BURRESS v. FREEDOM MORTGAGE CORPORATION
OPINION. Signed by Judge Noel L. Hillman on 9/3/2021. (tf, )
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JAMES BURRESS, on behalf of
himself and the putative
FREEDOM MORTGAGE CORPORATION,
DAVID J. DISABATO
LISA R. CONSIDINE
DiSABATO & CONSIDINE LLC
196 SANTIAGO AVENUE
RUTHERFORD, NEW JERSEY 07070
ROBERT W. MURPHY (admitted pro hac vice)
MURPHY LAW FIRM
1212 SE 2ND AVENUE
FORT LAUDERDALE, FLORIDA 33316
On behalf of Plaintiff
MARK E. DUCKSTEIN
JOSHUA N. HOWLEY
SILLS CUMMIS & GROSS P.C.
ONE RIVERFRONT PLAZA
1037 RAYMOND BOULEVARD
NEWARK, NEW JERSEY 07102
On behalf of Defendant
HILLMAN, District Judge
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”),
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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.
reasons expressed below, the Court will deny Defendant’s motion.
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
Plaintiff’s original complaint asserted one count under the
TILA. Plaintiff filed an amended complaint on January 13, 2021,
which added claims under the Fair Credit Reporting Act, 15
U.S.C. § 1681, et seq. (Counts Two and Three), and the Real
Estate Settlement Procedures Act, 12 U.S.C. § 2601 (Count Four).
Counts Two, Three, and Four were dismissed by a consent order
filed by the parties on June 30, 2021. (ECF No. 52.)
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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
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).”
details were provided for how Defendant arrived at the higher
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amount of “$417.60” printed at the statement’s bottom.
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
(ECF No. 16, “Exhibit L.”)
According to the Defendant, underpayments by Plaintiff in
February and March triggered the initial mismatched statements.
Defendant claims that recoupment of those underpayments
over the next several months led to the subsequent
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
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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
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
Under § 1026.41, the contents of the period statement for a
mortgage are very detailed and specific. See 12 C.F.R. §
1026.41(d) (Periodic statements for residential mortgage loans).
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issuance of each successive statement.
Defendant argues that
Plaintiff’s TILA must therefore be dismissed.
Subject matter jurisdiction
This Court has jurisdiction over Plaintiff’s federal claim
under 28 U.S.C. § 1331.
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
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the
outcome of the suit.
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
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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.
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.
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 256-
A party opposing summary judgment must do more than just
rest upon mere allegations, general denials, or vague
Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir.
TILA limits the time a person aggrieved under the Act may
TILA provides, “any action under this section may be
brought . . . within one year from the date of the occurrence of
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
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series is considered its own “occurrence.” 3
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.
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
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.
that each defective statement represents a discrete violation of
TILA with its own one-year statute of limitations.
Plaintiff contends that his complaint filed on October 30, 2020,
which was brought within one year from his receipt of the
TILA 15 U.S.C. § 1640(g) only entitles a single recovery
regardless of whether multiple violations occurred. In re
Wright, 133 B.R. 704, 710 (E.D. Pa. 1991) (“Although a single
violation of TILA gives rise to full liability for statutory
damages, 15 U.S.C. § 1640(a), multiple violations of TILA in the
course of a single loan do not yield multiple penalties but
result in only a single penalty.”).
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November 1, 2019 statement, adheres to TILA’s statute of
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
Purpose and Interpretation of TILA
TILA is a “federal consumer protection statute, intended to
promote the informed use of credit by requiring certain uniform
disclosures from creditors.”
In re Cmty. Bank of N. Va. & Guar.
Nat'l Bank of Tallahassee Second Mortg. Loan Litig., 418 F.3d
277, 303 (3d Cir. 2005); See also Beach v. Ocwen Fed. Bank, 523
U.S. 410, 412 (1998).
The legislation aims to “guard against
the danger of unscrupulous lenders taking advantage of consumers
through fraudulent or otherwise confusing practices.”
v. Chase Manhattan Corp., 156 F.3d 499, 502 (3d Cir. 1998).
