Conville v. Department of Education

Filing 22

MEMORANDUM OPINION AND ORDER. Signed by Honorable Robert T. Dawson on June 22, 2012. (lw)

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IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS FORT SMITH DIVISION MICHAEL J. CONVILLE, PLAINTIFF v. CASE No. 11-2246 SECRETARY ARNE DUNCAN U.S. DEPARTMENT OF EDUCATION DEFENDANT   MEMORANDUM OPINION AND ORDER Plaintiff Michael J. Conville seeks judicial review of an administrative (“the decision Department”), guaranteed Plaintiff’s Defendant’s student made and the loans. Motion by for the discharge Currently Summary Response/Cross Department Motion of before his the Judgment for of federally Court (Doc. Summary Education are 16) and Judgment (Doc. 18), Memorandum in Support (Doc. 19) and Statement of Undisputed Facts (Doc. 20). For the reasons set out below Plaintiff’s Motion for Summary Judgment (Doc. 16) is DENIED and Defendant’s Motion for Summary Judgment (Doc. 18) is GRANTED. Accordingly, Plaintiff’s Complaint (Doc. 2) is DISMISSED WITH PREJUDICE. I. Background Between 1976 and 1978, Plaintiff obtained five federally guaranteed loans in the amount of $22,500.00 to attend Catholic University of America. (Admin. Rec. P. 23). Upon completion of his course of study, Plaintiff was unable to find a job or to repay his student loan debt. (Doc. 2). Page 1 of 12 On September 9, 1983, Plaintiff applied to UNIPAC1, the servicer of his loans, for forbearance from September 1, 1983, through February 1, 1984. He asserted that he was looking for work in his field but was currently unable to meet his monthly payments due to low income caused by temporary unemployment. The request was approved on September 12, 1983. (Admin. Rec. P. 5). On March 28, 1984, Plaintiff applied to UNIPAC for forbearance from March 1, 1984 through June 1, 1984, citing his inability to meet his monthly payment. The request was approved on April 2, 1984. (Doc. 2, Ex. E). On June 26, 1984, Plaintiff wrote to UNIPAC that he would be unable to begin repaying his loan on July 1, 1984. He stated that his income was still at a level which made it impossible to begin repayment. it appears status. that “Unless some other arrangements can be made, my only recourse will be to enter default If you have any suggestions, please contact me.” 2, Ex. F). (Doc. On July 2, 1984, UNIPAC informed Plaintiff that it was unable to offer any further assistance on his account in addition to the previous ten months of forbearance. (Doc. 2, Ex. G.).                                                              1   UNIPAC loan Service Corporation was founded in 1978 and renamed Nelnet in 1996. Nelnet Investors, visited May 14, 2012). Page 2 of 12 (last On September 7, 1984, Plaintiff applied to UNIPAC for forbearance for the period of July 1, 1984, through December 1, 1984, explaining that given his monthly budget, he was unable to meet his monthly payment at that time. (Doc. 2, Ex. I). By letter dated September 26, 1984, UNIPAC informed Plaintiff that his request for forbearance was denied and that he would receive no further extensions on his loan. deemed “delinquent.” At this time the loans were (Doc. 2, Ex. J). On October 3, 1984, UNIPAC notified Plaintiff that it was accelerating his loans. UNIPAC demanded payment of the entire amount of the notes plus interest ($22,707.86) within thirty days. (Admin. Rec. P. 20). After receiving no payment, UNIPAC declared the loans in default as of November 1, 1984, and applied to the Federal Insured Student Loan Program for payment of the insurance claim. (Doc. 2, Ex. K). On March 21, 1985, Plaintiff wrote to the Department of Education, encouraging it to “please feel free to make any suggestions which outline a repayment plan that is compatible with my unemployed status.” The next entry in (Doc. 2, Ex. N). the administrative record is the Department’s response to Plaintiff’s request for review of his account, dated January 13, 2004. In its response, the Department advised Plaintiff that the amount needed to satisfy the outstanding balance on his account was $59,770.95, including Page 3 of 12 principal, interest, fees and collection costs. The Department advised Plaintiff that it could not cancel or reduce his loans and that agency. On his account had been turned over to a collection (Doc. 2, Ex. O). February 19, 2004, the Department responded to Plaintiff’s dispute of the interest and fees that had been added to his account, explaining that they were authorized by statute. The Department noted, “Your financial situation makes it difficult for you to repay this debt” and referred Plaintiff to the collection agency for additional information. (Doc. 2, Ex. P). In April, 2006, Plaintiff record from the Department. requested his administrative (Admin. Rec. P. 6). In June, 2008, Plaintiff received a “Notice of Proposed Treasury Offset2.” On August 21, 2008, Plaintiff wrote to the Department alleging that its decision to declare his loans in default was not consistent                                                              2   The Treasury Offset Program is a centralized offset