditor or the insurance proceeds should satisfy the arrears.” Id. In June of
2015, Farrington unequivocally advised Ocwen that he intended to use the insurance proceeds to
rebuild the subject property. SMF ¶ 25. In fact, the Plaintiff executed an Intent to Repair form
“certify[ing] that the Farmers Insurance loss check…will be used to repair the fire damage that
occurred on December 15, 2014 and that the repairs will be made in a workmanlike manner.” Id.
In June and July of 2015, Farrington, the sole owner of a contracting company, WGID
Construction Company, advised Ocwen that his contracting company would complete the
necessary repairs to his property. SMF ¶¶ 26-27. Farrington provided Ocwen with an executed
Contractor Agreement in July of 2015 as both the property owner and the contractor contracting to
repair and rebuild the Property for $370,000. SMF ¶ 28. The contract provided by Farrington
acknowledged that payments would be made in a series of draws. SMF ¶ 29. Additionally,
Farrington sent correspondence to Ocwen acknowledging that progress payments would be made
as opposed to a lump sum payment and reiterating his desire to use the insurance funds to rebuild
his home. SMF ¶ 30. Specifically, Farrington advised Ocwen that “I need to get started on this
as soon as possible as the construction season is well under way at this point so I will require the
first draw as soon as possible. The first phase of construction will necessarily be the demolition
6
and disposal of the ruins.” SMF ¶ 31. Farringt on and his contracting company also executed an
acknowledgement with Ocwen outlining the repair process wherein WGID Construction
covenanted “[t]hat each scheduled work phase has been satisfactorily completed in accordance
with all applicable Codes and Regulations and the plans and specifications set forth in the Contract
before disbursement of payment for such phase is made in accordance with the contract.” SMF ¶
32. Finally, WGID Construction, Farrington’s company, executed an Acknowledgement of
Payment Procedures acknowledging that (i.) progress payments are released based on inspection
results, (ii.) the contracted cost of the project was in excess of the amount of insurance funds held
by Ocwen, and (iii.) that the homeowner was responsible for the expenses in excess of the
insurance funds held by Ocwen. SMF ¶ 34.
On August 4, 2015, Ocwen released an initial draft, in the amount of $94,977.25, to
Farrington and his company to begin repair and reconstruction of Farrington’s home, which, as
outlined in Farrington’s July 10, 2015 letter, would include demolition and disposal of the ruins.
SMF ¶¶ 35-36; RSMF ¶ 35-36. Farrington used a portion of the loan proceeds to improve the
barn and repair the fencing on the Property, citing the need to place the material securely and keep
the livestock out of the foundation. SMF ¶ 37, Ex. A at 47; RSMF ¶ 37. Farrington also used
the funds for the demolition of the old structure, well, septic, foundation, ground iron to
foundation, excavation, water proofing, driveway, and disposal.5 SSMF ¶ 6.
Farrington’s Loan Transfer to Freedom
5 Freedom denies this fact but fails to cite to record evidence to support the denial.
7
In November of 2015, the servicing of Far rington’s mortgage was transferred from Ocwen
to Freedom, and Ocwen provided documents to Freedom relating to Farrington’s insurance claim.
SMF ¶ 38; SSMF ¶ 9. After the transfer, the communications between Freedom and Farrington
as it relates to disbursement of the second draw of the insurance proceeds were plagued with
alleged issues relating to missing documents, varied inspection results of the Property, and
Freedom’s requests for the status of the repairs of the Property.
First, there were disputes concerning whether Freedom had in its possession all the
documents necessary to release the second draw. By letter dated July 12, 2016, Freedom sent
Farrington a letter stating that it had made repeated attempts to contact him and that it had not
received any updates within the 90 days related to the status of repairs on the Property. SMF ¶
39, Ex. P. Although Farrington called Freedom to update insurance information on January 7,
2016, SMF ¶ 39; RSMF ¶ 39, in February and April of 2016, Freedom called Farrington but noted
that the “call could not be completed as dialed.” SMF ¶ 39; RSMF ¶ 39. On July 22, 2016,
Farrington called Freedom about the second draw of the loan proceeds, however, Freedom advised
that no documents were transferred from Ocwen, and it needed Farrington to resubmit all
documents. RSMF ¶ 40. Thereafter, while the record reflects that claim information was
submitted to Freedom, the nature of the claim information and who submitted the same is not
clear.6 RSMF ¶ 41, Ex. 2; Ex. 4 at 37-38. On August 3, 2016, Freedom’s service notes indicate
that an email was sent to Farrington regarding required missing documents. Pl.’s Ex. 2 at 16. In
6 Referencing an Exhibit Q, Freedom purports to set forth undisputed facts regarding conversations with Farrington
and his failure to provide requested i nformation. SMF ¶¶ 40-45. However, Freedom failed to provide the Court
with an Exhibit Q – described as pertinent portions of Freedom’s servicing notes. Thus, the Court derives these facts
from Farrington’s Responsive Statement and exhibits attached thereto.
8
April of 2017, Freedom advised Farrington that it had all documentation except for a letter of
intent. RSMF ¶ 44. Farrington provided a letter of intent to Ocwen. Def.’s Ex. I.
