Russo v. Navient Solutions, LLC

          MEMORANDUM AND ORDER (DOCS. 23, 27)

          HONORABLE J. GARVAN MURTHA UNITED STATES DISTRICT JUDGE

         I. Introduction

         Plaintiff Kayla Russo commenced this action in state court in October 2016. (Doc. 6.) The case was subsequently removed to this Court based on diversity jurisdiction. (Doc. 1.) Defendants Navient Solutions, LLC, SLM Private Credit Student Loan Trust 2006-A, SLM Private Credit Student Loan Trust 2010-C, SLM Private Credit Student Loan Trust 2011-A, SLM Private Credit Student Loan Trust 2011-B, and SLM Private Credit Student Loan Trust 2015-A (collectively, Defendants) move to dismiss the complaint. (Doc. 20.) The motion is fully briefed. See Docs. 26, 31. Russo moves for leave to file a second amended complaint. (Doc. 27.) Her motion is also fully briefed. See Docs. 32, 33.^[1] For the reasons discussed below, Plaintiff's motion is granted and Defendants' motion is denied as moot.

II. Background

         A prior defendant, SLM Private Credit Student Loan Trust, removed the case to this Court (Doc. 1) and, while a motion to substitute defendant (Doc. 9) was pending, Russo filed a motion to amend her complaint (Doc. 17) resulting in the March 2017 first Amended Complaint (Doc. 20) naming the current Defendants.

         On April 21, 2017, Defendants moved to dismiss the Amended Complaint. (Doc. 23.) On June 9, 2017, Russo opposed the motion to dismiss in a short filing (Doc. 26) and simultaneously filed a motion for leave to amend her complaint for a second time (Doc. 27). The proposed Second Amended Complaint adds factual allegations and contains specific counts of negligence, violation of the Vermont Consumer Protection Act, negligent misrepresentation, and invasion of privacy. (Doc. 27-1 (Proposed Second Amended Complaint).)

         Navient Solutions, LLC (“Navient”) was the servicer of the loans issued by each loan trust and acted as their agent. (Doc. 27-1 ¶¶ 6-7.)^[2] Between 2005 and 2009, Kathryn Blank applied through Navient's website for four private student loans^[3] for Plaintiff Russo^[4] that Navient later bundled into the Loan Trust defendants. Id. ¶¶ 23-40. Russo did not apply for the last three loans, Navient did not verify whether she was applying, and she did not become aware of the extent of the loans until after her graduation from college. Id. ¶¶ 41-42, 45.

         Navient provides professional services by counseling or assisting borrowers in the repayment of their loans. (Doc. 27-1 ¶¶ 47-48.) Russo could not remain current on her repayment obligations and, in August 2014, requested an income based repayment plan. Id. ¶¶ 46, 49-51. Navient advised Russo forbearance of her loans was her best option as they worked on a repayment plan, including her request for an income based plan, and her loans were placed in forbearance until October 2014. Id. ¶¶ 49-50, 52-53. She alleges Navient's advice was false and misleading because forbearance resulted in the addition of unpaid interest to the principal of the loans which Navient did not explain to her. Id. ¶¶ 55-57, 59-60, 65.

         In September 2014, Navient informed Russo it would not allow her an income based repayment plan. (Doc. 27-1 ¶ 61.) Navient again advised forbearance. Id. ¶ 63. In December, Navient informed Russo she did not qualify for a lower payment option and advised her best option was the interest only repayment plan. Id. ¶ 64. In the spring of 2015, when Russo stopped making payments, Navient began contacting her every day--including while she was working--up to seven times per day. Id. ¶¶ 66-68. Navient's collection practices disrupted her employment and damaged her reputation with her employer and teaching peers. Id. ¶ 70. Navient ignored Russo's oral request to contact her only after school hours and not to call her employer and her October 2015 written request that she be contacted only in writing. Id. ¶¶ 68, 71-72.

         III. Standard of Review

         Federal Rule of Civil Procedure 15(a) allows a party to amend its pleading with the court's leave and states the court should freely give leave when justice so requires. Fed.R.Civ.P. 15(a)(2). Where a motion to amend is opposed on grounds of futility, the Court must determine whether the amended complaint could withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Balintulo v. Ford Motor Co., 796 F.3d 160, 164-65 (2d Cir. 2015) (citing Lucente v. Int'l Bus. Machines Corp., 310 F.3d 243, 258 (2d Cir. 2002)).

         The Court will deny leave to amend if the proposed pleading fails to set forth “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). The Court must draw inferences from the allegations in the light most favorable to the plaintiff. Starr v. Georgeson S'holder, Inc., 412 F.3d 103, 109 (2d Cir. 2005). “A complaint should not be dismissed on the pleadings unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006) (internal quotation marks and citation omitted). The party opposing an amendment bears the burden of demonstrating why leave to amend would be futile. See Semper v. N.Y. Methodist Hosp., 786 F.Supp.2d 566, 582 (E.D.N.Y. 2011).^[5]

         IV. Discussion

         A. Motion to ...