Mungo-Craig v. Navient Solutions, Inc.
ORDER denying 8 Motion to Remand; granting 11 Motion to Dismiss for Failure to State a Claim; denying as moot 17 Motion for Summary Judgment and 18 Motion for Summary Judgment. Signed by US District Judge Terrence W. Boyle on 7/17/2017. Certified copy sent to Yacara Mungo-Craig via US Mail to 1810 Charbray Ln., Charlotte, NC 28213-5192. (Stouch, L.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
NAVIENT SOLUTIONS, INC.
NAVIENT DEPARTMENT OF
EDUCATION LOAN SERVICING,
This cause comes before the Court on plaintiffs motion to remand [DE 8], defendant's
motion to dismiss [DE 11], plaintiffs motion for summary judgment [DE 17], as well as
defendant's motion for summary judgment, or, in the alternative, to stay the matter pending
disposition of the motion to dismiss [DE 18]. The matters have been fully briefed and are ripe for
disposition. For the reasons discussed below, the motion to dismiss is granted and the matter will
Plaintiff commenced this civil action on November 8, 2016, by filing a complaint against
defendant 1 in Wake County Court, North Carolina, District Court Division. Plaintiffs complaint
asserts claims against defendant under the federal Fair Debt Collection Practices Act ("FDCP A")
and the North Carolina's Debt Collection Act ("NCDCA") related to defendant's efforts to
Both the summons and complaint filed by plaintiff indicate that she is asserting claims against a
single defendant. In the summons, plaintiff identified defendant as "Navient Solutions,
Inc/Navient Department of Education Loan Servicing." [DE 1-1 at l]. In the complaint, plaintiff
identified defendant as "Navient Solutions Inc Navient Department of Education Loan
Servicing." Id. at 3.
service certain debts. Plaintiff seeks damages in the amount of$20,500. On December 29, 2016,
defendant removed the matter to this Court.
The Court will first address plaintiffs motion to remand. 2 Removal of a civil action from
state court is only proper where the federal district courts would have original jurisdiction, 28
U.S.C. § 1441, and it is the burden of the removing party to show that jurisdiction lies in the
federal court. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (en bane).
Removal jurisdiction must be construed strictly in light of federalism concerns, and if
jurisdiction in the federal district court is determined to be doubtful, remand is required.
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).
Federal district courts have original jurisdiction over all civil actions "arising under the
Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Removal is appropriate on
the basis of federal question jurisdiction when the federal interest is apparent on the "face of the
Complaint." Gully v. First Nat'! Bank, 299 U.S. 109, 113 (1936). Here, plaintiffs complaint
specifically asserts that defendant has violated the Fair Debt Collection Practices Act. [DE 1-1 at
if 3]. This assertion is repeated throughout the complaint. Id
at ifif 1, 3, 4, 7, and 14. This is a
clear and explicit invocation of federal jurisdiction, notwithstanding plaintiffs claims that she
included the federal cause of action only to "coincide" with the state law cause of action or that
she intends to rely only on the state statutes cited in her complaint. [DE 8 at 2]. Because
plaintiffs complaint clearly presents a federal question as to plaintiffs FDCPA claim, this court
has original jurisdiction over the matter and plaintiffs motion to remand is without merit.
Additionally, this Court has supplemental jurisdiction over plaintiffs remaining state law claims
Although plaintiff has titled her filing at [DE 8] as a "Notice to Remand," this filing was
construed by the Court as a motion to remand. Defendant responded to the motion accordingly.
because all of plaintiffs claims arise from a common nucleus of operative facts. 28 U.S.C.
§ 1367(a). For these reasons, plaintiffs motion to remand will be denied.
Having found jurisdiction over this matter, the Court next turns to defendant's motion to
dismiss. A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint. Papasan
v. Allain, 478 U.S: 265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6),
"the court should accept as true all well-pleaded allegations and should view the complaint in a
light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th
Cir.1993 ). A complaint must allege enough facts to state a claim for relief that is facially
plausible. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means
that the facts pied "allow the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged," and mere recitals of the elements of a cause of action supported by
conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint
must be dismissed if the factual allegations do not nudge the plaintiffs claims "across the line
from conceivable to plausible." Twombly, 550 U.S. at 570. The complaint must plead sufficient
facts to allow a court, drawing on judicial experience and common sense, to infer more than the
mere possibility of misconduct. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d
250, 256 (4th Cir. 2009). The court need not accept the plaintiffs legal conclusions drawn from
the facts, nor need it accept as true unwarranted inferences, unreasonable conclusions, or
arguments. Philips v. Pitt County Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Although the
Court must construe the complaint of a pro se plaintiff liberally, such a complaint must still
allege "facts sufficient to state all the elements of [her] claim" in order to survive a motion to
dismiss. Bass v. E.1 DuPont de Nemours & Co., 324 F.3d 761, 765 (4th Cir. 2003).
