Opinion
Case No. 01-2006-JWL
June 29, 2001
MEMORANDUM AND ORDER
Plaintiff, the United States of America, filed this action against Dawn Lewis, who appears pro se, alleging that Ms. Lewis defaulted on student loans that had been guaranteed by the United States. This matter is presently before the court on plaintiff's motion for summary judgment (doc. #15). As set forth in more detail below, plaintiff's motion is granted.
I. Facts
The following facts are either uncontroverted or related in the light most favorable to Ms. Lewis, the nonmoving party. To finance her education, Ms. Lewis borrowed money through a federally guaranteed student loan program. Specifically, Ms. Lewis signed six promissory notes: a February 8, 1982 note in the amount of $1,191.00; a March 20, 1983 note in the amount of $2,500.00; a February 8, 1985 note in the amount of $2,500.00; a September 21, 1985 note in the amount of $2,500.00; an August 9, 1986 note in the amount of $2,500.00; and a July 25, 1987 note in the amount of $1,500.00. Sometime thereafter, plaintiff ceased carrying at least one-half the normal full-time academic load at an eligible institution; thus, under the terms of the notes, the notes became due six months later. At that time, a demand for payment was made according to the terms of the notes and Ms. Lewis defaulted on her obligation to repay. The lending institutions then assigned all rights and title to the loans to the Department of Education pursuant to 20 U.S.C. § 1087cc(a)(5). The United States has demanded payment and Ms. Lewis has not paid the amounts due. In essence, then, it is undisputed that Ms. Lewis has defaulted on each of the loans by failing to make all payments required by the terms of the loans. Thus, the United States argues it is entitled to summary judgment.
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
Discussion
While Ms. Lewis apparently concedes the issue of her indebtedness, she contends that various circumstances somehow excuse her from her obligations to repay the notes or somehow preclude the United States from collecting the amounts owed. Specifically, Ms. Lewis asserts three "defenses" to the United States' action: (1) the United States has failed to state a claim upon which relief can be granted because Ms. Lewis filed an application to have her student loans consolidated; (2) lack of due diligence prior to the assignment of the defaulted notes; and (3) that the United States delayed commencing this action for five years after assignment and that such delay "work[ed] a special hardship and oppressive effect on [Ms. Lewis's] financial stability and life." The court will address each of these asserted "defenses" in turn.
Application for Loan Consolidation
Ms. Lewis's primary argument in response to the United States' motion for summary judgment is that the government's action is "premature" because she has filed an application to have all of her loans consolidated. While the nature of Ms. Lewis's argument is not entirely clear, she seems to suggest that the government's suit is somehow unfair or lacking in good faith in that she has taken affirmative steps to assume responsibility for repaying her debt. By way of background, in January 1999, Ms. Lewis filled out a Loan Consolidation application via the Internet. However, because Ms. Lewis had student loans in default with Webster University, the Department of Education's Loan Origination Center determined that Ms. Lewis could not consolidate her student loans without first making satisfactory repayment arrangements for the defaulted student loans. Thus, in an effort to continue processing Ms. Lewis's request for consolidation, the Loan Origination Center mailed to Ms. Lewis a Loan in Default Letter and accompanying forms, including a "Repayment Plan Selection" form; a "Disclosure of Tax Information" form; a "Loan Rehabilitation Option" form; and a form entitled "How to Include Defaulted Federal Education Loans in a Direct Consolidation." Because Ms. Lewis did not return the completed forms to the Loan Origination Center within 14 days, Ms. Lewis's application for Loan Consolidation was deactivated by the Loan Origination Center.
Ms. Lewis, in response to the United States' motion for summary judgment, maintains that she sent the requested forms to the Loan Origination Center with her initial application in January 1999. She further contends that she never received the additional forms sent to her by the Loan Origination Center. Finally, she contends that the government advised her that it had everything it needed to consolidate her loans and that all she had to do was sign a promissory note that the government would send her a note she contends she never received. Nonetheless, it is uncontroverted that Ms. Lewis's loans were never consolidated. Thus, the government is entitled to collect on the original promissory notes and Ms. Lewis offers no authority or arguments suggesting otherwise. Moreover, while Ms. Lewis suggests that her application is still active (a fact which the government contests), she offers no authority suggesting that a pending application somehow precludes a collection action on the original notes. In the absence of any authority suggesting that Ms. Lewis's application bars this suit, the court rejects Ms. Lewis's asserted "defense" and concludes that the United States is permitted to pursue collection of the notes despite Ms. Lewis's application for loan consolidation.
Curiously, Ms. Lewis did not inquire about the status of her loan consolidation application at any time between March 1, 1999 and December 13, 2000. She apparently did so only after receiving a demand letter from the government about its intent to commence this suit.
Lack of Due Diligence
According to Ms. Lewis, she should be excused from her obligations to repay the notes (or that the United States should be barred from pursuing its claims against her) because the initial lending institutions did not exercise due diligence in pursuing their claims before tendering their claims to the United States. In response, the United States contends that any alleged lack of due diligence does not create a private right of action in favor of Ms. Lewis. Indeed, as the United States highlights, the majority of courts that have addressed this issue have so concluded. See, e.g ., United States v. Dwelley , 59 F. Supp.2d 115 (D. Maine 1999) (provisions requiring exercise of due diligence by lender in collection efforts prior to tendering claim to United States for payment, as set forth in 20 U.S.C. § 1080(a)-(d), do not enable a cause of action for student borrowers) (collecting cases). In support of her argument, Ms. Lewis relies on a case from the sole district representing the minority view-the Eastern District of Michigan. See United States v. Rhodes , 788 F. Supp. 339, 343 (E.D.Mich. 1992) (granting student debtor's motion for summary judgment because, among other things, government failed to produce evidence of lender's collection efforts). As the court noted in Dwelley , however, the court in Rhodes did not address in any way whatsoever the appropriateness of such a defense. Thus, the court does not find the Rhodes decision persuasive. By contrast, the court in Dwelley carefully analyzed the due diligence defense and rejected such a defense after reviewing other relevant case law addressing the issue. The court is persuaded by the Dwelley court's analysis of the issue. Thus, for the reasons set forth by the court in Dwelley and the cases cited therein, the court holds that Ms. Lewis may not invoke the lender's due diligence obligations against the United States on her own behalf. This argument, then, is rejected and does not provide any basis for precluding summary judgment in favor of the United States.
