There may or may not have been a communication breakdown at the bank. It sounds like they called some numbers that they had on file that turned out to be old. You say you provided them new contact information, which they "failed to update." I don't know how it works at your bank, but every financial institution I have just allows you to update online and it takes effect immediately. I make sure all contact info is current.
Either way, the part that bothers me is that you continued making the old payment when you knew (or should have known) that the amount had changed. When I had a mortgage with escrow back in the 1990s, I knew that once per year in a specific month, the payment amount would change. Property tax and insurance always go up (which you also should have been aware of), and there was always an over/under to be amortized. I got a mortgage statement/invoice every month in the mail (later by email), which included the escrow analysis once per year before the new payment took effect. Escrow accounts are a bit of a pain, but really a pretty straightforward process. Like someone else mentioned, I always had the new payment figured out on my own, long before the escrow analysis ever arrived. Why did you continue to auto bill-pay without confirming the amount due?
You may or may not be able to prove that the bank "failed to update" your contact information or some other communication-related negligence on their part. But I'd estimate that your own culpability in this saga is equal to, or greater than, the bank's. If you lose in court, you may end up owing them even more money. Cut your losses, learn a lesson, and move on with life. I would continue pushing the complaint at CFPB to see if that leads anywhere (probably not) and start working to fix your credit.