In considering a motion to dismiss pursuant to Rule J 2(b)(6), the Court may consider
documents attached to the complaint, as well as those attached to the motion to dismiss so long
as they are integral to the complaint and authentic. Fed. R. Civ. P. IO(c); Sec'y ofState for
Defence v. Trimble Navigation Ltd, 484 F.3d 700, 705 (4th Cir. 2007); Philips v. Pitt County
Mem 'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). A court ruling on a motion to dismiss under
Rule 12(b)(6) may also properly take judicial notice of matters of public record. Sec'y ofState
for Defence, 484 F.3d at 705.
Defendant's first argument for dismissal contends that plaintiff does not allege sufficient
supporting facts and ultimately cannot show that defendant is a "debt collector" as defined by the
FDCPA and, therefore, cannot state a claim under that Act. The FDCPA prohibits the use of
abusive, deceptive and unfair debt collection practices by debt collectors. 15 U.S.C. § 1692, et
seq. The Act regulates the collection of "debts" by "debt collectors" by regulating the type and
number of contacts a collector may make with the debtor. Under 15 U.S.C. § 1692a(6), a "debt
collector" includes "any person who uses any instrumentality of interstate commerce or the mails
in any business the principal purpose of which is the collection of any debts, or who regularly
collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or
due another." A "debt collector" does not include
any person collecting or attempting to collect any debt owed or due or asserted to
be owed or due another to the extent such activity (i) is incidental to a bona fide
fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which
was originated by such person; (iii) concerns a debt which was not in default at
the time it was obtained by such person; or (iv) concerns a debt obtained by such
person as a secured party in a commercial credit transaction involving the
15 U.S.C. § 1692a(6)(F).
While plaintiff stated in her complaint that defendant is a debt collector, such a
conclusory assertion is not sufficient to meet the pleading standards laid out by Twombly and
Iqbal. Instead, plaintiff must allege sufficiently plausible facts which set forth a cognizable claim
for this Court to adjudicate. As plaintiff has asserted a claim under the FDCPA, plaintiff
therefore must allege such facts sufficient to plausibly demonstrate that defendant is a "debt
collector" as defined in that Act, and a failure to do so is fatal to this action. Plaintiffs complaint
must also allege plausible facts to show that this is not a case covered by any exceptions listed in
the Act. Again, a failure to allege such requisite facts is fatal to the action.
As an initial matter, plaintiffs complaint fails to include any factual assertions to
establish that defendant is a debt collector within the meaning of the FDCPA. Plaintiffs
complaint is sparse on facts, and fails to demonstrate with a reasonable plausibility that
defendant is a debt collector by trade or regularly attempts to collect debts on behalf of third
parties. Heintz v. Jenkins, 514 U.S. 291, 293 (1995); see also Davidson v. Capital One Bank
(USA), NA., 797 F.3d 1309, 1315-16 (11th Cir. 2015)("The statutory text is entirely
transparent. ... [A] person must regularly collect or attempt to collect debts for others in order to
qualify as a 'debt collector' under the second definition of the term").
The complaint also fails to show that this is not a case covered by any exceptions listed in
the Act. Plaintiff has alleged no facts to show that defendant is not attempting to collect the debt
pursuant to a bona fide fiduciary obligation3, ofthat this case concerns a debt which was not
Defendant argues that it sought to collect student loans from plaintiff on behalf of the
Department of Education. It stated that, as a servicer of private and federal student loans, it
communicates with customers under the name "Navient Department of Education Loan
Servicing," when acting on behalf of the United States Department of Education and directed the
Court to the U.S. Department of Education website in support of this fact. See "Loan Servicing
Contracts," U.S. Department of Education, https://studentaid.ed.gov/sa/about/datacenter/business-info/contracts/loan-servicing. While plaintiffs complaint does not allege any
facts as to the nature of the debt sought to be collected, the Court notes that entities operating as
originated by defendant, or that the loan was in default during at the time it was obtained by
defendant. 4 As to this last point, plaintiff failed to allege any facts as to when defendant began
servicing the loan, and many courts have held that a failure to allege that an entity serviced a
loan before default is fatal to a claim under the express language of the FDCPA. See Parker v.
BAC Home Loans Servicing LP, 831 F. Supp. 2d 88, 94 (D.D.C. 2011); Edmondv. Am. Educ.
Servs., 2010 WL 4269129, at *5 (D.D.C. Oct.28, 2010) (granting motion to dismiss on plaintiffs
FDCPA claims because "[a]bsent an allegation that plaintiffs loan was in default when [the
defendant] acquired it, [the defendant] is not a debt collector and this is not subject to the
FDCPA") (citing Brumberger v. Sallie Mae Servicing Corp., 84 Fed.Appx. 458, 459 (5th Cir.
