- Law companies
- Related paperwork
- Motion to dismiss proposed class motion denied
- Borrowers allege student loan servicer misapplied funds to extend debt
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(Reuters) – A federal choose in New Jersey stated student debtors can pursue a lawsuit alleging Navient Corp fraudulently misallocated funds to extend the life of doubtless thousands and thousands of student loans.
U.S. District Judge Susan Wigenton on Thursday denied Navient’s movement to dismiss the lawsuit, saying the debtors who filed the proposed class motion final yr had legitimate claims beneath New Jersey’s anti-fraud statute and the buyer safety legal guidelines of Florida, New York and New Jersey.
Lisa Simonetti of Greenberg Traurig, who represents Navient, and Xavier Bailliard of Kranjac Tripodi & Partners, who represents the proposed class, didn’t instantly reply to requests for touch upon Friday.
The lawsuit was filed in June 2020 by 9 debtors whose loans have been serviced by Navient. They allege the corporate disproportionately utilized funds to curiosity quite than principal, incorrectly capitalized curiosity and steered funds to decrease rate of interest loans.
Navient’s web site and the truth that the corporate doesn’t give debtors an amortization schedule hinders debtors’ means to know or handle these points, they stated.
The lawsuit seeks damages on behalf of a proposed class of all these within the U.S. who’ve ever borrowed from or had loans serviced by Navient.
The firm moved for dismissal in December, calling the grievance devoid of any alleged misrepresentation in reference to the way in which funds have been allotted and missing specific information about how its procedures affected the plaintiffs.
The lender stated the category allegation needs to be dismissed as a result of the claims can be affected by the phrases of every particular person loan. Navient additionally stated the debtors’ claims for breach of fiduciary obligation couldn’t stand as a result of courts have discovered loan servicers should not fiduciaries.
In her ruling on Thursday, Wigenton stated that the particular allegations together with date and greenback quantity of the allegedly misapplied funds have been sufficient to state claims for fraud and violation of the buyer safety legal guidelines.
It was too early to contemplate whether or not the lawsuit can proceed as a category motion, she stated.
However, the choose agreed that Navient owed no fiduciary obligation to the debtors.
The case is Manetta et al. v. Navient Corp et al., U.S. District Court, District of New Jersey, No. 20-cv-07712.
For the debtors: Xavier Bailliard, James Van Splinter and Joseph Tripodi of Kranjac Tripodi & Partners.
For Navient: Lisa Simonetti and Rebecca Zisek of Greenberg Traurig.