Golden v. JP Morgan Chase Bank (In re Golden)

587 B.R. 414
CourtUnited States Bankruptcy Court, E.D. New York
DecidedJuly 25, 2018
DocketCase No. 16-40809-ess; Adv. Pro. No.: 17-01005-ess
StatusPublished
Cited by5 cases

This text of 587 B.R. 414 (Golden v. JP Morgan Chase Bank (In re Golden)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Golden v. JP Morgan Chase Bank (In re Golden), 587 B.R. 414 (N.Y. 2018).

Opinion

HON. ELIZABETH S. STONG, UNITED STATES BANKRUPTCY JUDGE

Introduction

Before the Court is a motion to compel arbitration by defendant Firstmark Services ("Firstmark"). Firstmark seeks an order referring the parties to arbitration with respect to the claims set forth in Tashanna Golden's complaint, and argues that the Federal Arbitration Act requires that this Court compel arbitration pursuant to an arbitration agreement between Firstmark and Ms. Golden.1 Ms. Golden responds that compelling arbitration here would create an inherent conflict with the purposes and policies of the Bankruptcy Code, and for those reasons, the Court *417should not compel arbitration, and Firstmark's motion should be denied.

Jurisdiction

This Court has jurisdiction over this proceeding pursuant to Judiciary Code Sections 157(b)(1) and 1334(b), and the Standing Order of Reference dated August 28, 1986, as amended by the Order dated December 5, 2012, of the United States District Court for the Eastern District of New York. In addition, this Court may adjudicate these claims to final judgment to the extent that they are core proceedings pursuant to Judiciary Code Section 157(b), and to the extent that they are not core proceedings, pursuant to Judiciary Code Section 157(c) because the parties have stated their consent to this Court entering a final judgment. See Wellness Int'l Network, Ltd. v. Sharif , --- U.S. ----, 135 S.Ct. 1932, 1940, 191 L.Ed.2d 911 (2015) (holding that in a non-core proceeding, a bankruptcy court may enter final orders "with the consent of all the parties to the proceeding" (quoting 28 U.S.C. § 157(c)(2) ).

Background

Ms. Golden's Bankruptcy Case

On February 29, 2016, Tashanna Golden, fka Tashanna B. Pearson, filed a petition for relief under Chapter 7 of the Bankruptcy Code. Case No. 16-40809. On July 28, 2016, the Chapter 7 Trustee filed a "no-asset" report stating that "there is no property available for distribution from the estate over and above that exempted by law." Case No. 16-40809, Doc. entry dated July 28, 2016. On August 3, 2016, the Court entered an order discharging Ms. Golden (the "Discharge Order"), and on that same day, her bankruptcy case was closed. On December 6, 2016, Ms. Golden filed a motion to reopen her bankruptcy case to obtain a determination of the dischargeability of certain of her student loans, and on January 10, 2017, the Court entered an order reopening the case.

This Adversary Proceeding

On January 18, 2017, Ms. Golden commenced this adversary proceeding as a putative class action, on behalf of herself and others similarly situated, by filing a complaint against JP Morgan Chase Bank, Firstmark Services, GoldenTree Asset, and National Collegiate Trust (the "Defendants") seeking a determination that certain debts that she incurred as a student are not nondischargeable student loan debts under Bankruptcy Code Section 523(a)(8)(B), and a finding of contempt against the Defendants for civil contempt for willful violations of the bankruptcy discharge injunction. Compl., Adv. Pro. No. 16-40809, ECF No. 1.

On May 31, 2017, the Court approved a stipulation between Ms. Golden and National Collegiate Student Loan Trust 2005-3 and 2006-4 (the "Trusts"), permitting the Trusts to intervene in this action. And on July 25, 2017, the Court approved a stipulation of dismissal as to defendant JP Morgan Chase Bank.

On October 17, 2017, Ms. Golden filed a First Amended Complaint (the "Amended Complaint") to add class action allegations and additional defendants. Am. Compl., ECF No. 32. And on November 2, 2017, Ms. Golden voluntarily dismissed defendant GoldenTree Asset Management from this action.

The Amended Complaint

Ms. Golden alleges that the Defendants have knowingly "appropriated a legal presumption for a class of debt" - including certain loans that she took out while she was a student at the University of Pennsylvania Law School-that they know is not entitled to a presumption of nondischargeability. Am. Compl. ¶ 1. She claims that the Defendants here knowingly misled *418her and other student debtors about the nature of these obligations. Ms. Golden advances these allegations on behalf of an alleged class of similarly situated individuals who have declared bankruptcy since 2005 across the United States, with loans originated or serviced by the Defendants. And Ms. Golden alleges that certain of the debts that she incurred in connection with her law school education are not nondischargeable student loans under Bankruptcy Code Section 523, and that the Defendants, including Firstmark, violated the discharge injunction entered in her bankruptcy case by seeking to collect on these debts after she received her bankruptcy discharge.

In her bankruptcy petition, Ms. Golden listed on her Schedule F certain "student loans" that she owes, including the loans described in the Amended Complaint, that the Defendants made to her in excess of the University of Pennsylvania Law School's published cost of attendance for the 2006-07 and 2007-08 academic years. Am. Compl. ¶ 40. She alleges that these loans are not nondischargeable student loans or conditional educational grants under Bankruptcy Code Section 523(a)(8). She alleges that she received a discharge on or about August 5, 2016, and that her creditors likewise "received notice of discharge." Am. Compl. ¶ 43.

Ms. Golden alleges that rather than treat these debts as discharged, as required by the bankruptcy law, the Defendants resumed their collection efforts after she received a discharge. She argues that they "fraudulently informed [her] that the [d]ebts were not discharged and demanded ... and accepted payment." Am. Compl. ¶ 44. Ms. Golden alleges that the "Defendants' abusive, deceptive and illegal collection efforts after Golden's Debts were discharged were made knowingly and willfully in violation of this Court's discharge orders." Am. Compl. ¶ 45.

Ms. Golden alleges that the Defendants and other creditors represented to her and to similarly situated student debtors that the Bankruptcy Code prohibited discharge of "any loan made to any person for any educational purpose," when they knew that "only private loans that meet the requirements of section 523(a)(8)(B) [are] nondischargeable." Am. Compl. ¶ 22. She claims that while the Defendants and other lenders informed borrowers such as herself that their loans were nondischargeable, these lenders securitized these same obligations for sale on the secondary market. And she asserts that the prospectuses for these asset-backed securities cautioned investors that, pursuant to Bankruptcy Code Section 523(a)(8), "only private loans made for qualified expenses were excepted from discharge." Am. Compl. ¶ 25.

Ms.

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Cite This Page — Counsel Stack

Bluebook (online)
587 B.R. 414, Counsel Stack Legal Research, https://law.counselstack.com/opinion/golden-v-jp-morgan-chase-bank-in-re-golden-nyeb-2018.