Pennsylvania Higher Education Assistance Agency v. Hoh

Filing 20

MEMORANDUM OPINION AND ORDER denying plaintiff's 12 MOTION for Summary Judgment; this case is STAYED to provide an opportunity for the parties to follow the established administrative procedures relating to defendant's claim of perma nent and total disability; the plaintiff to file a motion to end the stay at the earliest of the following, as directed and set forth more fully herein; the pretrial settlement conference scheduled for 4/16/2015 is CANCELED and the dates provided in the 9 Scheduling Order, and 14 Supplemental Scheduling Order are VACATED; directing this case removed from the Court's active docket. Signed by Judge Thomas E. Johnston on 4/13/2015. (cc: attys; any unrepresented party) (taq)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION

PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY,
Plaintiff,
v.

CIVIL ACTION NO. 2:14-cv-00748

WILLIAM G. HOH,
Defendant.

MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff‟s Motion for Summary Judgment. (ECF 12.) For the
reasons discussed herein, the Court DENIES this motion.
I. Background
This is an action for a judgment against Defendant arising out of a student loan that is
allegedly in default. On July 25, 1988, Defendant signed a promissory note to obtain a student loan
from the Pennsylvania Higher Education Assistance Agency (“PHEAA”) through the Health
Education Assistance Loan Program (“HEAL”), with a principal sum of $20,000 (the “Student
Loan”). (ECF 13 at 1; see ECF 18-1 at 4–5 (providing the promissory note).) The HEAL Loan is
guaranteed by the United States Department of Health and Human Services (“HHS”) “and is
governed by the Public Health Service Act (42 U.S.C. § 292, et seq.), the Health Education
Assistance Loan Program regulations (42 C.F.R. §[] 60.1, et seq.) . . . , and [HEAL] Policy
Memoranda.” (ECF 18-1 ¶ 4.) “[Plaintiff] is a statutorily-created instrumentality of the
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Commonwealth of Pennsylvania,” (ECF 1 ¶ 1 (citing 24 Pa. Cons. Stat. §§ 5101–5199.9)), and “is
the owner and servicer of” the Student Loan, (ECF 18-1 ¶ 5).
“On August 16, 1988, $11,256.00 was disbursed to [Defendant] on the Student Loan.”
(ECF 1 ¶ 9; ECF 13 at 2; see ECF 6 ¶ 4; ECF 18-1 ¶ 6.) “On or before May 19, 2013, [Defendant]
became delinquent on the Student Loan . . . .” (ECF 1 ¶ 11; ECF 13 at 2.) “[Defendant] has made
no payments on the HEAL Loan since prior to May 19, 2013.” (ECF 13 at 2; ECF 6 ¶ 5
(“Defendant admits . . . that he has made no payments on this student loan since before May 19,
2013 . . . .”).)
On January 8, 2014, Plaintiff filed the Complaint seeking “the amount of $12,261.63 of
principal, interest, and late fees plus a per diem of $0.92 . . . from December 13, 2003,” as well as
applicable attorney fees. (ECF 1.) Sometime between the filing of the Complaint and March 6,
2014, Defendant notified Plaintiff that he is permanently and totally disabled. (See ECF 18-1 ¶ 13.)
On March 6, 2014, Plaintiff mailed a correspondence in response to Defendant‟s assertion of
permanent and total disability, which stated that the recipient “must complete the enclosed forms
and provide additional documentation within 60 days from the date of this letter” and included
attached “Physician‟s Certification of Borrower‟s Total and Permanent Disability” and “Medical
Release” forms. (ECF 18-1 at 8–11.) As of September 2, 2014, Plaintiff did not receive a
“return[ed] completed and signed Certification of Borrower‟s Total [and] Permanent Disability
form.” (Id. ¶ 14.)
Defendant filed his Answer to the Complaint, by counsel, on March 10, 2014. (ECF 6.) In
his Answer, Defendant asserts that the Student Loan is not in default “due to [Defendant‟s] total

