Tracey v. Recovco Mortg. Mgmt. LLC

• Decision Date: 03 April 2020
• Docket Number: Civil Action No. 20-3298 (MAS) (TJB)
• Citation: 451 F.Supp.3d 337
• Parties: Constance T. TRACEY, Plaintiff, v. RECOVCO MORTGAGE MANAGEMENT LLC d/b/a Sprout Mortgage, and Hugh Goldson, Defendants.
• Court: U.S. District Court — District of New Jersey

451 F.Supp.3d 337

Constance T. TRACEY, Plaintiff,

v.RECOVCO MORTGAGE MANAGEMENT LLC d/b/a Sprout Mortgage, and Hugh Goldson, Defendants.

Civil Action No. 20-3298 (MAS) (TJB)

United States District Court, D. New Jersey.

Signed April 3, 2020

Thaddeus R. Maciag, Maciag Law LLC, Princeton, NJ, for Plaintiff.

Michael Anthony Iannucci, Blank Rome LLP, Philadelphia, PA, for Defendants.

MEMORANDUM ORDER

Michael A. Shipp, United States District Judge

This matter comes before the Court upon Plaintiff Constance T. Tracey's ("Plaintiff") Application for Entry of an Order to Show Cause with Mandatory Injunctive Relief. (ECF No. 2.) Defendants Recovco Mortgage Management LLC d/b/a Sprout Mortgage ("Sprout") and Hugh Goldson ("Goldson") (collectively, "Defendants") opposed (ECF No. 13), and Plaintiff replied (ECF No. 14).

I. INTRODUCTION

At the time of this Memorandum Order, the country is grappling with the uncertainty of the coronavirus crisis. It is against this backdrop that the Court reviews Plaintiff's Application and is in the unenviable position to evaluate the legal ramifications of an unfortunate set of facts.

Plaintiff, the owner of several rental properties, is an 81-year-old woman seeking to purchase her dream home. Sprout is a mortgage company dealing with the current economic downturn. The dispute concerns a misrepresentation made by a Sprout representative that funding for Plaintiff's mortgage was approved. Following the Sprout representative's misrepresentation, Plaintiff received the keys to the home and quickly moved in her belongings, only to find out hours later that Sprout failed to disburse the funds. Sprout contends it cannot fund the mortgage for reasons related to the financial crisis. Faced with the seller's threats to remove her from the home, Plaintiff sued the mortgage company and its representative, seeking to compel them to immediately fund the mortgage.

The Court is sympathetic to the parties' difficult situations, but for the reasons set forth below is unable to grant the relief Plaintiff requests.

II. BACKGROUND

This matter arises from Plaintiff's attempt to purchase her dream home (the "Property"). (Ver. Compl. ¶ 7, ECF No. 1; Pl.'s Moving Br. 6, ECF No. 3.) Plaintiff is the owner of five residential rental properties. (Pl.'s Reply Br. 2.) Plaintiff alleges that, on Friday, March 20, 2020—prior to the closing of the Property on Monday, March 23, 2020—the title closing agent provided Goldson, a Sprout agent, with "revised [closing documents] for closing." (Ver. Compl. ¶ 9.) Goldson replied via e-mail message, "Great, we match. Docs have been sent." (Id. ¶ 10.) On Monday, March 23, after the signing, execution and notarization of the closing documents provided by Defendants, the title closing agent forwarded the closing documents to Goldson "for funding approval." (Id. ¶ 14.) Goldson replied via e-mail message, "Docs look great. Funding approved." (Id. ¶ 15.) Plaintiff alleges that, upon Goldson's representation, the title closing agent informed Plaintiff the closing was complete. (Id. ¶ 16.) Plaintiff left the closing with the keys and moved into the Property. (Id. ¶ 17.) That same evening, Plaintiff received news that Sprout refused to fund the mortgage. (Id. ¶ 18.)

Defendants allege that, "[i]n light of the financial crisis created by the COVID-19 pandemic, Sprout became unable to fund the loan after its warehouse lenders stopped funding non-qualified mortgage loans like the one for which Plaintiff applied." (Defs.' Opp'n Br. 4 (citing Goldson Decl. ¶¶ 11-12, ECF No. 13-4), ECF No. 13.)

On March 26, 2020, Plaintiff filed suit against Defendants, alleging: (1) promissory and equitable estoppel; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; (4) negligent misrepresentation; (5) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1604(b) and Federal Reserve Board Regulation Z; (6) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq. ; (7) tortious interference with contract; and (8) violation of the New Jersey Consumer Fraud Act ("NJCFA"). (See generally Ver. Compl.) For each count, Plaintiff demands: "[s]pecific [p]erformance by way of permanent [m]andatory [i]njunctive [r]elief, ordering Sprout Mortgage to complete the funding of Plaintiff's mortgage loan forthwith" and other damages. (E.g. , Ver. Compl. ¶ 24.) In the present Application, Plaintiff seeks a court order mandating that Defendants immediately fund the $618,750 mortgage loan for the Property.¹ (Pl.'s Moving Br. 5.)