Because of the “remedial” nature of the Act, the Third Circuit
“notes that TILA . . . should be construed liberally in favor of
Id.; Slimm v. Bank of Am. Corp., No. CIV. 12-
5846 NLH/JS, 2013 WL 1867035 (D.N.J. 2013).
interpretation applies specifically to the statute of
is really a matter of balancing the interest of the
creditor in properly limiting its exposure both to an
initial suit and added damages, as provided under the Act
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versus the interest of the debtor in having the alleged
non-compliance corrected and his resulting injuries
remedied through compensation, as provided under the Act.
Inasmuch as the TILA is a remedial act designed to protect
the consumer, it seems obvious that it is the latter which
should be afforded the greater weight.
Schmidt v. Citibank (S. Dakota) N.A. (CBSD), 677 F. Supp. 687,
690 (D. Conn. 1987).
Other TILA Rulings
In addressing whether an “occurrence” materializes only at
the first violation of TILA or if it refreshes with each serial
violation, the parties indicate that outcomes typically address
two issues: (1) the type of transaction (open versus closed);
and (2) the type of violation (failure to disclose/omission
versus an affirmative act).
a. Open-End Transactions v. Closed-End Transactions
The term “open-end transaction” is defined in TILA as “a
plan under which the creditor reasonably contemplates repeated
transactions, which prescribes the terms of such transactions,
and which provides for a finance charge which may be computed
from time to time on the outstanding unpaid balance,” such as a
15 U.S.C. § 1602(i).
For an open-end transaction,
an “occurrence of a violation” is measured from either the
consummation of the transaction or when the first finance charge
Schwartz v. HSBC Bank USA, N.A., 160 F. Supp. 3d
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666, 680 (S.D.N.Y. 2016) (quoting Baskin v. G. Fox & Co., 550 F.
Supp. 64, 67 (D. Conn. 1982)).
As for a “closed-end transaction,” TILA does not
specifically define the term, but courts construe it to mean a
transaction where “the finance charge is divided into the term
of the loan and incorporated into time payments,” like a
mortgage or car loan.
McAnaney v. Astoria Fin. Corp., No. 04-
CV-1101JFBWDW, 2008 WL 222524 at *4 (E.D.N.Y. Jan. 25, 2008).
As opposed to open-end transactions, “[i]t is well-settled law
that in ‘closed-end credit’ transactions . . . the date of the
occurrence of violation is no later than the date the plaintiff
enters the loan agreement or, possibly, when defendant performs
by transmitting the funds to plaintiffs.”
Cardiello v. The
Money Store, Inc., No. 00 CIV. 7332 (NRB), 2001 WL 604007 at *3
(S.D.N.Y. June 1, 2001), aff'd sub nom. Cardiello v. The Money
Store, 29 F. App'x 780 (2d Cir. 2002) (citing numerous sources).
Nothing within 15 U.S.C. § 1640(e) signals for separate
treatment of the two types of loans.
Goldman v. First Nat. Bank
of Chicago, 532 F.2d 10 (7th Cir. 1976) (Stevens, J.,
dissenting) (“[Section 1640(e)] imposes the same requirement in
cases involving either type of transaction”).
have held that that an “occurrence of a violation” is not
typically interpreted the same way for an open-end transaction
as it is for a closed-end transaction.
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Northampton Nat. Bank of Easton, Easton, Pa., 584 F.2d 1288,
1296 (3d Cir. 1978); Follman v. World Fin. Network Nat. Bank,
971 F. Supp. 2d 298, 301 (E.D.N.Y. 2013) (“[T]he ‘date of the
occurrence of the violation’ can differ depending on the type of
consumer credit transaction at issue.”).
Courts rationalize treating the statute of limitations
differently between the types of agreements because,
In close end plans a determination of the charges is
possible from the time of the first payment. In open end
plans with “free ride” periods, a finance charge may not
appear until after many payments have been made. Until a
finance charge is levied the debtor has no cause for
complaint since there has been no action inconsistent with
the inaccurate disclosure.
Goldman v. First Nat. Bank of Chicago, 532 F.2d 10, 19 (7th Cir.
b. Affirmative Acts v. Omissions/Non-disclosures
Another factor a court considers in determining when a TILA
violation has occurred for the purposes of the statute of
limitations is whether the defendant’s alleged conduct
constituted an affirmative act or an omission.
such as a disclosure violation, may “occur at the ‘consummation’
of the transaction.”