There are similarly disputes concerning Freedom’s requests for the status of repairs and
differing inspection results obtained by Freedom which continuously delayed the release of the
second draw. With a decision on the second draw still pending, in late 2016, Farrington told
Freedom that he wished to have the remainder of the loan funds applied to the unpaid principal
balance, however, at other times, he requested disbursement of the additional funds to move
forward with construction. SMF ¶ 43. From February 2017 through October 2017, Farrington
made several requests for the second draw of insurance proceeds and contacted Freedom several
times to check the status of said request.7 RSMF ¶ 44. Indeed, a March 20, 2017 draw request
was cancelled, and it was determined that Freedom’s corporate approval was necessary to approve
the draw. SMF 45; RSMF ¶ 45. While Freedom states that an inspection revealed that
sufficient progress had not been made for the release of second draw, Farrington disputes that
Freedom ever told him that there was not sufficient progress. SMF ¶¶ 44-45; RSMF ¶¶ 44-45.
Thereafter,Freedom sent Farrington a letter in June 2017 indicating that it was waiting for a status
of repairs w hile the matter was still pending corporate approval. Id. In July of 2017, Farrington
advised Freedom that no additional work was performed on the Property since 2016 and a follow-
up inspection in August of 2017 confirmed that no additional work had occurred. SMF ¶ 46.
7 None of the exchanges between Farrington and Freedom between February and October 2017 resulted in the release
of the second draw. RSMF ¶ 44. Most of the conversations involved Freedom relaying to Farrington that the
matter was still pending corporate approval. Id. Other conversations involved discussion of inspections. For
instance, conversations in March 2017 revealed that an inspection showed that the Property was 31 percent complete,
and that corporate approval was necessary to release the funds. Id. Yet, in July of 2017, Freedom ordered a “50
percent inspection” of the property; in August 2017, an inspection determined that the Property was 27 percent
complete. Id.
9
On October 24, 2017, Freedom denied the second draw, citing the need for a letter of intent.
SMF ¶ 44. Freedom cited a missing letter of intent even though Ocwen had one on file since
2015. SSMF ¶ 25. Farrington characterizes Freedom’s October 2017 decision as a decision not
to allow the rebuild; of course, Freedom denies this, maintaining that it never decided not to allow
Farrington to rebuild his house and pursuant to the Deed of Trust, the loan proceeds had to be used
to fund the rebuild. SSMF ¶ 27; RSSMF ¶ 27.
The issues surrounding the second draw of insurance proceeds continued into 2018.
Farrington’s request for the second draw remained.8 SMF ¶ 49; RSMF ¶ 49. On June 26, 2018,
Freedom had another inspection performed which indicated that 30 percent of the work was
complete. Id. Tanya Tarver testified that she did not know what specifically these inspections
needed to show. Pl.’s Ex. 4 at 107.
On September 11, 2018, Farrington received a bankruptcy discharge and his Chapter 13
bankruptcy was closed, with Farrington’s mortgage, including any alleged arrearage, to be handled
outside of the bankruptcy context.9 SMF ¶ 50. There were additional bankruptcy proceedings
in October 2018 wherein Farrington alleged that Freedom had not released any insurance proceeds
and the misapplication of payments resulting in a purported arrearage. SMF ¶ 51; RSMF ¶ 51.
The adversary proceeding was dismissed for lack of jurisdiction. Pl.’s Ex. 15.
Freedom’s Credit Reporting to Transunion
8 Apparently, Farrington also requested that Freedom allow him to place a modular home on the property.
9 Farrington denies that there was an arrearage claiming that Freedom already decided that it was not going to allow
Farrington to rebuild. Of course, these issues are disputed.
10
In 2018, Freedom began reporting Farring ton’s mortgage payment information to the Big 3
credit bureaus. SMF ¶ 52; RSMF ¶ 52; Def.’s Supp. Ex. A. In October 2019, Transunion, a
consumer reporting agency (“CRA”), notified Freedom that Farrington disputed its credit
reporting; the credit report listed that Freedom was reporting him past due $38,736, and with a
balance of $285,366. SSMF ¶ 32; Ex. 8, p.1. 33. Transunion described Plaintiff’s dispute as
“[c]onsumer house burned down and an insurance company issued a check to Freedom for the
loss, Freedom refuses to apply the money to a rebuild on his property and therefore should apply
the insurance money to Freedom [sic].” SSMF ¶ 34. Freedom assigned its employee, Angela
Flores, to investigate Farrington’s dispute and to respond to Transunion. SSMF ¶ 35. On
November 20, 2019, Ms. Flores, certified to Transunion that the information reported about
Farrington was accurate. SSMF ¶ 36. Included in the response, Ms. Flores certified for
Freedom that the following was “accurate”: 1) that Plaintiff was currently 180 days late; 2) that
Plaintiff was over $38,000 past due; and 3) that Plaintiff had an outstanding balance of over
$284,000. SSMF ¶ 36. Ms. Flores does not remember investigating Farrington’s disputes nor
do the notes show the steps Ms. Flores took to investigate Farrington’s dispute.10 SSMF ¶¶ 37-
39.
Force-placed Insurance11
10 Farrington lodged a similar dispute with Experian. SSMF ¶ 47. Freedom assigned its employee, Juana Cambron,
who certified to Experian that the in formation reported about Plaintiff was accurate. SSMF ¶ 51. Ms. Cambron
does not remember the discrete steps she took to investigate the dispute; the facts relating to same are disputed by the
parties. SSMF ¶¶ 52-57; RSSMF ¶¶ 52-57.
11 Here again, Freedom relies on exhibits it failed to provide to the Court. Farrington objects to paragraphs 47
(citing to Exhibit Q) and 48 (citing to Exhibit D).
