United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING DEFENDANTS MICHIGAN STATE
UNIVERSITY'S AND GREAT LAKES HIGHER EDUCATION
CORPORATION'S MOTIONS TO DISMISS
BERNARD A. FRIEDMAN UNITED STATES DISTRICT JUDGE
This
matter is presently before the Court on the motions to
dismiss filed by defendants Michigan State University
(“MSU”) and Great Lakes Higher Education
Corporation (“Great Lakes”) [docket entries 12
and 20]. Plaintiff has filed a response in opposition to
MSU's motion, and MSU has filed a reply. Plaintiff has
not responded to Great Lakes' motion, and the time for
him to do so has expired. Pursuant to E.D. Mich. LR
7.1(f)(2), the Court shall decide these motions without a
hearing.
Background
This
action challenges “the wrongful and unlawful
denial” of plaintiff's February 5 and March 7,
2019, loan discharge applications, in which plaintiff sought
“federal student loan discharges by [defendants] the
U.S. Department of Education [(‘USDE')] and
Secretary Bet[s]y DeVos . . . due to the invalidity and
identity thefts of three [to] five USDE student
loans.”[1] Compl. ¶ 8; id., Exs. 1-2.
This action
also challenges, pursuant to the [Administrative Procedure
Act (“APA”)], Defendants' unlawful delays of
the effective date of an updated false certification
discharge eligibility rule intended to clarify student
loan debt discharge eligibility for involuntary USD[E]
student loans made to citizens who have found themselves
unknowingly and involuntarily taken advantage of by others
and made the victims of identity theft.
Id. ¶ 9 (alterations added) (emphasis in
original). Plaintiff states that he is a “victim[] of
identity theft” and that this lawsuit is a petition to
the USDE for “forgive[ness] [of] the financial
responsibility to repay identity theft victim loans.”
Id. ¶ 60.
At
issue in this case are a “Federal Direct PLUS Loan
Master Promissory Note” from the William D. Ford
Federal Direct Loan Program “for one or more Federal
Direct PLUS . . . Loans, ” a “Summer 2016 Federal
PLUS Loan” for $6, 133.00, and three “Federal
Direct PLUS Loans” totaling $49, 195.00. Id.,
Exs. 4-6. The master promissory note and the loans identify
plaintiff as the borrower, [2] and their stated purpose is to
fund his daughter's undergraduate education at MSU.
Id.
Plaintiff
claims that he “never actually signed” the master
promissory note dated July 16, 2015, that bears his
electronic signature. Id. ¶ 11. He
“admits” that he signed the application for the
Summer 2016 loan on May 1, 2016, id. ¶ 26, but
states that he “never knew, never planned and never
consented to be liable for” what he believes are three
to five other loans that post-date the master promissory note
and the Summer 2016 loan application because he did not sign
“any MSU Plus Loan Application (or any other student
loan application) after his May 1, 2016 signature.”
Id. ¶¶ 25, 30, 51. Plaintiff alleges that
at some point “after the $6, 133.00 loan was
made” he contacted “the MSU Student Loan
office” and Great Lakes, the loan servicer, by
telephone and told them about his lack of knowledge and
consent with respect to the master promissory note and any
loans other than the Summer 2016 loan, yet “within days
after he hung up, MSU and Great Lakes disbursed a third and
then subsequently made and disbursed two to three other
semester student loans without any pre-notice to him.”
Id. ¶¶ 31-32. Plaintiff claims that he
learned of these other loans “when I tried to get
preapproved on a mor[t]gage back in Oct[.] ¶
2016.” Id., Ex. 1 (PageID.20). He claims that
these other loans “were arranged by unknown persons
other than Plaintiff, ” id. ¶ 30, and
that his identity was stolen. Id. ¶¶
41-42, 57.
In a
Voluntary Statement Form he submitted to the Chesterfield
Police Department, plaintiff claimed that when he asked Great
Lakes for a copy of the master promissory note, Great Lakes
sent him “a bill” indicating that the “loan
is up to $70, 634.24.”[3] Id., Ex. 1 (PageID.20).
A letter signed by a USDE Borrowing Services Hearing Official
that is addressed to plaintiff and attached to the complaint
as Exhibit 6 indicates that as of February 4, 2019, the
outstanding balance on plaintiff's account for the three
“Federal Direct PLUS Loans” was $58, 547.53, with
“$51, 749.92 in unpaid principal and $6, 797.61 in
accrued interest.” Id., Ex. 6 (PageID.41, 43).