In re Smith, 737 F.2d 1549, 1552 (11th
Cir. 1984); Herzog v. IndyMac Bank, FSB, No. 11–4571, 2011 U.S.
Dist. LEXIS 130207, at *9–11, 2011 WL 5513205 (D.N.J. Nov. 9,
2011) (“If a lender fails to make one or more of the required
disclosures . . . such a claim . . . is subject to a one-year
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statute of limitations, which begins to run when the underlying
contract is executed.”).
Or it may occur later in the
See Schwartz, 160 F. Supp. 3d at 680 (where an
omission of a required disclosure appeared in the plaintiff’s
credit card statements received after the initial disclosures).
For a TILA violation in the form of an affirmative act,
such an imposition of an improper finance charge, the statute of
limitations typically runs from when the violative conduct
occurs rather than when the parties enter into a transaction.
See Goldman v. First Nat. Bank of Chicago, 532 F.2d 10, 20 (7th
Cir. 1976) (explaining that affirmative violations are typically
disconnected with the consummation of the agreement); Partida v.
Warren Buick, Inc., 454 F. Supp. 1366, 1371 (N.D. Ill. 1978)
(“Nothing in . . . the Act mandates that there can be no
violations of the Act after the transaction is consummated.”).
III. Whether the Statute of Limitations Runs from the March
2019 statement or Runs Anew from the Date of Each
In this case, the transaction at issue concerns a mortgage,
which would typically indicate that it is a close-end
transaction because at the beginning of the loan, the finance
charge is divided into the term of the loan and incorporated
into monthly payments, all of which a mortgagee is aware at the
time of contracting for 5, 10, 15, or 30 years.
In a typical
case involving a close-end transaction, a § 1638(f) violation
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for either an affirmative violation or an omission should
therefore be known at the inception of the transaction.
explained in the previous section, in this typical scenario, the
§ 1638(f) violation would constitute an “occurrence” on the date
of the first statement, if not even earlier on the date of the
consummation of the loan, which would trigger the one-year
statute of limitations as of that date, and not reset with each
This case, however, does not fit neatly into the typical
scenario for a close-end transaction.
While the type of the
underlying transaction is a relevant factor, a court must also
look at the nature of the inaccuracy itself.
inaccuracy in this case did not arise at the inception of the
mortgage in September 2014, but rather the first alleged §
1638(f) violation arose over four years later in March 2019.
Because the violation was not present when Plaintiff entered
into a transaction with Defendant, it cannot be held to have
In this way, the alleged § 1638(f) violation is
more like open-end transaction, where a debtor has no cause for
complaint until he realizes a problematic disclosure or improper
Thus, in this case, whether the mortgage is
considered a close-end or open-end transaction is an important
consideration, but it is not the key factor in the determination
of when the one-year statute of limitations begins to run.
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Defendant appreciates this point, and argues that the
Court should only consider its alleged first § 1638(f) violation
in March 2019 and ignore each subsequent defective statement
based on the “notice rule,” which has been invoked in open-end
Based on the notice rule, Defendant argues that
Plaintiff’s complaint is barred by the TILA one-year statute of
limitations because Plaintiff had actual notice of the allegedly
TILA-violative statements more than one year before he filed the
original complaint on October 30, 2020.
According to Defendant,
once Plaintiff had actual notice of a TILA violation upon
receiving the first defective statement in March 2019, the
“notice rule” requires running the limitations period from that
This is in contrast to Plaintiff’s position that each
violative statement triggers its own one-year statute of
Defendant relies upon the rulings in Baskin and Schwartz as
Baskin v. G. Fox & Co., 550 F. Supp. 64 (D. Conn.
1982); Schwartz v. HSBC Bank United States N.A., 160 F. Supp. 3d
666 (S.D.N.Y. 2016).
In the context of an open-end transaction
where a credit card servicer improperly compounded the finance
charges in contradiction of the disclosure on the statement of
how finance charges were to be calculated, the court in Baskin
was tasked with deciding whether the statute of limitations ran
from each serially committed affirmative finance charge or if it
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was limited to only the first instance.
Baskin, 550 F. Supp. at
The plaintiff there filed suit more than a year after the
first violation but within the statute of limitation for a
Id. at 65-66.
