Butry v. National Collegiate Student Loan Trust 2005-3
- Paul Gardephe
- 1:20-cv-05843
- U.S. District Court · Southern District of New York
- 23
In Butry v. National Collegiate Student Loan Trust 2005-3, Judge Gardephe granted defendants’ motion to dismiss the time-barred claims and closed the case.
The four named plaintiffs and the proposed class were affected because the court dismissed the asserted federal and New York claims as time-barred. The defendants prevailed on their motion to dismiss, and the case was closed.
What happened
Butry v. National Collegiate Student Loan Trust 2005-3 is a proposed class action by four student-loan borrowers who claimed that the defendants used false or misleading statements and improper practices to collect their loans. They sued under federal and New York laws.
The defendants argued that all of the claims were filed too late. The plaintiffs argued that the deadlines should be extended because the defendants had concealed the alleged misconduct and that later public reports and evidence revealed the scheme.
Judge Paul G. Gardephe granted the defendants’ motion to dismiss. He ruled that equitable tolling did not save the claims because the plaintiffs were aware of their possible claims by September 18, 2017, but did not file this case until July 28, 2020; the court dismissed the claims as time-barred and closed the case.
The detailed version
- Butry v. National Collegiate Student Loan Trust 2005-3 · No. 1:20-cv-05843
- Paul Gardephe
- Aug. 16, 2024
Background
Francis Butry, Cori Fraunhofer, Sandra Tabar, and Jaelysabel Villasante brought this proposed class action against four National Collegiate student-loan trusts, their servicing agents, and Forster & Garbus LLP. The complaint alleged that the defendants attempted to collect student loans through false and misleading statements, deceptive practices, and allegedly false court filings.
The complaint asserted three types of claims: violations of the Fair Debt Collection Practices Act against the servicing agents and Forster; deceptive acts under New York General Business Law § 349 against all defendants; and attorney deceit under New York Judiciary Law § 487 against Forster. The plaintiffs alleged that each had been sued in a state-court debt-collection case between 2013 and 2014 and that default judgments had been entered against them.
The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the claims were barred by statutes of limitations. They also argued that the New York General Business Law claim was preempted by the Fair Credit Reporting Act, but the court did not reach that argument.
Statutes of limitations
The court stated that Fair Debt Collection Practices Act claims generally must be filed within one year after the violation, New York General Business Law § 349 claims within three years after the injury, and New York Judiciary Law § 487 claims within six years after the injury. Based on the dates of the plaintiffs’ default judgments, the court concluded that the claims were untimely unless equitable tolling applied.
Equitable tolling is a rule that can pause a filing deadline when a plaintiff diligently pursues rights but an extraordinary circumstance prevents timely filing. The plaintiffs argued that the defendants’ alleged concealment prevented them from discovering their claims. The court agreed that the alleged misrepresentations were inherently self-concealing and that the defendants’ legal filings could qualify as an extraordinary circumstance for tolling purposes.
Ruling
The court concluded, however, that the extraordinary circumstances ended by September 18, 2017. By then, a New York Times article and a Consumer Financial Protection Bureau report had publicly described problems involving the trusts’ ability to document loan ownership and the filing of collection lawsuits lacking necessary documentation. The court found that the plaintiffs were aware of their possible claims by that date and were required to file within a reasonable period afterward.
The court separately ruled that the Judiciary Law § 487 claims were not saved by equitable tolling because the plaintiffs had nearly three years after September 2017—and before the six-year deadline expired on May 27, 2020—to file those claims. The complaint was filed on July 28, 2020.
The court also ruled that the plaintiffs waited too long to file their Fair Debt Collection Practices Act and General Business Law claims after learning of the alleged misconduct. Accordingly, the court dismissed all three categories of claims as time-barred, granted the defendants’ motion to dismiss, directed the clerk to terminate the motion, and closed the case. The opinion does not state that the dismissal was with or without prejudice.
Read the full 23-page opinion on CourtListener, the free public archive maintained by the Free Law Project.