11
Force-placed insurance is the process by w hich a lender obtains property insurance for the
borrower. SSMF ¶ 81, Ex. 4. The Deed of Trust requires that the Borrower maintain property
insurance for the Property. SMF ¶ 6. Specifically, the Deed of Trust requires that “Borrower
shall keep the improvements now existing or hereafter erected on the Property insured against loss
by fire…and any other hazards…” SMF ¶ 6. The Deed of Trust also contains provisions
permitting the mortgagee to obtain force-placed insurance coverage if the Borrower fails to
maintain coverage. SMF ¶ 7. In 2017, Freedom force-placed insurance on Farrington’s loan in
the amount of $1,963. SSMF ¶ 83, Ex. 4. In 2018, Freedom force-placed insurance on
Farrington’s loan in the amount of $2,002. SSMF ¶ 84. Freedom took out $300,000 in force-
placed insurance although Farrington’s home had been burnt to the ground and no longer existed.
SSMF ¶ 86.
The force-placed insurance policy (“Policy”) provided $300,000 in coverage protection for
the dwelling under Coverage A. Pl.’s Ex. 12. Coverage B protected “Other Structures” at ten
percent of Coverage A. Id. The Policy defines “dwelling” as “[a] building designed for use as a
residence for no more than four families or a mobile home.” Pl.’s Ex. 12. Further, the Policy
defines “mobile home” as “[a] building which satisfies the National Mobile Homes Construction
and Safety Standards, as presently existing or hereafter amended, or the American Society of Civil
Engineers Standard ANSI/ASCE 7-88.” Id. Farrington describes the conditions of the trailer as
an icebox in the winter and an oven in the summer; Farrington had to haul water and gas for the
trailer; his wife would not live with him due to the condition of the trailer; and Farrington was
12
forced to shower at work due to the living situatio n in the trailer.12 Pl.’s Supp. SMF ¶ 80.
Farrington maintains that there was no dwelling to provide coverage for; while Freedom states that
the policy could have potentially covered the mobile home as well as the barn, outbuildings, and
construction materials/equipment on the Property. SSMF ¶ 86-89; Def.’s RSMF ¶¶ 86-89.
III. LEGAL STANDARD
Summary judgment is appropriate “if the 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). “A fact is ‘material’ under Rule 56 if its existence or nonexistence might impact the
outcome of the suit under the applicable substantive law.” Santini v. Fuentes, 795 F.3d 410, 416
(3d Cir. 2015)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)); see also M.S. by
& through Hall v. Susquehanna Twp. Sch. Dist., 969 F.3d 120, 125 (3d Cir. 2020)(“A fact is
material if—taken as true—it would affect the outcome of the case under governing law.”).
Moreover, “[a] dispute over a material fact is ‘genuine’ if ‘a reasonable jury could return a verdict
for the nonmoving party.’” Santini, 795 F.3d at 416 (quoting Anderson, 477 U.S. at 248).
The moving party bears the burden of identifying portions of the record that establish the
absence of a genuine issue of material fact. Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986)). The burden then “shifts to the nonmoving party to go beyond the pleadings and ‘come
forward with ‘specific facts showing that there is a genuine issue for trial.’’” Id. (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). To survive a motion
for summary judgment, the nonmoving party must identify specific facts and affirmative evidence
12 While Freedom denies the allegations in this paragraph, it fails to set forth a citation supporting its counter
statements. See L. Civ. R. 56.1 (re quiring that a statement containing disagreements to state the material fact in
dispute and cite to affidavits or other documents submitted in connection with the motion).
13
that contradict those offered by the moving party. Anderson, 477 U.S. at 256-57. “A nonmoving
party may not ‘rest upon mere allegations, general denials or . . . vague statements . . . .’” Trap
Rock Indus., Inc. v. Local 825, Int’l Union of Operating Eng’rs, 982 F.2d 884, 890 (3d Cir. 1992)
(quoting Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991)). When considering a motion
for summary judgment, the court views the facts and all reasonable inferences drawn from the
facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., 475 U.S. at
587.
The above-articulated governing standard remains the same when courts are presented with
cross-motions for summary judgment. Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d
388, 402 (3d Cir. 2016). “When both parties move for summary judgment, ‘[t]he court must rule
on each party's motion on an individual and separate basis, determining, for each side, whether a
judgment may be entered in accordance with the Rule 56 standard.’” Id. at 402 (quoting 10A
Charles Alan Wright et al., Federal Practice & Procedure § 2720 (3d ed. 2016)).
IV. DISCUSSION
A. New Jersey Consumer Fraud Act (Count V)
Before addressing the substance of Farrington’s NJCFA claim, Freedom first argues that
because the Deed of Trust dictates that Colorado law governs the parties’ relationship, Farrington’s
NJCFA claim is barred by contractual and common law choice of law principles. Def.’s Br., ECF
No. 86-2, 14-22. Farrington argues that Freedom waived the choice-of-law affirmative defense
through its failure to raise same prior to summary judgment. Pl.’s Opp’n Br., ECF No. 90-2, 5-7.
