The opinion of the court was delivered by: Hon. Jerome B. Simandle
SIMANDLE, District Judge:
This matter, centering around insurance coverage for a home fire, is before the Court on three motions for summary judgment: Defendant Countrywide Home Loans, Inc., whom Plaintiffs sue based on Countrywide's alleged failure to pay the insurance premiums among other things, seeks summary judgment as to all of Plaintiffs' claims against it and as to its counterclaim against Plaintiffs to enforce a state court judgment [Docket Item 24]; Defendants Bahaa Batros and The Prudential Insurance Company of America, whom Plaintiffs sue for negligently issuing an invalid policy, seek summary judgment as to all of Plaintiffs' claims against them [Docket Item 25]; and Plaintiffs move for summary judgment on their claims against Home Site Insurance Company, seeking to force Home Site to pay for the fire [Docket Item 26].
This case involves the denial of an insurance claim after a fire occurred at a house owned by Plaintiffs. Plaintiffs argue that their mortgage lender, insurer, and insurance agent committed various torts and violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C § 2601 in the course of the relationship between the parties from purchase of the home until denial of the insurance claim. Plaintiffs bring suit against Assured Lending Corporation (the original mortgagee), Countrywide Home Loans, Inc. (current holder of the mortgage note and servicer of the mortgage), First Option Title Agency, L.L.C. (provider of closing services),*fn1 Home Site Insurance Company (the insurer), Bahaa Batros (an agent for Prudential), and The Prudential Insurance Company of America.
Plaintiffs Gustavo and Nilsa Ayala have resided in Camden, New Jersey since 1998. (Gustavo Ayala Feb. 6, 2007 Dep. 8:13-19.) In October 17, 2006, the couple purchased a property at 1112 Wheaton Avenue, Millville, New Jersey. (Id. 11:15-21.) Plaintiffs claimed to have purchased the property with the intent to move into the home once it was renovated. (Id. 16:6-17:24; 24:9-24.) Plaintiffs obtained a $92,000 loan from Assured Lending Corporation for the purchase of the property, secured by a mortgage against the property. (Muller Dep. at 43:5-17.)*fn2
The mortgage obligated Plaintiffs to obtain homeowner's insurance and to name Assured and its assignees as mortgagees/additional loss payees. (Countrywide Ex. B ("Mortgage") at 5.) The mortgage also required Plaintiffs to pay the insurance premiums into an escrow account controlled by Assured. (Id. at 4.)
In order to secure the insurance prior to closing, Assured introduced Mr. Ayala to Bahaa Batros, a New Jersey licensed insurance agent with Defendant Prudential Insurance Company. (Gustavo Ayala Jan. 16, 2005 Dep. 34:7-17.) As Mr. Ayala's first language is Spanish, a representative from Defendant Assured lending assisted him with obtaining the policy by acting as translator between Ayala and Batros on a three-way conference call. (Id. 36:1-9.)
There is a dispute about exactly what was said to Batros regarding the occupancy status of the home and whether Mr. Ayala informed Batros about his plans for renovations prior to moving in. Ultimately a policy was issued providing dwelling coverage for the insured property in the amount of $191,000, with effective dates of October 13, 2006 through October 13, 2007.
On December 2, 2006, there was a fire at the Wheaton Avenue property. At the time of the fire, Plaintiffs had not yet moved into the home. The Millville Police Bureau conducted an investigation of the fire on December 2, 2006, and the investigation was eventually assigned to a Detective Deckert. (Home Site Ex. G "Investigation Report.") Deckert writes in his investigation report that he was told by the firefighters that the fire originated in the basement on some mattresses and that the rear basement door appeared to have been forced open upon arrival of police and fire units. (Id. at 2.) Deckert also reports having seen a "For Rent" sign at the house listing Mr. Ayala's phone number. (Id.) Deckert reported that Ayala told him that he was doing repairs so he could rent the home out. (Id. at 3.)
Plaintiffs submitted a claim to Home Site for their property damage as a result of the fire. On March 12, 2007, Home Site denied the claim on the grounds that the home was not "owner occupied" at the time of the loss. (Countrywide Ex. G. ("Home Site Denial Letter") at 1.) Home Site also informed Plaintiffs that it was rescinding the insurance policy. (Id. at 2.)
On June 4, 2007, Plaintiffs initiated an action against Home Site, Batros, Prudential Insurance Company of America and Assured in the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2887-07. An Amended Complaint was filed on July 1, 2008 adding Countrywide as a defendant.
