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Gentleman v. Massachusetts Higher Education Assistance Corp.

United States District Court, N.D. Illinois, Eastern Division

August 12, 2019

JOSEPH T. GENTLEMAN, Plaintiff,
v.
MASSACHUSETTS HIGHER EDUCATION ASSISTANCE CORPORATION d/b/a AMERICAN STUDENT ASSISTANCE, a Massachusetts not for profit corporation, DELTA MANAGEMENT ASSOCIATES, INC., a Massachusetts corporation, and GLOBAL RECEIVABLES SOLUTIONS, INC. f/k/a WEST ASSET MANAGEMENT, INC., a Delaware Corporation, Defendants.

          MEMORANDUM ORDER AND OPINION

          SHARON JOHNSON COLEMAN, UNITED STATES DISTRICT COURT JUDGE

         Plaintiff Joseph Gentleman filed an Amended Complaint alleging a number of statutory and common-law claims against defendants Massachusetts Higher Education Assistance Corporation, doing business as American Student Assistance (“ASA”); Delta Management Associates, Inc. (“Delta”); and Global Receivables Solutions, Inc., formerly known as West Asset Management, Inc. (“GRS”). The claims arise in connection with the defendants' attempts to collect payment on a student loan that was consolidated in 2006. The Court granted in part and denied in part the defendants' motions to dismiss. The remaining claims are Counts I, II, V, and VI against ASA and Counts II to the extent it alleges violations of the FDCPA occurring after March 13, 2015 and Counts I and VI against Delta and GRS. Gentleman moves for summary judgment on all remaining claims, ASA's counterclaim, and Count IV[1] [147]. Delta moves for summary judgment on all remaining claims [140]. GRS likewise moves for summary judgment on all remaining claims[2] [143] and filed a motion to strike certain paragraphs of Gentleman's Rule 56.1 Statement [160]. For the reasons set forth herein, the Court grants in part and denies in part GRS's motion to strike. Gentleman's motion for summary judgment is denied, and Delta's and GRS's motions for summary judgment are granted.

         Rule 56.1 Statements and Evidence

         As an initial matter, the Court turns to the sufficiency of the parties' Rule 56.1 statements. GRS filed a motion to strike certain paragraphs of Gentleman's Rule 56.1 Statement, objecting that many of Gentleman's paragraphs violate Local Rule 56.1(a)(3) because they contain numerous factual allegations, they have no bearing on his claims against GRS, or they do not specify which defendant is the subject of the allegations. The Court also notes ASA's and Delta's objections to the facts and admonishes Gentleman for not streamlining his facts appropriately in his revised Rule 56.1 Statement. “[A] district court is entitled to expect strict compliance with Rule 56.1.” Ammons v. Aramark Unif. Servs., Inc., 368 F.3d 809, 817 (7th Cir. 2004). Moreover, Gentleman disregarded the Court's specific order to reduce the number of facts ¶ 120 and reduced the total number of paragraph numbers by combining multiple statements into lengthy narrative paragraphs. See Malec v. Sanford, 191 F.R.D. 581, 583 (N.D. Ill. 2000) (Castillo, J.) (“[T]he numbered paragraphs should be short; they should contain only one or two individual allegations[.]”). Thus, the Court exercises its discretion and strikes the following paragraphs of Gentleman's Rule 56.1 Statement that are not limited to short numbered paragraphs: 17, 19-21, 23, 32, 34-35, 58, 67, 72-73, 75, 78-79, 82, 84, 98-99, and 120.

         ASA and Delta also object to a number of Gentleman's Rule 56.1 Statement paragraphs on the basis that they rely on inadmissible hearsay. Hearsay is an out-of-court statement offered to prove the truth of the matter asserted, which is inadmissible absent an exception. Fed.R.Evid. 801(c), 802. None of the hearsay exceptions apply to these paragraphs, so the Court strikes paragraphs 7 and 62 of Gentleman's Rule 56.1 Statement. The Court also strikes the second portion of paragraph 18 related to information from a call Gentleman's wife allegedly made, the second sentence of paragraph 30 stating what ACS Education Services (“ACS”) allegedly told Gentleman, and all of paragraph 62 after the statement regarding Gentleman's interest in purchasing real estate. Despite the long and sometimes unclear or confusing nature of Gentleman's other Rule 56.1 Statement paragraphs, these facts are not so disruptive to the Court's decision-making process to warrant that the Court not consider them. The Court grants in part and denies in part GRS's motion to strike and ASA and Delta's objections to Gentleman's Rule 56.1 Statement.