Farrington argues that Freedom failed to raise a choice-of-law argument in its Motion to Dismiss
the NJCFA claim, in its Answer, or during the 15-month discovery period, which included
14
discovery on the NJCFA claim. Id. Thus, Farr ington argues that he would be prejudiced by this
belated choice-of-law argument since discovery has ended and he would now be precluded from
pursuing discovery to support a consumer fraud claim under Colorado law. Id. In its Reply,
Freedom argues that Farrington cannot claim surprise that Colorado, as opposed to New Jersey,
law applies because Farrington cites to Colorado law in his Complaint and Freedom preserved its
choice-of-law defense in its Answer by way of its Eleventh and Sixteenth Affirmative Defenses.
Def.’s Reply 4. Freedom also contends that it clearly and unequivocally denied that the New
Jersey Consumer Fraud Act applied to the parties’ relationship. Id.
Parties may waive choice-of-law issues if they are not raised in a timely fashion. Safarian
v. Am. DG Energy Inc., No. 10-6082, 2015 WL 12698441, at *6 (D.N.J. Nov. 24, 2015), aff'd, 729
F. App'x 168 (3d Cir. 2018)(citing Williams v. BASF Catalysts LLC, 765 F.3d 306, 316 (3d Cir.
2014)); see, e.g., Blue Cross Blue Shield Ass'n v. GlaxoSmithKline LLC, No. 13-4663, 2019 WL
13182410, at *1 (E.D. Pa. Nov. 8, 2019)(noting that a party’s litigation conduct can constitute
waiver of choice-of-law issues and declining to consider choice-of-law principles at the motion in
limine stage). “Rather than setting a firm end point at any specific stage of the litigation, the
Third Circuit has held that whether an affirmative defense is waived will depend on whether the
defense was raised ‘at a pragmatically sufficient time’ and whether the plaintiff was prejudiced in
his ability to respond.” Safarian, 2015 WL 12698441, at *6.
Here, based on the prejudice to Farrington, Freedom has waived the ability to raise a
choice-of-law argument. Freedom filed a Motion to Dismiss Farrington’s NJCFA claim but
remarkably failed to argue dismissal based on choice-of-law principles. Judge Bumb denied that
Motion, finding Farrington adequately pled a NJCFA claim. While Freedom’s Answer generally
15
denies that “Plaintiff and the Deed of Trust are pro tected by the CFA,” preserved “rights and
privileges in the Deed of Trust,” and stated that Plaintiff’s claims are barred based on the terms,
conditions, or other provisions of the applicable agreements between the parties, Freedom, after
filing a dispositive motion that failed to raise choice of law, also fails to specifically raise the
matter in its Answer. Thereafter, the parties engaged in more than a year of discovery on
Farrington’s claims, including the NJCFA claim. Thus, based on the specific set of facts and
circumstances presented here, Farrington would be prejudiced as the choice-of-law issue was
never, even though it could have been, squarely raised before this stage of litigation.
Significantly, the parties engaged in discovery, with the attendant time, effort, and expense relating
to same, on the NJCFA claim. As such, this Court finds that Freedom has waived any choice-of-
law defense as to the NJCFA claim.
Next, Freedom fails to show that there is no genuine dispute as to any material fact relating
to the NJCFA claim. The NJCFA prohibits:
The act, use or employment by any person of any unconscionable commercial
practice, deception, fraud, false pretense, false promise, misrepresentation, or the
knowing, concealment, suppression, or omission of any material fact with intent
that others rely upon such concealment, suppression or omission, in connection
with the sale or advertisement of any merchandise or real estate, or with the
subsequent performance of such person as aforesaid, whether or not any person has
in fact been misled, deceived or damaged thereby, is declared to be an unlawful
practice . . .
N.J.S.A. § 56:8-2. To state a claim under the NJCFA, a plaintiff shall allege: “1)
unlawful conduct by defendant; 2) an ascertainable loss by plaintiff; and 3) a causal
relationship between the unlawful conduct and the ascertainable loss.” Bosland v.
Warnock Dodge, Inc., 197 N.J. 543, 557 (2009); see also Frederico v. Home Depot, 507
16
F.3d 188, 202 (3d Cir. 2007)(citing Cox v. Sears R oebuck & Co., 138 N.J. 2, 647 A.2d 454,
462–465 (1994)(“a plaintiff must allege that the defendant engaged in an unlawful practice
that caused an ascertainable loss to the plaintiff.”).
Freedom contends that Farrington cannot show that it engaged in unlawful conduct
in connection with the sale or advertisement of any merchandise or real estate. To the
contrary, the NJCFA does not limit liability to only unlawful conduct in connection with
the sale or advertisement of real estate, but also encompasses conduct relating to the
subsequent performance of same. N.J.S.A. § 56:8-2. The record before the Court is
littered with factual disputes concerning alleged unconscionable and deceptive practices
relating to Freedom’s performance that a reasonable jury could find constitute behavior
falling outside of the norm of reasonable business practice. For example, Freedom’s
refusal for more than two years to disburse a second draw of the insurance proceeds
(Ocwen having disbursed the first draw of the insurance proceeds) for the rebuild of
Farrington’s home (i.e., varying inspection results and lack of clarity about what the
inspection results needed to provide to allow for disbursement of insurance proceeds; and
Freedom’s alleged lack of documents relating to the rebuild after assuming the loan from
Ocwen and using the lack of documentation as an alleged reason to hold the insurance
funds). Similarly, for the reasons provided infra, there is a genuine dispute as to material
facts concerning whether Freedom’s actions relating to the placement of force-placed
insurance were bona fide and reasonable (specifically, whether the Policy was purchased to
cover a dwelling that no longer existed). Summary judgment as to the NJCFA claim is
denied.
