PEREZ v. USA

Filing 29

OPINION AND ORDER: Granting 19 Defendant's Motion for Summary Judgment and denying 27 Plaintiff's Motion for Summary Judgment. The Clerk is directed to enter judgment. Signed by Senior Judge Mary Ellen Coster Williams. (ac7) Service on parties made. (Article No. 7017 1450 0000 1346 1321)

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No. 18-312C
(Filed: January 9,2019)

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JOSE A. PEREZ.

Plaintiff,
v.

THE UNITED STATES,
Defendant.

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OPINION AI{D ORDER GRANTING DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT

WILLIAMS, Senior Judge.
Plaintiff ple se Jose Perez alleges that the United States Department of Education
("Education") illegally exacted 914,455.58 from him by offsetting this amount from his Social
Security payments and applying it toward six unpaid student loans. Plaintiff claims that the loans
were repaid "on or about 2004-2005," and seeks a refund of the offset and an iniunction to cease
further collection attempts.
This matter comes before the Court on Defendant's motion for summary judgrnent.
Because there are no genuine issues of material fact and Defendant is entitled to judgment as a
matter of law, Defendant's motion for summary judgment is granted.

Backgroundl

Plaintifftook out 23 loans under various financial assistance programs authorized by Title
IV ofthe Higher Education Act of 1965. Twelve of Plaintiff s loans were cancelled, three were
made pursuant to the Perkins Loan Program, which has now ended, and the remaining eight were
made pursuant to the Federal Family Education Loan Program C'FFELP'). Scaniffe Decl. fl 24.
FFELP loans are made by private institutions but are guaranteed by state agencies or non-profit
organizations, and are reinsured and often subsidized by Education. Id. atfl 10. Plaintiff obtained
the loans in order to pursue studies at Jackson Memorial Hospital School of Nursing and

Hahnemann University, which is now part of Drexel University. Plaintiff attended Hahnemann
University from 1991-94, and earned a Bachelor of Science in Hahnemann's physician assistant

program. DA

2 14.

The six FFELP loans at issue are now held by Education. Scaniffe Decl. fl'lf 24-25. Under
Federal Family Education Loan Program, loans made by a bank, institute ofhigher education,
the
or Education itself acting as a lender are guaranteed by either state agencies or non-profit
organizations and are reinsured by Education. Id. at !l 10. When a borrowsr defaults, the guaranty
agency "pays on the claim to the holder of the loan, which may be either the original lender or
another eligible financial institution to whom the loan was assigned, and takes assignment ofthe
loan." Id. at fl I 1. After the guaranty agency pays a default claim, it files a claim with Education,
which reimburses the guaranty agency "a percentage of the losses the guaranty agency incurs in
honoring delault claims on qualifying loans. After the guarantor has been reimbursed, it must try
to collect the debt from the defaultcr . . ." Id. at fl 12. The guaranty agency "must remit to
Education a conesponding percentage ofany amounts it recovers directly from the defaulter," and
if the guaranty agency "obtains no payment from the debtor for a significant period, Education

t

This background is derived from Plaintiffs amended complaint, and the appendix attached
to Defendant's motion for summary judgment. "DA" refers to Defendant's appendix. Defendant's

appendix includes the declaration of S. Dawn Scaniffe, an attomey in the Department of
Education's Division ofPostsecondary Education, Office ofthe General Counsel. Attached to Ms.
Scaniffe's declaration are: Plaintilf s aggregate loan history from the National Student Loan Data
System ("NSLDS"); the NSLDS loan detail for each of Plaintiff s individual loans; the promissory
note for Loan 23; two checks reflecting disbursements for Loan 23; PlaintilPs debt detail from the
Debt Management and Collection System ('DMCS) database; promissory notes for Loans 22,
21,10,9,3,2, and l; a compilation of Plaintiffs promissory note signatures; DMCS records of
payment transactions and collection actions and communications between Plaintiffand Education;
the disclosure statements for Loans 23,21,10,9,3,2, and l; the collection agency history, notice
history, and payment history of Plaintiffs account from DMCS; Plaintiff s letter to Education
disputing Education's referral of Plaintiffs debt to Treasury Offset Program ("TOP"); the TOP
hearing decision; Plaintiffs 2005 complaint in the United States District Cou( for the Southern
District of Indiana against United Student Aid Funds ("USAF"); the District Court's 2007
judgment in favor of USAF for $42, 212.16; USAF's brief in support of summary judgment; the
affirmance by the United States Court of Appeals for the Seventh Circuit of the district court's
decision; Plaintif| s transcript from Drexel University; and promissory notes for Plaintiff s Perkins
Loans.

may require the guarantor to assign the loan to Education."
begins its own collection efforts. Id. atfl 13.

