Bush v. Northern Michigan University
Filing
17
OPINION; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
__________________________
ADRIAN BUSH,
Plaintiff,
v.
Case No. 2:14-CV-43
NORTHERN MICHIGAN UNIVERSITY,
HON. GORDON J. QUIST
Defendant.
__________________________________/
OPINION
Plaintiff, proceeding pro se, filed his complaint in this case on or about January 21, 2014 in
the 96th District Court for the State of Michigan in Marquette, Michigan. In his complaint, Plaintiff
essentially sought a declaration that a student loan he obtained while enrolled as a student at
Defendant Northern Michigan University is voidable at his election because Plaintiff had not
reached the age of majority at the time he signed the note (Note) evidencing the student loan.
Defendant removed the case to this Court on February 14, 2014, alleging federal question
jurisdiction based on Plaintiff’s request for damages pursuant to 15 U.S.C. § 1640 (the Truth in
Lending Act or “TILA”).
On March 11, 2014, the Court entered an Order to Show Cause, directing Defendant to show
cause within fourteen days why the Court should not remand the case to state court for lack of
subject matter jurisdiction. In particular, the Court was concerned that Plaintiff had not intended
to allege a federal claim simply by requesting damages under 15 U.S.C. § 1640 in his prayer for
relief. The Court allowed Plaintiff the opportunity to reply to Defendant’s response. Defendant
filed its response on March 25, 2014, arguing that because Plaintiff is pro se, his pleading should
be construed liberally, see Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 595 (1972), and,
therefore, the Court should construe Plaintiff’s complaint as alleging a TILA claim. Plaintiff did
not file a reply. In light of Defendant’s response and Plaintiff’s lack of a reply—indicating
Plaintiff’s intent to allege a TILA claim—the Court concludes that Plaintiff intended to plead a
federal claim, giving the Court subject matter jurisdiction over the complaint.
Defendant has filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), arguing that Plaintiff fails to state a claim for several reasons. Defendant contends that
Plaintiff’s infancy or lack of capacity defense to enforcement of the Note fails because the Higher
Education Act (HEA) specifically preempts Plaintiff’s state law infancy defense, a Michigan statute
bars the defense in actions to enforce educational loans, and Michigan law considers education one
of the “necessaries” for which a minor might contractually bind himself. Plaintiff has filed a
response, in which he raises a number of new issues not set forth in his original complaint, including
that his defense to enforcement of the student loan is not infancy, but “lack of bureaucratic
capacity”; that Defendant violated the Due Process Clause of the Fifth Amendment by “failing to
legitimize the loan in a court of law”; that the HEA’s preemption of the state law infancy defense
violates the Tenth Amendment and constitutes involuntary servitude in violation of the Thirteenth
Amendment; and that enforcement of the student loan violates Plaintiff’s “right to childhood.” In
addition, Plaintiff alleges that he was not eligible for a student loan because Defendant failed to
administer a required test to determine Plaintiff’s competence to obtain a student loan.
For the reasons set forth below, the Court will grant Defendant’s motion and dismiss
Plaintiff’s complaint with prejudice.
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Pursuant to Federal Rule of Civil Procedure 8(a), a complaint must provide “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Detailed factual
allegations are not required, but “a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 1964–65 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103 (1957)).
The court must accept all of the plaintiff’s factual allegations as true and construe the complaint in
the light most favorable to the plaintiff. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009).
The court must determine whether the complaint contains “enough facts to state a claim to relief that
is plausible on its face.” Twombly, 550 U.S. at 570, 127 S. Ct. at 1974. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S. Ct. 1937, 1949 (2009). Although the plausibility standard is not equivalent to a
“‘probability requirement,’ . . . it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. (quoting Twombly, 550 U.S. at 556, 127 S. Ct. at 1965). “[W]here the well-pleaded
facts do not permit the court to infer more than the mere possibility of misconduct, the complaint
has alleged—but it has not ‘show[n]’—that the pleader is entitled to relief.” Id. at 1950 (quoting
Fed. R. Civ. P. 8(a)(2)).