program, administered by the Financial Management Service's (FMS) Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states, in accordance with 26 U.S.C. § 6402(d) (collection of debts owed to federal agencies), 31 U.S.C. § 3720A (reduction of tax refund by amount of the debts), and other applicable laws. FMS disburses federal payments, such as federal tax refunds, for agencies making federal payments (known as "payment agencies"), such as the Internal Revenue Service. "Creditor agencies," such as the Department of Education, submit delinquent debts to FMS for collection and inclusion in TOP and certify that such debts qualify for collection by offset. Federal Management Service, (last visited May 15, 2012). Page 4 of 12 with the regulations of the Secretary of Education and that he was never given “notice about an income contingent repayment plan.” Plaintiff concluded with the demand that the Department recall and discharge his outstanding loans. (Admin. Rec. P. 12). On September 26, 2008, the Department wrote to Plaintiff in response to his request for a hearing on his objections3 to the offset of his tax returns. (Admin. Rec. P. 1). Elria Whitty, Hearing Official, informed Plaintiff that she had reviewed the documents provided Department’s by him electronic and records the information regarding his in the account and determined that the evidence was insufficient to show that the debt was not owed; that UNIPAC was required to offer him an additional forbearance or that his account was improperly serviced by the loan holder. On June 28, 2011, Plaintiff filed his Complaint pro se and in forma U.S.C. § decision pauperis 702, by under requesting the the Administrative review Department of of the Education Procedure September Federal 26, Act, 5 2008, Student Aid                                                              3   “Your objection(s) to offset: (1) You believe this debt is not an enforceable debt because you were entitled to a forbearance or deferment; (2) You are concerned about the origination fee you paid and believe that the loan holder improperly serviced the account and that your account should not have been assigned to the Department; (3) You believe the Department should have offered you income contingent repayment terms.” (Admin. Rec. P. 1).  Page 5 of 12 office4 that the Department finding Plaintiff’s student loan debt to be legally originally enforceable. filed in the (Docs. Eastern 1-2). District This of action Arkansas. was The Department moved to dismiss Plaintiff’s claims because there are no facts that make venue appropriate in the Eastern District. (Doc. 8). Plaintiff requested, in the interest of justice, that the Eastern District retain the case, or in the alternative that it be transferred to the Baltimore Division of the United States District Court for the District of Maryland. (Doc. 9). On December 15, 2011, Judge Susan Webber Wright found that given Plaintiff’s pro se status, transfer to the Western District of Arkansas5, rather than dismissal, would best serve the interests of justice. Judgment refer on (Doc. the Plaintiff 10). grounds to The that Treasury Department the administrative Offset capricious nor an abuse of discretion. II. moved was neither for Summary decision to arbitrary, (Doc. 18). Standard of Review                                                              4   The hearing official’s decision is the final action of the Secretary of Education for the purposes of judicial review under the Administrative Procedure Act. 5 U.S.C.A. § 701, et. seq. See Bennett v. Spear, 520 U.S. 154, 177-178 (1997)(explaining that agency action is “final,” and thus subject to judicial review, when it “marks the consummation of the decisionmaking process” and “determines a party’s rights or obligations”).   5 Plaintiff has resided in Mena, Arkansas (within the Western District), since at least 2004. (Doc. 8). Page 6 of 12 Summary judgment is appropriate when, viewing the facts and inferences in the light most favorable to the nonmoving party, “‘the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.’” Best Buy Stores, L.P. v. Benderson Wainberg Associates, 668 F.3d 1019, 1026 (8th Cir. 2012) (quoting Alvarez v. Des Moines Bolt Supply, Inc., 626 F.3d 410, 416 plain (8th language Cir. of 2010)(quoting Rule 56(c) Fed.R.Civ.P. mandates the 56(c)(2)). entry of The summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. party Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). seeking summary judgment always bears the “A initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. If the moving party meets the initial burden, the burden then shifts to the opposing party to produce evidence of the existence of a genuine issue for trial. Page 7 of 12 Id. at 324. A document filed pro se is to be liberally construed and “a pro se complaint, however inartfully pleaded, must be held to less stringent lawyers. standards than formal pleadings drafted by Erickson v. Pardus, 551 U.S. 89, 93 (2007). III. Discussion In reviewing the decision of the hearing official’s rejection of Plaintiff’s claim, the Court inquires whether the “agency