Lima v. Department of Education, United States et al
ORDER DENYING PLAINTIFF'S MOTION FOR RECONSIDERATION OF ORDER FILED APRIL 25, 2017 re: 102 . Signed by MAGISTRATE JUDGE KEVIN S.C. CHANG on 5/31/2017. (afc) Order filed April 25, 2017: ECF no. 100 "Order: (1) De nying Plaintiff's Motion for Summary Judgment and (2) Granting Defendant Educational Credit Management Corporation's Motion for Summary Judgment" CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). All participants are registered to receive electronic notifications.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
UNITED STATES DEPARTMENT OF
EDUCATION; EDUCATIONAL CREDIT )
CIVIL NO. 15-00242 KSC
ORDER DENYING PLAINTIFF’S
MOTION FOR RECONSIDERATION OF
ORDER FILED APRIL 25, 2017
ORDER DENYING PLAINTIFF’S MOTION FOR
RECONSIDERATION OF ORDER FILED APRIL 25, 2017
Before the Court is Plaintiff Charles Lima’s
(“Plaintiff”) Motion for Reconsideration of Order Filed April 25,
2017, filed May 4, 2017.
Defendant Educational Credit Management
Corporation (“ECMC”) filed an Opposition on May 18, 2017 and
Plaintiff filed a Reply on May 29, 2017.
This matter is suitable
for disposition without a hearing pursuant to Rule 7.2(e) of the
Local Rules of Practice for the U.S. District Court for the
District of Hawaii (“Local Rules”).
For the reasons articulated
below, the Court HEREBY DENIES Plaintiff’s Motion.
On April 25, 2017, this Court issued an Order: (1)
Denying Plaintiff’s Motion for Summary Judgment and (2) Granting
Defendant Educational Credit Management Corporation’s Motion for
Summary Judgment (“SJ Order”), wherein the Court made the
following pertinent findings and/or conclusions:
1) 31 U.S.C.
§ 3716 does not provide a private cause of action; 2) ECMC is not
a “debt collector” under the Fair Debt Collection Practices Act
(“FDCPA”), but even if it was, the fiduciary exception set forth
in 15 U.S.C. § 1692a(6)(F)(i) would preclude liability because
ECMC is a guaranty agency that owes a fiduciary duty to the
Department of Education (“DOE”) and its actions were incidental
to its fiduciary obligation; 3) Plaintiff’s Fifth Amendment Due
Process claim failed as a matter of law because ECMC is not a
governmental actor and its actions did not constitute federal
action; 4) none of the factors relevant to the inquiry of whether
to exercise supplemental jurisdiction favored retaining
jurisdiction as to Plaintiff’s conversion claim, and even if the
Court exercised supplemental jurisdiction, it would grant summary
judgment in ECMC’s favor on the claim; and 5) given the granting
of ECMC’s motion, there were no claims remaining upon which to
award the relief sought via Plaintiff’s motion.
Doc. No. 100.
Plaintiff seeks reconsideration of this Court’s SJ
Order pursuant to Local Rule 60.1(c) and Federal Rule of Civil
Procedure (“FRCP”) 60(b)(1) and (6).
Court erred in three respects:
Plaintiff argues that the
1) by failing to determine
whether or not ECMC is a holder of the Notes and misrelying on
evidence; 2) by finding that ECMC was not liable under the FDCPA;
and 3) deciding matters not pleaded; namely that the Court
summarily transformed the basis of the garnishment.
Local Rule 60.1 provides three grounds for
reconsideration of interlocutory orders:
(a) Discovery of new material facts not previously
(b) Intervening change in law;
(c) Manifest error of law or fact.
Local Rule 60.1.
Insofar as Local Rule 60.1 pertains to
interlocutory orders, it is inapplicable to the SJ Order.
FRCP 60(b) permits relief from final judgments, orders,
Such a motion may be granted on any one of six
(1) mistake, inadvertence, surprise, or excusable
(2) newly discovered evidence that, with
reasonable diligence, could not have been
discovered in time to move for a new trial under
(3) fraud (whether previously called intrinsic or
extrinsic), misrepresentation, or misconduct by an
(4) the judgment is void;
(5) the judgment has been satisfied, released or
discharged; it is based on an earlier judgment
that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Although Plaintiff relies on FRCP 60(b)(1) and (6), he
has not provided the applicable legal standard for either. He
cites “surprise” as a basis for reconsideration pursuant to FRCP
60(b)(1). FRCP 60(b)(1) is most commonly utilized in the context
of “excusable neglect”.
