Dismissals of National Collegiate Student Loan Collection Lawsuits under way in Texas (data for Harris County)

PRIVATE STUDENT LOAN TRUSTS NOW FILING

NONSUITS WITHOUT PREJUDICE 

The external audit of NCSLT collection case files for defaulted student loans, which is part of the package of remedies ordered by the CFPB, has yet to commence, but in the interim dismissals of pending collection cases are already in progress, even freshly filed ones.  

NCSLT collection suit dismissal order signed by Judge Storey
Harris County CCCL3 Sep. 25, 2017 

In July 2017, the various trusts filed 21 collection suits on defaulted student loans in Harris County Civil County Courts at Law (CCCLs) and two more in August. Of these, seven have now been nonsuited as of yesterday (Sep 26, 2017). Two are still awaiting orders of dismissal, and more may follow. 

All non-suit dismissals were filed after 9/18/2017, when the CFPB issued its CONSENT ORDER against TSI and proposed CONSENT JUDGMENT in its enforcement action against the Trusts, filed the same day in federal district court in Delaware. 

In Texas state courts, Plaintiffs may unilaterally dismiss cases by filing a NOTICE OF NONSUIT, i.e. without the opposing party's consent or the court's approval. The notice of nonsuit (sometimes called a motion for nonsuit or a motion to dismiss) is effective upon filing, and terminates the pending action immediately. The court's signing of an order of dismissal (which is supposed to be attached as a proposed order to the notice), is merely a ministerial act, meaning that the court does not get to decide whether to grant it or not. Some judges sign them more quickly than others. 

One exception to automatic case termination is a scenario where the Defendant has a counter-claim on file, which is rare. If a counterclaim is on file, the nonsuit will still be effective, but the case will remain pending until the counter-claim is resolved.

Because nonsuits are (generally) without prejudice, they do not prevent the plaintiff from re-filing them later. A nonsuit therefore does not "erase" the debt, and it may remain enforceable, depending on whether or not the statute of limitations has run, and other factors. A dismissal with prejudice, by contrast, would generally have preclusive effect, barring another lawsuit based on the same debt.
  

Shown below is the tally of the Harris County cases filed since July, their status, and some key characteristics, including program lender and documentation on the file. Only one lawsuit had the entire loan contract attached (i.e. not just the signature page or the first two pages in cases where the signature is on page 2), and none had complete chain-of-title evidence. Several lawsuits contained Pool Supplements. For purposes of default judgment or trial, of course, additional documentation would be submitted, with an affidavit from TransWorld Systems, Inc. aka TSI.

Also see page with

--> General Information on National Collegiate Student Loan Trust lawsuits in Texas. 

NCSLT CASES IN HARRIS COUNTY, TEXAS

COMMENCED IN JULY-AUGUST 2017 

Status of Nat'l Collegiate Trust collection cases as of Sep. 26, 2017 

LEGEND:
OP Filed = Original Petition (Complaint) filed on __
Order Date = Date nonsuit order was signed by the judge
Appl Date = Date on Student Loan Application (date of signature or fax stamp)
CCL = Court to which case assigned by number (there are four)
Items = Items on e-docket for the case (measure of activity)
Ds = Number of Defendants (1 or 2) (does not necessary match with number of signers on note)
OP Attachments = Documents attached to the Original Petition
SP = Signature Page (without Terms and Conditions pages)
2PGs = Same as SP, but 2 pages with signature(s) on the second page
NDS = Note Disclosure Statement
PS = Pool Supplement (for specific lender/loan program)
RFA = Requests for Admission (asking Defendant(s) to admit all relevant facts, incl. Trust’s ownership of note and amount of debt). Admissions are deemed admitted if not expressly denied in timely fashion.

 EXEMPLARS OF FRESHLY-FILED NOTICES OF NONSUIT

IN SLAB TRUST CASES 

This notice was filed 9/22/2017, but it is dated August 22, 2017

Perhaps an internal review was already under way to 

screen cases for dismissal under the CONSENT ORDER criteria before it made the news.
But plain clerical error is also a possibility. 

This nonsuit is dated September 21, 2017 and was also efiled that day

Judge Barnstone of CCCL1 signed the dismissal order a day later. 

Nonsuit / Dismissal Order signed one day after filing of Nonsuit Notice by the Trust  

Nonsuit: Voluntary Dismissal of Debt Suit under Rule of Procedure 162 (TRCP)

TRCP 162: THE TEXAS NONSUIT RULE

WHAT IS A NONSUIT?

A plaintiff's formal act of dropping a lawsuit is called nonsuit. It is done by notice of nonsuit or a motion for nonsuit under Rule 162 of the Texas Rules of Civil Procedure, cited as Tex. R. Civ. P. 162.  A motion is not even required because the judge has no discretion and must dismiss the lawsuit if no counterclaim remains on file and the case is not already in trial (for limited exceptions, see below). For the same reason, a hearing is not required either. Even in an ongoing trial, the plaintiff may still take a nonsuit if its attorney has not already finished presenting its case.

TRCP 162: THE NONSUIT RULE

The nonsuit rule gives the plaintiff the right to unilaterally terminate the lawsuit prior to trial as long as no counterclaim are on file and (s)he has not already presented all but rebuttal evidence at trial.

If counterclaims are on file, the plaintiff may still nonsuit its own claim(s), but it will not affect the opposing party's counterclaim, meaning that the lawsuit will continue on the counterclaim only. Even though it is not a counterclaim, a pending motion for sanctions will not be affected either if it is directed against the plaintiff or its attorney rather than against the Defendant (but there may be some room for argument on the issue, depending on the basis for sanctions).