17
B. Breach of Contract (Count II)/Br each of the Implied Duty of Good Faith and
Fair Dealing (Count IV)
Freedom argues that Farrington’s contractual claims fail because it has been more than
three years since the alleged breach and, thus, under Colorado law, the claims are time-barred.
Def.’s Br. 27-28. Freedom contends that the latest breach alleged by Farrington occurred on
March 20, 2017, three years and one month before Farrington initiated this lawsuit, when Freedom
allegedly advised Farrington, in bad faith, that corporate approval was needed to release the
insurance funds to Farrington. Id. at 28. Farrington argues that because Freedom had a
continuing duty to perform, a new claim accrues for each separate breach. Pl.’s Opp’n Br. 11.
Therefore, Farrington contends that Freedom’s breach, failing to apply the insurance proceeds to
Farrington’s mortgage balance, continued until September 2020 and therefore, he is entitled to
assert a claim for damages from the date of the first breach within the statute of limitations. Id.
Freedom did not reply to Farrington’s argument concerning Freedom’s alleged continuing
violations.
Under Colorado law, contract actions shall be commenced within three years after the
cause of action accrues. Colo. Rev. Stat. Ann. § 13-80-101(1)(a)(West). “A cause of action for
breach of any express or implied contract ‘shall be considered to accrue on the date the breach is
discovered or should have been discovered by the exercise of reasonable diligence.’”
Neuromonitoring Assocs. v. Centura Health Corp., 2012 COA 136, ¶ 26, 351 P.3d 486, 491 (Colo.
App. 2012)(quoting Colo. Rev. Stat. Ann. § 13–80–108(6)). However, where there is a
continuing contractual obligation coupled with repeated, successive breaches, “‘a new claim
accrues for each separate breach’ and the plaintiff ‘may assert a claim for damages from the date of
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the first breach within the period of limitation.’” Id. at ¶ 36; 492. Here, the Court finds that
Farrington’s contractual claims are not time barred because Farrington raises facts establishing that
by April 19, 2017 – three years before this lawsuit was initiated on April 17, 2020 – he was still
awaiting corporate’s decision about whether the second draw of the insurance proceeds would be
disbursed. RSMF ¶ 44h. Indeed, Farrington cites to record evidence indicating that Freedom
advised him on April 19, 2017, that a decision from corporate was still pending about
disbursement of the insurance proceeds and a decision would take about 7 days. RSMF ¶ 44i.
Freedom’s failure to ultimately disburse the insurance proceeds is the very conduct complained of
as it relates to the contract claims. Thus, Farrington has properly rebutted Freedom’s contention
that the last alleged breached occurred on March 20, 2017. Farrington’s contract claims are not
time barred.
C. Real Estate Settlement and Procedures Act (Count III)
Count IV of the Complaint asserts that Freedom’s charges for force-placed insurance were
not bona fide or reasonable, in accordance with 12 U.S.C. § 2605(m), because there was no
dwelling to insure because it burned down. Compl. ¶ 84-86. Freedom argues that Farrington
fails to meet his burden establishing that Freedom violated RESPA due to Farrington’s failure to
produce any evidence that the force-placed insurance was not bona fide or reasonable because
contrary to Farrington’s assertion that there was nothing more than “dirt and weeds” left on the
Property, there was a large barn and outbuildings on the property. Def.’s Br. 29-31. Moreover,
Freedom contends that Plaintiff fails to present expert testimony regarding the reasonableness of
the insurance rates or pointing to other insurance that was available. Id. at 31. In Opposition,
Farrington, attaching the Policy, acknowledges that a foundation, fence, and barn existed on the
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property, but contends that these items were exclu ded from the Policy. Pl.’s Opp’n Br. at 15.
Farrington contends that instead, Freedom took out $300,000 in coverage on a non-existent
dwelling and continued the Policy from 2017 through 2022. Id. For the first time, in its Reply,
Freedom proffers that the dwelling covered by the Policy was the “mobile home” that Farrington
placed on the Property, which is a dwelling for purposes of the Policy. Def.’s Reply at 8-9.
Freedom also contends that the barn was also covered by the Policy. Id.
All charges related to force-placed insurance imposed on the borrower by or through the
servicer shall be bona fide and reasonable. 12 U.S.C. § 2605(m). “A bona fide and reasonable
charge is a charge for a service actually performed that bears a reasonable relationship to the
servicer's cost of providing the service, and is not otherwise prohibited by applicable law.” 12
C.F.R. 1024.37(2)(h)(2). “A plaintiff bringing a § 2605 claim must sufficiently allege one of two
types of damages: (1) ‘actual damages to the borrower as a result of the failure’ to comply with §
2605; or (2) statutory damages ‘in the case of a pattern or practice of noncompliance with the
requirements’ of § 2605.’” Gorbaty v. Wells Fargo Bank, N.A., No. 10-CV-3291, 2012 WL
1372260, at *5 (E.D.N.Y. Apr. 18, 2012)(quoting 12 U.S.C. § 2605(f)). “A plaintiff seeking
actual damages under § 2605 must allege that the damages were proximately caused by the
defendant's violation of RESPA.” Id. (the case also discusses pattern and practice). To
successfully obtain statutory damages, a plaintiff must show “‘a pattern or practice of
noncompliance with the requirements’ of § 2605.” Id. Essentially, a plaintiff must demonstrate
a defendant routinely operates in this way or point to a wide-ranging, institutionalized practice.
Id.