Fed. R. Civ. P. 60(b).
Rule 60 reconsideration is generally
appropriate in three instances:
1) when there has been an
intervening change of controlling law; 2) new evidence has come
to light; or 3) when necessary to correct a clear error or
prevent manifest injustice.
Sch. Dist. No. 1J v. ACandS, Inc., 5
F.3d 1255, 1262 (9th Cir. 1993);
Sierra Club, Haw. Chapter v.
City & Cty. of Honolulu, 486 F. Supp. 2d 1185, 1188 (D. Haw.
2007) (“The Ninth Circuit has recognized that Rule 60(b) may be
used to reconsider legal issues and to reconsider the court’s own
mistake or inadvertence.”).
Surprise under FRCP 60(b)(1) “may be found in
circumstance[s] where there is some reason for confusion or
misunderstanding by the parties.”
In re Walker, 332 B.R. 820,
829 (Bankr. D. Nev. 2005) (citing 12 James Wm. Moore, et. al.,
Moore’s Fed. Practice 3d ¶ 60.41[a] (2005)).
FRCP 60(b)(6) is “used sparingly as an equitable remedy
to prevent manifest injustice.
The rule is to be utilized only
where extraordinary circumstances prevented a party from taking
timely action to prevent or correct an erroneous judgment.”
United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049
(9th Cir. 1993).
“The party must demonstrate both injury and
circumstances beyond his control that prevented him from
proceeding with the prosecution or defense of the action in a
Cmty. Dental Servs. v. Tani, 282 F.3d 1164,
1168 (9th Cir. 2002); In re Wilson, 349 B.R. 831, 836 (Bankr. D.
Idaho 2006) (citation omitted) (“To qualify for relief under Rule
60(b)(6), a moving party must ‘show both injury and that
circumstances beyond its control prevented timely action to
protect its interests.
Neglect or lack of diligence is not to be
remedied through Rule 60(b)(6).’”).
The Ninth Circuit requires that a successful motion for
reconsideration accomplish two goals.
“First, a motion for
reconsideration must demonstrate some reason why the Court should
reconsider its prior decision.
Second, the motion must set forth
facts or law of a ‘strongly convincing’ nature to induce the
court to reverse its prior decision.”
Jacob v. United States,
128 F. Supp. 2d 638, 641 (D. Haw. 2000) (citing Decker Coal Co.
v. Hartman, 706 F. Supp. 745, 750 (D. Mont. 1988)) (citation
Mere disagreement with a court’s analysis in a
previous order is not a sufficient basis for reconsideration.
White v. Sabatino, 424 F. Supp. 2d 1271, 1274 (D. Haw. 2006)
(citing Leong v. Hilton Hotels Corp., 689 F. Supp. 1572 (D. Haw.
1988)); Haw. Stevedores, Inc. v. HT & T Co., 363 F. Supp. 2d
1253, 1269 (D. Haw. 2005).
“Whether or not to grant
reconsideration is committed to the sound discretion of the
Navajo Nation v. Confederated Tribes and Bands of the
Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003) (citing
Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th
The provisions relied upon by Plaintiff do not provide
bases for reconsideration.2
Plaintiff has not adduced any reason
for confusion or misunderstanding by the parties that would
constitute “surprise” or identified extraordinary circumstances
Plaintiff filed an Amended Motion for Reconsideration in
an effort to add FRCP 60(b)(3) and FRCP 59(e) as bases for
reconsideration. The Court denied the Amended Motion because
Plaintiff filed it after ECMC filed its Opposition and because it
merely listed the foregoing rules; it did not explain how they
applied or why they supported reconsideration. Even if Plaintiff
had included these rules with the instant Motion, he would not be
entitled to reconsideration for the reasons discussed in this
A motion for reconsideration under Rule 59(e) should not be
granted, absent highly unusual circumstances, unless the district
court: 1) is presented with newly discovered evidence; 2) has
committed clear error; or 3) if there is an intervening change in
the controlling law. 389 Orange St. Partners v. Arnold, 179 F.3d
656, 665 (9th Cir. 1999) (citation omitted). Plaintiff’s
allegations of error are unfounded, and he has not presented
newly discovery evidence nor has there been an intervening change
in controlling law.
