Mazloom v. Navient Sols. (In re Mazloom)
| Decision Date | 29 March 2022 |
| Docket Number | Adv. Pro. 20-80033-6,18-60206-06 |
| Parties | In re: STEPHANIE MAZLOOM, Debtor. v. NAVIENT SOLUTIONS, LLC and NAVIENT CREDIT FINANCE CORPORATION, Defendants. In re: STEPHANIE MAZLOOM, on behalf of herself and all others similarly situated, Plaintiffs, |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Northern District of New York |
BOIES SCHILLER FLEXNER LLP Attorneys for Plaintiff, GEORGE CARPINELLO, ESQ., ADAM SHAW, ESQ.
JONES SWANSON HUDDELL & DASCHBUCH, LLC Attorneys for Plaintiff LYNN SWANSON, ESQ.
FISHMAN HAYGOOD LLP Attorneys for Plaintiff JASON W. BURGE ESQ.
McGUIRE WOODS Attorneys for Navient Solutions, K. ELIZABETH SIEG, ESQ., JOSEPH A. FLORCZAK, ESQ.
Stephanie Mazloom ("Plaintiff") entered into a loan agreement in order to pay the cost of attending medical school. After receiving a discharge under Chapter 7 of the Bankruptcy Code, Plaintiff brought a motion to reopen and, on her own behalf and all others similarly situated, commenced this adversary proceeding against Navient Solutions, LLC and Navient Credit Finance Corporation ("Defendants") on July 2, 2020 (together, Defendants and Plaintiff are the "Parties"). Plaintiff's complaint contains three counts and seeks, among other things: (a) declaratory relief that Plaintiff's and other putative class members' loans are dischargeable under 11 U.S.C. § 523(a)(8); (b) injunctive relief prohibiting Defendants from continuing to collect on discharged debts; (c) compensatory and punitive damages and monetary sanctions for violations of the discharge orders and statutory injunction; and (d) restitution and/or disgorgement of funds collected since the discharge orders were entered.[1]
The Parties have filed competing motions for summary judgment. On April 13, 2021, Defendants filed an Initial Motion for Summary Judgment ("Defendants' Summary Judgment Motion") (ECF No. 56). On May 18, 2021, Plaintiff filed her Opposition to Defendant's Initial Summary Judgment Motion and Cross-Motion for Partial Summary Judgment, ("Plaintiff's Motion for Summary Judgment") (ECF No. 76) (together, the "Parties' Summary Judgment Motions"). The Parties' Summary Judgment Motions address the threshold issue of the dischargeability of Plaintiff's debt to Defendants pursuant to § 523(a)(8)(A)(i). As required by Local Bankruptcy Rule 7056-1, the Parties filed: Defendants' Statement of Undisputed Facts in Support of Their Initial Motion for Summary Judgment (ECF No. 56-3); Plaintiff's Counter-Statement of Undisputed Material Facts (ECF No. 75); and Defendants' Responses to Plaintiff's Counter-Statement of Undisputed Material Facts in Support of Her Cross Motion for Summary Judgment (ECF No. 85). The following is based upon consideration of the Parties' written submissions, and arguments made before this Court on June 8, 2021. The Court is not submitting findings of fact and conclusions of law in this matter because Federal Rule of Civil Procedure ("FRCP") 52(a)(3), made applicable to this proceeding by Federal Rule of Bankruptcy Procedure ("FRBP") 7052, does not require such a submission when ruling on a motion for summary judgment.[2] As set forth below, the Court finds that neither Party has met their burden to prevail at summary judgment. Therefore, the Court denies the relief sought in both Parties' Summary Judgment Motions.
The Court has jurisdiction over the Parties and subject matter of this adversary proceeding pursuant to 28 U.S.C. §§ 1334(a), 1334(b), 157(a), and 157(b)(2)(A), (I), and (O). Venue is proper pursuant to 28 U.S.C. § 1409(a).
The Court may enter summary judgment "only if it concludes that there is no genuine dispute as to the material facts and that, based on the undisputed facts, the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see, e.g., Celotex Corp v. Catrett, 477 U.S. 317, 322-3 (1986); In re Baker, 465 B.R. 359, 363 (Bankr. N.D.N.Y. 2012) (same). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine dispute as to a material fact for trial and summary judgment is appropriate." In re Birnbaum, 513 B.R. 788, 799 (Bankr. E.D.N.Y. 2014) (citing McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006)).[3]
If the moving party meets its burden of demonstrating the absence of a genuine issue of material fact, the burden then shifts to the non-moving party "to come forward with evidence sufficient to create a genuine dispute as to a material fact for trial." In re Khan, 2014 Bankr. LEXIS 4205 at *17 (Bankr. E.D.N.Y. September 30, 2014). The non-moving party must "do more than simply show there is some metaphysical doubt as to the material facts." Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). A party moving for summary judgment can meet its burden either by producing evidence showing the absence of a genuine issue of material fact, or by pointing out to the Court that there is an absence of evidence supporting one or more essential elements of the non-moving party's case. In re Krautheimer, 210 B.R. 37, 56 (Bankr. S.D.N.Y. 1997); Long Oil Heat, Inc. v. Spencer, 375 F.Supp.3d 175, 190 (N.D.N.Y. 2019) (same).
