United States District Court, W.D. Arkansas, Fayetteville Division
MEMORANDUM OPINION AND ORDER
TIMOTHYL L. BROOKS, UNITED STATES DISTRICT JUDGE
Currently
before the Court are two related motions. The first motion is
Defendants Transworld Systems, Inc.'s
("Transworld") and Finkelstein, Kern, Steinberg
& Cunningham, P.C.'s ("FKSC") motion for
Summary Judgment (Doc. 22), and the second is Plaintiffs
Alisha and James Waddell's ("the Waddells")
Motion for Leave to File an Amended Complaint (Doc. 25). For
the reasons explained below, Transworld's and FKSC's
Motion for Summary Judgment is GRANTED, and
the Waddells' Motion for Leave to File an Amended
Complaint is DENIED as futile.
I.
BACKGROUND
This
case arises out of alleged violations of the Fair Debt
Collection Practices Act ("FDCPA") and the Arkansas
Fair Debt Collection Practices Act ("AFDCPA"), with
respect to collection actions filed against the Waddells in
state court. The collection actions concerned two student
loans, both of which were dispersed in July of 2007. Chase
Bank ("Chase") loaned the Waddells $8, 500
("Loan 1"), and Bank of America loaned them $4, 500
("Loan 2").[1]
In
September of 2007, Chase sold and assigned Its right to title
to Loan 1 to National Collegiate Funding, LLC
("NCF") as part of a bundled sale. The right to
title was subsequently sold and assigned to National
Collegiate Trust 2007-3 ("NCT 2007-3"). The
Waddells failed to make payments toward the loan. Transworld,
the agent and service provider for National Collegiate Trusts
("NCT"), placed Loan 1 with FKSC for collection.
FKSC sent the Waddells letters identifying NCT 2007-3 as the
creditor for Loan 1 and requested payment. The Waddells
contacted FKSC and agreed to a payment plan for Loan 1. The
Waddells made payments toward the debt, but eventually
stopped making payments.
On
March 23, 2017, FKSC filed a collection suit against the
Waddells on behalf of NCT 2007-3 in the Circuit Court for
Washington County, Arkansas, captioned National
Collegiate Student Loan Trust 2007-3 v. Alisha
Waddell and James Waddell, No. 72-cv-1006-1 ("Loan
1 Lawsuit"). The complaint in the Loan 1 Lawsuit
attached an affidavit from Transworld employee Dudley Turner
and various assignment documents. On July 11, 2017, FKSC
voluntarily dismissed the Loan 1 Lawsuit. Plaintiffs now
speculate that the Loan 1 Lawsuit was dismissed because FKSC
never intended to prosecute it; however, Defendants maintain
that they nonsuited the case because the state court denied
their request for a continuance.
On
October 25, 2016, FKSC filed a second collection suit against
the Waddells, this time concerning Loan 2. Bank of America
had sold and assigned its right, title, and interest in Loan
2 to NCF in September 2007. NCF subsequently sold and
assigned Loan 2 to National Collegiate Trust 2007-4
("NCT 2007-4"). The Waddells failed to make
required loan payments on Loan 2, and Transworld subsequently
placed Loan 2 with FKSC for collection. FKSC then sent the
Waddells letters Identifying NCT 2007-4 as the creditor for
Loan 2 and requested payment. The Waddells made some payments
toward the debt, but eventually stopped making payments.
FKSC's
collection lawsuit concerning Loan 2 was also filed in
Washington County Circuit Court in a case captioned
National Collegiate Student Loan Trust 2007-4 v. Alisha
Waddell andJames Waddell, No. 72-cv-16-2251 ("Loan
2 Lawsuit"). The complaint in the Loan 2 Lawsuit
attached an affidavit from Transworld employee Bryan Jackson.
Ultimately, FKSC dismissed the Loan 2 Lawsuit on November 28,
2017. Plaintiffs contend that this dismissal also occurred
because FKSC never intended to prosecute the lawsuit; but
Defendants counter that they took a nonsuit only because
their request for a continuance was denied by the state
court.
The
Waddells filed the instant lawsuit in this Court on May 22,
2018. They allege that Defendants' attempts to collect on
Loans 1 and 2 in state court violated the FDCPA and the
AFDCPA. They claim that what happened to the Waddells in
state court was "part of a nationwide practice and
pattern of suing consumers to collect student loan debt
accompanied by false and misleading affidavits and testimony
and suing without the intent or ability to prove their claims
that the consumers sued owed a student loan debt to one of
the National Collegiate Student Loan Trusts." (Doc. 1 at
1).
On
October 31, 2018, Defendants jointly moved for summary
judgment, arguing that: (1) the Waddells' claims are
time-barred, (2) Transworld's employee affidavits
attached to the state court complaints were not deceptive,
and (3) the Waddells' speculation that FKSC dismissed the
state court suits because they never intended to prosecute
them is false, as Defendants possessed the documentation to
show that the Waddells actually owed the debts on Loans 1 and
2, and those debts were subject to collection.
On
November 13, 2018, after Defendants moved for summary
judgment, Plaintiffs timely moved to amend their complaint.
(Doc. 25). The proposed amended complaint asserts all the
same causes of action that appear in the original complaint,
but adds certain facts related to a lawsuit that was filed in
Delaware Chancery Court. That case, which appears to be
ongoing, is styled The National Collegiate Master Student
Loan Trust /, et al. v. U.S. National Bank
Association, et al., No. 2018-0167. The Delaware
complaint alleges that the National Collegiate Master Student
Loan Trust instructed Transworld to stop filing lawsuits in
the name of the Trusts in instances where Transworld could
not demonstrate standing to collect on defaulted loans.
See Doc. 25-1 at 16-19.[2]Plaintiffs contend that they
are the victims of the same pattern and practice of conduct
that is set forth in the Delaware complaint, namely, that
Transworld lacked standing to file the Loan 1 and Loan 2
Lawsuits and was directed by the NCT not to file
those lawsuits.
II.
LEGAL STANDARD
The
legal standard for summary judgment is soundly established.
Federal Rule of Civil Procedure 56(a) notes that "[t]he
court shall grant summary judgment 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." The
Court reviews facts in the light most favorable to the
non-moving party, and must give that party the benefit of any
inferences that can be deduced from those facts. Canada
v. Union Bee. Co., 135 F.3d 1211, 1212-13 (8th
Cir.1997). The moving party must demonstrate the absence of a
genuine dispute of material fact and that it is entitled to
judgment as a matter of law. See Fed. R. Civ. P.
56(c); Matsushita Bee. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-587 (1986); Nat'l Bank
of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165
F.3d 602 (8th Cir. 1999).
Federal
Rule of Civil Procedure 15(a)(2) instructs the Court to
"freely give leave" to amend a pleading "when
justice so requires." However, the Court may deny
amendment based on the "futility" of the amended
complaint. Becker v. Univ. of Neb. at Omaha, 191
F.3d 904, 908 (8th Cir. 1999) (quoting Brown v.
Wallace,957 F.2d 564, 566 (8th Cir. 1992)). An
amendment is futile if it would not survive a subsequent
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