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Motion to Compel Arbitration Granted in Dispute Arising Out of Student Loan Promissory Note

Sierra Roach v. Navient Solutions, Inc.
No. JKB-15-1974 (December 10, 2015, U.S. District Court for the District of Maryland)

by Caroline E. Willsey, Law Clerk
Semmes, Bowen & Semmes (

Available at:

Sierra Roach (“Plaintiff”) brought a pro se action against Navient Solutions, Inc. (“NSI” or “Defendant”) under the Telephone Consumer Protection Act of 1991 (“TCPA”) and under the Fair Credit Reporting Act (“FCRA”). Defendant filed a Motion to Compel Arbitration and to Stay Action. Judge Bredar of the U.S. District Court for the District of Maryland granted NSI’s motion.

Defendant, a student loan servicer, disbursed to Bowie State University, on Plaintiff’s behalf, five (5) private student loans between September 2007 and September 2010. The principal balance of these loans totaled $68,894 (USD). The loans became delinquent in December 2013. Each student loan was accompanied by a promissory note containing, inter alia, an arbitration agreement providing that “either party may elect to arbitrate – and require the other party to arbitrate – any Claim under the terms and conditions.” The arbitration agreements are broadly written: each agreement spans “any legal claim, dispute or controversy … that arises from or relates in any way to [the] Note,” including, without limitation, “disputes concerning the validity, enforceability, arbitrability or scope of [the] Arbitration Agreement or [the] Note” and disputes involving alleged violations of “statute, regulation or common law.” The agreements state that they are governed by the Federal Arbitration Act (“FAA”).

On June 16, 2014, Plaintiff allegedly contacted Defendant to “dispute the payment claims associated with [her] alleged debt.” Specifically, Plaintiff stated that she had “not certified nor authenticated signature [sic] not been a willing participant to any endorsements;” that she was “not the party listed [on the] account[s];” and that her “personal information had been unlawfully used.” Plaintiff subsequently revoked consent to call her cell phone. Nevertheless, Plaintiff claimed that Defendant continued to call her via an automated system, ostensibly for debt-collection purposes.

Plaintiff also alleged that her credit reports with three (3) major reporting bureaus – Equifax, Experian, and TransUnion – contained inaccurate information relating to the student loans serviced by Defendant. Plaintiff claims that Defendant rectified the credit reports, but verified the adverse reports with Equifax.

Plaintiff filed the complaint in this case on July 6, 2015, seeking damages under the TCPA and the FCRA. Defendant responded with a Motion to Compel Arbitration and Stay Action. Plaintiff opposed Defendant’s Motion, and Defendant replied.

Under the FAA, in any contract involving interstate commerce, a provision through which the parties agree to arbitrate their disputes shall be “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The court noted that the FAA was written with a strong policy preference in favor or arbitral dispute resolution. A litigant can compel arbitration under the FAA if he/she can demonstrate: (1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction … to interstate or foreign commerce, and (4) the failure … of the [opposing party] to arbitrate the dispute.”

Plaintiff disputed NSI’s authority to enforce the arbitration agreements because she alleged that she did not execute the loan applications or receive the student loan funds. When a party moves to compel arbitration and the opposing party disputes the validity of the purported arbitration agreement, the motion to compel arbitration is treated as a motion for summary judgment.

In evaluating Defendant’s motion, the court preliminarily noted that three of the four aforementioned arbitrability requirements were satisfied: there was a dispute between the parties; the underlying transactions related to interstate commerce; and Plaintiff opposed arbitration. The dispute hinged on the second arbitrability element – the existence of a valid written agreement encompassing their dispute.

Rather than challenge the scope of the arbitration agreements, Plaintiff contended that the agreements had no application whatsoever because NSI was a separate entity from Sallie Mae Bank (the lender identified on the promissory notes). In response, Defendant pointed out that NSI was known as Sallie Mae, Inc. until May 2014. Whatever rights Sallie Mae, Inc. had necessarily accrued to NSI. Moreover, the arbitration agreement was drafted expansively to extend rights not only to the lenders, but also to Sallie Mae, Inc. (now NSI); its parents, subsidiaries, and affiliates; and its predecessors, successors, and assigns. Even if NSI were a materially distinct entity from Sallie Mae, that would make no difference, because as a member of the extended Sallie Mae family, NSI was contractually empowered to compel arbitration.

Alternatively, Plaintiff alleged that the signatures on the loan documents submitted by Defendant were not hers. The court noted that this claim was at least facially more valid (i.e., it was not easily dispelled by the plain language of the agreements). Indeed, the court stated that it may have been inclined to defer Defendant’s Motion to Compel and grant limited discovery on the issue of arbitrability if Plaintiff had presented an affidavit, a declaration, or some other admissible evidence unequivocally showing that she disputed the existence or validity of her student-loan debt. After all, if Plaintiff truly did not sign the promissory notes, she could not be compelled to arbitrate her TCPA and FRCA claims. Plaintiff merely supplied an affidavit stating that she had “no knowledge” about NSI or any contractual relations between NSI and herself. The court attributes these statements to Plaintiff’s mistaken belief that NSI is distinct from Sallie Mae (with whom Plaintiff does not deny having entered into a contractual relationship). Plaintiff’s unfamiliarity with NSI is immaterial to Defendant’s Motion to Compel Arbitration and Stay Action.

In the end, the court denied Plaintiff’s Motion Requesting Leave to File a Sur-Reply (filed nearly a month after Defendant filed its reply brief). In denying Plaintiff’s motion, the court gave two (2) reasons. First, the District “highly disfavored” surreplies. Second, Plaintiff’s motion was largely lifted from a brief in an “analogous but unrelated action” in West Virginia – arguments that the Supreme Court of Appeals of West Virginia rejected two days before Plaintiff filed her motion.