In barring the plaintiff’s
suit, the Baskin court held that the statute of limitations
began to run when the plaintiff first discovered the erroneous
computation of the finance charge, and even though many
subsequent statements imposed the same improper finance charge,
his TILA violation claim was untimely because it had been more
than a year since he had discovered the violation.
Id. at 67.
Defendant argues that the same rationale should be applied here.
Schwartz also concerned an open-end credit card
transaction, but it was with regard to the application of an APR
for late payments not disclosed on the billing statements.
Schwartz, 160 F. Supp. 3d at 680.
The court distinguished the
situation before it from Baskin because Baskin concerned the
improper imposition of finance charges, as opposed to the
omission of a required disclosure in each of the plaintiff’s
credit card statements.
The Schwartz court denied the
defendant’s motion to dismiss, where the defendant had argued
the plaintiff’s TILA violation claim was time-barred because the
first instance of the alleged improper disclosures occurred in
November 2013, and the plaintiff did not assert his APR
disclosure claim until the filing of his first amended complaint
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on March 27, 2015.
The court found that “in the context of a
creditor’s failure to make disclosures required under TILA, the
statute of limitations runs from each instance of Defendant’s
alleged failure to make a required disclosure.
disclosure claims are therefore timely in regards to the
disclosures contained in billing statements received during the
12-month period prior to his filing of the Amended Complaint.”
Id. at 681.
The court explained its reasoning, discussing Schmidt v.
Citibank (S. Dakota), N.A. (CBSD), 645 F. Supp. 214 (D. Conn.
Schmidt also concerned a defendant’s argument that the
plaintiff’s TILA violation suit for improper disclosures on a
credit card statement was untimely because the plaintiff first
received a periodic statement more than a year prior to the
complaint, even though the plaintiff had received allegedly
improper statements within a year of filing suit.
The court in
Schmidt recognized that periodic statements are required by 15
U.S.C. § 1637(b) for open-end credit arrangements, and that each
periodic statement constitutes a discrete and separate
“invitation” to accept credit.
Schmidt, 645 F. Supp. at 216.
“Creditors’ continuing statutory duty to provide consumers the
information required by the Act creates an obligation to include
the required information in each monthly statement.
do so is a fresh violation of the Act.”
The Schmidt court
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further opined, “Defendant’s construction of the Act would
permit creditors, once the one-year period after the
commencement of a credit relation expires, to continue sending
improper statements to consumers with impunity rather than to
conform those statements to the Act's requirements.
result would be inconsistent with the spirit, if not the letter,
of truth-in-lending legislation.”
The court in Schwartz followed that same reasoning:
In the circumstance where the violation at issue is the
creditor’s affirmative act - specifically, an improperly
levied charge - a consumer is reasonably on notice upon
receiving a billing statement reflecting the improperly
imposed charge. Where, however, the violation consists of
the creditor’s omission of required information, a consumer
cannot fairly to be said to have similar notice. . . .
Placing the burden on consumers to recognize the absence of
disclosures that are required precisely because consumers
lack meaningful information about credit terms would
directly contradict the intent of TILA. Rather, in the
context where the violation consists of a failure to
disclose penalty rates, the statute of limitations period
is more appropriately run from the time at which
information was omitted from a required disclosure.
Schwartz, 160 F. Supp. 3d at 680.
The court in Schwartz denied
the defendant’s motion to dismiss on the premise that each TILAviolative statement which contained an inadequate disclosure had
its own one-year statute of limitations. 4
As noted above, where there are multiple alleged TILA
violations, a plaintiff is only entitled to a single recovery,
as long as the defendant which has violated the TILA does not
commit subsequent TILA violations. Schmidt, 645 F. Supp. at 216
(quoting 15 U.S.C. § 1640(g)) ([T]he multiple failure to
disclose to any person information required under this chapter .
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Despite the court’s holding that the plaintiff’s TILA claim
could proceed, Defendant relies on Schwartz’s statement that
“where a creditor’s affirmative act violates TILA, a notice rule
for running the limitations period may reasonably be applied.”
Id. at 681 (citation and quotation omitted).
distinguishes Schwartz from Plaintiff’s claim here because
Defendant construes Plaintiff’s claim to be that of an
affirmative act, rather than an omission in a disclosure.
