Judge Denies Defendant’s MSJ, Partially Grants Plaintiff’s Motion in FDCPA Case

A District Court judge in California has partially granted a plaintiff’s motion for summary judgment while denying a defendant’s motion in a Fair Debt Collection Practices Act case, ruling that the defendant violated its discovery obligations by not providing documentation to prove the current creditor owned the debt in question and had a right to collect on it.

A copy of the ruling in the case of Lizarraga-Davis v. Transworld Systems can be accessed by clicking here.

Back in 2006, the plaintiff took out a student loan, which was then purchased and sold into a trust. The defendant is the custodian of the records for the trust and the defendant is charged with collecting on any account in the trust that goes into default.

The plaintiff defaulted on his student loan on 2015, at which point the loan was charged off and assigned to the defendant for collection. After unsuccessfully suing to collect on the debt, the defendant was sued by the plaintiff, which accused the defendant of violating Sections 1692e(2)(A), 1692e(5), 1692e(10), and 1692f because it allegedly lacked the proper documentation to collect on the debt.

Three years after first filing for a motion of summary judgment and being denied because it was unclear whether the record contained all the documents relevant to the loan in question, the defendant filed another motion for summary judgment, arguing that the documentation it had to prove ownership of the debt was “adequate.”

In filing its second motion, the defendant included an exhibit that contained a print-out of a spreadsheet with details about the plaintiff’s loan which it did not make available earlier because it contained “sensitive consumer information relating to other borrowers,” according to the defendant.

Judge Beth Labson Freeman of the District Court for the Northern District of California, took issue with the timing of the production of the documents. “The Court finds it startling, to say the least, that Transworld failed to produce in discovery the crucial document -Schedule 1 to the 2006-4 Pool Supplement, which identifies the loans included in the loan pool sold to The National Collegiate Funding LLC,” she wrote. “Moreover, Lizarraga-Davis’s counsel specifically requested all documents relating to assignment of the loan during meet-and-confer regarding discovery responses. Transworld’s failure to produce Schedule 1 is particularly surprising given the backdrop of administrative actions, investigations, and civil lawsuits addressing its loan collection practices.”

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