Murphy v. Navient Solutions, LLC et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
SHARI MURPHY,
Plaintiff,
v.
NAVIENT SOLUTIONS, LLC and
HIGHER EDUCATION LOAN
AUTHORITY OF THE STATE OF
MISSOURI,
Defendants.
Case No. 3:25-CV-379-NJR
MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
This matter is before the Court on Plaintiff Shari Murphy’s Motion to Remand to
State Court. (Doc. 11). Murphy initiated this action in the Circuit Court for the Third
Judicial Circuit in Madison County, Illinois, on October 20, 2023. (Doc. 1-1, at 2–9). On
March 21, 2025, Defendant Higher Education Loan Authority of the State of Missouri
(MOHELA) removed the action to this Court on the basis of diversity jurisdiction
pursuant to 28 U.S.C. §§ 1332, 1441(b), 1446(b)(3). (Doc. 1). A week later, Murphy moved
to remand this matter to state court. For the reasons set forth below, this Court grants
Murphy’s motion. 1
B ACKGROUND
This action arises from a dispute over student loans. From 2000 through 2003,
1 On March 28, 2025, Defendant Navient Solutions, LLC, filed a motion to dismiss for failure to state a
claim. (Doc. 8). Because this case will be remanded to state court, Navient’s motion to dismiss is denied as
moot.
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Murphy alleges that she borrowed money from the United States Department of
Education to pay for her law school degree. (Doc. 1-1, at 140). After graduating, she began
to make payments on her loans. Id. Murphy alleges that over the next twenty years, she
paid $82,345 to various loan servicers, including Defendant Navient Solutions, LLC. Id.
After pausing her payments from 2021 to 2023, Murphy inquired by telephone with
Navient about the status of her loans. Id. She alleges they informed her that her monthly
payment was to increase by over $200 per month. Id. Murphy claims that Navient could
not tell her the reason for this increase. Id. In fact, according to Murphy, Navient either
could not or would not tell her how long it would take for her loans to be repaid, the
interest rate on her loans, or even the loans’ remaining balance. Id. at 140–41.
Perhaps frustrated by the lack of assistance, Murphy requested copies of certain
documents associated with her loans: promissory notes, loan applications, consolidation
applications, her payment history, and an amortization table for the remaining balance
of her loans. Id. In response, Murphy alleges Navient sent her two letters. Id. at 141. One
letter stated that Navient does not provide amortization tables and instructed her to refer
to her original loan documents for the answers to her questions—documents she does
not have. Id. The other letter similarly failed to provide her with the requested
documentation. Id.
As a result of these difficulties, Murphy filed her initial complaint in state court
against Navient on October 20, 2023. Id. at 2–9. It included copies of both letters from
Navient, id. at 7–9, and sought a declaratory judgment under Illinois law that (1) she did
not owe Navient any money, (2) she was not in a legal relationship with Navient, and
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(3) that she had no contractual or financial obligation to Navient, id. at 5. On December 4,
2023, Navient filed its answer. Id. at 22–30.
After almost a year of discovery, see id. at 34–58, Murphy received a letter from
Defendant MOHELA on October 19, 2024, id. at 61, 68–70. The letter informed Murphy
that the servicing of two of her loans had been transferred from Navient to MOHELA.
Id. at 68–70. It also provided her with a table of the remaining unpaid principal and
interest she owed on those two loans, totaling $81,116.87. See id. at 70. In response,
Murphy 	filed 	her 	first 	amended 	complaint 	on 	December 20, 	2024, 	attaching 	the
October 19 	letter 	and 	adding 	MOHELA 	as 	a 	defendant. 	Id. at 59–70. 	She 	sought
essentially the same remedy: a declaratory judgment that she had no obligation to pay
any money to Navient or MOHELA.
MOHELA received a copy of the first amended complaint on January 15, 2025,
(Doc. 1, ¶ 1), but on February 11, 2025, Murphy moved for leave to amend her complaint
again (Doc. 1-1, at 137–146). The state court granted her motion on February 21, 2025.
(Doc. 1-1, at 150). Then, on March 21, 2025, MOHELA filed its notice of removal, thereby
removing the case to this Court. (Doc. 1). Navient provided its consent to this removal in
the same filing. Id. at 5. Murphy filed a motion seeking remand and an award of costs
and fees under 28 U.S.C. § 1447. (Doc. 11). MOHELA filed a response in opposition
(Doc. 16), to which Murphy filed a timely reply (Doc. 17).
