Thursday, July 20, 2017

Does a debt buyer qualify as a debt collector under the FDCPA ?

On June 12, 2017, the Supreme Court issued an opinion in Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017), where the Court resolved a split among the federal Courts of Appeals on whether purchasers of delinquent accounts, who then attempt to collect the defaulted debts, are considered debt collectors under the FDCPA. The Court ruled that Congress did not intend for debt buyers to be considered debt collectors for the purposes of the Act, where the debt buyer attempted to collect debts that the debt buyer now owned. Henson, 137 S.Ct. at 1724

But the issue is not completely resolved because the question was not answered categorically, and was limited to the particular factual scenario in that case, involving a particular debt buyer who was itself also a major original creditor, i.e. a lender that regularly originates its own loans. 

In Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017), the Supreme Court specifically addressed only whether or not the defendant could be found a debt collector when attempting to collect debts owed to itself as opposed to "another." Henson, 137 S.Ct. at 1721.

In holding that the defendant didn't meet the definition of debt collector, the Henson Court appears to address circumstances where the owner of the debt, and regardless of the origins of the debt, cannot be considered a debt collector under the Act for attempting to collect a debt that they own. But the Henson Court also made clear that its holding in that matter was narrow, and did not address the applicability of "in any business the principal purpose of which is the collection of any debts[.]" Henson, 137 S.Ct. at 1721. 

To appreciate the subtleties, a careful reading of the SCOTUS opinion, written by the High Court's newest member, is called for. Note the highlighted disclaimer as to what the Supremes did not address. 

137 S.Ct. 810 (2017)

Ricky HENSON, et al., petitioners,

No. 16-349.
Supreme Court of United States.
January 13, 2017.
Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit granted.

RICKY HENSON, ET AL., Petitioners,

No. 16-349.
Supreme Court of the United States.

Argued April 18, 2017.
Decided June 12, 2017.

GORSUCH, J., delivered the opinion for a unanimous Court
The Fair Debt Collection Practices Act authorizes private lawsuits and weighty fines designed to deter the wayward practices of "debt collector[s]," a term embracing anyone who "regularly collects or attempts to collect . . . debts owed or due . . . another." 15 U. S. C. §1692a(6). The complaint filed in this case alleges that CitiFinancial Auto loaned money to petitioners seeking to buy cars; that petitioners defaulted on those loans; and that respondent Santander then purchased the defaulted loans from CitiFinancial and sought to collect in ways petitioners believe violated the Act. The district court and Fourth Circuit held that Santander didn't qualify as a debt collector because it did not regularly seek to collect debts "owed . . . another" but sought instead only to collect debts that it purchased and owned.


A company may collect debts that it purchased for its own account, like Santander did here, without triggering the statutory definition in dispute. By defining debt collectors to include those who regularly seek to collect debts "owed . . . another," the statute's plain language seems to focus on third party collection agents regularly collecting for a debt owner—not on a debt owner seeking to collect debts for itself.

Petitioners' arguments to the contrary do not dislodge the statute's plain meaning. Petitioners point out that the word "owed" is the past participle of the verb "to owe," and so suggest that the debt collector definition must exclude loan originators (who never seek to collect debts previously owed someone else) but embrace debt purchasers like Santander (who necessarily do). But past participles like "owed" are routinely used as adjectives to describe the present state of a thing. Congress also used the word "owed" to refer to present debt relationships in neighboring provisions of the Act, and petitioners have not rebutted the presumption that identical words in the same statute carry the same meaning. Neither would reading the word "owed" to refer to present debt relationships render any of the Act's provisions surplusage, contrary to what petitioners suggest.

Petitioners also contend that their interpretation best furthers the Act's perceived purposes because, they primarily argue, if Congress had been aware of defaulted debt purchasers like Santander it would have treated them like traditional debt collectors because they pose similar risks of abusive collection practices. But it is not this Court's job to rewrite a constitutionally valid text under the banner of speculation about what Congress might have done had it faced a question that, on everyone's account, it never faced. And neither are petitioners' policy arguments unassailable, as reasonable legislators might contend both ways on the question of how defaulted debt purchasers should be treated. This fact suggests for certain but one thing: that these are matters for Congress, not this Court, to resolve. Pp. 3-11.

817 F. 3d 131, affirmed.

Justice GORSUCH, delivered the opinion of the Court.

Disruptive dinnertime calls, downright deceit, and more besides drew Congress's eye to the debt collection industry. From that scrutiny emerged the Fair Debt Collection Practices Act, a statute that authorizes private lawsuits and weighty fines designed to deter wayward collection practices. So perhaps it comes as little surprise that we now face a question about who exactly qualifies as a "debt collector" subject to the Act's rigors. Everyone agrees that the term embraces the repo man—someone hired by a creditor to collect an outstanding debt. But what if you purchase a debt and then try to collect it for yourself— does that make you a "debt collector" too? That's the nub of the dispute now before us.
The parties approach the question from common ground. The complaint alleges that CitiFinancial Auto loaned money to petitioners seeking to buy cars; that petitioners defaulted on those loans; that respondent Santander then purchased the defaulted loans from CitiFinancial; and that Santander sought to collect in ways petitioners believe troublesome under the Act. The parties agree, too, that in deciding whether Santander's conduct falls within the Act's ambit we should look to statutory language defining the term "debt collector" to embrace anyone who "regularly collects or attempts to collect . . . debts owed or due . . . another." 15 U. S. C. §1692a(6).

Even when it comes to that question, the parties agree on at least part of an answer. Both sides accept that third party debt collection agents generally qualify as "debt collectors" under the relevant statutory language, while those who seek only to collect for themselves loans they originated generally do not. These results follow, the parties tell us, because debt collection agents seek to collect debts "owed . . . another," while loan originators acting on their own account aim only to collect debts owed to themselves. All that remains in dispute is how to classify individuals and entities who regularly purchase debts originated by someone else and then seek to collect those debts for their own account. Does the Act treat the debt purchaser in that scenario more like the repo man or the loan originator?

For their part, the district court and Fourth Circuit sided with Santander. They held that the company didn't qualify as a debt collector because it didn't regularly seek to collect debts "owed . . . another" but sought instead only to collect debts that it purchased and owned. At the same time, the Fourth Circuit acknowledged that some circuits faced with the same question have ruled otherwise—and it is to resolve this conflict that we took the case. Compare 817 F. 3d 131, 133-134, 137-138 (2016) (case below); Davidson v. Capital One Bank (USA), N. A., 797 F. 3d 1309, 1315-1316 (CA11 2015), with McKinney v. Caldeway Properties, Inc., 548 F. 3d 496, 501 (CA7 2008)FTC v. Check Investors, Inc., 502 F. 3d 159, 173-174 (CA3 2007).

Before attending to that job, though, we pause to note two related questions we do not attempt to answer today. First, petitioners suggest that Santander can qualify as a debt collector not only because it regularly seeks to collect for its own account debts that it has purchased, but also because it regularly acts as a third party collection agent for debts owed to others. Petitioners did not, however, raise the latter theory in their petition for certiorari and neither did we agree to review it. 