Plaintiffs loan history for

Id.

Upon assignment, Educarion

these six loans, identified by their National Student Loan Data

System loan numbers. is as follows:

o

On June 30, 1989, Plaintilf signed a promissory note for Loan 23, a Subsidized
Stafford Loan in the amount of $2,625 for studies at Jackson Memorial Hospital
School ofNursing. The initial lender was CenTrust Savings Bank, and the guaranty
agency was the Florida Department of Education Office of Student Financial
Assistance. On October 15. 1994. Plaintiff defaulted on this loan, and on June 8,
1995, the Florida Department of Education Office of Student Financial Assistance
paid the default claim. On August 21, 1995, Education paid the guaranty agency,
which continued to hold the loan and continued to attempt to collect it. On
September 7, 2004, Education accepted assignment ofthe loan.

o

On June 2, 1991 , Plaintiff signed a promissory note for Loan 21 , a Supplemental
Loan for Students in the amount of $4,000 for studies at Hahnemann University.
The initial lender was Citibank, and the guaranty agency was United Student Aid
Funds ("USAF"). USAF is a Delaware corporation in the business ofguaranteeing
student loans. DA214. On January 30,f996, Plaintiff defaulted on this loan, and
on January 31,1996, USAF paid the default claim' On March 15' 1996, Education
paid the guaranty agency, which continued to hold the loan and continued to
;ttempt to collect on it. On November 29, 2010, Education accepted assignment of
the loan.

o On February 16, 1993, Plaintiff signed a promissory

note for Loan 9,

a

Supplemental Loan for students in the amount of$4,000 for studies at Hahnemann
University. The initial lender was Citibank, and the guaranty agency was USAF'
On January 30, 1996, Plaintiff defaulted on this loan, and on January 31' 1996,
USAF paid the default claim. On March 15, 1996' Education paid the guaranty
agency, which continued to hold the loan and continued to attempt to collect it On
November 29, 2010, Education accepted assignment ofthe loan.

.

On November 13, 1993, Plaintiff signed a promissory note for Loan 3,

a

Supplemental Loan for Students in the amount of$4,000 for studies at Hahnemann
University. The initial lender was Citibank, and the guaranty agency was USAF.
On January 30, 1996, Plaintiff defaulted on this loan, and on January 3I' 1996'
USAF paid the delault claim. On March 15, 1996, Education paid the guamnty
agency, which continued to hold the loan and continued to attempt to collect it' On
November 29,2010, Education accepted assignment ofthe loan.

.

On March 15, 1994, Plaintiff signed a promissory note for Loan 2, a Supplemental
Loan for Students in the zLrnount of $5,500 for studies at Hahnemann University.
The initial lender was Citibank, and the guaranty agency was USAF. On January
30, 1996, Plaintiff defaulted on this loan, and on January 31,1996, USAF paid the
default claim. On March 15, 1996, Education paid the guaranty agency, which

continued to hold the loan and continued to attempt to collect
2010, Education accepted assignment ofthe loan.

.

it.

On November 29,

On March 15,1994, Plaintiff signed a promissory note for Loan 1, a Supplemental
Loan for Students in the amount of $1,000 for studies at Hahnemann University.
The initial lender was Citibank, and the guaranty agency was USAF. On January
30, 1996, Plaintiff defaulted on this loan, and on January 31,1996, USAF paid the
default claim. On March \5, 1996, Education paid the guaranty agency, which
continued to hold the loan and continued to attempt to collect it. On November 29,
2010, Education accepted assignment ofthe loan.