LEGAL STANDARD
Removal is governed by 28 U.S.C. § 1441, which provides, in pertinent part, that
“any civil action brought in a State court of which the district courts of the United States
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have original jurisdiction, may be removed by the defendant or the defendants, to the
district court of the United States for the district and division embracing the place where
such action is pending.” 28 U.S.C. § 1441(a); see also Potter v. Janus Inv. Fund, 483 F. Supp.
2d 692, 694-95 (S.D. Ill. 2007). In other words, “[a] defendant may remove a case to federal
court only if the federal district court would have original subject matter jurisdiction over
the action.” Kitson v. Bank of Edwardsville, No. 06-528, 2006 WL 3392752, at *1 (S.D. Ill.
Nov. 22, 2006). The party seeking removal, as the proponent of federal subject matter
jurisdiction, has the burden of proof as to the existence of jurisdiction. See Meridian Sec.
Ins. Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir. 2006); see also Anglin v. Bristol-Myers Squibb
Co., No. 12-60, 2012 WL 1268143, at *1 (S.D. Ill. Apr. 13, 2012).
“Courts should interpret the removal statute narrowly and presume that the
plaintiff may choose his or her forum.” Doe v. Allied-Signal, Inc., 985 F.2d 908, 911
(7th Cir. 1993). “Doubts concerning removal must be resolved in favor of remand to the
state court.” Alsup v. 3-Day Blinds, Inc., 435 F. Supp. 2d 838, 841 (S.D. Ill. 2006).
Pursuant to 28 U.S.C. § 1332(a)(1), this Court shall have original jurisdiction of all
civil actions where the matter in controversy exceeds $75,000, exclusive of interest and
costs, and is between citizens of different States. 28 U.S.C. § 1332(a)(1). The statute further
states that “[a] civil action otherwise removable solely on the basis of jurisdiction under
section 1332(a) . . . may not be removed if any of the parties in interest properly joined
and served as defendants is a citizen of the State in which such action is brought.”
28 U.S.C. § 1441(b)(2).
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Under 28 U.S.C. § 1446, which governs the procedures for removal, “if the case
stated by the initial pleading is not removable, a notice of removal may be filed within
30 days after receipt by the defendant, through service or otherwise, of a copy of an
amended pleading, motion, order or other paper from which it may first be ascertained
that the case is one which is or has become removable.” 28 U.S.C. § 1446(b)(3). Section
1446 provides further that “[a] case may not be removed under subsection (b)(3) on the
basis of jurisdiction conferred by section 1332 more than 1 year after commencement of
the action, unless the district court finds that the plaintiff has acted in bad faith in order
to prevent a defendant from removing the action.” 28 U.S.C. § 1446(c)(1). “[W]hen an
action is ‘commenced’ for purposes of the removal statutes is determined by the law of
the state where a removed action originally was filed. Loellke v. Moore, No. 12-2-GPM,
2012 WL 253373, at *1 (S.D. Ill. Jan. 26, 2012) (citing Schorsch v. Hewlett–Packard Co., 417
F.3d 748, 750–51 (7th Cir. 2005)). Under Illinois law, an action “shall be commenced by
the filing of a complaint.” 735 ILCS 5/2-201.
DISCUSSION
I. 	Remand
Murphy argues this matter should be remanded because MOHELA’s removal of
this case was untimely. 2 (Doc. 11). Because she initiated her lawsuit on October 20, 2023,
2 Murphy also argues that the case should be remanded for lack of subject matter jurisdiction, as MOHELA
is not a citizen of Missouri but instead an arm of the state of Missouri itself. (Doc. 11, at 2–3). There is no
diversity jurisdiction over suits in which a state is a party. E.g., Illinois v. Kerr-McGee Chem. Corp., 677 F.2d
571, 575 n.5 (7th Cir. 1982). It is true that MOHELA has for some purposes been considered an arm of the
state of Missouri. See, e.g., Biden v. Nebraska, 600 U.S. 477, 489–94 (2023) (determining that MOHELA is an
arm of the state for the purposes of Article III standing, such that the state of Missouri had standing to sue
for an injury suffered by MOHELA). However, whether this is true for all purposes appears to be an
unsettled question. Compare, e.g., Mermigas v. Higher Education Loan Authority, No. 24-cv-11505, 2025 WL
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she contends, MOHELA’s removal on March 21, 2025, runs afoul of the one-year deadline
in diversity cases. (Doc. 11, at 3–4; Doc. 17, at 1–2).
