Summary
holding a creditor collecting its own debt without the aid of a third party is not a debt collector
Summary of this case from Saravia v. Select Portfolio Servicing, Inc.Opinion
Civil Case No. RWT 08-00012.
January 7, 2009
MEMORANDUM OPINION
This case arises out of a dispute concerning various fees and interest rates associated with the issuance and administration of several student loans by Defendant Sallie Mae Inc. Plaintiff Gail Marie Brown Sparrow contends that Defendant Salle Mae Inc. ("Sallie Mae") breached its statutory and contractual duties during its initial funding and continuing administration of her son's student loan accounts and its subsequent reporting of "derogatory events" to the three national credit reporting services that negatively impacted Plaintiff's credit history. Plaintiff also contends that she is entitled to relief under state claims for negligence and intentional infliction of emotional distress.
Defendant Sallie Mae Inc. asserts that Defendant SLM Corporation "is not a proper party to this action because it does not service loans and is merely a holding company that owns Sallie Mae, Inc." Def.'s Mot. to Dismiss First Am. Compl. at 1 n. 1. Accordingly, the Court will refer to Sallie Mae as the singular Defendant in the case.
Defendant Sallie Mae has filed a Motion to Dismiss, or in the Alternative, for a More Definite Statement. Because Plaintiff has failed to state a claim under the two counts of her complaint, Defendant's Motion to Dismiss will be granted.
I. PROCEDURAL HISTORY
Plaintiff filed her Complaint [Paper No. 1] on January 3, 2008. Defendant Sallie Mae moved to dismiss or, in the alternative, for a more definite statement on February 25, 2008. [Paper No. 4]. Plaintiff then filed an Amended Complaint on March 10, 2008. [Paper No. 6]. Defendant Sallie Mae again moved to dismiss or, in the alternative, for a more definite statement on March 31, 2008. [Paper No. 7]. Plaintiff filed her Opposition on April 21, 2008. [Paper No. 9]. Defendant filed its Reply on May 5, 2008. [Paper No. 10]. Before the Court is Defendant's Motion to Dismiss the First Amended Complaint, or in the Alternative, for a More Definite Statement [Paper No. 7] on the two counts contained in Plaintiff's Amended Complaint.
Plaintiff filed her Opposition on April 23, 2008, which exceeded the 14 day timeframe as Defendant's Motion to Dismiss the Amended Complaint was filed on March 31, 2008. See Local Rule 10.5.2 and Court's April 1, 2008.
II. FACTUAL BACKGROUND
III. STANDARD OF REVIEW
Id.12Edwards v. City of Goldsboro 178 F.3d 231243Bell Atlantic Corp. v. Twombly127 S. Ct. 19551969 Conley v. Gibson355 U.S. 41 Twombly id. Id. Id.
Conley stated that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief."
The Court must consider all well-pled allegations in a complaint as true, see Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe factual allegations in the light most favorable to the plaintiff, see Lambeth v. Bd. of Comm'rs of Davidson County, 407 F.3d 266, 268 (4th Cir. 2005). Nevertheless, the Court is not required to accept as true "a legal conclusion couched as a factual allegation," Papasan v. Allain, 478 U.S. 265, 286 (1986), conclusory allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or "allegations that are merely conclusory, unwarranted deductions of fact or unreasonable inferences," Veney v. Wyche, 293 F.3d 726 (4th Cir. 2002).
IV. ANALYSIS
Count One of the Plaintiff's Complaint "seeks an arithmetic and forensic accounting of and for all payments, charges, interest rate increases, and other penalties imposed upon her" due to the student loan administered by Sallie Mae. Plaintiff asserts a number of claims under various statutes, which the Court will address in turn.
As a threshold matter, Plaintiff stipulates to the dismissal of her claims that are based on the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., due to TILA's one-year statute of limitations. See 15 U.S.C. § 1640(e) (one year statute of limitations from the date of the alleged violation); Opp. to Defs.' Mot. to Dismiss First Am. Compl. at 6. The Court will grant the dismissal of her claims based on TILA with prejudice because she has failed to state a claim under TILA as more than one year elapsed between the time Plaintiff applied for and received the student loans administered by Sallie Mae (January 2001) and the time Plaintiff filed her complaint in this case (January 2008).