2004) (affirming dismissal ofFDCPA claim against student loan servicer because "[b]y its plain
terms the FDCPA does not apply" absent an allegation that plaintiff "was in default at the time
Sallie Mae began servicing his loans")); Ramirez-Alvarez v. Aurora Loan Servs., LLC, 2010 WL
2934473, at *5 (E.D. Va. July 21, 2010) (granting summary judgment for mortgage loan
servicer, which was not debt collector for purposes of FDCPA because it "received the debt in
question while it was not in default"); Mondonedo v. Sallie Mae, Inc., 2009 WL 801 784, at *5
fiduciaries of the Department of Education in servicing student loans have been held by the
courts to not be debt collectors under the FDCPA. See Rowe v. Educ. Credit Mgmt. Corp., 559
F.3d 1028, 1034 (9th Cir. 2009); Pelfrey v. Educ. Credit Mgmt. Corp., 208 F:3d 945 (1 lth Cir.
2000) (per curiam), aff'g 71 F.Supp.2d 1161 (N.D. Ala. 1999); Forman v. Texas Guaranteed
Student Loan, No. 5:13-cv-691-D,'2014 WL 6851712 *2 (E.D.N.C. 2014).
Numerous courts have found that student loan servicers, including this very same defendant,
that begin servicing prior to default are not debt collectors under the FDCP A. See, e.g.,
Brumberger v. Sallie Mae Servicing Corp., 84 F. App'x 458, 459 (5th Cir. 2004); Spyer v.
Navient Sols., Inc., No. 15-3814 (NLH/JS), 2016 WL 1046789, at *3 (D.N.J. Mar. 15, 2016)
(holding that N avient is not a 'debt collector' under the FDCPA ... because it became the loan
servicer (first as Sallie Mae before it changed its name) while plaintiffs loan w[as] not in
default."); Levy-Tatum v. Navient & Sallie Mae Bank, No. CV 15-3794, 2016 WL 75231, at *7
(E.D. Pa. Jan. 7, 2016); Edmondv. Am. Educ. Servs., No. CIV.A. 10-0578 JDB, 2010 WL
4269129, at *5 (D.D.C. Oct. 28, 2010); Mondonedo v. Sallie Mae, Inc., No. 07-4059-JAR, 2009
WL 801784, at *3 (D. Kan. Mar. 25, 2009); Valletta v. Navient Corp., No. CV-16-01934-PHXDGC, 2017 WL 1437563, at *3 (D. Ariz. Apr. 24, 2017); Haysbertv. NavientSols., Inc., No.,
CV 15-4144 PSG (EX), 2016 WL 890297, at *11 (C.D. Cal. Mar. 8, 2016).
(D. Kan. Mar. 25, 2009) (granting summary judgment for loan servicer that "obtained the loans
originated by [a bank] for servicing prior to default and is exempt from liability under the
FDCPA"); Taggart v. Wells Fargo Home Mortg., Inc., 2010 WL 3769091, at *11 (E.D. Pa. Sept.
27, 2010) ("Loan servicers are not 'debt collectors' under the FDCPA unless the debt being
serviced was in default at the time the servicer obtained it.").~
For these reasons, plaintiff has failed to show with facial plausibility that defendant is a
debt collector and not an organization within the exceptions listed in 15 U.S.C. § lo92(a)(6)(F).
As a result, plaintiffs complaint fails to allege the necessary elements to sustain a claim under
the FDCPA, and therefore defendant's motion to dismiss the federal cause of action will be
Defendant next argues that plaintiff cannot state a claim under North Carolina law
because such state law claims are related to the collection of federal student loans and are
therefore preempted by the Higher Education Act (the "HEA"), 20 U.S.C. § 1070 et seq., and
corresponding regulations from the Department of Education. Although the body of plaintiffs
complaint does not specifically identify the type of loans sought to be collected in this matter, the
caption of plaintiffs complaint identifies defendant as a loan servicer for the Department of
Education and indicates, therefore, that defendant is being sued in its capacity as a loan servicer
for the Department of Education. It is a matter of public record that defendant services federal
student loans on behalf of the Department of Education and does so under the name "Navient
Department of Education Loan Servicing." 5 Plaintiff pleads no other facts to identify the specific
nature of her debt, or to claim that it was not related to federal student loans owned by the U.S.
Department of Education. Accordingly, such claims are preempted by the HEA and
See "Loan Servicing Contracts," U.S. Department of Education,
corresponding regulations, and therefore defendant's motion to dismiss the state law actions will
also be granted. See Forman v. Texas Guaranteed Student Loan, No. 5:13-CV-691-D, 2014 WL
6851712 *2 (E.D.N.C. 2014).
In sum, plaintiffs complaint fails to allege facts necessary to sustain actions under state
and federal law. Because plaintiffs complaint will be dismissed in its entirety, the Court need
not reach either motion for summary judgment.
For the foregoing reasons, plaintiffs motion to remand [DE 8] is DENIED and
defendant's motion to dismiss [DE 11] is GRANTED. Plaintiffs and defendant's motions for
summary judgment [DE 17, 18] are DENIED as moot. The Clerk is DIRECTED to close the
SO ORDERED, this
day of July, 2017.
TERRENCE W. BOYLE
UNITED STATES DISTRIC
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?