Second, the parties briefly allude to another statutory definition of the term "debt collector"—one that encompasses those engaged "in any business the principal purpose of which is the collection of any debts." §1692a(6). But the parties haven't much litigated that alternative definition and in granting certiorari we didn't agree to address it either.

With these preliminaries by the board, we can turn to the much narrowed question properly before us. In doing so, we begin, as we must, with a careful examination of the statutory text. And there we find it hard to disagree with the Fourth Circuit's interpretive handiwork. After all, the Act defines debt collectors to include those who regularly seek to collect debts "owed . . . another." And by its plain terms this language seems to focus our attention on third party collection agents working for a debt owner— not on a debt owner seeking to collect debts for itself. Neither does this language appear to suggest that we should care how a debt owner came to be a debt owner— whether the owner originated the debt or came by it only through a later purchase. All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for "another." And given that, it would seem a debt purchaser like Santander may indeed collect debts for its own account without triggering the statutory definition in dispute, just as the Fourth Circuit explained.

Petitioners reply that this seemingly straightforward reading overlooks an important question of tense. They observe that the word "owed" is the past participle of the verb "to owe." And this, they suggest, means the statute's definition of debt collector captures anyone who regularly seeks to collect debts previously "owed . . . another." So it is that, on petitioners' account, the statute excludes from its compass loan originators (for they never seek to collect debts previously owed someone else) but embraces many debt purchasers like Santander (for in collecting purchased debts they necessarily seek to collect debts previously owed another). If Congress wanted to exempt all present debt owners from its debt collector definition, petitioners submit, it would have used the present participle "owing." That would have better sufficed to do the job—to make clear that you must collect debts currently "owing . . . another" before implicating the Act.

But this much doesn't follow even as a matter of good grammar, let alone ordinary meaning. Past participles like "owed" are routinely used as adjectives to describe the present state of a thing—so, for example, burnt toast is inedible, a fallen branch blocks the path, and (equally) a debt owed to a current owner may be collected by him or her. See P. Peters, The Cambridge Guide to English Usage 409 (2004) (explaining that the term "past participle" is a "misnomer[], since" it "can occur in what is technically a present . . . tense"). Just imagine if you told a friend that you were seeking to "collect a debt owed to Steve." Doesn't it seem likely your friend would understand you as speaking about a debt currently owed to Steve, not a debt Steve used to own and that's now actually yours? In the end, even petitioners find themselves forced to admit that past participles can and regularly do work just this way, as adjectives to describe the present state of the nouns they modify. See Brief for Petitioners 28; see also B. Garner, Modern English Usage 666 (4th ed. 2016) (while "owing . . . is an old and established usage . . . the more logical course is simply to write owed").

Widening our view to take in the statutory phrase in which the word "owed" appears—"owed or due . . . another"— serves to underscore the point. Petitioners acknowledge that the word "due" describes a debt currently due at the time of collection and not a debt that was due only in some previous period. Brief for Petitioners 26-28. So to rule for them we would have to suppose Congress set two words cheek by jowl in the same phrase but meant them to speak to entirely different periods of time. All without leaving any clue. We would have to read the phrase not as referring to "debts that are owed or due another" but as describing "debts that were owed or are due another." And supposing such a surreptitious subphrasal shift in time seems to us a bit much. Neither are we alone in that assessment, for even petitioners acknowledge that theirs "may not be the most natural interpretation of the phrase standing in isolation." Id., at 26-27.

Given that, you might wonder whether extending our gaze from the narrow statutory provision at issue to take in the larger statutory landscape might offer petitioners a better perspective. But it does not. Looking to other neighboring provisions in the Act, it quickly comes clear that Congress routinely used the word "owed" to refer to present (not past) debt relationships. For example, in one nearby subsection, Congress defined a creditor as someone "to whom a debt is owed." 15 U. S. C. §1692a(4). In another subsection, too, Congress required a debt collector to identify "the creditor to whom the debt is owed." §1692g(a)(2). Yet petitioners offer us no persuasive reason why the word "owed" should bear a different meaning here, in the subsection before us, or why we should abandon our usual presumption that "identical words used in different parts of the same statute" carry "the same meaning." IBP, Inc. v. Alvarez, 546 U. S. 21, 34 (2005).

Still other contextual clues add to petitioners' problems. While they suggest that the statutory definition before us implicitly distinguishes between loan originators and debt purchasers, a pass through the statute shows that when Congress wished to distinguish between originators and purchasers it left little doubt in the matter. In the very definitional section where we now find ourselves working, Congress expressly differentiated between a person "who offers" credit (the originator) and a person "to whom a debt is owed" (the present debt owner). §1692a(4). Elsewhere, Congress recognized the distinction between a debt "originated by" the collector and a debt "owed or due" another. §1692a(6)(F)(ii). And elsewhere still, Congress drew a line between the "original" and "current" creditor. §1692g(a)(5). Yet no similar distinction can be found in the language now before us. To the contrary, the statutory text at issue speaks not at all about originators and current debt owners but only about whether the defendant seeks to collect on behalf of itself or "another." And, usually at least, when we're engaged in the business of interpreting statutes we presume differences in language like this convey differences in meaning. See, e.g., Loughrin v. United States,573 U. S. ___, ___ (2014).

Even what may be petitioners' best piece of contextual evidence ultimately proves unhelpful to their cause. Petitioners point out that the Act exempts from the definition of "debt collector" certain individuals who have "obtained" particular kinds of debt—for example, debts not yet in default or debts connected to secured commercial credit transactions. §§1692a(6)(F)(iii) and (F)(iv). And because these exemptions contemplate the possibility that someone might "obtain" a debt "owed or due . . . another," petitioners submit, the word "owed" must refer only to a previous owner. Ibid.This conclusion, they say, necessarily follows because, once you have "obtained" a debt, that same debt just cannot be currently "owed or due" another.

This last and quite essential premise of the argument, however, misses its mark. As a matter of ordinary English, the word "obtained" can (and often does) refer to taking possession of a piece of property without also taking ownership—so, for example, you might obtain a rental car or a hotel room or an apartment. See, e.g., 10 Oxford English Dictionary 669 (2d ed. 1989) (defining "obtain" to mean, among other things, "[t]o come into the possession or enjoyment of (something) by one's own effort or by request"); Kirtsaeng v. John Wiley & Sons, Inc., 568 U. S. 519, 532-533 (2013) (distinguishing between ownership and obtaining possession). And it's easy enough to see how you might also come to possess (obtain) a debt without taking ownership of it. You might, for example, take possession of a debt for servicing and collection even while the debt formally remains owed another. Or as a secured party you might take possession of a debt as collateral, again without taking full ownership of it. See, e.g., U. C. C. §9-207, 3 U. L. A. 197 (2010). So it simply isn't the case that the statute's exclusions imply that the phrase "owed . . . another" must refer to debts previously owed to another.