Scaniffe Decl.'lf 25. The initial amount disbursed to Plaintiffunder these six loans was 921,125.
The loans were declared in delault as a result of Plaintiff making no voluntary pal, nents, and, as
of May 1, 2018, the total amount Plaintiff owed was $41,921.21. Id. at flfl 36,39, 54.
Once the loans were declared in default, Education placed the loans in the Treasury Offset

Program ("TOP'), which is a centralized debt collection program administered by the Treasury
Department for the purpose ofassisting federal agencies in the collection of delinquent debts owed
to the Government. Id. at fl 1 7. Education has collected 47 offsets from Plaintiff via TOP,
beginning on May 29, 2009, for a total of $14,455.58, which has been credited toward Plaintiff s
six defaulted loans.2 Id. at'lT!l 40-41. Education also collected $355.52 by garnishing Plaintiff s
wages on February 13, 2007. Id. at'11fl 40-41.
Prior to refening Plaintiff s defaulted loans to TOP for collection, Education sent Plaintiff
three letters, dated August 18, 2005, August I l, 2006, and July 3, 2008, notifying Plaintiff of
Education's intent to begin collection via TOP. Id. at tf 44. Education began collection under TOP
onMay 29,2009. Id. atfl4l. After TOP offsets had begun, Education sent Plaintiff an additional
letter on June 3, 2011, notifring Plaintiff of Education's collection efforts. Plaintiff did not
respond to these notices until October 27 , 2017 , when he sent Education a letter objecting to the
offsets being taken from his Social Security payments, claiming that he never received notice of
the debt or collection effort, that he repaid the debt in 2004-05, and requesting that Education
discontinue taking ofl'sets, refund offsets collected, and grant Plaintiff a hearing. Am. Compl. U 9l
DA 187-89. On January 18, 2018, Education responded to Plaintiff, stating that its records showed
letters were sent to Plaintiff on multiple occasions, and that the Department's records showed his
debt existed. DA l9I-92. The letter also stated that an in-person hearing was not required as
Plaintiff did not provide sufficient information as to why his objection could not be resolved
through a review of documentary evidence. DA 191.
On April 6,2005, Plaintiff filed a complaint against USAF, the guaranty agency for five
ofthe six loans at issue here, in the United States District Court for the Southem District oflndiana,
alleging that USAIi lailed to validate the debt and failed to afford Plaintiff a hearing prior to
garnishing his wages, and seeking a permanent injunction against further collection efforts and a
refund of all funds oreviouslv collected. DA 196-99. Five loans at issue in Plaintiffs District

2

The last TOP offset was on April 25, 2018. Upon notification of this lawsuit, Education
stopped the TOP offsets and will not resume them until the conclusion of this matter. Scaniffe
Decl. fl 49.

Court case are also at issue here. On January 22,2007, the District Court dismissed Plaintiff s
complaint with prejudice and entered judgment in favor of USAF in the amount of $42,212.16
plus interest. DA 210. On January 29,2007, Plaintiff moved to set aside the District Court's
judgment. The District Court denied Plaintiff s motion on January 31, 2007. On February 16,
2007 , the District court denied a second, nearly identical motion, which it construed as a Rule
60(b) morion, Relief from a Judgment or order, and on September 27 , 200'7 , the united States
Court of Appeals for the Seventh Circuit affirmed the District Court's February 16 decision.
On June 27, 2018, Plaintiff filed his amended complaint in this Court. Plaintiff alleges ihat

the offsets from his Social Security payments pursuant to TOP are an illegal exaction, a Fifth
Amendment Taking, and violate his due process rights.
Discussion

Summary Judgment Standard
Summary judgment is appropriate where there is "no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law'" RCFC 56(a); see also Anderson
v. Liberty Lobbv. Inc., 477 U.S. 242,247-48 (1986). A genuine dispute is o-ne that "may
.""-""bty b.."*l""d tn favor of either party." Libeltv Lobby,4TT IJ.S. at250. A fact is material
if it ,,miglt affect the outcome of the suit.'; ld. at 248. The moving party bears the burden of
resolved
establishlng the absence ofany material fact, and any doubt over factual disputes will be
in favor ofihe nonmoving party. Minsus constructors. Inc. v. United States, 812 F.2d 1387, 1390
(Fed. Cir. 1987). Once this burden is met, the onus shifts to the nonmovant to present evidence
of fact
irom which a finder of fact might rule in his favor. Ifhe does so, there is a genuine issue
that requires a trial. Libertv Lobbv,477 U.S. at257.