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and permanent disability, which under the terms of the agreement cancels this indebtedness.” (Id.
¶ 7.)
On September 2, 2014, Plaintiff filed the instant Motion for Summary Judgment. (ECF 12.)
To date, Defendant has not filed a response.
II. Legal Standard
Rule 56 of the Federal Rules of Civil Procedure governs motions for summary judgment.
That rule provides, in relevant part, that summary judgment should be granted if “there is no
genuine issue as to any material fact.” Summary judgment is inappropriate, however, if there exist
factual issues that reasonably may be resolved in favor of either party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986). “Facts are „material‟ when they might affect the outcome of the
case, and a „genuine issue‟ exists when the evidence would allow a reasonable jury to return a
verdict for the nonmoving party.” News & Observer Publ’g Co. v. Raleigh-Durham Airport Auth.,
597 F.3d 570, 576 (4th Cir. 2010). When construing such factual issues, the Court must view the
evidence “in the light most favorable to the [party opposing summary judgment].” Adickes v. S.H.
Kress & Co., 398 U.S. 144, 157 (1970).
The moving party may meet its burden of showing that no genuine issue of fact exists by
use of “depositions, answers to interrogatories, answers to requests for admission, and various
documents submitted under request for production.” Barwick v. Celotex Corp., 736 F.2d 946, 958
(4th Cir. 1984). Once the moving party has met its burden, the burden shifts to the nonmoving
party to “make a showing sufficient to establish the existence of an element essential to that party‟s
case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). If a party fails to make a sufficient showing on one element of that party‟s
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case, the failure of proof “necessarily renders all other facts immaterial.” Id. at 323.
“[A] party opposing a properly supported motion for summary judgment may not rest upon
mere allegation or denials of his pleading, but must set forth specific facts showing that there is a
genuine issue for trial.” Liberty Lobby, 477 U.S. at 256. “The mere existence of a scintilla of
evidence” in support of the nonmoving party is not enough to withstand summary judgment; the
judge must ask whether “the jury could reasonably find for the plaintiff.” Id. at 252.
A party‟s failure to respond to a motion for summary judgment, in and of itself, does not
show that the moving party is entitled to judgment as a matter of law. Custer v. Pan Am. Life Ins.
Co., 12 F.3d 410, 416 (4th Cir. 1993). “Thus, the court, in considering a motion for summary
judgment, must review the motion, even if unopposed, and determine from what it has before it
whether the moving party is entitled to summary judgment as a matter of law.” Id.; see also Fed. R.
Civ. P. 56(e) (“If a party . . . fails to properly address another party‟s assertion of fact . . . , the court
may . . . grant summary judgment if the motion and supporting materials--including the facts
considered undisputed--show that the movant is entitled to it . . . .”).
III. Discussion
Plaintiff contends that Defendant signed the promissory note, Plaintiff owns the Student
Loan, and Defendant is in default. (ECF 13.) As such, Plaintiff argues it is entitled to summary
judgment. (Id.)
“To establish a prima facie case of a student loan default, the [plaintiff] must prove three
elements: (1) the defendant signed a promissory note for a student loan; (2) the [plaintiff] owns the
promissory note signed by the defendant[;] and (3) the defendant has defaulted on the note.”
United States v. White, No. 5:08–CV–348–F, 2009 WL 3872342, at *2 (E.D.N.C. Nov. 18, 2009);
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see also United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001) (providing similar
elements); HICA Educs. Loan Corp. v. Assadi, Civil Action No. WMN–12–216, 2012 WL
3156828, at *2 n.1 (D. Md. Aug. 1, 2012) (citation omitted) (same). “After the [plaintiff] meets
this burden, the burden then shifts to the alleged debtor to prove „the non-existence,
extinguishment, or variance in payment of an obligation.‟” White, 2009 WL 3872342, at *2
(quoting Guillermety v. Sec’y of Educ. of U.S., 341 F. Supp. 2d 682, 688 (E.D. Mich. 2003)); see
also Lawrence, 276 F.3d at 197 (“Because the [plaintiff] produced sufficient evidence to satisfy its
summary judgment burden, the burden shifted to [the defendant] to „set forth specific facts
showing that there is a genuine issue for trial,‟ not just to „rest upon the mere allegations or denials
of the adverse party‟s pleading.‟” (quoting Resolution Trust Corp. v. Camp, 965 F.2d 25, 29 (5th
Cir. 1992))).
In his Answer to the Complaint, Defendant admits that he signed the Student Loan
documents and Plaintiff is the present owner of the debt. (See ECF 6 ¶¶ 2 & 4.) Defendant also
admits that “he has made no payments on this student loan since before May 19, 2013.” (Id. ¶ 5.)
However, Defendant contends that he is permanently and totally disabled and, under the terms of
the loan documents, the debt is therefore cancelled. (Id. at 2 (“Under the terms of the loan
agreement, if Defendant became totally and permanently disabled, the unpaid indebtedness on the
note shall be canceled in accordance with applicable federal statutes and regulations. Defendant
has become totally and permanently disabled, and, therefore, the indebtedness is canceled.”).)
The debt instrument in this case provides the following, in relevant part:
If [the borrower] die[s] or become[s] totally and permanently disabled, [his]
unpaid indebtedness on this Note shall be cancelled in accordance with applicable
Federal statute[s] and regulations.
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(ECF 18-1 at 5); see also 42 C.F.R. § 60.8(a)(10) (stating that, in the context of this type of student
loan, “[t]he borrower‟s total loan obligation is cancelled in the event of death or total and
permanent disability”). The implementing regulations pertaining to this type of student loan state
that “[a] borrower is totally and permanently disabled if he or she is unable to engage in any
substantial gainful activity because of a medically determinable impairment, which the Secretary
expects to continue for a long and indefinite period of time or to result in death.” 42 C.F.R.
§ 60.39(b)(1). In United States v. Hargrett, the court analyzed the HHS‟s “policies regarding the
specifics of HEAL loan discharge requests” and provided the following discussion regarding the
relevant procedures:
To be discharged due to a disability, HHS policy requires that: (1) the debtor must
inform the HEAL lender/holder that he or she is disabled and request a discharge;
(2) the lender/holder must forward to HHS the debtor's request for discharge based
on disability and stay collection activities; (3) the lender/holder must request in
writing that the debtor complete and return the Physician's Certification of
Borrower's Total and Permanent Disability . . . in addition to providing supporting
documentation within sixty days from the date of the letter; and (4) upon receiving
the disability documentation from the debtor, the lender/holder must send the same
to HHS for review. In the event that the debtor does not respond with supporting
documentation within sixty days, collection activity must resume. If the
lender/holder receives the Disability Form and other documentation, which is
facially insufficient either in content or in timing, then HHS will attempt to get
additional information. The debtor then will be given an additional thirty days to
provide the information requested by HHS. If HHS has enough documented
information to make a formal determination concerning the debtor's status, then all
collection activities must be suspended until HHS renders the decision.1
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The regulations relating to this type of loan provide the following broad outline of these procedures:
After being notified by the borrower or the borrower‟s representative that the borrower
claims to be totally and permanently disabled, the holder of the loan may not attempt to collect on
the loan from the borrower or any endorser. The holder must promptly request that the Secretary
determine whether a borrower has become totally and permanently disabled. With its request, the
holder must submit medical evidence no more than 4 months old that it has obtained from the
borrower or the borrower‟s representative.