By this point petitioners find themselves in retreat. Unable to show that debt purchasers regularly collecting for their own account always qualify as debt collectors, they now suggest that purchasers sometimes qualify as debt collectors. On their view, debt purchasers surely qualify as collectors at least when they regularly purchase and seek to collect defaulted debts—just as Santander allegedly did here. In support of this narrower and more particular understanding of the Act, petitioners point again to the fact that the statute excludes from the definition of "debt collector" certain persons who obtain debts before default. 15 U. S. C. §1692a(6)(F)(iii). This exclusion, petitioners now suggest, implies that the term "debt collector" must embrace those who regularly seek to collect debts obtained after default. Others aligned with petitioners also suggest that the Act treats everyone who attempts to collect a debt as either a "debt collector" or a "creditor," but not both. And because the statutory definition of the term "creditor" excludes those who seek to collect a debt obtained "in default," §1692a(4), they contend it again follows as a matter of necessary inference that these persons must qualify as debt collectors.

But these alternative lines of inferential argument bear their own problems. For while the statute surely excludes from the debt collector definition certain persons who acquire a debt before default, it doesn't necessarily follow that the definition must include anyone who regularly collects debts acquired after default. After all and again, under the definition at issue before us you have to attempt to collect debts owed another before you can ever qualify as a debt collector. And petitioners' argument simply does not fully confront this plain and implacable textual prerequisite. Likewise, even spotting (without granting) the premise that a person cannot be both a creditor and a debt collector with respect to a particular debt, we don't see why a defaulted debt purchaser like Santander couldn't qualify as a creditor. For while the creditor definition excludes persons who "receive an assignment or transfer of a debt in default," it does so only (and yet again) when the debt is assigned or transferred "solely for the purpose of facilitating collection of such debt for another.Ibid. (emphasis added). So a company collecting purchased defaulted debt for its own account—like Santander— would hardly seem to be barred from qualifying as a creditor under the statute's plain terms.

Faced with so many obstacles in the text and structure of the Act, petitioners ask us to move quickly on to policy. Indeed, from the beginning that is the field on which they seem most eager to pitch battle. Petitioners assert that Congress passed the Act in large measure to add new incentives for independent debt collectors to treat consumers well. In their view, Congress excluded loan originators from the Act's demands because it thought they already faced sufficient economic and legal incentives to good behavior. But, on petitioners' account, Congress never had the chance to consider what should be done about those in the business of purchasing defaulted debt. That's because, petitioners tell us, the "advent" of the market for defaulted debt represents "`one of the most significant changes'" to the debt market generally since the Act's passage in 1977. Brief for Petitioners 8 (quoting Consumer Financial Protection Bureau, Fair Debt Collection Practices Act: CFPB Annual Report 2014, p. 7 (2014)). Had Congress known this new industry would blossom, they say, it surely would have judged defaulted debt purchasers more like (and in need of the same special rules as) independent debt collectors. Indeed, petitioners contend that no other result would be consistent with the overarching congressional goal of deterring untoward debt collection practices.

All this seems to us quite a lot of speculation. And while it is of course our job to apply faithfully the law Congress has written, it is never our job to rewrite a constitutionally valid statutory text under the banner of speculation about what Congress might have done had it faced a question that, on everyone's account, it never faced. See Magwoodv. Patterson, 561 U. S. 320, 334 (2010) ("We cannot replace the actual text with speculation as to Congress' intent"). Indeed, it is quite mistaken to assume, as petitioners would have us, that "whatever" might appear to "further[] the statute's primary objective must be the law." Rodriguez v. United States, 480 U. S. 522, 526 (1987) (per curiam) (emphasis deleted). Legislation is, after all, the art of compromise, the limitations expressed in statutory terms often the price of passage, and no statute yet known "pursues its [stated] purpose[] at all costs." Id., at 525-526. For these reasons and more besides we will not presume with petitioners that any result consistent with their account of the statute's overarching goal must be the law but will presume more modestly instead "that [the] legislature says . . . what it means and means . . . what it says." Dodd v. United States, 545 U. S. 353, 357 (2005) (internal quotation marks omitted; brackets in original).

Even taken on its own terms, too, the speculation petitioners urge upon us is far from unassailable. After all, is it really impossible to imagine that reasonable legislators might contend both ways on the question whether defaulted debt purchasers should be treated more like loan originators than independent debt collection agencies? About whether other existing incentives (in the form of common law duties, other statutory and regulatory obligations, economic incentives, or otherwise) suffice to deter debt purchasers from engaging in certain undesirable collection activities? Couldn't a reasonable legislator endorsing the Act as written wonder whether a large financial institution like Santander is any more or less likely to engage in abusive conduct than another large financial institution like CitiFinancial Auto? Especially where (as here) the institution says that its primary business is loan origination and not the purchase of defaulted debt? We do not profess sure answers to any of these questions, but observe only that the parties and their amici manage to present many and colorable arguments both ways on them all, a fact that suggests to us for certain but one thing: that these are matters for Congress, not this Court, to resolve.

In the end, reasonable people can disagree with how Congress balanced the various social costs and benefits in this area. We have no difficulty imagining, for example, a statute that applies the Act's demands to anyone collecting any debts, anyone collecting debts originated by another, or to some other class of persons still. Neither do we doubt that the evolution of the debt collection business might invite reasonable disagreements on whether Congress should reenter the field and alter the judgments it made in the past. After all, it's hardly unknown for new business models to emerge in response to regulation, and for regulation in turn to address new business models. Constant competition between constable and quarry, regulator and regulated, can come as no surprise in our changing world. But neither should the proper role of the judiciary in that process—to apply, not amend, the work of the People's representatives.

The judgment of the Court of Appeals is


Wednesday, July 19, 2017

Rule 11 Agreement under TRCP enforceable in federal court in removal case

It may sound a bit odd, but a Rule 11 Settlement Agreement under Texas Law, -- the rule reference being to rule 11 of Texas Rules of Civil Procedure (TRCP) -- can be enforced in federal court, even though the federal court has its own set of procedural rules. And it need not be signed conventionally either. An email chain may be sufficient. In the absence of binding precedent from the Texas Supreme Court on the matter, federal magistrate judge in Fort Worth recently made an Erie guess as to how the Texas high court would rule on the issue, and granted motion to compel party to sign formal settlement papers based on agreement reached by the parties' respective attorneys through an email exchange. Magistrate judge found that all essential terms were included, and that the electronic agreement was enforceable. Attorney for consumers was allowed to withdraw from case. 

BANK OF AMERICA, N.A., Defendant.

Civil Action No. 4:17-cv-00160-O-BP.
United States District Court, N.D. Texas, Fort Worth Division.
May 16, 2017.


HAL R. RAY, Jr., Magistrate Judge.