“To prevail [under FRCP 60(b)(3)], the moving party must
prove by clear and convincing evidence that the [order or
judgment] was obtained through fraud, misrepresentation, or other
misconduct and the conduct complained of prevented the losing
party from fully and fairly presenting the defense.” Casey v.
Albertson’s Inc., 362 F.3d 1254, 1260 (9th Cir. 2004) (citation
omitted). FRCP 60(b)(3) “require[s] that fraud . . . not be
discoverable by due diligence before or during the proceedings.”
Id. (citation and quotations omitted) (alteration in original).
Having failed to identify any fraud, misrepresentation, or
misconduct on the part of ECMC that prevented him from fairly
presenting a defense, it would be impossible for Plaintiff to
prove that the SJ Order or judgment was obtained as a result of
such conduct, much less by clear and convincing evidence.
Unsupported allegations of fraud or misrepresentation do not
that prevented him from taking timely action to prevent or
correct an erroneous judgment.
Moreover, as detailed below, Plaintiff has not set
forth facts or law of a strongly convincing nature to induce the
Court to reverse its prior decision.
Plaintiff rehashes the same
arguments presented in connection with the summary judgment
The Court addresses each of Plaintiff’s arguments in
Manifest Error of Fact
Plaintiff first alleges that the Court manifestly erred
by misrelying on the evidence presented by ECMC and ignoring his
Plaintiff insists that the issue of holdership had to
be determined as an initial matter.
As explained in the SJ
Order, the Court ruled on the claims in the Complaint and nothing
Plaintiff’s contention that his submissions were ignored
and not given due weight is speculative, at best.3
considered all of the evidence presented by the parties and the
fact that Plaintiff did not prevail does not entitle him to
Plaintiff again cites to ECF PageID #s, even though the
Court admonished that it was improper to do so. SJ Order at 21
n.10 (“ECF citations should reference the applicable document
number on the docket, not the Page ID#.”). It is extremely
cumbersome to locate citations by ECF PageID #. Any citations
should refer to the docket number and applicable page number of
the referenced document.
Manifest Error of Law
Plaintiff secondly challenges the SJ Order on the basis
that the Court’s findings with respect to his FDCPA claim are
contrary to Ninth Circuit precedent.
According to Plaintiff, the
Court erroneously relied on an agreement between NYHESC and ECMC
in determining that ECMC owed a fiduciary duty to DOE.
reading of the SJ Order establishes otherwise.
As already discussed in the preceding
section, ECMC obtained all right, title, and
interest in Plaintiff’s Notes upon assignment of
the same by NYHESC pursuant to the agreement
between the DOE and ECMC. ECMC’s CSF, Ex. 4. In
accordance with that same agreement, ECMC acceded
to “assume additional tasks involving the transfer
from other guaranty agencies to ECMC of certain
FFEL Program loans where a collection judgment has
been obtained.” Id. What is more, following
assignment, ECMC assumed all guarantor
responsibilities for Plaintiff’s Notes and other
judgment accounts. Id., Ex. 5; Rowe II, 730 F.
Supp. 2d at 1288-89 (“Even though the student
loans at issue in this case were already in
default at the time ECMC became the guarantee
agency for the State of Oregon, it did assume all
the fiduciary obligations of the previous guaranty
The agreement between NYHESC and ECMC
concerning the transfer of judgment accounts
describes ECMC as having been “created under the
direction of [DOE] to provide specialized
guarantor services to [DOE] pursuant to FFEL
Program including accepting transfer of title to
certain student loan judgment accounts by entering
into agreements with other FFEL guarantors, such
as [NY]HESC.” ECMC’s CSF, Ex. 5. This is
consistent with the DOE’s designation and
identification of ECMC as a guaranty agency.
Guaranty Agency Contact List, https://ifap.ed.gov/
drmaterials/attachments/appa.pdf (last visited
Apr. 25, 2017); Bennett II, 504 Fed. Appx. at 877
(relying in part on the list of guaranty agencies
posted on DOE’s official website). For these
reasons, the Court finds that ECMC is a guaranty
agency and as such, it owes a fiduciary duty to
SJ Order at 19-20.