42 C.F.R. § 60.39(b)(2).

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No. 04 C 2433, 2005 WL 1950669, at *2 (N.D. Ill. Aug. 11, 2005) (citations omitted); see also
Dep‟t of Health & Human Servs., Lender Policy Mem. L-95-10, Permanent & Total Disability
(1995) (“Policy Mem. L-95-10”) (discussing the procedures for when a borrower claims
permanent and total disability).
In the present case, Plaintiff mailed a “Certification of Borrower‟s Total & Permanent
Disability” form on March 6, 2014. (ECF 18-1 ¶ 13; id. at 8–11 (providing a letter from American
Education Services, dated March 6, 2014, noting a request to discharge a student loan and
enclosing “Physician‟s Certification of Borrower‟s Total and Permanent Disability” and “Medical
Release” forms).) 2 This letter included a header with the following mailing address for the
recipient:
William G. Hoh
PO BOX 8068
S. Charleston, WV 25303–0068
(Id. at 8.)
There are questions of fact as to whether Defendant received this correspondence. In
particular, this mailing address differs from the address provided for Defendant in the
Complaint―which Plaintiff filed roughly three months before sending the March 6, 2014
correspondence. (See ECF 1 ¶ 2 (“Defendant Mr. Hoh is a resident of Charleston, Kanawha
County, West Virginia with his last known address being at 112 Yorktowne Place.”). But see ECF
18-1 at 6 (providing a July 15, 2013 letter from American Education Services purportedly to
Defendant at the “PO Box” address regarding the delinquency of payments on the Student Loan).)