         In his opposition to GRS's motion for summary judgment, Gentleman contends that the Court should strike the affidavit of Andrew Balthaser, GRS's Vice President of Compliance. Gentleman asserts that Balthaser's affidavit is self-serving, is not based upon his personal knowledge, fails to properly introduce business records, and includes improper testimony regarding the current status of the relationship between ASA and GRS. GRS responds that self-serving affidavits are permissible under certain circumstances, that Balthaser is familiar with GRS's business record practices, and that Balthaser reviewed the relevant records to the topics he testifies about in his affidavit. Gentleman also contends that the call records attached as Exhibit 1 were not produced during discovery, so should be stricken. GRS responds that the call records are a summary of the calls placed to Gentleman, which are all listed on the 115 pages of servicing notes produced in discovery that Gentleman included as an exhibit. (Dkt. 146-3, Ex. 33 at 134-55.)

         A party may offer an affidavit as evidence in support of a summary judgment motion so long as the affidavit is “made on personal knowledge, set[s] out facts that would be admissible in evidence, and shows that the affiant ... is competent to testify.” Fed.R.Civ.P. 56(c)(4). The Seventh Circuit permits affidavits, deposition testimony, and other written statements that “by their nature are self-serving, ” as long as they are based on personal knowledge and otherwise satisfy Rule 56. See Hill v. Tangherlini, 724 F.3d 965, 967 (7th Cir. 2013). The Court understands Gentleman's objection to improper business records to be a hearsay objection. Rule 803(6) recognizes an exception for business records rendering them admissible so long as “the custodian or another qualified witness” can establish that the record was made by someone with knowledge and made and kept in the regular course of business. Fed.R.Evid. 803(6).

         The Court is satisfied that Balthaser has sufficient personal knowledge to testify about GRS's telephone systems and related records of such calls and is a “qualified witness” for the purposes of Federal Rule of Evidence 803(6). See Norman v. AllianceOne Receivables Mgmt., Inc., 637 Fed.Appx. 214, 216 (7th Cir. 2015). To be classified as a business record, the witness need not have created the records about which he is testifying. See Thanongsinh v. Bd. of Educ., 462 F.3d 762, 777 (7th Cir. 2006). Balthaser's affidavit states that he is the Vice President of Compliance, that he is familiar with GRS's records through his job duties, and that he has knowledge of and access to GRS's business records and practices. Further, Balthaser presents specific testimony regarding GRS's relationship with ASA concerning Gentleman's account. Balthaser states that the account was recalled, which means that GRS no longer has any pecuniary interest in the account. Although Gentleman contends that this is not based on any documentation, Gentleman submitted ASA and GRS's Collection Services Agreement to the Court. That agreement indicates that once an account is recalled that GRS has no outstanding rights to the account and any payments received by GRS after recall “shall be immediately endorsed and issued to ASA.” (Dkt. 146-6, Ex. P § 2.2.)

         Finally, the Court will not consider the summary call record document because the summary was not produced to the opposing party during discovery and Balthaser does not explain how the records were created. However, each of the calls in the summary records are reflected in the exhibit submitted to the Court by Gentleman, so Gentleman cannot contend that he was unaware of the information included therein. Therefore, the Court considers Balthaser's testimony regarding the call records listed in GRS's complete records concerning their handling of Gentleman's account. (Dkt. 146-3, Ex. 33 at 134-55.) Thus, the Court strikes Exhibit 1, but otherwise denies Gentleman's request to strike Balthaser's affidavit.

         In his opposition to Delta's motion for summary judgment, Gentleman contends that the Court should also strike the affidavit of Patrick Young, Delta's Compliance Manager. Gentleman asserts many of the same arguments, indeed sometimes verbatim, that he made for excluding Balthaser's affidavit, including arguing that Young's affidavit is self-serving, is not based upon his personal knowledge, fails to properly introduce business records, and includes improper testimony regarding the current status of the relationship between ASA and Delta. Delta responds that self-serving affidavits are permissible under certain circumstances, that Young is familiar with Delta's business record practices, and that Young reviewed the relevant records to the topics he testifies about in his affidavit.