The letter explains that at some point after the three loans
were declared to be in default, Great Lakes assigned the
account to the USDE's Default Resolution Group.
Id. (PageID.41). The loans were entered into the
USDE's database on December 6, 2018. Id. As of
the date of the letter the USDE had received no payments
towards the account. Id. (PageID.42).
The
USDE hearing official's letter states that the letter is
a “response to [plaintiff's] recent request for a
hearing on your objection to offset your federal and/or state
tax refunds and other payments for a debt held by the U.S.
Department of Education, Federal Student Aid.”
Id. (PageID.41). The letter contains information
about how to apply for a loan discharge, including “an
identity theft discharge.” Id. (PageID.42-43).
It informs plaintiff that based on a review of documentary
evidence, [4] plaintiff's “student aid
obligation [is] past due and legally enforceable, ” and
therefore, the USDE “will request the U.S. Department
of the Treasury to offset your federal and/or state tax
refunds and other payments to collect this debt.”
Id. (PageID.43). Plaintiff “ha[d] the option
to avoid [this] offset . . . by sending payment in the amount
of $58, 547.53 . . . or by entering into a repayment
agreement satisfactory to the Department . . . .”
Id.
On
April 5, 2019, plaintiff initiated this action against
Secretary of Education Betsy DeVos, the USDE, MSU, and Great
Lakes “pursuant to 28 U.S.C. 1331, the Administrative
Procedures Act (‘APA'), 5 U.S.C. 701-706, and the
Declaratory Judgment Act, 28 U.S.C. 2201-2202, the common law
and Michigan's statutory law (e.g. Michigan's Uniform
Commercial Code).” Id. at 1. Plaintiff also
references the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681. Id. at
11; id. ¶ 62. The complaint contains seven
counts. Count I is entitled “MPN Liability Does Not
Exist Because the Purported Borrower Never Actually
Signed the MPN Note.” Id. at 3 (emphasis
in original). Count II is entitled “Liability Admitted
on ‘Summer 2016 Loan.'” Id. at 5.
Count III is entitled “No Liability for Other Three to
Five Loans.” Id. at 6. Count IV is entitled
“Regulation of Claims Based on False
Certification.” Id. at 7. Count V is entitled
“Unreasonable Challenge Requirements and
Deficiencies.” Id. at 11. Count VI is entitled
“Fair Credit Reporting Act.” Id. Count
VII is entitled “False Hearing - Appeal.”
Id. at 12.
For
relief, plaintiff asks that the master promissory note
“and any and all other loans (except the Summer 2016
loan actually signed by Plaintiff Arsenault) be held void and
null, void and unenforceable against [him], ”
id. at 14, and that the USDE be prevented from
“request[ing] the U.S. Department of the Treasury . . .
offset [his] federal and/or state tax refunds and other
payments to collect this debt.” Id. at 15
(quoting id., Ex. 6 (PageID.43)). Plaintiff also
wants defendants to notify the credit reporting agencies that
“no sum is presently owed” by plaintiff and to
“immediately remove all references to student
loans” from his credit reports. Id. ¶ 63;
id. at 14. He asks for an immediate stay of any
pending “USDE administrative proceedings.”
Id. at 14. In addition, plaintiff seeks accounting
information regarding the loans, as well as a declaratory
judgment, damages, costs, interest, and attorney fees
“pursuant to 42 U.S.C. 1988.” Id. ¶
27; id. at 14-16.
MSU's
Motion to Dismiss
It is
unclear from the face of the complaint which counts are
directed specifically against MSU. Plaintiff refers to the
loans in dispute as “MSU federal student loans, ”
id. ¶¶ 25, 30, and indicates that the
Summer 2016 loan was taken out to cover part of his
daughter's undergraduate tuition at MSU. Id.
¶¶ 22, 49. He alleges that MSU disbursed three to
four loans without prior notice after he communicated to its
student loan office that he did not know about, and did not
consent to, any loan that was not the Summer 2016 loan.
Id. ΒΆΒΆ 31-32. MSU argues that dismissal of
the complaint is appropriate under Fed.R.Civ.P. 12(b)(6)
because the complaint fails to state a claim against this
defendant. MSU also argues that ...