III. DISCUSSION ²

A "[p]reliminary injuncti[on] ... is an ‘extraordinary remedy, which should be granted only in limited circumstances.’ " Ferring Pharms., Inc. v. Watson Pharms., Inc. , 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co. , 290 F.3d 578, 586 (3d Cir. 2002) ). Plaintiff bears the burden of establishing she is "likely to succeed on the merits ...[,] likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [her] favor, and that an injunction is in the public interest." Winter v. NRDC, Inc. , 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) (citations omitted).

The first two factors are "gateway factors" and are "most critical." Reilly v. City of Harrisburg , 858 F.3d 173, 179 (3d Cir. 2017), as amended (June 26, 2017). If these gateway factors are met, a court then considers the remaining two factors. Id. "A plaintiff's failure to establish any element in [her] favor renders a preliminary injunction inappropriate." Nutrasweet Co. v. VitMar Enters. , 176 F.3d 151, 153 (3d Cir. 1999).

"Moreover, where the relief ordered by the preliminary injunction is mandatory and will alter the status quo, the party seeking the injunction must meet a higher standard of showing irreparable harm in the absence of an injunction." Bennington Foods LLC v. St. Croix Renaissance, Grp., LLP , 528 F.3d 176, 179 (3d Cir. 2008). To that end, mandatory preliminary injunctions should be granted "sparingly." United States v. Spectro Foods Corp. , 544 F.2d 1175, 1181 (3d Cir. 1976).

A. Likelihood of Success on the Merits

Plaintiff argues that she has shown a reasonable probability of success on the merits. (Pl.'s Moving Br. 5.) In her Moving Brief, Plaintiff recounts certain facts from the Verified Complaint and re-lists the Counts stated therein. (Id. at 5–6.) Plaintiff, however, fails to cite any Federal or New Jersey law, stating only:

It is well settled in both Federal law and New Jersey law, that the behavior of Defendants is actionable, and subjects Defendants to a lawsuit for compensatory, punitive and exemplary damages as applicable, and injunctive relief, together with application for attorney fees, sanctions, and costs of court.

(Id. at 5.)

In opposition, Defendants address the merits of each claim. Defendants argue that Plaintiff cannot succeed on her contract claim because, inter alia , a loan is consummated upon disbursement of funds and the loan was never funded. (Defs.' Opp'n Br. 11–12 (citing Franklin v. Fin. Freedom Acquisition, LLC , No. 12-7884, 2014 WL 1316093 (D.N.J. April 1, 2014) ; In re Velardi , 547 B.R. 147, 155 (M.D. Pa. Bankr. Ct. 2016). As to Plaintiff's negligent misrepresentation claim, Defendants argue that Plaintiff "is experienced enough to know that funding approval is not synonymous with disbursements of the funds" and whether Plaintiff justifiably relied on the information Goldson provided to the title closing agent should be a matter for a jury. (Defs.' Opp'n Br. 17.)

On reply, Plaintiff addresses Defendants' arguments regarding her contract and negligent misrepresentation claims. As to her contract claim, Plaintiff argues that the mortgage funding agreement does not contain a force majeure clause and that Defendants, accordingly, have no such defense. (Pl.'s Reply Br. 9–12.) As to her negligent misrepresentation claim, she alleges that the title closing agent showed her Goldson's message on his phone and argues that Plaintiff reasonably relied on that communication to her detriment. (Pl.'s Reply Br. 5–6.) Plaintiff also points to Goldson's certification, in which he admitted to making a mistake. (Id. )

The standard to obtain preliminary injunctive relief is heavy, particularly where injunctive relief alters the status quo. Allegations contained in a complaint and attorney argument without citation to the law is insufficient to meet this heavy burden. See, e.g. , Cent. Jersey Freightliner, Inc. v. Freightliner Corp. , 987 F. Supp. 289, 295–96 (D.N.J. 1997) ("A preliminary injunction is not appropriate in the instant case because plaintiffs have failed to provide sufficient evidence that the above[-]mentioned factors favor relief.... Plaintiffs' mere allegations are insufficient to establish a likelihood of success on the merits of that claim."). Because Plaintiff fails to provide adequate substantive analysis on any of her claims in her seven-page Moving Brief, relying mainly on her Complaint, and only addresses her breach of contract and negligent misrepresentation claims on reply, the Court addresses whether Plaintiff has established a likelihood of success on those claims alone.

To demonstrate a likelihood of success on the merits, Plaintiff must show that she "can win on the merits (which requires a showing significantly better than negligible but not necessarily more likely than not)." Reilly , 858 F.3d at 179. "[W]hether a party has met this threshold will necessarily vary with the circumstances of each case ... [and] the elements of the movant's claims...." Fres-co Sys. USA, Inc. v. Hawkins , 690 F. App'x 72, 77 (3d Cir. 2017).

To state a prima facie case for breach of contract, a plaintiff must plead: (1) "that the parties entered into a contract containing certain terms"; (2) "that [the plaintiff] did what the contract required [her] to do"; (3) "that [the defendant] did not do what...