Bad News

United States District Court Judge Thelton E Henderson signed a 23 page Order today Granting KeyBank’s Motion to Dismiss Third Amended Complaint in the Northern District of California case entitled Matthew C. Kilgore et al. v KeyBank National Association, et al., Case No. C08-2958 TEH today. The judge dismissed the case with prejudice. This means that the case is lost, unless an appeal later reverses the judge. This is the same lawsuit in which Pinnacle Law Group sued Student Loan Xpress and AES and then later dismissed SLX after entering into the proposed class action settlement that is now awaiting approval or rejection by Judge Merryday in Florida.

Plaintiffs and their counsel sought to stop KeyBank and its loan services provider Great Lakes Educational Loan Services (“Great Lakes”) from collecting the loans or reporting the loan balances to credit reporting agencies. Plaintiffs had 6 claims for relief, all of which were thrown out by Judge Henderson.

A full explanation of the judge’s ruling will be posted later. For now, I quote the judge’s conclusion: “Defendants’ motion to dismiss is GRANTED. Plaintiffs first, second and sixth causes of action are dismissed for failure to state a claim, and their third, fourth and fifth claims are dismissed on federal preemption. The TAC (third amended complaint) is DISMISSED without leave to amend. The clerk shall enter judgment and close the file. IT IS SO ORDERED.”

I spoke to Andy August of Pinnacle Law Group about this loss tonight and he described this loss as “the greatest disappointment” of his career.

For my clients throughout the country with KeyBank loans, this is not the end. I will continue my efforts on your behalf. For my clients with SLX loans, this loss for students with KeyBank loans underlines one of the reasons for the proposed settlement with SLX: the fact that when you do not settle, you risk a total loss in court.