Before the Court are Plaintiff Wilfred Omoloh's Motion for Temporary Restraining Order/Injunction (ECF No. 11), filed April 12, 2017, and Addendum (ECF No. 13), filed April 13, 2017; Defendant's Motion to Enforce Settlement Agreement with Incorporated Memorandum of Law (ECF No. 16), filed April 24, 2017; Plaintiffs' Attorney Asem Z. Eltiar's Motion for Withdrawal as Counsel (ECF No. 18), filed April 28, 2017; Defendant's Opposition to Plaintiff Wilfred Omoloh's Motion for Temporary Restraining Order/Injunction and Addendum Thereto (ECF No. 19), filed May 3, 2017; and Defendant's Response and Objection to Asem Z. Eltiar's Motion to Withdraw as Counsel for Plaintiffs (ECF No. 20), filed May 3, 2017. After reviewing the pleadings and applicable law, the undersigned RECOMMENDS that United States District Judge Reed O'Connor DENY Plaintiff Wilfred Omoloh's Motion for Temporary Restraining Order/Injunction (ECF No. 11), GRANT Asem Z. Eltiar's Motion for Withdrawal as Counsel (ECF No. 18), GRANT Defendant's Motion to Enforce Settlement Agreement (ECF No. 16), GRANT Defendant's Motion to Enforce Settlement Agreement (ECF No. 16), ORDER Plaintiffs to execute the settlement agreement and return it to counsel for Bank of America no later than seven (7) days after the date Judge O'Connor's order is issued, and DISMISS this action with prejudice.


Plaintiffs Wilfred and Kathleen Omoloh (collectively, "the Omolohs") filed an original petition in the 67th Judicial District Court of Tarrant County, Texas, alleging violations of 12 CFR § 1024.41, 12 CFR § 1024.35, and the Texas Debt Collection Act, in addition to claims for breach of contract and wrongful foreclosure against Defendant Bank of America, N.A. ("Bank of America"). All claims relate to the foreclosure of the Omolohs' home ("the Property"). ECF No. 1-1. On February 21, 2017, Bank of America removed the action based on federal question and diversity of citizenship jurisdiction. ECF No. 1. On March 20, 2017, the parties filed their Joint Notice of Settlement and Request for Stay of Case Deadlines, informing the Court that they had reached a settlement agreement and anticipated filing a joint stipulation of dismissal within 30 days of the Notice. ECF No. 9.

Thereafter, Plaintiff Wilfred Omoloh ("Wilfred") filed a pro se Motion for Temporary Restraining Order/Injunction (ECF No. 11), requesting in part that his attorney withdraw from the case, and an Addendum to the Motion (ECF No. 13). Pursuant to further order of the Court, the Omolohs' attorney, Asem Zaid Eltiar, filed his Motion to Withdraw as Counsel (ECF No. 18). Bank of America opposed the Motion to Withdraw as Counsel on the grounds that Eltiar should remain as counsel to ensure enforcement of the settlement agreement previously reached between the parties. ECF No. 20.
Bank of America filed its Motion to Enforce Settlement Agreement (ECF No. 16) on April 24, 2017, asserting that the parties agreed to all material terms of the settlement agreement and requesting that the Court order enforcement of the agreement. Bank of America attached the emails chronicling the parties' exchange regarding settlement terms to its Motion as Exhibit D. ECF No. 16-4. The Omolohs' attorney emailed Bank of America's attorney, Connie Jones, on February 28, 2017, stating in pertinent part: "In an effort to resolve this matter, my client has authorized me to ask for $10,000 cash for keys and 30 days to vacate in exchange for dismissal with prejudice of the case and all claims. Please let me know (soon please). Thank you, Asem[.]" Id. at 3.

On March 1, 2017 at 10:04 a.m., Attorney Jones responded to the above e-mail with an email entitled "Confidential Settlement Communication" which stated:
Asem: [Bank of America] has approved a cash for keys agreement, with a 30 day move-out and payment to your clients of $6,000 in exchange for a dismissal with prejudice. The Omolohs will have until 6 PM on Friday, March 31, 2017 to vacate the property. [Bank of America] and the Omolohs wil[l] execute a confidential written settlement agreement in a form acceptable to the parties, which includes a full release of [Bank of America], a provision for non-disparagement of [Bank of America], plus other standard terms. Please let me know if your clients agree to these terms, so that we can notify the proper parties to delay the lockout scheduled for Friday. As soon as I hear from you, I will start drafting the settlement agreement. I look forward to hearing from you at your earliest convenience. Best, Connie Jones[.]
Id. at 2-3. At 2:08 p.m. that same day, Attorney Eltiar responded with the following: "My client agrees. In drafting settlement agreement please make the payment payable to `Asem Eltiar' and have it be mailed to my office. Thank you[,] Asem[.]" Id. at 2. Attorney Jones responded: "Great, thanks. I will notify [Bank of America] and Shellpoint's counsel as well. I will need W9's for both plaintiffs and also for your office in order to request the settlement check. Best, Connie[.]" Id. As previously stated, the parties filed their Joint Notice of Settlement and Request for Stay of Case Deadlines on March 20, 2017. ECF No. 9.


A. Pro Standard  

The undersigned notes that Wilfred filed his Motion for Temporary Restraining Order/Injunction pro se, although represented by counsel. Therefore, the undersigned will evaluate the Motion and Addendum in accordance with Fifth Circuit precedent affording liberal construction to pro se pleadings. Particular to a pro se party, courts are to liberally construe the pleadings, taking all well-pleaded allegations as true. Johnson v. Atkins, 999 F.2d 99, 100 (5th Cir. 1993). "[A] pro se [pleading], however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)).

B. Temporary Restraining Order/Preliminary Injunction


C. Enforcement of Settlement Agreement

"A district court may exercise its discretion to enforce a settlement agreement where one party to a suit has initially agreed to a settlement but later refused to execute a formal agreement reciting the terms of the settlement." Weaver v. World Fin. Corp. of Texas, No. CIV.A. 3:09-CV-1124-G, 2010 WL 1904561, at *1 (N.D. Tex. May 12, 2010) (citing Daftary v. Metro. Life Ins. Co., 136 F.3d 137, 1998 WL 30059, at *1 (5th Cir. Jan. 12, 1998) (per curiam)). This Court has both federal question and diversity of citizenship jurisdiction over the claims in the instant case. See ECF No. 1. A court exercising diversity jurisdiction applies the law of the state in which the settlement agreement was negotiated and is to be performed. Lockette v. Greyhound Lines, Inc.,817 F.2d 1182, 1185 (5th Cir. 1987). "More specifically, the enforceability of a settlement agreement in a diversity case tried in a federal district court in Texas is governed by the provisions of Rule 11 [of the] Texas Rules of Civil Procedure (`Texas Rule 11')." Borden v. Banacom Manufacturing and Marketing, Inc., 698 F. Supp. 121, 123 (N.D. Tex. 1988)

Under Texas Rule 11, "a settlement agreement is enforceable only if it is (1) `in writing, signed[,] and filed with the papers as part of the record' or (2) `made in open court and entered of record.'" Williamson v. Bank of N.Y. Mellon, 947 F. Supp. 2d 704, 707 (N.D. Tex. 2013) (citing Tex. R. Civ. P. 11; Estate of Martineau v. ARCO Chem. Co., 203 F.3d 904, 910 (5th Cir. 2000)). Only the first provision is applicable to this case.