         The Court also is satisfied that Young has sufficient personal knowledge to testify about Delta's telephone systems, collection efforts related to Gentleman, and related records and is a “qualified witness” for the purposes of Federal Rule of Evidence 803(6). See Norman, 637 Fed.Appx. at 216. Young's affidavit states that he is the Compliance Manager, that he is familiar with Delta's records through his job duties, and that he has knowledge of and access to Delta's business records and practices. Further, Young presents specific testimony regarding Delta's actions concerning Gentleman's account. Young states that Delta is no longer collecting on the loan at issue and does not have any financial interest in the loan. Although Gentleman again contends that this is not based on any documentation, Gentleman also submitted ASA and Delta's Collection Services Agreement to the Court. (Dkt. 146-6, Ex. O.) Delta's contract with ASA does not provide for Delta to receive any compensation for funds that ASA recovers from Gentleman through its own collection efforts. (Id., Ex. O § 3.1.) The Court will also consider the business records attached to the affidavit because these documents were produced during discovery, and Young has properly laid the foundation for these business records. See Fenje v. Feld, 301 F.Supp.2d 781, 789 (N.D. Ill. 2003) (Hart, J.), aff'd, 398 F.3d 620 (7th Cir. 2005) (“Even if a party fails to authenticate a document properly or to lay a proper foundation, the opposing party is not acting in good faith in raising such an objection if the party nevertheless knows that the document is authentic.”).

         Next, many of Gentleman's Rule 56.1(b)(3)(B) Responses to Delta's Rule 56.1 Statement and GRS's Rule 56.1 Statement, respectively, do not comply with Local Rule 56.1(b) because Gentleman did not respond with “specific references” to the record that demonstrate a factual dispute. L.R. 56.1(b)(3)(B); Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). And, where the cited material does not clearly explain how it creates a genuine dispute, the nonmoving party should provide an explanation. Gentleman does not do that, despite the clarity of the Local Rules. For many of the statements that Gentleman disputes, he has improperly relied on cursory remarks and citations to a range of paragraphs in his own Rule 56.1 Statement. The majority of the paragraphs that Gentleman cites from his 56.1 Statement do not cite specific supporting material that creates a genuine dispute.

         The Court further finds that Gentleman's bare support for many of his Rule 56.1 Statements is insufficient. Gentleman often relies on his own affidavit, yet attempts to rebut facts that could not be within his personal knowledge. For purposes of an affidavit (or deposition testimony) personal knowledge may include inferences and opinions, but not speculations or hunches. See Herzog v. Graphic Packaging Int'l, Inc., 742 F.3d 802, 805 n.1 (7th Cir. 2014) (citing Fed.R.Civ.P. 56(c)(4)); Payne v. Pauley, 337 F.3d 767, 772 (7th Cir. 2003). Gentleman is not qualified to opine about the type of device used to call him when he has no support other than a hearsay statement from a representative who allegedly worked for an unknown collection agency.

         This Court deems admitted those paragraphs that Gentleman does not expressly admit yet fails to dispute with citations to relevant and admissible evidence in the record. See Dade v. Sherwin- Williams Co., 128 F.3d 1135, 1139 (7th Cir. 1997) (referring to L.R. 56.1's predecessor rule, the court affirmed the district court's taking as true uncontroverted facts alleged in the movant's statement and supported by references to the record). Thus, the following paragraphs of Delta's Rule 56.1 Statement are deemed admitted: 4, 6, 8, 11-13, 17-19, 21-22, and 34-35. The following paragraphs of GRS's Rule 56.1 Statement are also deemed admitted: 11, 13, 16, and 17-29. The Court further deems admitted those paragraphs where Gentleman's response to Delta's Rule 56.1 Statement contradicts his earlier sworn deposition testimony: 2, 5, 16, and 30. For the same reason, the Court deems admitted the following paragraphs of GRS's Rule 56.1 Statement: 32, 33, and 35-36. See Buie v. Quad/Graphics, Inc., 366 F.3d 496, 505 n.5 (7th Cir. 2004).

         Background

         The parties dispute whether Gentleman obtained more than one consolidation loan, whether Gentleman obtained or signed the loan at issue, whether the loan is enforceable, and the content of some communications between Gentleman and the defendants. These facts are material for some of the claims and are dispositive for several claims related to ASA. The following facts are not disputed, unless otherwise noted.

