Savedoff v. Access Group, Inc.
| Decision Date | 02 May 2008 |
| Docket Number | No. 07-3670.,07-3670. |
| Citation | 524 F.3d 754 |
| Parties | Jill B. SAVEDOFF, individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. ACCESS GROUP, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Kitchenoff & Asher, Philadelphia, Pennsylvania, for Appellee.
Before: KEITH, CLAY, and GILMAN, Circuit Judges.
CLAY, J., delivered the opinion of the court, in which KEITH, J., joined. GILMAN, J. (p. 770), delivered a separate opinion concurring in the result.
In this diversity class action, brought pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) (2006), Defendant Access Group, Inc. ("Access Group") appeals the district court's denial of Access Group's motion for summary judgment and its grant of Plaintiff Jill B. Savedoff's ("Savedoff") motion for partial summary judgment on the issue of liability for Savedoff's breach of contract claims. For the reasons that follow, we AFFIRM in part and REVERSE in part the judgment of the district court, and REMAND the case for further proceedings consistent with this opinion.
Access Group is a non-profit organization formed by a consortium of major law schools to assist law students as well as other professional students in procuring loans to finance their education. In order to obtain a loan, Access Group requires a student borrower to submit a loan application and sign a promissory note (the "student loan contract" or "Promissory Note") containing the terms of the loan. Once Access Group confirms the loan application and the current interest rate, Access Group disburses the loan funds to the borrower's educational institution.
Under the student loan contract, the period between the disbursement of the loan funds up to the first day of the repayment period, which is usually nine months after the borrower's graduation, is called the "interim period." During this interim period, the loan accrues interest, but the borrower is not required to pay the interest that accrues.
After this interim period, the loan enters the "repayment period," which typically lasts twenty years. Access Group offers borrowers three repayment options: Easy Pay Equal, Easy Pay 2 Step, or Easy Pay 3 Step. Easy Pay Equal requires the borrower to make amortized payments of interest and principal throughout the twenty year term of the loan. Easy Pay 2 Step allows the borrower to pay only interest for the first two years of the repayment period and then, for the remainder of the loan term, to make amortized payments of interest and principal. Easy Pay 3 Step provides for two years of interest only payments, followed by three years of interest with partial principal payments, concluded with amortized payments of interest and principal for the remainder of the loan term. Borrowers select their choice of repayment option two to three months before the repayment period begins.
The terms of the borrower's repayment of the loan is governed by paragraph E of the student loan contract, which provides:
1. Interim Period — During the Interim Period you [Access Group] will send me [borrower] quarterly statements showing my loan disbursements and the interest that accrues on my loan. Statements will be sent to the address shown on your records, as provided in Paragraph L. The quarterly statements will cover periods beginning on the initial Disbursement Date and thereafter on the first date of each January, April, July, and October. I may, but am not required to, make payments of interest or principal during the Interim Period. You may add any interest that I do not pay during the Interim Period to the principal balance as described in Paragraph D.3.[1]
2. Repayment Period — During the Repayment Period you will send me periodic statements on my loan. The periodic statements will cover periods beginning on the first day of the Repayment Period and on the same day each following month. I will make consecutive monthly payments in the amounts and on the payment due dates shown on my periodic statements until I have paid all the principal and interest and any other charges I may owe under this Promissory Note.
3. Repayment Terms — The amounts shown on my periodic statements will be consecutive monthly installments of the principal and interest calculated each Change Date to equal the amount necessary to amortize the unpaid principal balance (including any capitalized interest) of my loan (as of the date of calculation) in equal monthly installments of principal and interest at the Variable Rate then in effect over the number of months remaining in the Repayment Period.[2]
4. Amounts Owing at the End of the Repayment Period — Since interest accrues daily upon the unpaid balance of my loan, if I make payments after my payment due dates, I may owe additional interest. If I have not paid my late charges, I will also owe additional amounts for those late charges. In such case you will increase the amount of my last monthly payment to the amount necessary to repay my loan in full.[3]
5. Minimum Repayment — Notwithstanding Paragraph E.3, I agree to pay at least $50 each month (principal and interest) or the unpaid balance, whichever is less. I understand that this may result in my loan being paid off in less than 240 months.
Paragraph A of the student loan contract contains a general contractual obligation to pay the loan amount, which reads:
I, [the borrower], intending to be bound, promise to pay to your [Access Group's] order on the terms of this Promissory Note all of the principal sum of [the amount loaned] to the extent it is advanced to me or paid on my behalf, and as set out below, interest on such principal sum, interest on any unpaid accrued interest added to the principal balance, a supplemental guarantee fee as set out below . . . late charges, and in the event of default, and to the extent permitted by applicable law, costs of collection, and reasonable attorneys' fees.