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Freedom fails to meet its initial burden by identifying portions of the record that establish
the absence of a genuine issue of material fact as to whether its placement of the force-placed
insurance was bona fide and reasonable. While Freedom contends for the first time in its Reply
Brief that the mobile home placed by Farrington on the Property was the dwelling covered by the
Policy, Freedom did not provide the Policy as an exhibit and failed to even raise the mobile home
in its moving brief. Farrington, citing to, and providing the Court with, the Policy, disputes that
there was any dwelling covered by the Policy. A plain reading of the Policy allowed for the most
coverage for the dwelling -- $300,000 of coverage for the dwelling pursuant to Coverage A. Pl.’s
Ex. 12. Coverage B protected “Other Structures” at ten percent of Coverage A. While the
Policy specially provides that a “mobile home” can constitute a “dwelling,” the Policy defines
“mobile home” as “[a] building which satisfies the National Mobile Homes Construction and
Safety Standards, as presently existing or hereafter amended, or the American Society of Civil
Engineers Standard ANSI/ASCE 7-88.” Pl.’s Ex. 12. The Court has not been presented with
evidence demonstrating that the mobile home on Farrington’s Property met this standard and was
indeed covered by the Policy. Farrington, citing to the Policy, maintains that there was no
dwelling covered by the Policy. Indeed, as to the “mobile home,” Farrington refers to it as a
“trailer” and describes the conditions of the trailer as follows: it is an icebox in the winter and an
oven in the summer; Farrington had to haul water and gas for the trailer; his wife would not live
with him due to the condition of the trailer; and Farrington was forced to shower at work due to the
living situation in the trailer.13 SSMF ¶ 80.
13 While Freedom denies the allegations in this paragraph, it fails to set forth a citation supporting its counter
statements. See L. Civ. R. 56.1 (re quiring that a statement containing disagreements to state the material fact in
dispute and cite to affidavits or other documents submitted in connection with the motion).
21
The facts presented here are distinguishabl e from the Iaffaldano case, cited by Freedom, for
one key reason: in that case, plaintiff took issue with the unreasonableness of the force-placed
insurance premium, while here, Farrington’s allegation is that the Policy was unreasonable and not
bona fide because there was no dwelling to protect. See Iaffaldano v. Sun W. Mortg. Co., Inc.,
No. 2:17-CV-14222, 2018 WL 2221872, at *1 (S.D. Fla. Feb. 21, 2018). There exists a material
dispute as to the dwelling covered by the Policy and whether the trailer or mobile home constituted
a dwelling or not is crucial to the issue of whether the insurance was bona fide and reasonable.
Summary judgment is denied.
D. FCRA (Count I)
In the Complaint, Farrington asserts that Freedom violated 15 U.S.C. 1681s-2(b) by
reporting inaccurate information to the “Big 3” credit bureaus, performing an insufficient
investigation after Farrington disputed the reporting, and by failing to accurately report the results
of the investigation. Compl. ¶¶ 58-67. Freedom seeks summary judgment on the FCRA claim
on the premise that, as a matter of law, Farrington cannot establish, as a threshold matter necessary
to sustain a FCRA claim, that Freedom’s reporting was inaccurate or misleading. Def.’s Br. 33.
Accordingly, the Court should not even reach the reasonableness of Freedom’s investigation. Id.
In response, Farrington, having filed a cross-motion seeking summary judgment on this issue,
argues that Freedom reported inaccurate information claiming that Freedom would not let him
rebuild his home and, thus, the insurance proceeds should have been applied to the mortgage
balance. Pl.’s Opp’n Br. 21-22. Farrington contends that Freedom’s application of the
insurance proceeds to his loan balance would have rendered the account current, with a lower
account balance. Id. Alternatively, Farrington argues that the information reported by Freedom
22
was misleading because it could have used a certa in compliance condition codes to indicate that an
insurance payment could have been used toward the mortgage balance or that Farrington was
disputing the reporting. Id. at 22-23. Before addressing the reasonableness of the investigation,
the Court will resolve the threshold issue of accuracy first.
The FCRA governs consumer credit reporting and “‘was crafted to protect consumers
from the transmission of inaccurate information about them, and to establish credit reporting
practices that utilize accurate, relevant, and current information in a confidential and responsible
manner.’” Seamans v. Temple Univ., 744 F.3d 853, 860 (3d Cir. 2014)(quoting Cortez v. Trans
Union, LLC, 617 F.3d 688, 706 (3d Cir. 2010)). As such, the FCRA imposes a myriad of
obligations on CRAs and furnishers of credit information, like banks. Id.
Section 1681s-2(a), outlining the duties of furnishers, prohibits furnishers from providing
information to a consumer reporting agency which it has reasonable cause to believe is inaccurate.
15 U.S.C. § 1681s-2(a)(1)(A). However, the Third Circuit explained that the FCRA precludes
privates suits for violations of § 1681s-2(a), leaving enforcement of that provision to federal and
state officials. Seamans, 744 F.3d at 864. A private suit may only be initiated after the
furnisher is notified by a CRA of a consumer dispute concerning the accuracy or completeness of
the information provided to a CRA by the furnisher. Id.; 15 U.S.C. § 1681s-2(b).
The furnisher’s receipt of a dispute triggers its duty to reasonably investigate to ensure the
completeness and accuracy of the information furnished. SimmsParris v. Countrywide Fin.