A court exercising federal question jurisdiction, where the substantive rights and liabilities of the parties derive from federal law, applies federal law to the enforcement of settlement agreements. Mid-S. Towing Co. v. Har-Win, Inc., 733 F.2d 386, 389 (5th Cir. 1984)Henry v. BG of Dallas Corp., No. 3:13-CV-2060-BF, 2014 WL 10919570, at *1 (N.D. Tex. Oct. 8, 2014). Federal law treats a settlement agreement as a contract and requires a manifestation of mutual assent, usually in the form of an offer and acceptance. Guidry v. Halliburton Geophysical Servs., Inc., 976 F.2d 938, 940 (5th Cir. 1992)Henry, 2014 WL 10919570, at *1 (quoting Chen v. Highland Capital Mgmt., L.P.,No. 3:10-CV-1039-D, 2012 WL 5935602, at *2 (N.D. Tex. Nov. 27, 2012)). Thus, the dispositive difference between the two standards as applicable to the instant case is that "[f]ederal law does not require settlement agreements to be reduced to writing." E.E.O.C. v. Phillip Servs. Corp., 635 F.3d 164, 167 (5th Cir. 2011) (citing Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir. 1981) (per curiam)).

Here, it is appropriate to apply the more exacting Texas Rule 11 standard, as briefed by Bank of America, because the Court is exercising diversity jurisdiction "[a]nd because the settlement at issue was negotiated and to be performed in Texas[.]" See Oliver v. Kroger Co., 872 F. Supp. 1545, 1547 (N.D. Tex. 1994)see also 28 U.S.C. § 1652 ("The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply."). Therefore, the settlement agreement must be (1) in writing, (2) signed, and (3) filed with the papers as part of the record to be enforced. See, e.g., Williamson, 947 F. Supp. 2d at 707-08.

D. Withdrawal of Counsel

"An attorney may withdraw from representation only upon leave of the court and a showing of good cause and reasonable notice to the client." Matter of Wynn, 889 F.2d 644, 646 (5th Cir. 1989) (citation omitted). In the Northern District of Texas, Local Rule 83.12 requires that an attorney seeking to withdraw as counsel file a motion to withdraw, and in such motion
[S]pecify the reasons requiring withdrawal and provide the name and address of the succeeding attorney. If the succeeding attorney is not known, the motion must set forth the name, address, and telephone number of the client and either bear the client's signature approving withdrawal or state specifically why, after due diligence, the attorney was unable to obtain the client's signature.
L.R. 83.12(a). Ultimately, withdrawal of counsel is a "matter entrusted to the sound discretion of the court." Matter of Wynn, 889 F.2d at 646 (citation omitted).


A. Plaintiff Wilfred Omoloh's Motion for Preliminary Injunction Should be Denied.


B. The Parties' Settlement Agreement Should be Enforced.

To be enforceable, the settlement agreement at issue must be (1) in writing, (2) signed, and (3) filed with the papers as part of the record. See, e.g., Williamson v. Bank of N.Y. Mellon, 947 F. Supp. 2d 704, 707 (N.D. Tex. 2013).

i. The Settlement Agreement is in Writing.

As is present in the instant case, an e-mail exchange between the parties "which is complete within itself in every material detail, and which contains all of the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony" is sufficient to satisfy the "in writing" requirement of Texas Rule 11. Id. at 708-09 (quoting Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995) (quoting Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978))). Although the Texas Supreme Court has not yet decided whether an e-mail exchange meets the requirements of Texas Rule 11, the Williamson court held that an e-mail exchange would be sufficient under Texas law after making an "Erie guess" and determining "as best it can what the state high court would most likely decide." Id. at 708 (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)Terrebonne Parish Sch. Bd. v. Columbia Gulf Transmission Co., 290 F.3d 303, 317 (5th Cir. 2002)).

The Williamson court, in enforcing a settlement agreement, determined that the Texas Supreme Court would hold that an e-mail exchange satisfies the "in writing" requirement because (1) in Padilla v. LaFrance, the Texas Supreme Court held that a series of letters met the requirement; (2) the Texas Uniform Electronic Transactions Act ("TUETA") states that an electronic record satisfies a law requiring a record to be in writing, Tex. Bus. & Com. Code § 322.007(c); (3) a Texas appeals court held "that a series of emails, among other pieces of evidence, `confirmed a settlement agreement between the parties'[,]" Green v. Midland Mortg. Co., 342 S.W.3d 686, 691 (Tex. App.-Houston [14th Dist.] 2011, no pet.); and (4) another court in the Northern District of Texas "has concluded that an email exchange later signed by an attorney was a valid writing under [Texas] Rule 11[,]" Dymatize Enters. Inc. v. Maximum Human Performance, Inc., No. 3:09-CV-0046-O-BH, 2010 WL 4788573, at *5 (N.D. Tex. Sept. 20, 2010), report and recommendation adopted, No. 3:09-CV-046-O, 2010 WL 4788571 (N.D. Tex. Nov. 17, 2010). Id. at 708-09. The undersigned agrees that the Texas Supreme Court would likely hold that a series of e-mails, setting forth all essential elements of the agreement and complete in every material detail, satisfies the "in writing" requirement.

Because the series of e-mails is a written agreement, the e-mails must be complete in every material detail and contain all essential elements of the agreement in order to be enforced. Padilla, 907 S.W.2d at 460. The agreement memorialized in the e-mail exchange provides that (1) Bank of America will pay $6,000 to the Omolohs; (2) the Omolohs will dismiss their claims against Bank of America with prejudice; (3) the confidential settlement agreement will include a full release, provision for non-disparagement, and other standard terms; and (4) the Omolohs will vacate the Property no later than 6:00 p.m. on March 31, 2017. ECF No. 16-4 at 2. The Omolohs, through their attorney, agreed in full to these terms, and the undersigned finds that the settlement agreement is complete in every material detail and contains all essential elements. See Padilla, 907 S.W.2d at 460. Thus, the Texas Rule 11 "in writing" requirement is satisfied by the e-mail exchange between the parties.

ii. The Settlement Agreement is Signed.