Second, Plaintiff contends that Sallie Mae violated the Fair Debt Collection Practices Act ("FDCPA") by engaging in "unfair practices." Am. Compl. at 2. Simply put, Sallie Mae is not a "debt collector" that is subject to the terms of the FDCPA. See 15 U.S.C. § 1692a(6) (defining debt collector as "any person who uses any instrumentality of interstate commerce of the mails in any business the principal purpose of which is the collection of any debts"). Rather, Sallie Mae is a creditor that is collecting its own debt without the aid of a third party. See 15 U.S.C. § 1692a(4) (defining creditor as "any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another."); see also Scott v. Wells Fargo Home Mortgage, Inc., 326 F. Supp. 2d 709, 717-18 (E.D. Va. 2003) (granting summary judgment in favor of defendants because "creditors, mortgagors, and mortgage servicing companies are not debt collectors and are statutorily exempt under the FDCPA"), aff'd, 67 Fed. Appx. 238 (4th Cir. 2003) (unpublished) (per curiam).
Plaintiff alternatively contends that Sallie Mae may be considered a "debt collector" "for that portion of the Loan or loans which were private loans or loans transferred to or from other entities." Am. Compl. ¶ 5. This additional contention is easily disposed of because there is no allegation or proof that Sallie Mae was not the originator of the loans and received the loans from another entity. In fact, Plaintiff alleges that she entered "into a contractual relationship with Sallie Mae for initial funding . . . of her son's student loan accounts," which contradicts her assertion that these loans were transferred from other entities thereby transforming Sallie Mae into a "debt collector." Am. Compl. ¶ 6 (emphasis added). Because Plaintiff has failed to state a claim under the FDCPA, the Court will dismiss the FDCPA allegations in Count I of Plaintiff's Amended Complaint. Third, Plaintiff contends that Sallie Mae failed to make required disclosures under the Higher Education Act ("HEA") to her and to her son prior to the origination of the loan made under the FFELP. Even if Sallie Mae had failed to provided the disclosures enumerated in 20 U.S.C. § 1083, Plaintiff is without a judicial remedy because the HEA does not confer a private right of action to enforce violations of its statutory scheme. 20 U.S.C. § 1082(a)(2) (providing that the Secretary may sue); 20 U.S.C. § 1083(f)(2)(B) (holding that a lender's failure to provide information required by that section "shall not provide a basis for claim of civil damages"); see also Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 598 (4th Cir. 2005) (noting that "no federal private right of action exists" under the HEA as only the Secretary is authorized to enforce it). Accordingly, the Court will dismiss the HEA allegations in Count I of Plaintiff's Amended Complaint.
In any event, there is no allegation or factual support that Plaintiff's loans were in default if and when they were received by Sallie Mae and thus there is no basis for holding Sallie Mae subject to the FDCPA as a "debt collector." See 15 U.S.C. § 1692a(6)(F) (excluding from definition of "debt collector" any person who received a debt that "was not in default at the time it was obtained by such person.").
The Court notes that an accounting, which is the relief Plaintiff seeks, is not an available statutory remedy under either TILA or the FDCPA. See 15 U.S.C. §§ 1640(a), 1692k(a) (providing for monetary damages under TILA and FDCPA).
Fourth, Plaintiff alleges that Sallie Mae, in violation of the Fair Credit Reporting Act ("FCRA"), inaccurately reported certain information to the three credit reporting agencies and that she disputed this information by letter to Equifax dated February 3, 2003. See Compl. Ex. B. While a private right of action exists under the FCRA, it must be before the expiration of the earlier of two dates: (a) two years after the date of discovery of the violation; or (b) five years after the date on which the violation that is the basis for such liability occurs. See 15 U.S.C. § 1681p. Given that Plaintiff drafted her letter to Equifax, which disputed the purported inaccurate information, on February 3, 2003, she necessarily discovered the violation either on or before that date, which is more than two years prior to the time she filed her original complaint in January 2008. Accordingly, Plaintiff's FCRA claim is time-barred and the Court will dismiss the FCRA allegations in Count 1 of Plaintiff's Amended Complaint.
