451 F.Supp.3d 337
D.N.J.2020Background
- Plaintiff Constance Tracey (81), owner of multiple rental properties, entered a residential closing on March 23, 2020 to buy a 19‑acre historic property; Sprout Mortgage agent Hugh Goldson emailed the title agent, “Funding approved.”
- After the closing, the seller gave Tracey the keys and she moved in, but later that evening Sprout refused to disburse funds, blaming COVID‑19 related warehouse‑lender funding stoppages.
- Tracey sued Sprout and Goldson seeking specific performance/mandatory injunction compelling immediate funding of a $618,750 mortgage and pleaded multiple state and federal claims (breach of contract, negligent misrepresentation, TILA, RESPA, NJCFA, etc.).
- The Court treated the request as a preliminary (but potentially permanent) mandatory injunction, noting the heightened standards where relief would alter the status quo.
- The Court denied the injunction: Tracey failed to show likelihood of success (court analyzed breach of contract and negligent misrepresentation) and failed to show immediate irreparable harm; the Court granted expedited discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a mandatory injunction should compel Sprout to fund the loan immediately | Tracey relied on Goldson’s “Funding approved” and seeks specific performance to complete funding | Sprout says it cannot fund because warehouse lenders stopped funding non‑QM loans due to COVID‑19 and funding never occurred | Denied — mandatory injunction inappropriate given failure to meet gateway factors |
| Likelihood of success on breach of contract | Tracey contends parties contracted to fund the loan and performed closing formalities | Sprout: no loan consummation because funds were never disbursed; no commitment/mortgage commitment shown | Denied — plaintiff did not produce the contract/commitment or plead required contractual elements |
| Likelihood of success on negligent misrepresentation | Tracey says Goldson negligently misrepresented funding; title agent showed her the message and she justifiably relied | Sprout: funding‑approval is not equivalent to disbursement; Tracey is experienced in real estate and reasonable reliance is disputed | Denied — factual dispute over justifiable reliance and proximate causation; plaintiff did not meet threshold |
| Irreparable harm | Tracey claimed unique property loss, retention of down payment, risk of eviction, and COVID‑19 risks making housing replacement unsafe | Sprout: monetary damages (including loss of down payment) are compensable; COVID‑19 harms speculative; other closing parties involved | Denied — no clear showing of immediate, non‑compensable irreparable injury; higher showing required for mandatory relief |
Key Cases Cited
- Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205 (3d Cir. 2014) (contrast between preliminary and permanent injunction standards)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (four‑factor test for preliminary injunctions)
- Reilly v. City of Harrisburg, 858 F.3d 173 (3d Cir. 2017) (likelihood of success and irreparable harm are the critical gateway factors)
- Bennington Foods LLC v. St. Croix Renaissance Grp., LLP, 528 F.3d 176 (3d Cir. 2008) (mandatory injunctions that alter the status quo require a heightened showing)