         From 1996 through 1998, Gentleman obtained seven Federal Family Education Loan Program (“FFELP”) student loans to cover his law school educational expenses. Gentleman consolidated all of his student loans with one lender in 1998. (Dkt. 152-1, Ex. 7.) On March 5, 2006, a direct consolidation loan was obtained in Gentleman's name, which was used to pay off the 1998 consolidation loan. (Dkt. 152-1, Ex. 8.) Then the next day, a 2006 FFELP consolidation loan was obtained in Gentleman's name and used to pay off the 2006 direct consolidation loan. (Dkt. 146-1, Ex. 8 at 60.) Gentleman's name, biographical information, and a signature of his name appeared on the document titled Federal Consolidation Loan Application and Promissory Note (“Promissory Note”). Above the signature, the Promissory Note stated “I UNDERSTAND THAT THIS IS A LOAN THAT I MUST REPAY.” (Id.) The interest rate for the Promissory Note was 6.25 percent. (Id., Ex. 8 at 55.) ACS serviced the Promissory Note. ASA, a student loan guarantor, was not involved with Gentleman's application for the Promissory Note, but guaranteed the note.

         Gentleman made sporadic payments to the Promissory Note servicer from 2006 to 2010. On March 20, 2011, ACS sent a final notice to Gentleman informing him that he owed a balance of $82, 884.03 on the Promissory Note and that his account would be declared in default if he did not pay the balance. Gentleman did not and defaulted on the Promissory Note in 2011. Shortly after the default, ASA paid their guarantee for the Promissory Note to ACS. Then ASA sent a letter to Gentleman on September 11, 2011, that demanded that $84, 808.98 be paid immediately. ASA wrote another letter on September 21, 2011, that stated that Gentleman owed $85, 069.22. Delta Delta is a collection agency. ASA and Delta entered into a Collection Services Agreement, and ASA assigned Gentleman's debt to Delta for collection in January 2012. (Dkt. 146-6, Ex. O.)

         Delta sent a letter to Gentleman on January 9, 2012, indicating that ASA was the creditor and that Delta would assume the debt unless Gentleman notified Delta within 30 days that he disputed the validity of the debt. Gentleman wrote to Delta requesting documents regarding the assignment of the Promissory Note, so Delta sent a letter to Gentleman on January 30, 2012, that enclosed a copy of the Promissory Note. That version of the Promissory Note was missing several pages of standard written terms. The parties dispute whether Gentleman himself executed the Promissory Note. Gentleman testified that when he received the incomplete Promissory Note he discovered that someone had forged his signature on the document. The defendants assert that Gentleman executed the Promissory Note. Delta placed an entry in the servicing notes for the Promissory Note on January 30, 2012, indicating that Delta should only contact Gentleman in writing.

         On November 24, 2014, a Delta representative placed a call to Gentleman's cell phone using a Mitel 5212 desktop telephone. The Mitel 5212 phone does not store a list of telephone numbers and cannot generate random sequential numbers. To initiate the call, the Delta representative picked up the phone and entered the digits of the telephone number on the phone's keypad. A Delta representative used the same process to place a series of calls to Gentleman's cell phone in January and February 2016.

         Delta placed a cease and desist flag in its system of record on December 8, 2014, stating that Gentleman should not be contacted by phone or mail. From that point forward, Delta had no contact with Gentleman until January 2016 when Gentleman contacted Delta. On January 27, 2016, Gentleman testified that he called ASA to determine which entities to name as defendants in this litigation. Then, Gentleman called Delta for information on how to resolve the default on the Promissory Note. Delta advised Gentleman that he could pay the loan in full, submit a settlement offer, or rehabilitate the loan. During that call, Delta obtained Gentleman's consent to contact him regarding the loan and removed the cease and desist flag for the loan. Following the conversation, Delta provided the paperwork to submit a settlement offer to Gentleman. Gentleman called Delta a second time the same day to confirm his receipt of the settlement paperwork.

         Delta called Gentleman on February 1, 2016, to review the additional information they required to evaluate Gentleman's settlement offer. During that call, Gentleman asked for a variety of information about the terms of the Promissory Note, including the loan balance, interest rate, method of interest accrual, and basis for calculating any accrued penalties. Gentleman emailed additional questions related to the loan to a Delta manager, and Delta called Gentleman on February 2, 2016 to review his questions. Gentleman's response to the Delta representative was that he would call back, although he never did. Delta prepared a letter to Gentleman on March 11, 2016, that substantiated the loan balance, interest rate, and accrued penalties, which Gentleman did not receive until this ...


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