Corp., 652 F.3d 355, 357 (3d Cir. 2011). Specifically, a furnisher must, in pertinent part: 1)
investigate the disputed information; 2) review all relevant information from the CRA; 3) report
the results of the investigation to the CRA; 4) if inaccurate or incomplete information is
23
uncovered, report those results to all CRAs. 15 U .S.C. § 1681s-2(b). The furnishers
investigation must be reasonable. The Third Circuit held, like CRAs, furnishers must follow
reasonable procedures concerning the accuracy of consumer data under the FCRA; “a reasonable
procedure is one ‘that a reasonably prudent person would undertake under the circumstances.’”
Seamans, 744 F.3d at 864 (quoting Cortez, 617 F.3d at 709). The issue of reasonableness is a
“question for trial unless the reasonableness or unreasonableness of the procedures is beyond
question.” Id. at 864-65. Yet, the reasonableness of a furnisher’s investigative procedures
should be evaluated based on the content of the notice of dispute sent by the CRA. Id. at 865.
A plaintiff must show inaccuracy to state a claim under § 1681s-2(b). Esperance v.
Diamond Resorts, No. 1:18-CV-10237, 2022 WL 1718039, at *5 (D.N.J. May 27, 2022). A
showing of inaccuracy is required to establish an entitlement to actual damages. Id. Factually
incorrect information is inaccurate and technically correct information is inaccurate “if, through
omission, it ‘create[s] a materially misleading impression.’” Seamans, 744 F.3d at 865.
Whether information is technically inaccurate is generally a question for the jury. Id.
Farrington’s FCRA claim fails and Freedom is entitled to summary judgment because there
is no genuine dispute as to any material fact establishing that the information furnished by
Freedom to the CRAs was factually inaccurate or misleading. Courts have found that a plaintiff
must show a factual inaccuracy in the furnisher’s report to a CRA, not the existence of a disputed
legal issue. Esperance, 2022 WL 1718039, at *5 (referencing the First Circuit’s pronouncement
that “a plaintiff's required showing [under § 1681s–2(b)] is factual inaccuracy rather than the
existence of disputed legal questions”)(quoting Chiang v. Verizon New England, 595 F.3d 26, 35
(1st Cir. 2010)); Hopkins v. I.C. Sys., Inc., No. CV 18-2063, 2020 WL 2557134, at *7 (E.D. Pa.
24
May 20, 2020)(the furnished information must ste m from a factual inaccuracy, not a legal one).
“‘[F]urnishers are neither qualified nor obligated to resolve matters that turn on questions that can
only be resolved by a court of law.’” Esperance, 2022 WL 1718039, at *5.
Here, Farrington contests whether, at the time of the reporting, Freedom should have
applied the insurance proceeds to the mortgage balance which would have rendered Freedom’s
reporting inaccurate. After Farrington’s bankruptcy proceedings concluded, Freedom reported
Farrington’s loan balance and over $30,000 in arrears to the CRAs. It is undisputed that Freedom
was holding about $189,000 in insurance proceeds to be used for the rebuild of Farrington’s home.
It is also undisputed that if the $189,000 were applied to Farrington’s loan, the figures reported to
the CRAs would have been lower. However, there is no evidence before the Court establishing
that Freedom had an obligation to apply the insurance proceeds to Farrington’s loan balance at the
time it furnished the information to the CRAs – indeed, that appears to be a legal issue and
furnishers are not required to resolve the legal validity of a debt prior to reporting to CRAs.
In support of its claim, Farrington points the Court to record evidence purportedly
establishing that “[o]nce Defendant decided in October 2017 that it was not going to allow Plaintiff
to rebuild the house, Defendant was required by the Deed of Trust to apply the insurance to
Plaintiff’s loan.” SSMF ¶ 27, Def.’s Ex. C; RSMF ¶ 50. This statement, however,
mischaracterizes the record evidence. Freedom did in fact deny Farrington’s request for the
second draw on October 24, 2017, but it also cited the need for a letter of intent. Farrington does
not direct the Court to any evidence demonstrating that Freedom also represented it was no longer
going to allow the rebuild. Indeed, Farrington continued to request the second draw after the
October 2017 decision and Freedom and Farrington continued to go through inspections and
25
another round of corporate approval, whether this was reasonable or not is simply not relevant to
the analysis of this claim.
Second, Farrington’s reference to the Deed of Trust fails to inject genuine issues of fact
concerning Freedom’s obligation to apply the insurance proceeds to the mortgage balance at the
time it furnished the information to the CRAs. The Deed of Trust provides, in pertinent part,
[u]nless the Lender and Borrower otherwise agree in writing, any insurance proceeds . . . shall be
applied to restoration or repair of the Property, if the restoration or repair is economically feasible
and Lender’s security is not lessened.” Def.’s Ex. C, p. 4 ¶ 5. Further, the Deed of Trust
provides, “[i]f the restoration or repair is not economically feasible or Lender’s security would be
lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument . .
..” Id. The Court has not been presented with any evidence of the parties’ agreement in writing
to utilize the insurance proceeds for a purpose other than the restoration or repair of Farrington’s
home. There is no evidence before the Court demonstrating that the Deed of Trust allows one
party to the agreement to dictate when the insurance proceeds would be utilized for the loan
balance as opposed to the rebuild. Similarly, there is no evidence establishing when, pursuant to
the Deed of Trust, a determination concerning the continued economic feasibility of a rebuild
should occur. Frankly, in light of the Deed of Trust and the parties’ disputes about the rebuild,
these determinations, concerning the applicability and construction of the Deed of Trust as it
relates to the insurance proceeds and the utilization of same, appear more appropriate for a court of
law. Esperance, 2022 WL 1718039, at *5 (finding “that the validity of Plaintiffs’ debt to
Diamond Resorts vis-à-vis the Deed-in-Lieu is a legal dispute rather than a factual one.”).