The TUETA contains a parallel electronic signature provision to its electronic record provision, which states that "[i]f a law requires a signature, an electronic signature satisfies the law." Tex. Bus. & Com. Code § 322.007(d). "An electronic signature, in turn, is `an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.'" Williamson, 947 F. Supp. 2d at 709 (citing Tex. Bus. & Com. Code § 322.002(8)). Similar to the above analysis, "[t]he [undersigned's] best Erie guess is that the Texas Supreme Court would consider the relevant emails in this case to be signed under TUETA and [Texas] Rule 11." Id. Each attorney's signature is a manually typed name, thus representing the very "electronic symbols attached to a record and executed with the intent to sign the record as contemplated by TUETA." Id. at 710-11 ("[T]he Court makes an Erie guess that the Texas Supreme Court would consider both a typed name and a signature block in an email to be electronic signatures under TUETA."). Therefore, the undersigned finds that the attorneys' typed names on their e-mails suffice to satisfy the "signature" requirement of Texas Rule 11. Id. at 710 (collecting cases in which courts have held that typed names at the end of e-mails constitute signatures "under various states' statutes of frauds and enactments of the Uniform Electronic Transactions Act (`UETA'), which is the source of TUETA").

iii. The Settlement Agreement is Filed with the Papers as Part of the Record.

Finally, the settlement agreement meets the "part of the record" requirement of Texas Rule 11 because it was filed as an exhibit to the Motion to Enforce Settlement Agreement. Oliver v. Kroger Co., 872 F. Supp. 1545, 1549 (N.D. Tex. 1994). "Both federal and state courts in Texas enforce agreements filed contemporaneously with motions seeking their enforcement." Williamson, 947 F. Supp. 2d at 712 (citations omitted). Because the settlement agreement between the parties satisfies each element of Texas Rule 11, the undersigned finds that it should be enforced. Accordingly, the undersigned RECOMMENDS that Judge O'Connor GRANT Bank of America's Motion to Enforce Settlement Agreement, ORDER the Omolohs to execute the settlement agreement and return it to counsel for Bank of America no later than seven (7) days after the date Judge O'Connor's order is issued, and DISMISS this action with prejudice.

C. Plaintiffs' Counsel's Motion to Withdraw Should be Granted.

Asem Eltiar, counsel for the Omolohs, asserts that good cause exists for his withdrawal as counsel because Wilfred has evinced his desire to proceed pro se instead of executing the settlement agreement, and both of the Omolohs refused to return executed settlement documents as Mr. Eltiar requested. ECF No. 18 at 1-2. Mr. Eltiar further represents that he is unable to communicate with Plaintiff Kathleen Omoloh entirely because she is presently in a remote region of Africa without phone or internet access, and that although Wilfred agreed to sign the motion to withdraw, he did not return the signed motion to Mr. Eltiar by the stipulated date and time. Id. The Omolohs' refusal to return a signed and executed settlement agreement, which they were obligated to execute, constitutes good cause for counsel's withdraw. Weaver v. World Fin. Corp. of Texas, No. CIV.A. 3:09-CV-1124G, 2010 WL 1904561, at *3 (N.D. Tex. May 12, 2010). Accordingly, the undersigned RECOMMENDS that Mr. Eltiar's Motion for Withdrawal as Counsel be GRANTED.


For the foregoing reasons, the undersigned RECOMMENDS that United States District Judge Reed O'Connor DENY Plaintiff Wilfred Omoloh's Motion for Temporary Restraining Order/Injunction (ECF No. 11), GRANT Asem Z. Eltiar's Motion for Withdrawal as Counsel (ECF No. 18), GRANT Defendant's Motion to Enforce Settlement Agreement (ECF No. 16), ORDER Plaintiffs to execute the settlement agreement and return it to counsel for Bank of America no later than seven (7) days after the date Judge O'Connor's order is issued, and DISMISS this action with prejudice.
Asem Eltiar is ORDERED to send a copy of this findings, conclusions, and recommendation to Plaintiffs via e-mail, first class mail, and certified mail return-receipt requested. It is further ORDERED that Mr. Eltiar submit a notice to the Court evidencing a copy of service via electronic mail and proof of mailing through the United States Postal Service within three (3) days of the date of this findings, conclusions, and recommendation.

A copy of this findings, conclusions, and recommendation shall be served on all parties in the manner provided by law. Any party who objects to any part of this findings, conclusions, and recommendation must file specific written objections within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P. 72(b)(1). In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the magistrate judge's findings, conclusions, and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific. Failure to file specific written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error. See Douglass v. United Services Auto. Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc).

Debt Collector Profile: John C. Adams - Attorney in charge of Texas Attorney General Ken Paxton's Student Loan Collection Shop