Initially, the Court addresses Plaintiff’s federal-law claim under the TILA. In his complaint,
Plaintiff requests costs in accordance with 15 U.S.C. § 1640. (Dkt. # 1-1 at Page ID 9.) Apart from
Plaintiff’s failure to allege a violation of the TILA, Plaintiff fails to state a claim because student
loans made under Title IV of the HEA are exempt from the TILA’s protections. 15 U.S.C. 1603(7)
(exempting from the TILA “[l]oans made, insured, or guaranteed pursuant to a program authorized
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by title IV of the Higher Education Act of 1965"); see also United States v. Forrest, No. 11-14461,
2012 WL 3237192, at * 3 (E.D. Mich. July 12, 2012) (noting that “Congress has expressly exempted
student loans from the purview of the Truth in Lending Act”), Report and Recommendation adopted,
2012 WL 3235046 (Aug. 7, 2012). Because Plaintiff’s Federal Perkins Loan arises under Title IV
of the Higher Education Act, see 20 U.S.C. § 1087aa (a), Plaintiff’s TILA claim fails as a matter of
law.
Having disposed of Plaintiff’s sole federal claim, the Court must decide whether to exercise
its discretion to dismiss or address Plaintiff’s state-law claims. 28 U.S.C. § 1367(c)(3). This
decision requires a balancing of interests. Harper v. AutoAlliance Int’l, Inc., 392 F.3d 195, 211 (6th
Cir. 2004). “A district court should consider the interests of judicial economy and the avoidance
of multiplicity of litigation and balance those interests against needlessly deciding state law issues.”
Id. (internal quotation marks omitted). Considering the pertinent interests in this case, the Court
concludes that the balance of factors weighs in favor of the Court deciding Plaintiff’s state law
claim, particularly because a federal statute controls Plaintiff’s claim. In addition, judicial economy
favors a prompt resolution of Plaintiff’s claim.
As noted above, Plaintiff contends that Defendant may not enforce the Note because Plaintiff
was a minor at the time he signed the Note and therefore lacked the capacity to contract. See
Woodman ex rel. Woodman v. Kera LLC, 486 Mich. 228, 236–37, 785 N.W.2d 1, 5 (2010). The
HEA provides, however, that “[n]otwithstanding any provision of State law to the contrary . . . in
collecting any obligation arising from a loan made under part D of this subchapter, an institution of
higher education that has an agreement with the Secretary pursuant to section 1087cc(a) of this title
shall not be subject to a defense raised by any borrower based on a claim of infancy.” 20 U.S.C. §
1091a(b)(3). Numerous courts have concluded that this provision expressly preempts state infancy
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defenses. See Chae v. SLM Corp., 593 F.3d 936, 942 (9th Cir. 2010) (noting that § 1091a(b)(3) is
one of several express preemption provisions); Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 596
n.5 (4th Cir. 2005) (§ 1091a(b) is one of several sections of the HEA that expressly preempts certain
state law claims and defenses); Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1124–25 (11th
Cir. 2004) (stating that the HEA is “riddled with isolated preemptive provisions,” one of which
preempts state-law infancy defenses).
Plaintiff offers no authority to the contrary, and the Court finds no reason to disagree with
these cases that the HEA preempts state-law infancy defenses to enforcement of federal student
loans. Plaintiff argues, however, that preemption of such defenses is contrary to the Tenth
Amendment, which states: “The powers not delegated to the United States by the Constitution, nor
prohibited by it to the states, are reserved to the states respectively, or to the people.” U.S. Const.