J.A. at 105. Each contract also contains a provision stating that the contract will be governed by federal law and the laws of the state of Ohio.
Between August 13, 1999 and June 25, 2002, Savedoff entered into a series of student loan contracts with Access Group, containing the provisions described above and totaling $ 71,858.00, to finance her legal education. Prior to the start of her repayment period, Savedoff elected to make her payments under Access Group's Easy Pay 3 Step repayment option. At the end of the interim period, Access Group, pursuant to paragraph D.3 of the student loan contracts, added all outstanding interest that had accrued during the interim period to the original loan amount, creating a new principal balance of $88,477.00.
The repayment period for Savedoff's loan commenced on March 20, 2003. For the next two years, pursuant to the Easy Pay 3 Step repayment plan, Access Group sent Savedoff monthly statements which listed the amount of interest owed on the loan and requested a monthly interest payment of $296.36. As required by the student loan contracts, the interest rate on Savedoff's loan was adjusted quarterly by Access Group to reflect changes in the standard index. These interest rate changes were indicated on Savedoff's monthly statements. However, Savedoff's monthly payment was not increased.4 As a result, during the first two years of repayment, Savedoff accrued around $650 of interest on her loan that was not paid for in her monthly interest payments. Like both parties as well as the district court, we will, for purposes of this opinion, refer to this accrued, but unpaid, interest as "Additional Interest."
In March of 2005, at the end of the first phase of repayment, Access Group capitalized the Additional Interest by adding it to the principal balance of Savedoff's loan. Access Group then charged and collected interest from Savedoff on this Additional Interest. Access Group had engaged in this practice with all of its Easy Pay 2 Step and Easy Pay 3 Step loans since 2000. In October of 2004, prior to the commencement of the instant suit, Access Group voluntarily discontinued this practice as to all new loans issued.
On January 19, 2006, in response to Access Group's capitalization of the Additional Interest on her loan, Savedoff filed a federal class action complaint in the United States District Court for the Northern District of Ohio5 against Access Group the Kentucky Higher Education Student Loan Corporation ("KHESLC"), and the National City Corporation ("National City").6 In her initial complaint, Savedoff alleged claims of breach of contract and unjust enrichment based on Access Group's addition of Additional Interest to the principal balance of her loans and the loans of other class members. On April 27, 2006, Savedoff filed an amended complaint against the same parties alleging the same claims. All defendants filed timely answers to both of these complaints.
On April 19, 2006, Savedoff filed a motion for class certification. The parties filed a joint proposed stipulation concerning class definition and class certification on August 15, 2006. On November 6, 2006, the district court certified the class as:
All persons who are borrowers under an EZ Pay Plan on whose Student Loans any of the Defendants have, since January 1, 1993, compounded accrued interest after commencement of the repayment period. Excluded from the Class are those borrowers whose accrued interest has been compounded solely pursuant to a written forbearance agreement with the lender.
In July of 2006, after Savedoff's...
To continue reading
Request your trial
-
Cranpark Inc. v. Rogers Group Inc.
...leads to an evaluation of reasonable expectations of the parties.” Fultz & Thatcher, 2006 WL 3833971, at *6. Savedoff v. Access Group, Inc., 524 F.3d 754, 763-64 (6th Cir.2008). In Ohio, the fundamental elements of a breach of contract claim include: (1) the existence of a contract; (2) per......
-
Jones v. Lubrizol Advanced Materials, Inc.
...Class Action Fairness Act rests on diversity of citizenship, the forum State's choice-of-law rules apply. Savedoff v. Access Group, Inc. , 524 F.3d 754, 760 n.5, 762 (6th Cir. 2008) (applying forum State's choice-of-law rules where, as here, federal jurisdiction was premised on 28 U.S.C. § ......
-
Bracken v. Dasco Home Med. Equip., Inc.
...language's meaning can be determined by considering the language in the context of other contractual language. Savedoff v. Access Group, Inc., 524 F.3d 754, 764 (6th Cir.2008) (“In determining whether contractual language is ambiguous, the contract ‘must be construed as a whole.’ ”) (intern......
-
Bash v. Textron Fin. Corp. (In re Fair Fin. Co.)
...viewed as persuasive unless it is shown that the state's highest court would decide the issue differently.” Savedoff v. Access Grp., Inc. , 524 F.3d 754, 762 (6th Cir. 2008). In this instance, neither the Ohio Supreme Court nor Ohio's Court of Appeals has directly addressed the issue before......