MOHELA, on the other hand, insists that its removal was timely because the one-
year deadline runs from when the action “commences.” (Doc. 16, at 3–9). Under Illinois
law, it argues, this action only “commenced” as to MOHELA when Murphy amended
her complaint to include it as a defendant. Id. Thus, the deadline in 28 U.S.C. § 1446(c)
would run one year from January 15, 2025—the date MOHELA was served with the first
amended complaint.
This Court need not reach the question of whether this action “commenced” with
respect to MOHELA when the complaint was initially filed or when MOHELA was
served with Murphy’s first amended complaint. This is because MOHELA’s notice of
removal was untimely under 28 U.S.C. § 1446(b)(3) regardless of when the action
commenced. 3
The general removal statute provides two different 30-day deadlines for removal.
See 28 U.S.C. § 1446(b). The first applies where the case is removable based only on the
2576745, at *2–3 (N.D. Ill. Sept. 4, 2025) (determining that MOHELA, being a government corporation, was
a “body politic” and not a “person” for the purposes of an Illinois statute), with Good v. Dep’t of Educ., 121
F.4th 772, 822 (10th Cir. 2024) (determining that MOHELA is not an arm of the state for Eleventh
Amendment sovereign immunity purposes), petition for cert. filed, No. 24-992, 2025 WL 863236 (Mar. 12,
2025). Because remand is warranted on procedural grounds, the Court declines to resolve the question and
assumes, without deciding, that MOHELA is a citizen of Missouri for the purposes of the analysis below.
3 MOHELA claims that Murphy “concedes that MOHELA’s removal is timely under Section 1446(b)(3)
because it was filed within 30 days of when the Court granted [her] motion for leave to file [her second
amended complaint].” (Doc. 16, at 3 n.2). Based on the Court’s review of Murphy’s filings, this claim—
made without citation to the alleged concession—does not appear to be accurate. Murphy contends that
the removal was untimely. Though her arguments focus primarily on the one-year limitation in § 1446(c),
she has neither conceded nor waived other issues of timeliness. Cf. Cox v. Hi-Cube Express, Ltd., No. 03-cv-
1248, 2003 WL 23219936, at *1 (S.D. Ind. Dec. 31, 2003) (explaining that, though “procedural defects in
removal . . . are waived if the plaintiff does not file a timely motion to remand,” a motion to remand raising
solely jurisdictional issues was sufficient for the district court to reach the procedural issue of timeliness).
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initial pleading. See id. § 1446(b)(1). In that case, a defendant has 30 days from the receipt
of the initial pleading or summons to file their notice of removal. Id. The second applies
where the case is not removable by the initial pleading. Id. § 1446(b)(3). In such cases, the
30-day deadline begins to run when “the defendant receives a pleading or other paper
that affirmatively and unambiguously reveals that the predicates for removal are
present.” Walker v. Trailer Transit, Inc., 727 F.3d 819, 824 (7th Cir. 2013).
Here, the second rule applies because Murphy’s original complaint did not
unambiguously 	reveal 	that 	the 	amount-in-controversy 	predicate 	for 	removal 	was
present. Though Murphy and Navient (the only parties to the original complaint) are
citizens of different states (Doc. 1, ¶ 9), Murphy’s original complaint asked only for a
declaratory judgment that she did not owe Navient any money—without specifying how
much money was at issue. (Doc. 1-1, at 5). She even alleged that Navient had been unable
to tell her the balance of her outstanding loan. Id. at 4. In other words, the amount in
controversy was unascertainable when the complaint was initially filed. As a result, the
complaint would only become removable (and the 30-day deadline would only begin)
when MOHELA “receive[d] a post-complaint pleading or other paper that affirmatively
and unambiguously specifie[d] a damages amount sufficient to satisfy the federal
jurisdictional minimums.” Walker, 727 F.3d at 825.
MOHELA contends this happened on February 21, 2025, when Murphy filed her
second amended complaint and added two new claims for compensatory damages in
excess of $80,000. (Doc. 1, ¶¶ 3–5; Doc. 16, at 3–4, 9). Under MOHELA’s interpretation,
the 30-day deadline expired on March 23, 2025—two days before its notice of removal.