JOHN C. ADAMS, Assistant Attorney General (Review)
John C. Adams is the State's student loan collector-in-chief. Not his official title, but a fitting moniker, considering what he does day-in, day-out. The loans at issue are administered by the Texas Higher Education Coordinating Board (THECB) and Adams takes them to court for collection when ex-students or their parents (or other co-signers) don't pony up.
By the thousands.
These are State of Texas loans, not federal student loans or private student loans. They are governed by statute. Chapter 52 of the Texas Education Code, to be specific. 
The most common ones are TEXAS B-ON-TIME (BT) loans and COLLEGE ACCESS LOANS (CAL), but there are others, including conditional grants or scholarships that are converted to repayable loans if the conditions for the grant are not met, such as when the student drops out of the program funded by the grant/loan.
Adams has been at it since 1999. He presides over a highly automated lawsuit production system with few employees geared up to produce default judgments (mostly) at a rapid rate with a minimum amount of effort and time expenditure. In other words, highly efficient. If a trial is needed or a hearing is requested on a case, Adams typically budgets 5 minutes for an in-court appearance. Unfortunately for Texas consumers, the cost-savings associated with the economies of scale are not passed on to them, as will be detailed below.
All State student loan collection suits are filed at the Travis County Courthouse, which is located within a few blocks of Adams' office at 300 W 15th St., Austin TX 78701-1649.
Documents to be filed with the court are assembled using electronic litigation forms (templates) into which a few pieces of variable data (such as name and address of Defendant, and amount of the alleged balance outstanding) are entered either manually or by using file merge functionality on office software. As a result, the documents in student loan case files are almost identical. They can be viewed by pulling up the docket sheet on the County Clerk's website, and selecting the "Document Event" option from the menu. The easiest way to access a case docket is by entering the cause number (if known) on the search screen. For research purposes, sets of cases can also be identified by searching for name of attorney or name of party (here "STATE OF TEXAS") and specifying a date range.
The principal documents in a student loan case filed by John C. Adams consist of the following:
The PLAINTIFF'S ORIGINAL PETITION shows the Plaintiff as 'STATE OF TEXAS' or “THE STATE OF TEXASE” in the case style. This document has a copy of the signed promissory note or similar contract document and a loan disclosure page attached to it. If several loans are involved, there will be several such exhibits, usually bearing exhibit stickers A, B, C and so one, respectively -- one for each set of loan origination documents. There are a limited number of petition templates to accommodate the differences between loans and conditional grants, and the distinctions between in-state and out-of-state defendants. Within a category, the pleadings look alike except for the based case-level data, i.e. defendant identity information and amount of principal because they are all based on the same template. Defendants are identified with prior names or alias, if applicable, address, and social security number. The latter is blackened out, or – in legal speak – redacted, for privacy reasons.
The CITATION is normally prepared by the clerk of the court, but is here pre-printed as part of the AG student loan pleading template. It is served either by a process server or via the Texas Secretary of State (in the case of out-of-state debtors). After service on the defendant, the private process server will file a RETURN OF SERVICE in the form of a declaration under penalties of perjury attesting to service (with date and manner of service) or a declaration/affidavit of DUE DILIGENCE detailing service attempts that were unsuccessful. In the latter case, a motion for alternate service will likely be filed, unless the address for the Defendant was bad. 
A MOTION FOR ENTRY OF DEFAULT JUDGMENT is filed when the Defendant does not answer by the time his or her written answer is due, as stated on the CITATION. The motion is a one-page document accompanied by an affidavit by Cheryl Bellesen titled AFFIDAVIT IN SUPPORT OF FINAL JUDGMENT BY DEFAULT and an attorney fee affidavit by John C. Adams, the attorney who signs all pleadings and motions, and is the attorney in charge under rule 8 of the Texas Rules of Civil Procedure. AG Ken Paxton’s name is on the pleadings, but he is too busy to handle garden-variety litigation of this sort. A proposed default judgment is filed with the motion.
If the Defendant files an answer, and by doing so contests the lawsuit, a motion for default judgment is no longer appropriate under the rules governing civil suits, regardless of whether the answer is filed without a lawyer (pro se) or through an attorney. An attorney will typically file a document labeled DEFENDANT'S ORIGINAL ANSWER which will – at the minimum – contain a general denial. Some attorney’s also raise other issues. When an answer is filed by or on behalf of a student loan defendant,  Adams can be expected to file a MOTION FOR SUMMARY JUDGMENT because such a motion is the next-best procedural mechanism to quickly obtain a judgment in the creditor's favor.
In Texas state courts, it is enough to file a "general denial" to contest the case, which puts the burden on the Plaintiff to prove its cause of action, here breach of promissory note/loan agreement or breach of guaranty, depending on whether the student or the co-signer is named as the defendant. In student loan cases litigated by Adams, however, the evidence submitted to support a default judgment is virtually the same as the evidence submitted in support of summary judgment. These cases rarely reach the trial stage because they are disposed of by resort to alternative means.
The motion filed in lieu of a motion for entry of default will be titled PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT and will be accompanied by an affidavit by Cheryl Bellesen titled AFFIDAVIT IN SUPPORT OF PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT and by an AFFIDAVIT IN SUPPORT OF ATTORNEY'S FEES by John C. Adams. 
All affidavits on the merits of the State's claim are signed by CHERYL BELLESEN, and are notarized by KATHERINE M. BUXTON, who is a notary without bond because she works in the Attorney General's Office, i.e. for the State of Texas. Buxton is a Legal Secretary and performs administrative functions, such as interacting with the clerks of the Travis County Courts at Law, in which the State's student loan cases are prosecuted.
Both a motion for entry of default judgment and a motion for summary judgment will have a proposed judgment attached, but it will not be titled "proposed" because Adams expects it to be signed as drafted (or rather, as computer-generated). The presiding judges of the county courts, Judge TODD WONG and Judge ERIC SHEPPERD, will normally sign Adams' judgments as presented, but may occasionally revise the amount of attorney's fees (downward) and may occasionally cross out interest or change the rate, if they find an error in the documentation. This is highly unlikely to happen in the default judgment context, however, because no one will be before the court to lodge any objections, or to point out any errors or omissions. Adams himself does not make an in-court appearance for default judgments. The paperwork is simply submitted to the court by his legal secretary for approval and signing by either one of the two presiding judges (or, in rare instances, a visiting judge).  
Occasionally, Assistant AG Adams files a nonsuit (voluntary dismissal) or a motion to consolidate two cases against the same defendant or two cases involving the same debt initially brought against a former student and the guarantor under two separate cause numbers, or an agreement for a payment plan signed by the Defendant. In the latter scenario, the case might be put on hold (stayed or abated). A great many cases, however, proceed speedily to a default judgment in the absence of a timely answer the Defendant or an agreement, provided that the service of citation was successful. If not, a motion for substitute service will likely be filed.