EFFECT OF NONSUIT 

A nonsuit is effective when filed in writing, or dictated into the record, but the expiration of the court's plenary power, and the deadline to file a post-judgment motion, is based on the date the judge actually signs the order of dismissal, which may be a few days or more later. Once that happens, the lawsuit is officially over. A dismissal order may be delayed if the opposing party (the defendant) has a motion for sanctions pending, because the nonsuit does not nix such a motion.

The dismissal is supposed to be without prejudice rather than with prejudice because a termination by nonsuit does not involve an adjudication of the merits of the plaintiff's claims. The only thing the judge gets to do is sign the dismissal order, and that is considered a "ministerial" act, meaning that no "judging" in the common sense of the term is involved. But see -- > Dismissal with prejudice rather than without prejudice after nonsuit.

Cost of court in the nonsuit context are rarely an issue. The dismissal order may state that costs shall be borne by the party incurring same, but in a simple debt collection case all costs (in the form of filing and service fees) will already have been paid by the plaintiff, and they cannot be shifted to the defendant without a judgment against the defendant. Typically, there were no depositions in a debt collection case that ends with a nonsuit, which could otherwise entail significant costs because of the high fees charged by court reporters (typically assessed based on number of pages of double-spaced transcription of testimony).

SETTING ASIDE A PRIOR NONSUIT / DISMISSAL ORDER 

While the filing of the nonsuit leaves no discretion with the judge, a judge's approval is needed to undo it. This requires a motion to set aside the dismissal order, or other type of post-judgment motion. It may take the form of a motion for new trial even if there was no trial, and even though the notion of a new one  makes no sense under the circumstances. It could also be termed a motion to reinstate, which is the term more commonly used when the plaintiff seeks to revive a lawsuit that the court has dismissed on its own intiative (-- > DWOP; -- >  Dismissal for want of prosecution).

Like post-judgment motions under other circumstances, a motion to set aside the dismissal following a nonsuit, must be filed before the trial court's plenary power over the judgment (in this case, judgment of dismissal) expires. Such a post-judgment motion could be based on discovery of new evidence; or the plaintiff may claim that the nonsuit was filed in error. If the stated basis is dubious, the defendant's counsel may wish to oppose it. Otherwise, it may not be worth contesting it. If, for example, the plaintiff's counsel represents to the court that the nonsuit was accidentally filed in the wrong case, the trial judge will probably grant the motion and reinstate the case on the docket as an active case.

If the plaintiff files and nonsuit and the case is dismissed by the judge even though a claim for affirmative relief by the defendant against the plaintiff was pending at the time, the defendant may want to file a motion attacking the dismissal order as erroneous under Rule 162. The same time-line applies to the Defendant's motion (unless neither defendant nor defendant's counsel did not get notice of the dismissal, in which case another rule of procedure may provide a viable exception to the otherwise applicable deadline).

THE OPPOSING PARTY HAS NO SAY 

There is normally no basis for the defendant to complain of a nonsuit because the plaintiff's right to nonsuit is virtually absolute. For the same reason, there is no basis for an appeal by the other party. Even if the dismissal is with prejudice, it will rarely be worth complaining about it because such language is generally to the defendant's benefit. It can be used to support the defense of res judicata should the plaintiff refile the same lawsuit later, perhaps with a different attorney.

SPECIAL SCENARIO: PARTIAL SUMMARY JUDGMENT BEFORE NONSUIT

If a partial summary judgment has previously been granted in a pending case, the nonsuit does not vacate it. Instead, the nonsuit will make it final for purposes of appeal, as long as  the nonsuit covers all claims that remained pending after the partial summary judgment order was signed.

The rationale for the rule that a partial summary judgment is unaffected by a subsequent nonsuit is that such judgment constitutes a judicial decision on the merits. To attack it, it would have to be made the subject of a timely post-judgment motion or challenged by appeal after the partial summary judgment is rendered final by the nonsuit (dismissal) order that disposes of the rest of the lawsuit.

A common scenario in debt litigation is the following: The plaintiff's attorney has obtained a default judgment or a summary judgment against one of two defendants, and the plaintiff then nonsuits the second defendant so it can start enforcement action against the first based on a final judgment against that defendant. If the statute of limitations is not running out, a separate lawsuit can be filed against the second defendant later, should the collection efforts on the judgment against the first defendant be unsuccessful.

If the statute of limitations is an issue, the plaintiff may instead seek a severance so as to obtain a final enforceable judgment against one defendant while continuing the lawsuit against the other (-- > Motion to sever). This would also preclude that defendant from arguing that collateral estoppel should bar the claim against her. She might try that defense in a second, separate lawsuit, reasoning that the claim has already been litigated and resulted in a final judgment, -- a final judgment against someone else (the co-defendant in the first lawsuit) and that the plaintiff should not be allowed to split  the same debt claim.

Partial summary judgments involving some cause of actions or claim, but not others, are unlikely in debt suit litigation because the underlying facts and damages are the same for different theories of recovery. Thus, if the creditor's attorney obtains a judgment for breach of contract, the other theories (if any) will become moot because the plaintiff cannot recover the same damages twice using a different legal theory (-- > single satisfaction rule, alternative theories of recovery).

In any event, most likely the summary judgment order will not even specify the successful legal theory and will include the words that all relief not granted is denied, thus indicating that nothing remains to be decided. -- > Mother Hubbard Clause; interlocutory vs. final summary judgments; -- > finality of judgments for purposes of appeal.)