Indeed, Farrington contends that the insurance proceeds, if applied, would have reduced the
26
amount he owed; he does not, however, dispute th at he owed and was in arrears for the amount
reported by Freedom. The Court is constrained by the case law on this issue – a furnisher is not
obligated to resolve issues of law prior to reporting otherwise factual information.
Farrington’s citation to the Ninth Circuit case, Gross v. CitiMortgage, Inc., 33 F.4th 1246,
1251 (9th Cir. 2022), which is not binding on this Court, does not change the Court’s analysis
because it is distinguishable from the facts presented here. Gross concerned a dispute over the
accuracy and investigation of defendant’s (the holder of the junior mortgage) reports to the CRAs
of a mortgage balance, late fees, and interests, following the foreclosure and trustee sale of
plaintiff’s home, the proceeds of which did not cover the junior mortgage. Gross, 33 F.4th 1246.
Central to the issue was an Arizona Anti-Deficiency Statute, which abolished plaintiff’s liability
for the mortgage debt as it provided that “no action may be maintained to recover any difference
between the amount obtained by sale and the amount of the indebtedness ....”. Gross, 33 F.4th at
1251. As to the issue of the accuracy of the reporting, the Ninth Circuit found that pursuant to the
Anti-Deficiency Statute, plaintiff no longer had an obligation to pay the debt and, thus, there was
no balance or any loan to accrue interest or last fees. Id. Thus, it was patently incorrect for
defendant to report otherwise. Id. The Ninth Circuit likened the plaintiff’s situation to the
discharge of a debt following bankruptcy as the plaintiff was absolved of all personal liability for
the debt based on the statute. Id. Here, unlike Gross, there is no evidence that Farrington’s
mortgage debt was abolished or discharged due to discharge or a statute requiring same.
Moreover, while the Deed of Trust provides the ability for insurance proceeds to be applied to the
mortgage balance, there is no evidence before the Court establishing that such a determination had
been made – specifically, a determination that the restoration or repair was no longer economically
27
feasible or that the Lender’s security would be les sened so as warrant application of the insurance
proceeds to the sums secured by the Security Instrument.14
To be clear, the Court’s findings on this issue do not in any way address the
appropriateness of Freedom’s actions in deciding whether or not to release the insurance proceeds
for rebuild – the Court merely finds no genuine issue of material fact as to the accuracy of
Freedom’s reporting to the CRAs. Farrington cannot sustain a claim under § 1681s-2(b) of the
FCRA.1516
V. CONCLUSION
For the reasons set forth above, the Court grants Freedom’s Motion for Summary Judgment
as to the FCRA claim (Count I). The Court denies Freedom’s Motion for Summary Judgment as
to the contract, RESPA, and NJCFA claims (Counts II, III, IV and V). The Court denies
14 Relatedly, this also defeats any argument relating to the Compliance Condition Codes. It is undisputed that the
“AB” code applies when a debt is be ing paid through insurance. Def.’s Supp. Ex. C, 2019 Credit Reporting
Resource Guide. As stated above, there had been no determination that the mortgage balance was to be paid through
insurance. Similarly, a plain reading of codes “XB” and “XC” demonstrate that they do not apply. As to the XB
code, the Credit Report Resource Guide provides that it applies when account information has been disputed by the
consumer directly to the data furnisher also states “[c]ode XB should no longer be reported after the investigation is
complete”. Here, Freedom reported the information to the CRAs, Farrington filed a dispute with the CRA, the CRA
advised Freedom of the dispute, and Freedom in turn “investigated,” determined the accuracy of same, and then
reported back to the CRA. Thus, Farrington did not dispute the information directly to Freedom and the XB code
would have been irrelevant to Freedom’s report back to the CRA because the investigation was complete. Regarding
the “XC” code, the Credit Report Resource Guide provides that the code is to be “[r]eported when the investigation of
an FCRA dispute made by the consumer directly to the data furnisher has been completed by the data furnisher.”
Here again, Farrington filed his dispute with the CRA, not Freedom, the credit furnisher.
15 Conversely, Farrington’s Cross-Motion seeking summary judgment is denied as moot. Even if it were not moot,
Farrington’s Cross-Motion seeking summary judgment rests on the same facts offered in response to Freedom’s MSJ.
Accordingly, for the reasons set forth above, Farrington fails to point the Court to portions of the record that establish
the absence of a genuine issue of material fact. The Court has found that the dispute concerning whether the
insurance proceeds should have been applied to the mortgage balance was a legal, not a factual, dispute that did not
impact that factual accuracy of the information reported by Freedom to the CRA. Thus, Farrington cannot sustain his
burden.
16 Based on this finding, the Court cannot consider the reasonableness of Freedom’s investigation and, while the
Court reviewed all record evidence, a recitation of facts relating to the investigation is unnecessary.
28
Farrington’s Cross-Motion for Summary Judgment as to the FCRA claim. An accompanying
Order will be entered.
□□□
Dated: October 31, 2022 Vy Ss
KAREN M. WILLIAMS
United States District Judge
29