While Ms. Lewis did not address her due diligence argument in response to the United States' motion for summary judgment, she did address this argument in some detail in her response to the United States' motion to dismiss-a motion that was aimed at Ms. Lewis's defenses to the extent they were asserted as counterclaims in Ms. Lewis's answer to the United States' complaint. This motion was still pending at the time the United States filed its motion for summary judgment and that addresses many of the same issues raised by the United States in its motion for summary judgment. Thus, while the court ultimately concludes that the motion to dismiss is moot (in that the motion for summary judgment is granted in its entirety), the court nonetheless turns to the papers filed in connection with the motion to dismiss to the extent they contain arguments made by Ms. Lewis that are relevant to the disposition of the summary judgment motion.
United States' Delay in Filing Action
Finally, Ms. Lewis contends that the United States is barred from bringing this action because the United States delayed filing the action until five years after the assignment of the notes. According to Ms. Lewis, the United States did not commence this action when the notes were assigned to it in 1995 because the United States knew that Ms. Lewis did not have the financial resources to repay the notes. Ms. Lewis contends that the United States purposefully delayed commencing this action until Ms. Lewis's credit rating and financial status improved and that the delay has caused a special hardship on her financial stability and life.
To the extent Ms. Lewis suggests that the action is barred by some statute of limitations, there is no statute of limitations applicable to the federal government's collection of student loans. See 20 U.S.C. § 1091a(a). To the extent Ms. Lewis suggests that the action is barred by the doctrine of laches, this argument is also rejected. Although the federal government may, in certain limited circumstances, be subject to the defense of laches in the context of student loan collection, see Dwelley , 59 F. Supp. at 118, no such defense is applicable here because there is no evidence that Ms. Lewis has been materially prejudiced by the delay. See id .; accord United States v. McLaughlin , 7 F. Supp.2d 90, 92-93 (D.Mass. 1998) (finding no evidence of "special hardship" to support laches defense in student loan collection action where government filed suit 16 years after alleged default). The only prejudice suggested by Ms. Lewis is that she now has the resources to repay the notes or, at the very least, that she is just now getting back on her feet financially. Ms. Lewis has directed the court to no authority (and, not surprisingly, the court has found none) suggesting that this alleged prejudice is sufficient to invoke a laches defense. Compare Rhodes , 788 F. Supp. at 342-43 (holding that 17-year delay in collection effort caused material prejudice to defendant because relevant records were no longer accessible and therefore laches barred claim). In short, the court rejects Ms. Lewis's "special hardship" defense.
Conclusion
Having rejected each of Ms. Lewis's defenses to this action, and because it is undisputed that Ms. Lewis has defaulted on her obligation to repay the notes, the court grants summary judgment in favor of the United States. See, e.g., United States v. Durbin , 64 F. Supp.2d 635, 637 (S.D.Tex. 1999) (government entitled to summary judgment upon showing that the defendant is a person who issued the note; that the government owns the note; and that the note is unpaid). The only remaining issue, then, is the amount of the judgment. In that regard, the government has filed Certificates of Indebtedness reflecting the amounts due in principal, interest and costs on each promissory note. Ms. Lewis has not controverted the information contained therein. With respect to the notes dated February 8, 1982 and March 20, 1983, then, the relevant Certificate of Indebtedness reflects that the total principal sum due and owing is $3,691.00 plus interest in the sum of $2,814.74 as of September 6, 2000, plus interest accruing thereafter at the rate of nine percent per annum or at a daily rate of $0.91 until the date of judgment. Thus, the total prejudgment interest owing on the initial two notes as of the date of judgment (June 29, 2001) is $3,084.10. With respect to the remaining four notes, the relevant Certificate of Indebtedness reflects that the total principal sum due and owing is $9,000.00 plus interest in the sum of $6,495.68 as of September 6, 2000, plus interest accruing thereafter at the rate of nine percent per annum or at a daily rate of $2.22 until the date of judgment. Thus, the total prejudgment interest owing on the remaining four notes as of the date of judgment is $7,152.80. IT IS THEREFORE ORDERED BY THE COURT THAT plaintiff's motion for summary judgment (doc. #15) is granted and plaintiff's motion to dismiss (doc. #10) is therefore moot. Accordingly, the court enters judgment against Ms. Lewis for the unpaid principal of her student loans plus interest to date in the amount of $22,927.90. Interest on the judgment shall be paid as prescribed by 28 U.S.C. § 1961 until the judgment is paid in full.
The court has simply taken the $2,814.74 figure and added $269.36 — representing 296 days (measured from September 6, 2001 through the date of judgment) multiplied by $0.91.
In arriving at this figure, the court has taken the $6,495.68 figure and added $657.12-representing 296 days multiplied by $2.22.
IT IS SO ORDERED.