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Henderson v. General Revenue Corp.

United States District Court, W.D. Virginia, Roanoke Division

March 21, 2019

WILLIE HENDERSON, individually and behalf of all others similarly situated, Plaintiff,


          Hon. Glen E. Conrad Senior United States District Judge

         This case is presently before the court on the plaintiffs motion for leave to file a second amended complaint. For the reasons set forth below, the court will grant the plaintiffs motion.


          On June 22, 2017, plaintiff Willie Henderson filed the instant action against General Revenue Corporation ("GRC"), alleging that GRC violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p, in its efforts to collect federal student loan debts from Henderson and others similarly situated. Henderson's original complaint was based on a letter dated February 7, 2017, in which GRC advised Henderson that he had defaulted on his student loan debt and owed over $100, 000 in principal, interest, and collection costs.

         On December 21, 2017, the court granted Henderson's motion for leave to file an amended complaint. The amended complaint included additional facts regarding GRC's alleged violations of the FDCPA. It also added claims against a new defendant, Pioneer Credit Recovery, Inc. ("Pioneer"), stemming from Pioneer's communications with Henderson. Both GRC and Pioneer are subsidiaries of Navient Corporation ("Navient").

         On August 14, 2018, Henderson filed a motion for class certification. Henderson then moved to stay the deadlines for briefing the certification motion pending discovery. That motion was granted and the parties were given until January 21, 2019 to complete discovery.

         At the time Henderson moved for class certification, he knew that GRC and Pioneer were performing the debt collection activities at issue pursuant to agreements with Navient Portfolio Management, LLC ("NPM"), another subsidiary of Navient. In January of 2019, the defendants produced a copy of the "Master Servicing Agreement" between NPM and several loan guarantors, including United Student Aid Funds, Inc. ("USAF"), the guarantor of Henderson's alleged debt. Under the terms of the Master Servicing Agreement, NPM is obligated to "perform all customary and usual portfolio management and collection services and duties associated with the collection of defaulted educational loans." Master Servicing Agreement § A(1), Dkt. No. 93-1. The agreement further provides that NPM "shall use commercially reasonable efforts . . . to obtain payment in full of the principal balance, accrued interest, and collection charges on a Loan." Id.. § A(5). The agreement permits NPM to utilize the services of "Subordinate Servicers," with the understanding that NPM "shall have sole responsibility for contracting with, compensation, oversight, and audit of such servicers. Id. § A(4).

         On February 4, 2019, Henderson filed the instant motion for leave to file a second amended complaint. The proposed amended pleading adds NPM as a defendant and asserts claims of vicarious liability against NPM. That same day, in accordance with a briefing order entered on October 22, 2018, Henderson filed a memorandum in support of his motion for class certification.

         In light of the tandem filings by the plaintiff, the existing defendants requested a status conference, which was held on February 11, 2019. Following the status conference, the court entered an order establishing a briefing schedule for the plaintiffs second motion to amend. The court advised the parties that it would set new deadlines for additional briefing on the issue of class certification following the disposition of that motion. The court tentatively rescheduled the hearing on the issue of class certification for April 26, 2019.


         After the period for amending a complaint as a matter of right has expired, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a)(2). Rule 15 provides that leave should be freely given when justice so requires. Id. "The Supreme Court has declared that 'this mandate is to be heeded.'" Edwards v. City of Goldsboro. 178 F.3d 231, 242 (4th Cir. 1999) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). "The law is well settled 'that leave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.'" Id. (emphasis in original) (quoting Johnson v. Oroweat Foods Co.. 785 F.2d 503, 509 (4th Cir. 1986)).

         In opposing the pending motion, GRC and Pioneer argue that the motion is untimely and that the proposed amendments would be futile. For the following reasons, the court finds both arguments unpersuasive.

         Turning first to the timing of the motion, Henderson does not dispute that he was aware of NPM's contractual relationship with GRC and Pioneer as early as March of 2018, when he received copies of the defendants' respective agreements with NPM. However, Henderson emphasizes that the full extent of NPM's role in the debt collection efforts undertaken by GRC and Pioneer did not become clear until the defendants produced the Master Services Agreement in January of 2019. Less than one month later, Henderson filed the instant motion seeking leave to add NPM as a defendant. Under these circumstances, the court does not believe that the timing of the motion weighs against amendment.

         Moreover, even assuming that the motion could have been filed earlier, the United States Court of Appeals for the Fourth Circuit has made clear that"[d]elay alone is an insufficient reason to deny leave to amend." Edwards, 178 F.3d at 242. "Rather, the delay must be accompanied by prejudice, bad faith, or futility." Id. In their brief in opposition to the pending motion, GRC and Pioneer suggest that granting leave to amend would prejudice NPM's ability to "defend against certification of class-action claims." Defs.' Br. Opp'n 5, Dkt. No. 98. However, the court made clear at the previous status conference that it would allow NPM sufficient time to respond to the motion for class certification if the court granted leave to file a second amended complaint. The court tentatively rescheduled the hearing on the certification motion for April 26, 2019, with the understanding that the hearing would be postponed if necessary to allow NPM ...

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