amend. X. Plaintiff fails to cite any authority supporting such argument, nor is the Court aware of
any case supporting Plaintiff’s argument. Similarly, Plaintiff fails to cite any authority supporting
his argument that preemption of state-law infancy defenses “violates the plaintiff’s 13th Amendment
right to freedom from involuntary servitude.” (Dkt. # 7 at Page ID 34.) In contrast courts have
rejected similar arguments out of hand. See Craig v. Educ. Credit Mgmt. Corp. (In re Craig), 579
F.3d 1040, 1047 (9th Cir. 2009) (describing the debtor’s Thirteenth Amendment argument based on
the purported impossibility that she would ever pay off her student loan as “patently specious”);
Sibley v. U.S. Dep’t of Educ., No. 96-1392, 1997 WL 159204, at *3 (7th Cir. Apr. 1, 1997) (stating
that the plaintiff’s argument that the HEA’s removal of the statute of limitations for initiating a wage
offset subjected him to involuntary servitude “requires no discussion other than an observation that
it is without merit”); Sibley v. U.S. Dep’t of Educ., 913 F. Supp. 1181, 1189 n. 8 (N.D. Ill. 1995)
(observing that the HEA’s salary offset in no way compelled the plaintiff to work for the
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government in violation of the Thirteenth Amendment). Likewise, this Court finds Plaintiff’s
argument without merit. Therefore, Plaintiff’s claim that he lacked capacity to enter into the Note
fails as a matter of law.1
Plaintiff also raises several other arguments based on claims or theories not pled in his
complaint. Plaintiff has not formally moved to amend his complaint to add these claims, but even
if Plaintiff had done so, the Court would deny the motion. A court may deny leave to amend on a
number of grounds, including when the amendment would be futile. See Brown v. Owens Corning
Inv. Review Comm., 622 F.3d 564, 569 (6th Cir. 2010). An amendment is futile if it could not
withstand a Rule 12(b)(6) motion. Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th
Cir. 2000). Plaintiff’s newly-raised claims would not withstand a motion to dismiss.
First, Plaintiff argues that Defendant violated Plaintiff’s due process rights by “failing to
legitimize the loan in a court of law.” Plaintiff fails to cite any law permitting enforcement of
student loans only through court proceedings. In addition, Plaintiff cites no authority for his
proffered claim that Defendant violated his due process rights by enforcing the Note.
Second, Plaintiff contends that the crux of his claim is not that he lacked the capacity to
contract because he was a minor, but because he lacked “bureaucratic capacity.” Although Plaintiff
has attempted to explain what he means by “bureaucratic capacity,” the Court is unaware of any
such concept under federal or state law that constitutes a defense to enforcement of a debt
obligation.
1
Given that the Court has concluded that the HEA preempts Plaintiff’s claim that he lacked the capacity to
contract, the Court need not spend significant time on Defendant’s other arguments. However, the Court notes that
Michigan law also renders an infancy defense inapplicable to educational loans. M.C.L.A. § 600.1404(2)
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Third, Plaintiff refers to “[t]he right of childhood,” which he defines as “the right to make
every mistake once, understand the consequence of majority, experience lesser consequence, and
thus develop without undo [sic] consequence.” (Dkt. # 7 at Page ID 34.) As with his other claims,
Plaintiff cites no authority supporting a “right of childhood,” and to this Court’s knowledge no court
has ever recognized such a right under federal law.
Plaintiff’s final argument is not clear, but he appears to claim that he was not eligible for a
student loan in the first instance, and therefore Defendant may not rely on the HEA to preempt
Plaintiff’s state-law infancy defense. In particular, Plaintiff alleges that he lacks a high school
diploma or the equivalent and, therefore, Defendant was required to administer a competency test
to ensure that Plaintiff could benefit from the education he was offered. Plaintiff relies on Section
484(d) of the HEA, 20 U.S.C. § 1091(d), which provides that in the case of a student who lacks a
high school certificate of graduation or the recognized equivalent of such, the student must
demonstrate an ability to benefit from the education or training being offered by meeting one of four
standards, one of which is an acceptable score on an “independently administered examination.”
20 U.S.C. § 1091(d)(1). As Defendant notes, however, a student may also demonstrate eligibility
by showing that he “has completed a secondary school education in a home setting that is treated
as a home school or private school under State law.” 20 U.S.C. § 1091(d)(3).2 To demonstrate
compliance with this section, Defendant has submitted a copy of Plaintiff’s Home School
Certificate, showing a Home School graduation date of August 15, 2003—one month before
2
The Court notes that this provision was in effect in 2003, when Plaintiff graduated from a home school
program and signed the Note.
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Plaintiff signed the Note.3 Thus, any claim by Plaintiff that he was ineligible for the loan in the first
instance would be futile.
Having concluded that it has subject matter jurisdiction over this matter, the Court will grant
Defendant’s Motion to Dismiss for the reasons set forth above.
An appropriate order will enter.
Dated: May 15, 2014
/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE
3
Defendant states that it offers the Home School Certificate only as a means to show futility rather than as part
of its Motion to Dismiss.
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