Alvaro Jimenez v. SLM Private Education Student Loan Trust 2011-A et al

Filing 33

ORDER Requiring Supplemental Briefing re 28 ADMINISTRATIVE MOTION to Extend Time to Serve Defendant SLM Private Education Student Loan Trust 2011-A, and 23 MOTION to Dismiss. Signed by Judge Kandis A. Westmore on 8/9/2017. (kawlc2, COURT STAFF) (Filed on 8/9/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ALVARO JIMENEZ,
Plaintiff,

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Case No. 17-cv-01624-KAW
ORDER REQUIRING SUPPLEMENTAL
BRIEFING

v.
SLM PRIVATE EDUCATION STUDENT
LOAN TRUST 2011-A, et al.,

Re: Dkt. Nos. 23, 28

United States District Court
Northern District of California

Defendants.
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On March 24, 2017, Plaintiff Alvaro Jimenez filed the instant suit against Defendants SLM

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Private Education Student Loan Trust 2011-A ("SLM"), Law Offices of Harris & Zide, and Flint

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C. Zide, alleging violations of the Fair Debt Collection Practices Act and the Rosenthal Fair Debt

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Collection Practices Act. (Compl., Dkt. No. 1.) Plaintiff's claims are based on the filing of SLM

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Private Education Student Loan Trust 2011-A v. Mario A. Jimenez, Case No. CLJ 537908 in the

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Superior Court for the County of San Mateo, in which Defendant SLM was represented by

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Defendants Law Offices of Harris & Zide and Defendant Zide. (Compl. ¶ 19.) Plaintiff asserts

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that the SLM v. Jimenez complaint misrepresents the character, amount, and legal status of the

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debt, that Defendant SLM lacks standing to sue on the alleged debt, that the amount sued for is

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higher than the amount owed, and that SLM is barred from bringing an action pursuant to

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provisions regarding co-signor disclosures. (Compl. ¶ 22.)

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On August 2, 2017, Defendant SLM filed a motion to dismiss the instant case. (Dkt. No.

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23.) Defendant SLM argues that dismissal was warranted under Federal Rule of Civil Procedure

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12(b)(4) and (5) because Defendant SLM was improperly named as a defendant, as "a trust is not a

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legal entity and has no capacity to sue or be sued" under California law. (Id. at 5 (internal

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quotation omitted).) Rather, Defendant SLM asserts that the action must name the trustee,

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administrator, or executor of the trust as the defendant, not the trust itself. (Id.) In the alternative,

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Defendant contends that dismissal is warranted under Federal Rule of Civil Procedure 12(b)(6)

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because Plaintiff failed to plead adequate facts to provide notice of his claim. (Id. at 6.)
On August 4, 2017, Plaintiff filed a motion to extend the time to serve Defendant SLM,

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specifically to serve Defendant SLM's registered agent. (Dkt. No. 28.) Plaintiff also filed an

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opposition to Defendant SLM's motion to dismiss, arguing that Defendant SLM is a Delaware

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Statutory Trust that can be sued in its own name. (Dkt. No. 29 at 2-3.) With respect to Defendant

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SLM's Rule 12(b)(6) argument, Plaintiff repeatedly refers to documents that were produced to

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Plaintiff in connection with the underlying state court litigation. (Id. at 4-6.)
On August 7, 2017, Defendant SLM opposed Plaintiff's motion to extend time, on the

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United States District Court
Northern District of California

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ground that its motion to dismiss was based on Defendant SLM not being a proper defendant, not

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on the manner of service. (Dkt. No. 30.) Thus, an extension of time to serve was not necessary

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because either Defendant SLM should be dismissed as an improper defendant, or Defendant SLM

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was a proper party and had already been served. (Id. at 3.) That same day, Plaintiff filed a reply

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in support of his motion to extend time, contending that Defendant SLM should not be permitted

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to claim that it could not be sued without naming a trustee as a party defendant. (Dkt. No. 32 at 1-

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2.)

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Having reviewed the parties' briefing, the Court requires supplemental briefing on whether

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Defendant SLM may sue or be sued in California. In Portico Management Group, LLC v.

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Harrison, the California Court of Appeal explained that in general, "[a] trust cannot sue or be

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sued," as "the trustee is the real party in interest with standing to sue and defendant on the trust's

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behalf." 202 Cal. App. 4th 464, 473 (2011). The Court of Appeal, however, acknowledged that

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there are particular trusts that general trust law does not apply to, such as an unincorporated

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business or Massachusetts trust. Id. at 475. These business trusts were different from ordinary

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trusts, as their object was "not to hold and conserve particular property, with incidental powers . . .

