The Court of Appeals for the Tenth Circuit has upheld a ruling in favor of a defendant that was sued for obtaining a default judgment and garnishing the plaintiff’s wages after he defaulted on a student loan debt, by falsely claiming he was the victim of identity theft and claiming the defendants lacked standing to sue and did not own his loan.
A copy of the ruling in the case of Taylor v. National Collegiate Student Loan Trust 2007-1, Transworld Systems, EGS Financial f/k/a NCO Financial Systems can be accessed by clicking here.
The plaintiff applied for a loan with JPMorgan Chase to borrow $30,000 to attend the University of Nevada-Las Vegas. The plaintiff deposited the check, but never attended the university. The plaintiff never made any payment on the debt and the loan was charged off. One of the defendants filed suit to collect on the unpaid debt. The plaintiff did not respond to the complaint and a default judgment was awarded. A year after the default judgment was awarded, the plaintiff moved to dismiss the collection lawsuit. The motion was denied. Two years later, the plaintiff sought a hearing, claiming the debt was fraudulent.
The plaintiff’s wages began being garnished. The plaintiff then sued the defendants, saying he was never served with the complaint in the collection lawsuit, and then subsequently amended the complaint to add claims he was the victim of identity theft. The plaintiff then tried to amend the complaint to allege the loan was discharged in bankruptcy, a move the defendants noted conflicted with the identity theft claim. The plaintiff then admitted he was not the victim of identity theft. The defendants sought sanctions and were awarded nearly $38,000. Ultimately, the court granted summary judgment for the defendants.
The plaintiff appealed, claiming he was sanctioned without notice, that the District Court judge erred by granting summary judgment for the defendants, and that additional discovery should have been compelled.
The Appeals Court rejected each of the plaintiff’s arguments, upholding summary judgment for the defendants.