Fifth, Plaintiff contends that "[u]pon information and belief," as an African-American female, she experienced "discriminatory, offensive, and invidious treatment . . . at the hands of the Defendants [which] was motivated and predicated in principal part by a pervasive distaste for [her] racial ethnicity" and that a Caucasian American citizen would not have experienced "such disparate treatment." Am. Compl. ¶ 18. To establish a cause of action under § 1981, a plaintiff must allege that she is member of a racial minority, that the defendant intended to discriminate against her on the basis of race, and that the discrimination concerned one of the statutorily enumerated rights such as the right to make and enforce contracts. 42 U.S.C. § 1981; Spriggs v. Diamond Auto Glass, 165 F.3d 1015, 1018 (4th Cir. 1999). Though a plaintiff is not required to plead a prima facie case to survive a motion to dismiss, she must plead facts sufficient to state each element of the asserted claim because a § 1981 action "must be founded on purposeful, racially discriminatory actions." Spriggs, 165 F.3d at 1018. As such, Plaintiff's vague and conclusory allegations do not suffice. See Luy v. Balt. Police Dep't, 326 F. Supp. 2d 682, 689 (D. Md. 2004) (holding that plaintiff's allegation that defendant "willfully, intentionally, and unlawfully discriminated against [him]" in denying him promotions and equal treatment because he was Asian American failed to state a cause of action under § 1981 because plaintiff did not reference any actual events that occurred during his employment). Similarly, here, Plaintiff's complaint lacks a factual basis for concluding that she was treated differently than similarly-situated borrowers or that she was intentionally discriminated against on the basis of race. Although the Court must consider all well-pled allegations in a complaint as true, see Albright, 510 U.S. at 268, and must construe factual allegations in the light most favorable to the plaintiff, see Lambeth, 407 F.3d at 268, it is not required to accept as true "a legal conclusion couched as a factual allegation," Papasan, 478 U.S. at 286, conclusory allegations devoid of any reference to actual events, United Black Firefighters, 604 F.2d at 847, or "allegations that are merely conclusory, unwarranted deductions of fact or unreasonable inferences," Veney, 293 F.3d at 726. Thus, Plaintiff's bare and conclusory allegations of racial discrimination under § 1981 are insufficient to state a claim.
Count Two of Plaintiff's Amended Complaint, which asserts state causes of action under theories of breach of contract, negligence, and intentional infliction of emotional distress all fail for the same reason as Plaintiff's § 1981. Plaintiff has not alleged essential elements of these claims and her legal conclusions cannot serve as the required factual allegations necessary to survive a motion to dismiss.
First, a breach of contract claim requires a contractual obligation owed by defendant to plaintiff and a material breach of that obligation. Cont'l Masonry Co. v. Verdel Constr. Co., 279 Md. 476, 480, 369 A.22 566, 569 (1977). Plaintiff has not alleged either element in her original or amended complaint; her bare and conclusory allegation that Sallie Mae's conduct "constitutes an egregious breach of its continuing contract with the Plaintiff" does not suffice. Am. Compl. ¶ 21.
Second, negligence requires a duty owed by defendant to plaintiff, a breach of that duty, and injury proximately caused by that breach. Valentine v. On Target, Inc., 353 Md. 544, 549, 727 A.29 947, 929 (1999). Here, Plaintiff similarly fails to allege any one of the required elements and relies upon her conclusory allegation that Sallie Mae's violation of its contract with her "constitutes negligence." This fails to state a claim for negligence sufficient to survive the instant motion to dismiss. Am. Compl. ¶ 21.
Finally, Plaintiff has failed to allege that Sallie Mae's conduct was intentional or reckless and so extreme and outrageous as to cause her severe emotional distress. Tavakoli-Nouri v. Maryland, 139 Md. App. 716, 728, 779 A.2d 992, 999 (Md. Ct. Spec. App. 2001). Without even considering whether Sallie Mae's conduct was intentional or reckless or exceeded the threshold required to subject it to liability, Plaintiff has failed to allege that she even suffered emotional distress — much less that the distress was severe. Rather, Plaintiff's bare allegation is that "[t]his conduct also constitutes . . . the tort of `intentional infliction of emotional distress.'" Am. Compl. ¶ 21.
V. CONCLUSION
For the foregoing reasons, the Court will, by separate order, grant Defendant's Motion to Dismiss.