The above passage demonstrates that the
Court’s evaluation of whether ECMC is a guarantee agency turned
1) the agreement between DOE and ECMC; 2) the agreement
between NYHESC and ECMC; and 3) DOE’s identification of ECMC as a
In determining guaranty agency status, the
Court did exactly what Plaintiff accuses it of failing to do;
that is, it considered the facts of the case.
Mot. at 4-5 (“The
Order’s treatment of the guarantor issue flies in the face of
Ninth Circuit precedent which instructs that the issue of
guarantor is to be determined by the facts of the case.”).
Therefore, Plaintiff’s argument is wholly without merit.
Plaintiff additionally challenges this Court’s analysis
with respect to the issue of whether ECMC’s actions were
incidental to its fiduciary obligation.
As he has throughout
these proceedings, Plaintiff advances conclusory assertions
without any detailed discussion.
The entirety of his argument
can be found in a single sentence - “In further finding that the
collection was incidental to a guaranty agency’s fiduciary duty,
the Order again contravenes the Ninth Circuit’s admonishments and
findings in Rowe.”
Mot. at 5.
Mere disagreement with the SJ
Order is not a sufficient basis for reconsideration.
absence of any analysis by Plaintiff, it is unclear how the Court
purportedly erred, other than reaching a conclusion adverse to
Deciding Matters not Pleaded
Finally, Plaintiff challenges what he believes is an
improper transformation of the basis for the garnishment and
accuses the Court of denying him the ability to present a defense
to claims raised by ECMC, going so far as to say that this
amounted to a denial of due process.4
In his Reply, Plaintiff
claims to have been unfairly surprised5 that the SJ Order found
as facts allegations that were not pled as defenses or
The Court already considered and rejected
Plaintiff’s contention that ECMC was required to assert a
Reliance Ins. Co. v. Doctors Co., 299 F. Supp. 2d
1131, 1154 (D. Haw. 2003) (“Reiteration of arguments originally
made in support of, or in opposition to, a motion for summary
judgment do not provide a valid basis for reconsideration.” ).
Plaintiff continues to challenge the very
existence of a the debt upon which the
administrative offset is based. He also submits
that the Notes were required to have been the
subject of a compulsory counterclaim pursuant to
FRCP 13. These issues do not preclude the entry
of summary judgment in ECMC’s favor. To start,
Ironically, Plaintiff simultaneously accuses the Court of
neglecting to resolve his unpled claims.
Plaintiff use of “unfair surprise” is inconsistent with
FRCP 60(b)(1)’s use of “surprise”.
Plaintiff has been presented with the Notes in
response to his multiple inquiries about the basis
of the debt owed and ECMC justifiably submitted
the Notes as evidence to counter Plaintiff’s
allegation that there was no basis for
administrative offset. More importantly, however,
the claims asserted by Plaintiff do not involve
the resolution of the debt owed. Bennett v.
Premiere Credit of N. Am. (“Bennett I”), No. 4:11cv-124, 2012 WL 1605108, at **6-7 (S.D. Ga. May 8,
2012), aff’d Bennett II, 504 Fed. Appx. at 872
(“The Court’s hypothetical determination of
whether a debt collection counterclaim would be
compulsory or permissive would have no effect on
the Court’s resolution of Bennett’s claims. As
discussed, supra, Bennett has not demonstrated any
entitlement to relief on any of the claims alleged
in her complaint.”). In any event, no claims
remain upon which to award any remedy or relief.
SJ Order at 32-33 (emphasis added).
The Court further stated
If anything, resolution with respect to the
existence or amount of the debt should be raised
at the administrative level. See, e.g., 34 C.F.R.
§ 30.24 (identifying opportunities for the debtor
to obtain review of the existence or amount of a
debt); cf. Bennett II, 504 Fed. Appx. at 879
(citing available administrative rights,
procedures, and remedies pursuant to the HEA
concerning the existence or amount of the
plaintiff’s debt in the context of administrative
Id. at 33 n.17 (emphasis added).
Plaintiff’s disagreement with
the Court’s ruling cannot provide a basis for reconsideration.
In fact, it was Plaintiff who attempted to obtain rulings that
extended beyond the face of the Complaint.
