Allen v. United Student Aid Funds, Inc.

Background

Hepzibah Z. Allen sued United Student Aid Funds, Inc. (USAF), Navient Solutions, LLC, Navient, and Pioneer Credit Recovery, Inc., alleging violations of the Fair Debt Collection Practices Act (FDCPA), a federal law regulating certain debt-collection practices. Her claims concerned a student loan obtained under the Federal Family Education Loan Program. She alleged, among other things, that the defendants improperly assigned her debt, misrepresented the amount owed, and engaged in improper wage garnishment.

On September 28, 2018, the court granted the defendants’ motions to dismiss. The court ruled that Allen had not stated a claim because the defendants did not qualify as “debt collectors” under the FDCPA. It found that the allegations against the Navient defendants were conclusory, that Navient Solutions had serviced the loan since it originated before the default, and that USAF’s collection activity was incidental to a bona fide fiduciary obligation and therefore fell within an FDCPA exemption. Allen’s first motion for reconsideration was denied on September 26, 2019.

Second Motion for Reconsideration

Allen’s second motion sought relief under Federal Rule of Civil Procedure 60(b)(1)(6), which allows relief from an order in limited circumstances. The court explained that reconsideration is an extraordinary remedy requiring exceptional circumstances, such as an intervening change in controlling law, newly available evidence, or the need to correct clear error or prevent manifest injustice. A reconsideration motion cannot simply repeat arguments previously rejected or present arguments that could have been made earlier.

Allen argued that a January 2020 letter showed that the defendants had admitted their collection activities were connected to a fiduciary obligation. The court found that the letter was not materially different from letters attached to the original complaint. It also noted that Ascendium Education Solutions, Inc., identified in the letter, was not a defendant in the action. In addition, the court stated that describing collection efforts as incidental to a fiduciary obligation supported, rather than undermined, the conclusion that the activity was exempt from the FDCPA’s definition of “debt collector.”

Ruling

Judge Vernon S. Broderick held that Allen had not shown the exceptional circumstances required for reconsideration and had repeated arguments already rejected twice. The court therefore denied Allen’s second motion for relief from the September 28, 2018 order. The court did not resolve whether Allen’s approximately 17-month delay in filing the motion was reasonable because it found that she failed to satisfy the substantive standard for reconsideration. The clerk was directed to terminate the motion, close the case, and mail the order to Allen.