Opinion
Civil Action No: 00-1937.
February 12, 2001.
MEMORANDUM AND ORDER
Background
Defendant, Cesar Munoz ("Munoz") was a student at Phillips Junior College in Marrero, Louisiana when he obtained three guaranteed student loans through the Bank of Horton in Horton, Kansas. The total amount borrowed was $6862. The first two loans, evidenced by promissory notes executed on October 14, 1998 and July 27, 1999, were each for the amount of $2,625. The third loan, evidenced by a promissory note executed on April 18, 1990, was for the amount of $1,612. Munoz does not dispute that he signed these three notes.
The loans were guaranteed by United Student Aid Fund, Inc. and reinsured by the Unites States of America on behalf of the Department of Education ("DOEd"). According to DOEd, defendant made minimal payments on these loans in the amount of $448.50. Defendant, however, claims that he has never "knowingly" made any payments on the loans. In any event, defendant was declared in default on January 3, 1991. The guaranty agency paid the holder $5,607.50 on the claim and was reimbursed by DOEd. The guaranty agency assigned its rights and title to the loans to DOEd on July 13, 1995. Plaintiff claims that since the assignment of the loan, DOEd has received a total of $675.98 in payments from "all sources," including Treasury Department offsets, "if any." Defendant denies knowledge of these payments. He further claims that these loans were "forgiven" as a consequence of his active service in Desert Storm during the years of 1991-1992.
February 6, 2001 Affidavit of Cesar Munoz, paragraph VIII, attached to his opposition to the motion for summary judgment.
May 19, 2000 Certificate of Indebtedness of Gwen Black, Loan Analyst, U.S. Department of Education, attached to original complaint.
Id.
Before me is DOEd's motion for summary judgment.
Discussion
Actions on promissory notes are "among the most suitable classes of cases for summary judgment." Colony Creek, Ltd. v. Resolution Trust Corp., 941 F.2d 1323, 1325 (5th Cir. 1991), quoting Lloyd v. Lawrence, 472 F.2d 313, 316 (5th Cir. 1973). A prima facie case on a promissory note is made when the "plaintiff alleges it is the owner and holder of the note, and that the note is in default." United States v. Nelson, 821 F. Supp. 1137, 1138 (W.D.La. 1993); United States v. Bertucci, 2000 WL 1234560 (E.D.La. 2000).
Once the plaintiff has established a prima facie case, the burden then shifts to the defendant "to establish the nonexistence, extinguishment or variance in payment of the obligation." United States v. Irby, 517 F.2d 1042, 1043 (5th Cir. 1975); Bertucci, at *2.
Plaintiff has alleged that is the owner and holder of the notes, and that the notes are in default. Defendant apparently does not dispute these allegations, nor does he dispute that he signed the notes. However, he claims that these loans have been "forgiven."
Defendant has submitted an affidavit in opposition to the summary judgment. He states that from 1989 until the present he has been in the employ of the Armed Forces of the United States either in a Reserve, Active Duty, or Civilian capacity. From July, 1991 through April, 1992, Defendant was on Active Duty in the United States Army in the Desert Storm Campaign. He claims that when he returned in 1992, he was informed by the Veterans Administration that his student loans would be forgiven because of his service in Desert Storm. He further claims that in 1993, he received a telephone call from a representative of the Bank of Horton. This representative also advised him that his loans had been forgiven.
Defendant denies ever having made any payments on these loans. Further, he asserts that he was unaware of any dispute concerning these loans until he was served with plaintiff's lawsuit in August, 2000.
Defendant has submitted no documents reflecting a forgiveness of his obligation on these loans, and did not provide adequate identification of either of the individuals who purportedly informed him that the debts would be forgiven. Nevertheless, I find that defendant's affidavit raises serious questions of fact concerning the present viability of these loans. Although it may be unlikely that, without more, defendant will be able to prove forgiveness or extinguishment of the debt, the questions of fact raised by his affidavit preclude the granting of summary judgment at this time.
Accordingly,
IT IS ORDERED, that plaintiff's motion for summary judgment is DENIED, without prejudice to refiling upon the completion of discovery.