2

Plaintiff filed an affidavit in which an employee of an entity associated with Plaintiff states that “American
Education Services” is “a fictitious name used by [PHEAA] . . . to conduct its loan servicing operations.” (ECF 18-1
¶ 1.)

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Additionally, the letter included a header that states “Dear Mr. Cunningham.” (ECF 18-1 at 8. See
generally ECF 6 at 3 (providing that Edwin H. Pancake―not a “Mr. Cunningham”―is
Defendant‟s attorney of record in this case).)
Plaintiff provided the affidavit of a Loan Operations Department Supervisor, which states
that, as of August 29, 2014, Defendant “has failed to return [a] completed and signed Certification
of Borrower‟s Total & Permanent Disability form.” (ECF 18-1 ¶ 14.) However, Plaintiff failed to
provide any evidence that Defendant previously received letters at this “PO BOX” mailing
address, that he designated this address as his mailing address, or that he actually received the
March 6, 2014 correspondence.
If Defendant never received this correspondence, then he never had an opportunity to
respond with the requisite information and the established administrative procedures could not
occur. See Policy Mem. L-95-10, at 2 (providing the procedures for when a borrower claims
permanent and total disability). In addition, if Defendant notified Plaintiff of a permanent and total
disability and Plaintiff failed to send the appropriate forms to Defendant, then there is a stay on
collection activities pending the execution of the appropriate procedures. See 42 C.F.R.
§ 60.39(b)(2) (“After being notified by the borrower or the borrower‟s representative that the
borrower claims to be totally and permanently disabled, the holder of the loan may not attempt to
collect on the loan from the borrower or any endorser.”); Policy Mem. L-95-10, at 2 (stating that,
once a borrower notifies a lender that he is permanently and totally disabled, “[t]he holder/servicer
places a collection stay on the borrower‟s account” and “[t]he borrower is notified by letter of this
60-day collection stay and is mailed the Physician‟s Certification of Borrower‟s Total and
Permanent Disability form”). Thus, there remain material issues of fact as to whether the Student
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Loan is in default. Accordingly, Plaintiff is not entitled to summary judgment. See, e.g., Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (providing the summary judgment standard).
IV. Conclusion
For the foregoing reasons, the Court DENIES Plaintiff‟s Motion for Summary Judgment.
(ECF 12.) This case is STAYED to provide an opportunity for the parties to follow the established
administrative procedures relating to Defendant‟s claim of permanent and total disability. The
Court DIRECTS Plaintiff to file a motion to end the stay at the earliest of the following: (1)
Plaintiff filing evidence in this case that Defendant received the March 6, 2014 correspondence, or
that Defendant designated “PO BOX 8068, S. Charleston, WV 25303–0068” as his mailing
address; (2) within thirty days of the end of the sixty-day period initiated by Plaintiff‟s mailing of a
new letter to Defendant enclosing the appropriate materials related to Defendant‟s claim of
permanent and total disability―but only if Defendant fails to provide any materials to Plaintiff in
response to this correspondence; or (3) within thirty days of HHS‟s initial determination regarding
Defendant‟s permanent and total disability.
For the reasons stated above, the pretrial settlement conference scheduled for Thursday,
April 16, 2015 is CANCELED and the dates provided in the Scheduling Order, (ECF 9), and
Supplemental Scheduling Order, (ECF 14), are VACATED. The Clerk is DIRECTED to remove
this case from the Court‟s active docket.
IT IS SO ORDERED.

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The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:

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April 13, 2015