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But MOHELA is wrong. The first pleading or other paper affirmatively and
unambiguously specifying the amount in controversy was Murphy’s first amended
complaint, 	not 	her 	second. 	The 	first 	amended 	complaint—again, 	seeking 	only 	a
declaration 	that 	Murphy 	did 	not 	owe 	Defendants 	any 	money—attached 	and
incorporated by reference the letter from MOHELA dated October 19, 2024. (Doc. 1-1,
at 61, 68–70). This letter explained that service of Murphy’s loans had been transferred to
MOHELA from Navient and included a table of the individual loans that were “now with
MOHELA.” Id. at 68, 70. The table showed that Murphy had two loans with MOHELA
and listed the amounts of unpaid principal and unpaid interest on each loan. Id. at 70.
The total of these unpaid amounts—the obligations Murphy was asking the Court to
declare she did not have—was $81,116.87. See id.
MOHELA’s receipt of the first amended complaint therefore triggered the 30-day
deadline to file its notice of removal. The pleading on its face challenged a claimed
obligation of over $75,000, thus affirmatively and unambiguously revealing an amount
in controversy sufficient to satisfy the federal jurisdictional minimum. See Progressive N.
Ins. Co. v. North, 699 F. Supp. 3d 696, 699 (S.D. Ill. 2023) (“In a declaratory judgment
action, ‘the amount in controversy is measured by the value of the object of the
litigation.’” (quoting Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 347 (1977))).
MOHELA received Murphy’s first amended complaint on January 15, 2025.
(Doc. 1, ¶ 1). MOHELA did not file its notice of removal until March 21, 2025—65 days
later. Because this fell well outside of the 30-day deadline in 28 U.S.C. § 1446(b)(3),
MOHELA’s notice of removal was untimely. This case will therefore be remanded to the
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Circuit Court for the Third Judicial Circuit in Madison County, Illinois.
II. 	Costs and Fees
Because a remand is warranted, the Court must reach Murphy’s request for an
award costs and fees. (Doc. 11, at 4–5). Under 28 U.S.C. § 1447(c), such an award is only
proper if “the defendant ‘lacked an objectively reasonable basis for seeking removal.’”
Lott v. Pfizer, 492 F.3d 789, 792 (7th Cir. 2007) (quoting Martin v. Franklin Cap. Corp., 546
U.S. 132, 141 (2005)) A plaintiff is thus entitled to costs and fees on remand only “if, at the
time the defendant filed his notice in federal court, clearly established law demonstrated
that he had no basis for removal.” Id. at 793.
First, Murphy argues it was objectively unreasonable for MOHELA to remove this
case, citing the existence of diversity jurisdiction, when it is an arm of the state of Missouri
rather than a Missouri “citizen.” (Doc. 11, at 4). However, as explained above, whether
MOHELA is an arm of the state of Missouri for all purposes (including diversity
jurisdiction) is far from clearly established. Supra note 2. Therefore, it cannot be said that
MOHELA lacked an objectively reasonable basis for seeking removal, as it is not settled
that MOHELA cannot be a citizen for diversity purposes.
Second, Murphy argues she is entitled to costs and fees because it was objectively
unreasonable for MOHELA to wait so long to remove this case. (Doc. 11, at 4). But this
argument “conflates the proper procedure for removal with removal jurisdiction. Only
an objective absence of the latter can justify an award of costs.” Schmidt v. Walworth
County, 786 F. App’x 65, 67 (7th Cir. 2019) (citation omitted). Because it was not clearly
established that removal jurisdiction under 28 U.S.C. § 1441 was absent, the untimeliness
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of MOHELA’s removal was a mere procedural defect and cannot justify an award of costs
and fees under 28 U.S.C. § 1447(c).
CONCLUSION
For these reasons, the Motion to Remand to State Court (Doc. 11) filed by Plaintiff
Shari Murphy is GRANTED. Murphy’s request for fees and costs is DENIED. The
Motion to Dismiss filed by Defendant Navient Solutions, LLC is DENIED as moot.
This matter is REMANDED to the Circuit Court for the Third Judicial Circuit in
Madison County, Illinois, for all further proceedings.
IT IS SO ORDERED.
DATED: 	January 15, 2026
___________________________
NANCY J. ROSENSTENGEL
United States District Judge
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