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but to provide a medium for the conduct of business and sharing of its gains." Id.; see also Thales

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Alenia Space France. v. Thermo Funding Co., 989 F. Supp. 2d 287, 295 (S.D.N.Y. 2013)

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("Business trusts are more akin to business entities -- such as limited partnerships, LLCs, or even
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corporations -- than to the traditional trusts"). "Unlike traditional trusts, a business trust may be

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treated as a separate entity," against whom judgment could be entered. Portico, 202 Cal. App. at

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475.
The parties must explain whether Defendant SLM falls into the category of the business

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trust, and provide specific legal authority and factual evidence in support. The Court observes that

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the various SLM Private Education Loan Trusts have apparently filed over thirty cases in

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California, including the underlying SLM v. Jimenez complaint. E.g., SLM Private Educ. Loan

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Trust 2010-C v. Moran, Case No. KC069475 (filed July 21, 2017); SLM Private Educ. Loan Trust

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2012-B v. Elliot, Case No. RIC1712088 (filed June 27, 2017); SLM Private Education Loan Trust
2011-C v. Mangyan, Case No. BC665931 (filed June 21, 2017); SLM Private Education Loan

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United States District Court
Northern District of California

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Trust 2011-A v. Alozie, Case No. EC066498 (filed March 23, 2017). Moreover, in the underlying

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SLM v. Jimenez complaint, Defendant SLM did not name a trustee and described itself as "a

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corporation qualified to do business in California," which strongly suggests that Defendant SLM is

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a business trust that can both sue and be sued.1 (Michel Decl., Exh. A, Dkt. No. 28-1.) This also

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suggests that Defendant SLM's argument that it may not sue or be sued in California is specious;

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Defendant SLM cannot have it both ways.
Defendant SLM is also apparently listed in Delaware's Department of State Division of

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Corporations as a statutory trust. (Michel Decl., Exh. C.) Several courts have found that statutory

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trusts formed under Delaware law are business trusts. See also Thales Alenia Space France, 989

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F. Supp. 2d at 298 ("Delaware statutory trusts meet this Court's definition of a business trust");

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Dargahi v. Hymas, No. 05 Civ. 8500(BSJ), 2008 WL 8586675, at *1 (S.D.N.Y. Oct. 15, 2008)

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("Since 1988, Delaware law has provided by statute for the creation of the form of unincorporated

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association formerly known as a business trust, and now known as a statutory trust") (internal

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quotation omitted).
The Court also requires supplemental briefing on whether the Court should abstain from

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deciding the instant case, given the pending state action between the parties. Plaintiff's claims

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Many of the above-listed cases also do not name a trustee.
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appear to be dependent on the resolution of the pending state action, as Plaintiff's claims are

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essentially defenses to the merits of Defendant SLM's claims in that pending action. For example,

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Plaintiff argues that Defendant SLM lacks standing to sue on the alleged debt, has sued for the

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wrong amount, and is barred from bringing the action due to co-signor disclosures violating the

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law. (Compl. ¶ 22.) Plaintiff also challenges the validity of the state claims raised in the

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underlying SLM v. Jimenez complaint. (Compl. ¶ 20.)2 Many of Plaintiff's arguments in

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opposition to the motion to dismiss are also premised on discovery responses produced in the state

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court case. (Dkt. No. 29 at 4-5.) In light of the ongoing state action, the Court requires briefing

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on whether abstention should apply, including Colorado River abstention, a doctrine created by
the Supreme Court to prevent duplicative litigation between state and federal courts. Colo. River

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United States District Court
Northern District of California

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Water Conservation Dist. v. United States, 424 U.S. 800 (1976); see also Krieger v. Atheros

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Commc'ns, Inc., 776 F. Supp. 2d 1053, 1057 (N.D. Cal. 2011) ("Under the Colorado River

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doctrine, a federal court may abstain from exercising its jurisdiction in favor of parallel state

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proceedings where doing so would serve the interests of wise judicial administration, giving

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regard to the conservation of judicial resources and comprehensive disposition of litigation")

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(internal quotation omitted).

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Both parties shall file the requested supplemental briefing, which shall be no more than ten

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pages, by August 23, 2017. The parties may then file a response to the other parties' supplemental

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briefing, which shall be no more than seven pages, by August 30, 2017.
IT IS SO ORDERED.

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Dated: August 9, 2017
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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Many of these claims appear to have been raised as defenses in Plaintiff's answer to the SLM v.
Jimenez complaint.
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