Golden v. Discover Bank (In re Golden)

Decision Date19 July 2021
Docket NumberAdv. Pro. No. 20-01051-ess,Case No. 16-40809-ess
Citation630 B.R. 896
CourtU.S. Bankruptcy Court — Eastern District of New York
Parties IN RE Tashanna B GOLDEN, fka Tashanna B Pearson, Debtor Tashanna B Golden, fka Tashanna B Pearson, on behalf of herself and all others similarly situated Plaintiff, v. Discover Bank, Defendant.

George F. Carpinello, Esq. Adam Shaw, Esq. Jenna Smith, Esq. Boies Schiller Flexner LLP 30 South Pearl Street (11th Floor) Albany, NY 12207 Attorneys for Plaintiff Tashanna B. Golden, fka Tashanna B. Pearson, on behalf of herself and all others similarly situated.

Clay Jackson Pierce, Esq. Erin L. Hoffman, Esq. Kyle Hosmer, Esq. Brian P. Morgan, Esq. Faegre Drinker Biddle & Reath LLP 1177 Avenue of the Americas New York, NY 10036 Attorneys for Defendant Discover Bank.

Jason W. Burge, Esq. Kathryn J. Johnson, Esq. Fishman Haygood, LLP 201 Saint Charles Avenue (Suite 4600) New Orleans, LA 70170 Attorneys for Plaintiff Tashanna B. Golden, fka Tashanna B. Pearson, on behalf of herself and all others similarly situated.

Joshua B. Kons, Esq. 50 Albany Turnpike (Suite 4024) Canton, CT 06019 Attorneys for Plaintiff Tashanna B. Golden, fka Tashanna B. Pearson, on behalf of herself and all others similarly situated.

Lynn E. Swanson, Esq. Jones, Swanson, Huddell & Garrison, LLC 601 Poydras Street (Suite 2655) New Orleans, LA 70130 Attorneys for Plaintiff Tashanna B. Golden, fka Tashanna B. Pearson, on behalf of herself and all others similarly situated.

MEMORANDUM DECISION ON THE DEFENDANT'S MOTION TO STRIKE CLASS ALLEGATIONS

ELIZABETH S. STONG, UNITED STATES BANKRUPTCY JUDGE

Introduction

The matter before the Court is a motion by Defendant Discover Bank ("Discover") to strike class allegations, with prejudice, from the Complaint filed on May 12, 2020 pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f), as incorporated by Federal Rules of Bankruptcy Procedure 7012 and 7023 (the "Motion to Strike").

Discover argues that this Court lacks the jurisdiction to adjudicate discharge violation claims arising from discharge orders issued outside this District. It argues that subject matter jurisdiction alone does not enable one bankruptcy court to enforce another's discharge order. Discover asserts that both the Supreme Court and the Second Circuit have made clear that a court retains jurisdiction over its own prior orders, and that this retention enables the court to interpret and enforce those orders. And it argues that asking the Court to interpret and enforce discharge orders entered by other bankruptcy courts is an attempt to divest those courts of jurisdiction and to deprive them of their right to enforce their own orders.

Ms. Golden disagrees. She responds first that this Court plainly has subject matter jurisdiction to proceed here. She points to Judiciary Code Section 1334, which is the source of this Court's – and every bankruptcy court's – subject matter jurisdiction "to adjudicate claims arising under or related to the Bankruptcy Code," and Bankruptcy Rule 7023, which permits "this Court, like all bankruptcy courts, ... to entertain class actions." Plf's Opp. at 4, ECF No. 9. Next, she argues that the Supreme Court mandates that courts exercise their subject matter jurisdiction. She also disputes that only the issuing court can adjudicate a discharge injunction violation claim, and questions how, if that is so, one judge within a district could hear even a district-wide class claim. And finally, Ms. Golden disagrees with Discover's interpretation of recent Second Circuit and Supreme Court decisions and argues that those cases either support her position here or do not address it.

Ms. Golden commenced this adversary proceeding as a putative class action, on behalf of herself and others similarly situated, by filing a complaint against Discover seeking a determination that certain debts that she incurred as a student are not nondischargeable student loan debts under Bankruptcy Code Section 523(a)(8)(B), and a finding of civil contempt against Discover for willful violations of the bankruptcy discharge injunction. Compl., ECF No. 1. Ms. Golden alleges that Discover and other creditors represented to her and to similarly situated student debtors that the Bankruptcy Code prohibited discharge of "any loan made to any person for any educational purpose," when they knew that "only private loans that meet the requirements of section 523(a)(8)(B) [are] nondischargeable." Compl. ¶ 19. Ms. Golden seeks to maintain this action on behalf of herself and as a representative of a nationwide class consisting of individuals who, like her, "received private loans owned or serviced by [Discover] which exceeded the cost of attendance at such institutions as defined in 26 U.S.C. § 221(d) ; who obtained bankruptcy discharges after January 1, 2005; who were subsequently subjected to [Discover's] acts to collect on the loans; and who have not reaffirmed their loans." Compl. ¶ 45.