Neither Baskin nor Schwartz supports the application of the
“notice rule” as urged by Defendant in this case.
distinguishable based on the nature of the transaction and the
alleged § 1638(f) violation.
The Baskin court explained,
“[W]hen a consumer applies for and is issued a credit card under
an open end credit plan, there is no extension of credit from a
lender to a potential borrower, because no debt has yet accrued.
With the ‘free ride’ period permitted under most credit cards,
it is only when the first finance charge is imposed that a
consumer usually becomes aware that a violation of the Act has
This may be many months after the application for and
issuance of the card.”
Baskin, 550 F. Supp. at 67.
court found, “Under these circumstances it appears evident that
. . shall entitle the person to a single recovery . . . but
continued failure to disclose after a recovery has been granted
shall give rise to rights to additional recoveries.”).
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the purpose of the Act - to ensure the ‘informed use of credit’
- is best served if the starting point for the limitation period
is deemed to be the date when there has been a finance charge
which puts the consumer on notice that a violation has
This case does not present the same concerns expressed in
Baskin with regard to “informed use of credit.”
“amount due” on the monthly statements should have been known
from the inception of the mortgage, as is typical in a close-end
transaction, yet four years into the transaction, and for
reasons unexplained on the statement, in alleged violation of 12
C.F.R. § 1026.41 (“Periodic statements for residential mortgage
loans”), the “amount due” at the top of the statement differed
from the “amount due” at the bottom of the statement. 5
Additionally, unlike Baskin, this case does not concern a
TILA violation in the form of an improperly imposed finance
charge, which was charged each month from the inception of the
credit card arrangement.
Here, two different amounts due began
to appear on Plaintiff’s statements four years after the loan’s
Further, in Baskin the plaintiff complained about the
defendant’s alleged violation of the TILA in a letter to
defendant more than a year before filing suit. Here, Plaintiff
did not send a letter of inquiry to Defendant until June 8,
2020, which was four months before Plaintiff filed suit.
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inception that were disconnected from any originating documents
associated with Plaintiff’s mortgage with Defendant.
Also dissimilar to the situation here, the TILA violation
in Baskin was implemented in the same manner every month from
the time a finance charge was imposed, which was over the course
of several years.
In this case, a mismatch first appeared on
Plaintiff’s statement in March 2019.
A different mismatch
appeared in April 2019, and then another different mismatch
appeared in May 2019, and so on.
In each statement Defendant
provided an allegedly “false or misleading” amount due in
violation § 1638(f), and without any explanation in alleged
violation of 12 C.F.R. § 1026.41, that did not appear to have
any relation to the previous statement.
In other words, instead of the same mismatch appearing on
every statement from the inception of the loan or even from
March 2019 onward, starting in March 2019 Plaintiff was
presented with differing amounts he was required to pay with no
way to determine whether he should pay the top amount or the
bottom amount, and with no way to determine whether the next
month would contain the same or different mismatch.
Plaintiff only had “notice” of one mismatch at a time, rather
than an initial notice of a TILA violation that repeated in the
same manner thereafter which would support the application of
the notice rule.
Case 1:20-cv-15242-NLH-AMD Document 56 Filed 09/07/21 Page 22 of 26 PageID: 836
Moreover, the Court notes that the notice rule applied in
Baskin arose from a Seventh Circuit case as a way to save a
plaintiff’s TILA violation claim, rather than to defeat it.
Baskin court explained the leading case for the application of
the notice rule was Goldman v. First Nat'l Bank of Chicago, 532
F.2d 10 (7the Cir.), cert. denied, 429 U.S. 870, (1976).
the plaintiff applied for, received, and used his
BankAmericard for almost a year before he was assessed a
finance charge for a late payment. At that point, he
noticed a discrepancy between the imposition of the finance
charge and the method used for calculating the finance
charge set forth in the disclosure statement received by
the plaintiff at the time the card was issued. Suit was
commenced more than one year after the plaintiff received
his credit card, but within a year of the time the
violation came to plaintiff's attention. The district
court ruled that the action was time-barred. The Court of
Appeals for the Seventh Circuit reversed, holding that the
statute did not run until the first finance charge was
imposed. The court stressed that its ruling depended on
the unique nature of the open end credit plan where a
determination of a violation of the Act is only possible
when the consumer receives the first finance charge, which
may be months after he receives and uses his credit card.
