Carlson v. Educational Credit Management Corporation
- Donovan Frank
- 0:19-cv-02699
- U.S. District Court · District of Minnesota
- 11
In Carlson v. Educational Credit Management Corporation Shared Services Company, Judge Leung stayed the case and partly granted and partly denied Carlson’s discovery motion.
Virginia Marie Carlson, Educational Credit Management Corporation Shared Services Company, LLC, and Allied Interstate, LLC. The proceeding was stayed because of Allied’s bankruptcy, while the court required Educational Credit Management Corporation Shared Services Company, LLC to supplement its disclosures and required Allied to provide periodic status updates.
What happened
In Carlson v. Educational Credit Management Corporation Shared Services Company, the plaintiff sued over efforts to collect a student-loan debt that she said had already been paid. Allied Interstate later filed for bankruptcy, which automatically paused the claims against it.
Because the claims against Allied and Educational Credit Management Corporation Shared Services Company, LLC appeared closely connected, the court stayed the entire case to avoid duplicate proceedings and piecemeal decisions. The court struck the scheduled settlement conference and required Allied to provide regular updates about its bankruptcy case.
Judge Leung partly granted and partly denied Carlson’s motion to compel discovery. He ordered Educational Credit Management Corporation Shared Services Company, LLC to supplement its initial disclosures within 14 days with information from its counsel’s September 19, 2020 letter, but found nothing improper about the existing disclosures otherwise.
The detailed version
- Carlson v. Educational Credit Management Corporation · No. 0:19-cv-02699
- Donovan Frank
- Oct. 28, 2020
Background
Virginia Marie Carlson, representing herself, sued Educational Credit Management Corporation Shared Services Company, LLC, Allied Interstate, LLC, and the U.S. Department of Education. The opinion states that the Department of Education had already been dismissed. Carlson alleged that Educational Credit Management Corporation Shared Services Company, LLC held a student-loan debt she contended had been paid and had engaged Allied to collect it.
Allied filed for bankruptcy. Under the Bankruptcy Code, that filing automatically stayed, or paused, Carlson’s claims against Allied. The court explained that the automatic stay generally does not extend to nonbankrupt co-defendants. But because the claims against Allied and Educational Credit Management Corporation Shared Services Company, LLC appeared significantly intertwined, the court concluded that judicial economy supported staying the proceeding against both defendants. The stay applied to the entire proceeding except for the limited discovery dispute addressed in the order.
The court struck the settlement conference scheduled for November 6, 2020. It also ordered Allied to submit a status letter every three months, beginning February 1, 2021, reporting on the status of its bankruptcy case and its effect on this proceeding.
Motion to Compel
Carlson moved to compel Educational Credit Management Corporation Shared Services Company, LLC to provide initial disclosures identifying the current holder of the promissory note connected to the dispute. The court explained that the original complaint had named Educational Credit Management Corporation, which had answered that it became the guarantor and holder of Carlson’s student loan. Carlson’s amended complaint instead named Educational Credit Management Corporation Shared Services Company, LLC. The court treated the amended complaint as the operative pleading and stated that Educational Credit Management Corporation was no longer a party.
Educational Credit Management Corporation Shared Services Company, LLC repeatedly stated that it did not hold the loan and was not the proper party. Its disclosures stated that Educational Credit Management Corporation was the proper party and that the relevant records were held by that corporation. Counsel also represented that Educational Credit Management Corporation held the loan, that it was a Minnesota corporation with its principal place of business in Minnesota, and that Texas Guaranteed Student Loan Corporation had transferred the loan to Educational Credit Management Corporation on September 23, 2009, after the loan had been reduced to a judgment.
The court found nothing improper about Educational Credit Management Corporation Shared Services Company, LLC’s initial disclosures. However, out of caution, it granted in part and denied in part Carlson’s motion to compel. The court ordered that entity, within 14 days, to supplement its initial disclosures with the information contained in the third paragraph of counsel’s September 19, 2020 letter, to the extent it had not already done so. The court also stated that any request to reconsider an earlier order denying Carlson’s motion for default was not properly before it.
Order and Effect
The proceeding was STAYED until further order, except for the limited discovery matter. The settlement conference was STRICKEN. Allied was required to provide the periodic bankruptcy-status letters. Carlson’s motion to compel was GRANTED IN PART and DENIED IN PART. The court also referred Carlson to the Minnesota Chapter of the Federal Bar Association’s Pro Se Project, which may assist her in determining whether she named the proper defendants and understanding the effect of Allied’s bankruptcy. The order did not decide the underlying dispute over the student-loan debt.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.