In this proceeding, both Parties have moved for summary judgment to determine whether the Plaintiff's student loan debt is exempt from discharge pursuant to § 523(a)(8)(A)(i). This does not alter the underlying standard for each independent motion for summary judgment. "When faced with cross-motions for summary judgment…the court must consider 'each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.'" In re Rood, 448 B.R. 149, 158 (Bankr. D. Md. 2011) (citing Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003)); In re N-Liquidation, Inc., 2018 Bankr. LEXIS 2138 at *10 (Bankr. N.D.N.Y. July 20, 2018) (). Cross motions for summary judgment do not require the court to decide the case on the merits. "[T]he court can deny both motions if both parties have failed to meet the burden of establishing that no genuine issues of material fact exist and that they are entitled to judgment as a matter of law." In re Kogos, 2010 Bankr. LEXIS 4079 at *9 (Bankr. N.D.Ill. November 30, 2010); see also Guard Ins. Group v. Reliable Ins. Servs., LLC, Shah Builders, & Carlos Quin De Hurtado, 2018 U.S. Dist. LEXIS 237072 at *9 (E.D.N.Y. March 20, 2018) (); Sosne v. FDIC, 2016 (U.S. Dist. LEXIS 24201 (E.D. Mo. February 29, 2016) (same); Ohio Cas. Ins. Co. v. Twin City Fire Ins. Co., 2018 U.S. Dist. LEXIS 234831 (E.D.N.Y. June 28, 2018) (same).
In an action to determine the dischargeability of a purported student loan debt pursuant to § 523(a)(8), the creditor has the initial burden to establish, by a preponderance of the evidence, the existence of the debt and that the debt is an educational loan within the statute's parameters. In re Kashikar, 567 B.R. 160, 168 (B.A.P. 9th Cir. 2017); see also Grogan v. Garner, 498 U.S. 279, 287 (1991). If this burden is met, the burden of production shifts to the debtor, while the creditor retains the ultimate burden of proof by a preponderance of the evidence. Grogan, 498 U.S. at 286.
The following recitation of facts has been drawn from the Parties' Statements and Counter-Statements of Material Facts, the briefs submitted by the Parties, the hearing held on June 8, 2021, and other submissions on the Court's docket.
From 2006 through 2008 Plaintiff attended medical school in Antigua and Barbuda.[4]Plaintiff's Counter-Statement of Undisputed Material Facts 1, ECF No. 85. In order to finance the cost of her education, in August 2006, Plaintiff obtained a private student loan from Nellie Mae Bank in the amount of $38, 400 ("Private Student Loan"). Defendants' Response to Plaintiff's Counter-Statement of Undisputed Material Facts 2, ECF No. 84. Nellie Mae Bank was one of the predecessors-in-interest to defendant Navient Solutions LLC which has at all relevant times serviced the Private Student Loan. Id. Included in the loan documents signed by Plaintiff was a promissory note with language stating that "EXCEL Grad Loans…are private education loans…that complement the Federal Stafford Loan program…" and that her "loan is an educational loan and is made under a program that includes Stafford Loans and other loans and which is funded in part by non-profit organizations, including governmental units, and, therefore, is not dischargeable in bankruptcy."[5] Defendants' Statement of Undisputed Facts 3, ECF No. 56-3. It is uncontested that Navient provides both private loans and Stafford loans, and that Plaintiff's loan was funded entirely with private funds. Id. at 2. Plaintiff was not eligible for, and did not receive, a Stafford loan. Plaintiff's Counter-Statement of Undisputed Material Facts 1, ECF No. 85.
In 2014, Defendants created a prospectus to inform students about the different loans offered by Defendants ("Prospectus"). Navient Prospectus, Aug. 25, 2014, ECF No. 87-3. Both Parties, in their submissions, reference to the deposition of Patty Peterson, Defendants' Senior Vice-President of Operations, taken on April 28, 2021, in which Ms. Peterson discussed the nature of the EXCEL Grad Loan Program. Peterson Dep., Apr. 28, 2021, ECF No. 87-1. References were also made to an earlier deposition of Ms. Peterson discussing the same matters in a separate case. Peterson Dep., Dec. 17, 2020, ECF No. 87-2.
On February 21, 2018...
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