Baskin, 550 F. Supp. at 67 (citing Goldman, 532 F.2d at 22).
The Baskin court then distinguished Goldman from the case
In the case sub judice the plaintiff admittedly perceived
what he considered to be a violation of the Act more than
one year before the commencement of the action. He was
fully cognizant of his rights under the Act by the spring
of 1976, and thereafter spent several months arranging
charges and payments with G. Fox in order to have his
account reflect an even $100 for evidentiary purposes at
trial. These maneuvers have proved fatal to the
plaintiff’s cause of action. On the basis of the statute
Case 1:20-cv-15242-NLH-AMD Document 56 Filed 09/07/21 Page 23 of 26 PageID: 837
of limitations and relevant case law, it is clear that the
plaintiff’s action is barred.
The rationale for starting the one-year statute of
limitations clock at the time when a credit card holder first
notices that the finance charge has been improperly calculated
and continues to be improperly calculated in the same manner
thereafter month after month makes sense in that context.
Where, however, a discrepancy of the amount due on a mortgage
statement appears, especially when the amount due each month
should be pre-determined at the outset of the mortgage and
consistent on a single statement, and a different discrepancy
appears on another statement, with no continuity of the
differing amounts due and no disclosure explaining the
discrepancy, it can only be found that each error is a separate
“occurrence” of a TILA violation, and the mortgagee only had
“notice” of a TILA violation at the time of each error.
remedial purpose of the TILA, and the requirement that the TILA
be interpreted liberally in favor of consumers, supports this
Schwartz and Schmidt also support this finding.
Defendant unilaterally construes Plaintiff’s TILA violation
claim as an “affirmative act” akin to the improperly imposed
finance charges in Baskin, Plaintiff’s TILA violation claim
Case 1:20-cv-15242-NLH-AMD Document 56 Filed 09/07/21 Page 24 of 26 PageID: 838
arises from alleged disclosure violations such as in Schwartz
TILA requires specific disclosures on periodic
statements for both credit relationships and for a residential
It was not until July 13, 2020 when Defendant
responded to Plaintiff’s letter of inquiry that Defendant
explained the sudden appearance of mismatched amounts due on his
As in Schwartz and Schmidt, Defendant allegedly
failed in its statutory duty, under 5 U.S.C. § 1638(f) and 12
C.F.R. §§ 1026.41(c) and 1026.41(d), to provide Plaintiff with
the explanatory information required by the TILA in each monthly
Every failure to do so constituted a fresh violation
of the Act.
Thus, in this case, the one-year statute of limitations for
each of the allegedly TILA-violative statements started on the
day Plaintiff “noticed” the alleged TILA violation on each
In that vein, if the notice rule were to apply here as it was
in Baskin, arguably the statute of limitations would not have
begun to run until Plaintiff received the requisite notice
required by the TILA on July 13, 2020 via Defendant’s response
letter, because even though he previously recognized the
mismatched “amount due” on his statements, it was only then that
he discovered an alleged TILA violation in the form of deficient
disclosures on those statements. This is in contrast to Baskin,
where the plaintiff knew the finance charge was improper from
the first instance but failed to take any legal action for over
a year. The Court, however, aligns with Schwartz and Schmidt
and other similar cases in holding that each TILA-violative
periodic statement with improper disclosures has its own oneyear statute of limitations that runs from the date of each
Case 1:20-cv-15242-NLH-AMD Document 56 Filed 09/07/21 Page 25 of 26 PageID: 839
For the November 1, 2019 statement, and using that
date as the relevant date to start the clock, Plaintiff’s
October 30, 2020 complaint against Defendant for its alleged §
1638(f) TILA violation arising from that statement is timely.
The evaluation of that claim may proceed on its merits.
For the reasons expressed above, Defendant’s motion for
summary judgement will be denied.
An appropriate Order will be
Date: September 3, 2021
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
Case 1:20-cv-15242-NLH-AMD Document 56 Filed 09/07/21 Page 26 of 26 PageID: 840
Exhbit A - November 2019 statement (Docket No. 9 at 18.)
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