succeed on a motion for summary judgment, Defendant must show that
Plaintiffs defaulted Ioans were properly assigned to Education and that Education followed the
proper procedures to collect tne aeut. See Kiople v. United States, 105 Fed. cl. 651,653'57
an attomey at Education familiar
iZOi Z;.'O"f.na*t provided the declaration of S. bawn Scaniffe,
with ihe agency's electronic records databases, in particular its records on defaulted loans.
of
Scaniffe Oecf. j'1 1-7. Ms. Scaniffe testified that her declaration was based on her review
Scaniffe's
plaintilf s records as well as her knowledge of ToP. Id. at ll 8. Attached to Ms.
declaration are 241 pages of exhibits detailing Plaintiff s loan history, as well as correspondence
between Plaintiff and Education, Plaintiff and USAF, and Plaintiffs previous lawsuit against
USAF. DA 1-241 . Defendant has established that valid loans were made to Plaintiff, that Plaintiff
failed to repay them, that Education guaranteed these loans and paid the amounts Plaintiff owed,
and that plaintiff now owes Education these amounts plus interest as allowed by law. See Kipple,
of
105 Fed. cl. at 654-55 (finding no genuine issue of material fact as whether or not assignment
the plaintiff s loans to Education occurred where Defendant provided Education. employee's
declaration establishing how Education acquired the loan from the plaintiff s university); see also
wagstaff v. United States, 111 Fed. Cl. 754,764 (2013) (finding complaint could not survive
;.-..y J"dg"r*t *h"te the plaintiff was unable to produce any evidence showing that the
promissory notes were invalid or that the assignment was improper)'

In order to

Plaintiffhas provided no evidence supporting his claims that fie debt is invalid or that the
debt was paid. All six of the loans at issue are in default. Although Plaintiff alleges that the loans
at issue were repaid in 2004-2005, Plaintiffhas provided no evidence ofthis claimed repayment,
and Education's records do not reflect any voluntary payments ever being made by Plaintiff. Id'
at fl 39. Plaintiff has not identified any genuine issues of material fact that prevent entry of
summary judgment on behalf of the Government.

Plaintiff atleges that the TOP offsets taken from his Social Security payments are an illegal
exaction and seeks the retum of all money taken pursuant to TOP. In order to state a claim for an
illegal exaction, a plaintiff must allege that he "has paid money over to the Governmenl, directly
or in effect, and [seek] retum ofall or part ofthat sum that was improperly paid, exacted, or taken
from the claimant in contravention of the Constitution, a statute, or a regulation." Aerolineas
Arsentinas v. United States,'77 F.3d 1564, 15',72-73 (Fed. cir. 1996) (internal citation and
qFtutionrnutkr omitted); see also Norman v. United States,429F.3d 1081, 1095 (Fed. Cir.2005);
clapn v. United States, 121 ct. Cl. 505, 512-13 (1954) (finding that an illegal exaction occurs
*6enl1he Govemment has the citizen's money in its pocket, and pleads the illegal acts of its
officials as an excuse for keeping it there"). Although Plaintiff has stated a claim for illegal
exaction, alleging that Education, via the TOP offsets, has taken money from him in violation of
Plaintiff owed the Govemment the
3 I U.S.C. g 3 716, the uncontroverted evidence establishes that
not
amounts oifset. Nor can Plaintiff establish a Fifth Amendmcnt taking claim, as Plaintiff does
action. See Zainulabeddin v.
concede that the Government has acted legitimately in its collection
United States, I 3 8 Fed. Cl. 4g2, 506 (201 8) ("In asserting a takings claim, a plaintiff must concede
th" l.gitit"*y of the govemment action that effected the taking."). Section 3716 of Title 31,
via
entitleid Administrative offset, allows a Government agency to collect amounts owed
administrative offset, even from payments due under the Social Security Act. 31 U.S.C. $ 3716
(201D.3

In addition, Plaintiff seeks an injunction against further collection attempts, but this Court
may
lacks the authority to grant this type of equitable relief in the circumstances here' This Court
in situations where such relief is
only grant equitatle relief in certain tax cases, bid protests, and
iinlid.nt of
1491(a)(2); Martinez y' United
un
-d collateral to" a monetary judgment. 28 U'S.C. $ conditions are met' this Court
States, 333 F.3d 1295, 1303 (Fed. Cir. 2003). As none of these
cannot grant Plaintiff s requested injunction.

3

plaintiffalso alleges a violation ofhis Fifth Amendment Due Process rights, but this Court
lacks jurisdiction over thls claim, as the Due Process clause is not money-mandating' LeBlanc v'
United States.50 F.3d 1025, 1028 (Fed. Cir. 1995).

Conclusion
Defendant's motion for summary judgm.ent is GRANTED. Plaintiffs motion to conduct
discovery, his motions to strike Defendant's atrnnative defenses, and his motion for summary
judgment are DENIED. The Clerk is directed to dismiss this action.