Discover's Motion to Strike calls for this Court to consider whether the issues that it identifies are distinct from the issues to be addressed in the context of class certification – that is, whether "the motion ‘addresses issues separate and apart from issues that will be decided on a class certification motion.’ " Def's Mem. at 8, ECF No. 7 (quoting Greene v. Gerber Prods. Co. , 262 F. Supp. 3d 38, 52 (E.D.N.Y. 2017) ) (quoting Chen-Oster v. Goldman, Sachs & Co. , 877 F. Supp. 2d 113, 117 (S.D.N.Y. 2012) ). If the questions presented are, in substance, the same as the questions to be addressed on a motion for class certification, then they should be deferred until that matter is before the Court, and addressed in that context.

Discover's Motion to Strike also calls for this Court to consider whether it lacks jurisdiction, including subject matter jurisdiction and the jurisdiction to enter a remedy, to consider Ms. Golden's allegations that seek the certification of a nationwide class. Although Discover does not dispute that the Court has subject matter jurisdiction to decide this question, it argues that this Court's jurisdiction is limited on "threshold, non-merits" grounds, which prevent the Court from adjudicating an asserted violation of another court's order. Def's Reply at 13, ECF No. 12. Subject matter jurisdiction – and all matters related to jurisdiction – is foundational, and serves as the starting point for everything that a federal court can do. When that question is raised, even inferentially, it must be addressed, and promptly. Where it is lacking, the court cannot proceed.

And finally, if jurisdiction, including subject matter jurisdiction and the jurisdiction to enter a remedy, is present, and the issues identified are distinct from the questions to be addressed in a motion to certify a class, then the Court must consider whether, at this stage in these proceedings, it is clear that this Court cannot exercise its jurisdiction to entertain this action as a nationwide class and enter a remedy of any type, no matter the definition of the class, the nature of the certification that is sought, or the evidence.

Jurisdiction

This Court has jurisdiction over this adversary proceeding pursuant to Judiciary Code Sections 157(b)(1) and 1334(b), and the Standing Order of Reference dated August 28, 1986, as amended by the Order dated December 5, 2012, of the United States District Court for the Eastern District of New York. In addition, this Court may adjudicate these claims to final judgment to the extent that they are core proceedings pursuant to Judiciary Code Section 157(b), and to the extent that they are not core proceedings, pursuant to Judiciary Code Section 157(c) because the parties have indicated their consent to this Court entering a final judgment. See Wellness Int'l Network, Ltd. v. Sharif , 575 U.S. 665, 135 S. Ct. 1932, 1948, 191 L.Ed.2d 911 (2015) (holding that in a non-core proceeding, the parties' consent to the entry of a final order by a bankruptcy court may be express or implied).

Background
Ms. Golden's Bankruptcy Case

On February 29, 2016, Tashanna Golden, fka Tashanna B. Pearson, filed a petition for relief under Chapter 7 of the Bankruptcy Code. Case No. 16-40809. On July 28, 2016, the Chapter 7 Trustee filed a "no-asset" report stating that "there is no property available for distribution from the estate over and above that exempted by law." Case No. 16-40809, ECF entry dated July 28, 2016. On August 3, 2016, the Court entered an order discharging Ms. Golden (the "Discharge Order"), and on that same day, her bankruptcy case was closed. On December 6, 2016, Ms. Golden filed a motion to reopen her bankruptcy case to obtain a determination of the dischargeability of certain of her student loans, and on January 10, 2017, the Court entered an order reopening the case.

Selected Procedural History of this Adversary Proceeding

On May 12, 2020, Ms. Golden commenced this adversary proceeding as a putative class action, on behalf of herself and others similarly situated, by filing a complaint against Discover seeking a determination that certain debts that she incurred as a student are not nondischargeable student loan debts under Bankruptcy Code Section 523(a)(8)(B), and a finding of contempt against Discover for civil contempt for willful violations of the bankruptcy discharge injunction.

Ms. Golden requests a declaratory judgment, pursuant to Judiciary Code Section 2201 and Bankruptcy Rule 7001(9), that her debts were discharged by operation of law on August 3, 2016, the date of her bankruptcy discharge, because they are not student loans excluded from discharge under Section 523(a)(8). Ms. Golden claims that since Discover was notified of the Discharge Order pursuant to Bankruptcy Rule 4004(g) and still sought to collect on her debts by use of dunning letters, e-mails, text messages, and telephone calls, the Court should cite Discover for civil contempt and order it to pay damages in an amount to be determined at...

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