action, capricious, an findings, abuse and of conclusions” discretion, or are “arbitrary, otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). An agency action can be set aside as arbitrary and capricious if the agency: only relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Cent. S.D. Co-op Grazing Dist. v. Sec'y of United States Dep't of Agric., 266 F.3d 889, 894 (8th Cir. 2001) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29, 43 (1983)). Moreover, “the standard of review is narrow and a court is not to substitute its judgment for that of the agency.” Id., at 895. Accordingly, decisions receive under “a this high standard degree Page 8 of 12 of of review, judicial agency deference.” Missouri Limestone Producers Ass'n, Inc. v. Browner, 165 F.3d 619, 621 (8th Cir. 1999) (quoting Dubois v. Thomas, 820 F.2d 943, 948–49 (8th Cir. 1987)). Utilizing this standard, a reasonable fact-finder could not conclude that the Department's decision was arbitrary and capricious. All the available evidence, namely the Administrative Record and the pleadings, lead to the conclusion that the Department made a reasonable decision that Plaintiff’s debts were valid and enforceable, that he was ineligible for additional forbearance and that his account was not improperly serviced. Plaintiff does not dispute the fact that he took out the loans, nor does he allege any fraudulent conduct involved in the execution of the loan contests the applications or promissory notes. As the Department’s Court decision understands, to request Plaintiff the Treasury Department to offset his federal and/or state tax refunds and other payments because the evidence & original). hearing clearly decision was erroneous.” “contrary (Doc. to the facts in in the 16)(emphasis For this proposition, Plaintiff refers twice in his Motion for Summary Judgment to Paragraph 3 of Page 2 of the Hearing Decision, which reads: “The information you provided shows that UNIPAC Student Loan Center determined that you were ineligible for forbearance.” rebuttal to the (Admin. Rec. P. 2, ¶ 3). Department’s Motion Page 9 of 12 for Summary In his Judgment, Plaintiff offers as evidence that he was eligible for forbearance the fact that the Department “stipulated for the record that ‘forbearance’ was in fact ‘granted’ to the Plaintiff on the grounds of ‘financial hardship.’” (Doc. 21). Plaintiff is referring to Paragraph 3 of the Department’s Statement of Material Facts: requested “Beginning forbearance of on his September student loan 9, 1983, Plaintiff payments, for the reason that he had been temporarily unemployed, and unable to make his monthly payments. 1984).” Such was granted up until July 1, (Doc. 20, ¶ 3). Plaintiff is essentially arguing that because the Department granted him forbearance before, it was obligated to continue to do so until he advised them he was not suffering economic hardship; forbearance the eligibility. Department While we is are estopped from sympathetic Plaintiff, this argument is without merit. denying with the Under the Federal Family Education Loan and Federal Direct Student Loan Programs the lender may, but is not required, to grant forbearance upon properly documented written request. 34 C.F.R. § 682.211(a)(2). Furthermore, the lender must reasonably believe and document in the borrower’s file that the borrower intends to repay the loan but, due to acceptable reasons, is currently unable to make scheduled payments. 34 C.F.R. § 682.211(a)(2)(i). When UNIPAC denied Plaintiff’s last request for forbearance, the decision Page 10 of 12 maker noted loan....” that “Borr[ower] has shown no intent to repay (Doc. 2, Ex. I). The Hearing Official noted that she reviewed the documents provided by Plaintiff and those maintained in the Department’s records. suggest In the that absence the of decision specific was facts arbitrary or and Plaintiff’s allegations are merely conclusory6. no evidence that the Department’s decision evidence to capricious, Because there is was unreasonable, arbitrary or capricious, summary judgment is appropriate here. IV. Conclusion The Court concludes that there exists no basis to set aside the agency's decision. For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiff’s Motion for Summary Judgment (Doc. 16) is DENIED, Defendant United States Department of Education’s Motion for Summary Judgment (Doc. 18) is GRANTED and Plaintiff’s complaint is dismissed without prejudice. All parties are to bear their own costs and fees.                                                              6 Plaintiff’s lengthy Complaint distills into three main allegations:  1. The Department did not engage in default aversion activities under 20 U.S.C. § 1078; 2. The Department denied Plaintiff the opportunity to make an income contingent repayment plan; and 3. The Department erred in failing to cancel Plaintiff’s debt because of his status as care-giver to his father. (Doc. 2).   Page 11 of 12 IT IS SO ORDERED this 22nd day of June, 2012. /s/ Robert T. Dawson Honorable Robert T. Dawson United States District Judge Page 12 of 12

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