The fact that the
Court limited its analysis to the four claims asserted in the
Complaint, with the resulting rulings unsatisfactory to
Plaintiff, does not amount to error or “surprise”.
Plaintiff contends in his Reply that the amount of the
debt owed was the essence of the Complaint.
Yet the Complaint
contains no claims concerning the amount of the debt owed.
bolster his position, Plaintiff points to arguments and relief
requested in his motion for summary judgment - that he
characterizes as claims - but none have been pled as
claims/causes of action in the Complaint.6
Requests for relief
that are presented in a summary judgment motion are not causes of
action in the litigation without having been pled in the
As the Court noted in the SJ Order, Plaintiff
explained that his requests for relief in his motion for summary
judgment could be found in paragraph 1 of his prayer for relief
in the Complaint.
SJ Order at 32 n.15.
Not only is this a
concession that those requests for relief were not pled as formal
claims in the Complaint, paragraph 1 in the prayer for relief
does not even include the dispositive relief sought in
In his Reply, Plaintiff referenced 3 of the 4 requests
for relief set forth in his motion for summary judgment:
1) he has no obligation to ECMC based on an
alleged note dated January 29, 1979;14 2) ECMC
failed to produce a copy of the note or inform him
of the nature and amount of the debt prior to the
commencement of the administrative offset of his
Social Security benefits or at anytime thereafter
as required by § 3716; 3) the note does not exist
and/or there is no evidence of the loan.
Reply at 8.
Plaintiff’s motion for summary judgment:
WHEREFORE, Plaintiff requests that this Honorable
1. Grant a Judgment declaring the Plaintiff’s loan
obligation, if any, if not a federal student loan
or a claim of the United States Government as
contemplated by 31 USC § 3711 [sic] and,
accordingly, not subject to Administrative Offset
under 31 USC § 3716 [sic].
Compl. at 7.
The Court cannot be faulted for failing to address
non-existent claims and Plaintiff cannot reasonably claim “unfair
surprise” that the Court’s analysis was limited to the four
claims set out in the Complaint.
Plaintiff has not explained,
how the Court could award declaratory or other relief with no
claims remaining, much less with respect to requests for relief
that were not asserted as causes of action.
Cf. Fauley v. Wash.
Mut. Bank FA, No. 3:13-CV-00581-AC, 2014 WL 1217852, at *9 (D.
Or. Mar. 21, 2014) (concluding that the plaintiff’s claim for
injunctive relief “is actually a prayer for relief which the
court may consider only after adjudicating her substantive causes
of action”); Capodiece v. Wells Fargo Bank, No. C 13-00032 WHA,
2013 WL 1962310, at *7 (N.D. Cal. May 10, 2013) (finding that the
plaintiffs’ requests for declaratory and injunctive relief are
types of remedies, not independent claims, and that “declaratory
and injunctive relief may be sought as part of their prayer for
relief – not as independent claims for relief”).
At the heart of Plaintiff’s misunderstanding about the
evaluation of his claims is his belief, though erroneous, that
the holder issue or existence and/or amount of the debt bore on
It is clear, based on his claims and allegations,
that Plaintiff’s reliance on the statutory and constitutional
provisions in the Complaint was misplaced.
arguendo, that Plaintiff obtained favorable rulings with respect
to certain requests for relief in his motion for summary
judgment, he would not prevail with respect to the four claims in
the Complaint because those claims were not predicated on the
amount and/or existence of the debt.
Plaintiff persists with
arguments that he already presented in connection with the
summary judgment motion.
Said arguments were not compelling
then, nor are they now.
In sum, Plaintiff has failed to present a basis for
reconsideration, much less facts or law of a strongly convincing
nature to induce the Court to reconsider its prior decision.
Although Plaintiff clearly challenges the Court’s SJ Order, mere
disagreement with the Court’s analysis is insufficient to warrant
Based on the foregoing, the Court HEREBY DENIES
Plaintiff’s Motion for Reconsideration of Order Filed April 25,
2017, filed May 4, 2017.
IT IS SO ORDERED.
Honolulu, Hawaii, May 31, 2017.
Kevin S.C. Chang
United States Magistrate Judge
CIVIL NO. 15-00242 KSC; LIMA V. UNITED STATES DEPARTMENT OF EDUCATION, ET AL.;
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION OF ORDER FILED APRIL 25,
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