On or about April 14, 2009, almost two years after Plaintiffs commenced litigation, Home Site submitted a subsequent denial of the insurance on the grounds that no payment had been made toward the policy. (Countrywide's Ex. L.) According to a Countrywide employee, on December 28, 2006, Countrywide received a bill from Home Site for the insurance premiums, and according this his testimony, Countrywide also received a notice of cancellation of the policy that same day. (Grzeskowiak Dep. at 23:18-31:3.) Countrywide contacted Home Site to inquire about the bill and cancellation notice, and Home Site informed Countrywide that the insurance policy was being canceled effective January 17, 2007. The Countrywide employee testified that Countrywide did not pay the bill because "the bill would have been paid at closing based on the policies and procedures that are in place." (Id. at 25:21-26:2.)
Shortly after receipt of this information in the state court litigation, Plaintiffs dismissed their action without prejudice and, on May 29, 2009, initiated a second action against Home Site, Batros, Prudential Insurance Company of America, Assured and Countrywide and added First Option as a defendant. This action was removed to this Court, and on September 24, 2009, Plaintiffs filed the presently operative pleading, the First Amended Complaint.
The Amended Complaint contends that Assured Lending and Countrywide's failure to forward Plaintiffs' insurance payments to the insurer, permitting closing to take place without verifying a valid policy of homeowners insurance had been obtained, and failing to discover that no valid homeowners insurance policy was in place gives rise to several claims: negligence (Count I); fraud (Count II); breach of contract (Count III); violation of RESPA (Count IV); violation of N.J. Stat. Ann. § 17:16F-18 (Count V); and violation of New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 58:8-2 (Count VI).*fn3
The Amended Complaint claims that Home Site breached its contract with Plaintiffs by improperly denying coverage (Count XII), and seeks declaratory judgment that the insurance contract was in force at the time of the fire (Count XIII).
The Amended Complaint claims that Batros was negligent for failing to indicate the proper intended use of the property to Defendant Home Site, or in the alternative failed to elicit the appropriate kind of information from Plaintiffs to assess the appropriateness of the property for insurance through Home Site and was otherwise negligent in the performance of his duties as a licensed insurance producer in New Jersey (Count XIV). The Amended Complaint further claims that because of various agency relationships, Batros's negligence is imputed to Home Siteand Prudential; it also claims that Countrywide is responsible for Assured's negligence and breach of contract (Count XV).*fn4
The Amended Complaint asks for reformation of the Home Site insurance policy, arguing in the alternative to their above claims that there was a mutual mistake of fact between the parties regarding Plaintiffs' eligibility for insurance, and that the policy should be retroactively reformed as providing insurance for non-owner occupied properties (Count XVI).
Finally, the Amended Complaint brings a second and separate fraud claim against Assured Lending, arguing that informing Plaintiffs that Batros could provide him the kind of insurance needed was done with the full knowledge that this was not the case, being done purely to close the deal for Assured Lending (Count XVII).
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" only if it might affect the outcome of the suit under the applicable rule of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Summary judgment will not be denied based on mere allegations or denials in the pleadings; instead, some evidence must be produced to support a material fact. Fed. R. Civ. P. 56(c)(1)(A); United States v. Premises Known as 717 S. Woodward Street, Allentown, Pa., 2 F.3d 529, 533 (3d Cir. 1993). However, the court will view any evidence in favor of the nonmoving party and extend any reasonable favorable inferences to be drawn from that evidence to that party. Hunt v. Cromartie, 526 U.S. 541, 552 (1999). Where the nonmoving party bears the burden of persuasion at trial, the moving party may be entitled to summary judgment merely by showing that there is an absence of evidence to support an essential element of the nonmoving party's case. Fed. R. Civ. P. 56(c)(1)(B); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
IV. PLAINTIFFS' SUMMARY JUDGMENT MOTION
Plaintiffs argue that Home Site breached the insurance contract by failing to pay for the fire damage.*fn5 Under the Third Circuit Court of Appeals' controlling interpretation of New Jersey law, to state a claim for breach of contract, a party must prove that there is (1) a contract between the parties; (2) a breach of that contract; (3) damages flowing therefrom; and (4) that the party stating the claim performed its own contractual obligations. Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007). As explained below, there is a genuine dispute of material fact regarding whether Mr. Ayala in fact planned to move his family into the home, meaning that both the coverage and material misrepresentation issues are not ...