Debtors represented by attorney will also promptly face a motion for summary judgment (served on their attorney, instead of directly on them), but will have a better chance of such motion being postponed. It will thus win them time, even if they ultimately have a judgment entered against them. The most attorneys for debtors can typically accomplish is a reduction of attorney’s fees, or a consolidation of cases when the attorney is hired to represent both the student-obligor and the co-signer, which will also likely yield a reduction in fees awarded because the duplication of fees is eliminated. 
AGREED JUDGMENTS, like default judgment, are uncontested, but - unlike default judgment, have been expressly agreed to by the Defendant and are signed by the Defendant in addition to being signed by Adams (for the State as Plaintiff) and by the judge. That means they are unappealable, but such an agreed judgment will nevertheless state that it is appealable because that language is on the template that Adams uses to submit such judgments.
Other agreements, such a payment plan, are in the nature of a contract and do not require the court's approval or signature.
Adams' agreed judgments typically reflect at best a reduction of the amount of attorney's fees from what they would otherwise be, but no reduction of principal or interest. Agreed judgment can generally not be attacked after they are signed by the court, which distinguishes them from default judgments, which may be appealed or attacked by post-judgment motion, albeit subject to certain rather unforgiving deadlines.
In a large number of cases, the Defendants, who reside in locations all over the State (and some even beyond), never file an answer, and Adams then promptly moves for default judgment with two above-mentioned affidavits, one by Cheryl Bellesen attesting to the amounts owed (broken down by principal, accrued interest, and late fees, if any) and the applicable post-judgment interest rate (typically between 5% and 6%, in some cases as high as 9%) and an affidavit on attorney's fees.
Adams pleads for "not less than" $750.00 or $1,000 in attorney's fees in the petition that is served on the Defendant, but he routinely swears to a higher amount as reasonable and necessary once he moves for default or summary judgment.
Even if a Defendant answers the lawsuit, thus preventing a default judgment, he or she will not be able to effectively counter the fee claim because the reasonableness and necessity of attorney's fees is considered a matter on which expert testimony is required. Adam's boilerplate fee affidavit ipso facto qualifies as "expert testimony" because he is an attorney. It does not matter that it comes from an assembly line.
Courts take fee testimony as true (even if it is not) because it is not contested, and routinely enter judgment in the amount requested. If it comes to trial, pro se defendants face the same predicament. They are not qualified to offer testimony on attorney's fees because they are lay persons, and they will not even be aware of the large caseload Adams oversees, and how little time he actually spends on a single case.
The county courts in Austin (Travis County) that process these student loan cases routinely grant everything Adams asks for, including $1,500 - $5,000 in attorney’s fees even though Adams would have spent less than an hour, probably more likely no more than a few minutes, on any one single case. With rare exceptions, such as when an attorney for a debtor challenges venue or the Bellesen’s affidavit, thus forcing Adams to do a little extra work, they are all cookie-cutter cases. If service on the defendant is successful and the defendant does nothing, a default judgment will be entered in due course.
Adams typically brings separate lawsuit against the student and the guarantor, and seeks separate judgments against the two defendants on the same debt (thus doubling the amount), and also duplicates the award of attorney's fees by pursuing this dual-track strategy. He may agree to consolidate such parallel lawsuits on the same debt, but that will likely only happen if both Defendant are represented by a single attorney, which is rare. Most Defendants do not have the benefit of legal assistance and are sitting ducks, to put it metaphorically.  
Two county courts process hundreds of student loan cases ("hear" would be a misleading term, given the prevalence of default judgments without court appearance) and do not require Adams to support the affidavit testimony on the amount outstanding in principal and interest with accounting records of any kind. Adams therefore does not submit any, basing the request for judgment solely on the testimony of Cheryl Bellesen. 
The only bits of data that vary among cases are the type and number of loans and amounts owed, the interest rate, the amount of attorney's fees, and the information that identifies the Defendant. Bellesen does not even specifically state whether the Defendant owes the money based on having signed the loan agreement/promissory note as student borrower, or whether the Defendant is being sued as a co-signer / guarantor. The remainder of her testimony is boilerplate, including the assertion that the Defendant has missed as many as six installment payments, which is what the Texas Education Code requires to trigger acceleration of the outstanding balance that would otherwise be payable over the course of many years, like a mortgage. Bellesen does not state in what amount monthly payments were required to be made by a particular defendant, and no documentation containing this information is submitted to the court (except, in rare instances, where it comes to a bench trial).  
The only documentation Adams typically provides to support a motion seeking judgment for the State are the loan origination documents (promissory note/cosigner guaranty and disclosure statement), which obviously do not reflect any payment history.
As an assistant attorney general, Adams is not subject to the fair debt collection laws and routinely engages in litigation conduct that would violate the spirit, if not the letter, of consumer protection laws, if private collection attorneys and debt collection law firms engaged in it. Including those enforced by the same Attorney General, i.e. Texas Debt Collection Act and DTPA. 
Suing student loan obligors and guarantors in a county in which they do not reside is a practice that is mandated by statute, as the Education Code states that all such suits shall be filed in Travis County (Austin). Relative to the State as a whole, Austin is a small city and only a small percentage of the entire population of student loan obligors lives there. The vast majority of such Defendants are therefore faced with a lawsuit in a distant forum. In one recent instance, Adams even sued a Defendant long-distance in Japan. He regularly sues them in other states, serving them through the Texas Secretary of State.  
As to where student loan collection suits are filed, the Attorney General has no choice, though the mandatory venue provision was likely enacted for the Attorney General's convenience and efficiency in denigration of the competing interest of the Defendants, who would otherwise be entitled to defend a lawsuit in the county where they live.
The actual conduct of litigation, however, is a different matter. There is choice in how the Attorney General goes about managing the student loan caseload, and how he treats debtors, and some of the standard practices engaged in by Assistant AG Adams, with approval of his superiors - ultimately AG Ken Paxton - are both properly characterized as deceptive and abusive, as will be demonstrated below.
Deceptive representation as to the amount of damages and attorney's fees sought
When student loan defendants are served with law suit papers but do not answer, Adams promptly submits a motion for default judgment with an affidavit by Cheryl Bellesen that states the amount of principal, the amount of accrued interest, and the amount of late charges (if any). In some cases, the accrued interest is a substantial portion of the total. In the case of very old loans, the accrued interest may exceed half the amount of the principal, even if the interest rate is low (typically between 5 and 7 per cent).
When he files the original petitions, however, Adams only states the dollar amount of "the principal sum" even though the information on the full amount of the judgment he will be seeking is readily available. The difference is hidden in the phrase "plus interest." Why would Adams not state the full amount in the petition? The obvious answer is that a Defendant is less likely to fight the lawsuit if the amount of the debt is understated and is much lower than the amount of the judgment that will ultimately ensue.
The same with the attorney's fees. Adams plead a dollar figure for attorney's fees in most of his original petitions (either $750.00 or $1,000.00, depending on the type/amount of the loan), but he qualifies this specific dollar amount with the term “not less than” (In some cases, attorney's fees are mentioned, but no dollar figure is stated). 

At the point in time when Adams files the original petition, he knows that he will be asking for at least $1,500.00 in attorney’s fees, and as much as $5,000.00 in cases that involve higher loan balances. He knows this because seeking judgment for attorney’s fees in the range of $1,500.00 to $5,000.00 is an integral component of his office's standard operating procedures, and Adams personally signs and dates each one of the fee affidavits (assuming an image of his signature is not attached electronically). Needless to say, Defendants are generally not privy to this superior knowledge of the Attorney General's collection policies and practices, and associated standard operating procedures.
While technically a pleaded claim for no less than $1,000 does not preclude a claim for $5,000, and can therefore not be said to be categorically false, it is nevertheless deceptive because a lay reader of ordinary intelligence will look at the specific dollar figure, and will not read and interpret "at least $1,000" as $1,000 times five, i.e. $5,000.00. 
Nor would it be reasonable for a defendant to reckon that the State's attorney will spend much time on the case if the Defendant decides not to contest it. Much rather, it would be reasonable for the defendant to assume that by not fighting the lawsuit, he or she will ease the workload for the State (and mitigate the State's damages, to the extent staff attorney time can be considered damages), and thereby keep the attorney's fees low. Notwithstanding, a defendant who does not respond to the lawsuit will then be hit with a default judgment that includes an award of attorney's fees that is higher than the $750.00 or $1,000.00 dollar figure in the petition that was served on the defendant.
Motions for default judgment are, in fact, highly automated and involve minimal attorney involvement. Just like the pleadings filed to open a new case, these motions all look alike except for a few case-level particulars such as defendant name, amount of principal and interest, and the applicable interest rate (5.25% for most loans, judgment interest of 5% if no interest rate is specified on the note). The affidavits in support of default are also very similar. Mass-produced with document production software. The attached promissory notes differ, or course, but they are preexisting documents, not documents created in the course of litigation.   
Assistant Attorney General John C. Adams was in private practice as a solo from May 1996 to 1999. He reports that prior to that he was an Associate at Hull & Associates, P.C., which is a Houston debt collection firm owned by James N. Hull.
Texas court records also reflect that Adams was affiliated with FREEDMAN, HULL, MATHEWS & PRICE, P.C. in the early 1990s.
John C. Adams mostly represented companies and financial institutions while in private practice of law in Houston, Texas.
Adams is a graduate of the UH Law Center and was licensed in 1989, just a few months after he received his JD degree from U of H. His State Bar of Texas license number (SBOT or TBN number) is 00865800 and his public profile on State Bar's website does not reflect any derogatory disciplinary history.