Dykes v. Missouri Higher Education Loan Authority
| Decision Date | 29 July 2021 |
| Docket Number | 4:21-CV-00083-RWS |
| Parties | JEFFREY DYKES, on behalf of himself and all others similarly situated, Plaintiff, v. MISSOURI HIGHER EDUCATION LOAN AUTHORITY Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This case is before me on the Defendant's Motion for Judgment on the Pleadings pursuant to Fed.R.Civ.P. 12(c). ECF No [10]. Defendant, Missouri Higher Education Loan Authority (MOHELA) argues that it is entitled to Eleventh Amendment sovereign immunity because it is an arm of the state of Missouri. MOHELA also argues it is entitled to immunity under Mo. Rev. Stat. § 537.600 and that Plaintiff failed to adequately allege the amount in controversy necessary to establish diversity jurisdiction under 28 U.S.C. § 1332. For the reasons discussed below I will grant Defendant's Motion for Judgment on the Pleadings.
In 2002, Plaintiff Jeffrey Dykes took out a federal student loan to pay for his education. His loan was assigned to MOHELA for loan servicing. From 2011 until 2016, Plaintiff was on an Income Driven Repayment Plan, which renewed annually. In 2017, based on an increase in Plaintiff's annual income his monthly payment changed to more than $850 per month. Due to prior financial obligations, plaintiff was unable to pay the $850 a month and could only afford roughly $150 per month. Plaintiff states that MOHELA rejected his proposal to adjust his repayment plan to $150 monthly payments. Additionally, in 2017 Plaintiff's wife was diagnosed with cancer. Her treatment increased Plaintiff's monthly expenses by $350. Because of this new financial obligation Plaintiff was unable to make payments and was delinquent on his loan. In response to communication from MOHELA's delinquency department, Plaintiff requested their assistance in repaying his loans. In response to his inquiries Plaintiff alleges that MOHELA stated that there was no alternative repayment plan and that it had never heard of such a plan. Instead, MOHELA offered Plaintiff an Income Driven Repayment plan, which would have required monthly payments of $861. Plaintiff could not afford this plan. Plaintiff also alleges that at this time, MOHELA denied him the option of an Income Based Repayment plan, which would have resulted in a monthly payment of $350. From the pleadings it is unclear if the Defendant provided Plaintiff a reason for the denial. Plaintiff also alleges that beginning in 2018 he was qualified for an Alternative Repayment Plan consisting of monthly payments of $150. Plaintiff does not indicate how long the Alternative Repayment Plan would have been in place or whether it would be dependent on yearly financial statements.
Plaintiff now brings this suit on behalf of himself and others similarly situated. He brings three claims for negligence per se, negligent misrepresentation, and equitable estoppel. Plaintiff claims that MOHELA misrepresented the repayment options available, leading to unnecessary periods of forbearance and eventual default. In response, Defendant filed a motion for judgment on the pleadings arguing it is entitled to sovereign immunity, that Plaintiff failed to state a claim for equitable estoppel, and that I do not have subject matter jurisdiction over the claim.
When considering a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c), I must “accept as true all factual allegations set out in the complaint and must construe the complaint in the light most favorable to the plaintiff, drawing all inferences in his favor.” Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006). “Judgment on the pleadings is appropriate only when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law[.]” Ashley Cty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009) (internal quotation marks and citation omitted).
I review a motion for judgment on the pleadings under the same standard as a Fed.R.Civ.P. 12(b)(6) motion to dismiss. See Clemons v. Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009). Therefore, I consider all facts alleged in the complaint as true to determine if the complaint states a “claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). “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.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Although a complaint need not contain “detailed factual allegations, ” it must contain sufficient factual allegations “to raise a right to relief beyond the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
In addition to the complaint, I may consider exhibits that are attached to the complaint as well as materials necessarily embraced by the complaint, without having to convert the motion to one for summary judgment. Humphrey v. Eureka Gardens Pub. Facility Bd., 891 F.3d 1079, 1081 (8th Cir. 2018); Ryan v. Ryan, 889 F.3d 499, 505 (8th Cir. 2018). Materials necessarily embraced by the complaint include “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.” Ryan, 889 F.3d at 505 (internal quotation marks and citations omitted).
In its motion for judgment on the pleadings, MOHELA makes three distinct arguments. First it argues that it is entitled to sovereign immunity because it is an arm of the state and/or entitled to immunity under Mo. Rev. Stat. § 537.600. Second, it argues that the Plaintiff failed to state a claim for equitable estoppel. Lastly, MOHELA argues that I do not have subject matter jurisdiction because the Plaintiff has failed to establish that the amount in controversy satisfies 28 U.S.C. § 1331. For the reasons discussed below I will grant the Defendant's motion.
The Eleventh Amendment recognizes sovereign immunity, which bars individuals from bringing suites for damages against unconsenting states in federal courts. Thomas v. St Louis Bd. Of Police Com'rs., 447 F.3d 1082, 1084 (8th Cir. 2006). Eleventh Amendment immunity also extends to arms of the state. Whether an entity is an arm of the state turns on its relationship to the state under state law. Gorman v. Easley, 257 f.3d 738, 743 (8th Cir. 2001) (overturned on other grounds). Additionally, the Supreme Court, in Edelman v. Jordan, stated that the Eleventh Amendment bars “suit[s] in federal court[s] by private parties seeking to impose a liability which must be paid from public funds in the state treasury.” Edelman v. Jordan 415 U.S. 651, 663 (1974). As a result, when determining whether a particular agency is an arm of the state, I must consider both “the agency's degree of autonomy and control over its own affairs and, more importantly, whether a money judgment against the agency will be paid with state funds.” Thomas, 447 F.3d at 1084; See also Public School Retirement System of Missouri v. State Street Bank & Trust Co., 640 F.3d 821, 827 (8th Cir. 2011).
First, I must consider MOHELA's relationship with the State of Missouri and the amount of independence MOHELA has from the State. See Id. MOHELA was established by statute in 1981. Mo. Rev. Stat. § 173.350 et seq. The enabling statute established MOHELA as “a public instrumentality and body corporate” and deemed exercises of the powers conferred in the legislation to be “the performance of an essential public function.” Mo. Rev. Stat. § 173.360. It also gave MOHELA the authority “to sue and be sued” and “to acquire, hold and dispose of personal property.” Mo. Rev. Stat. § 173.385. These characteristics indicate that MOHLEA enjoys some operational independence from the State of Missouri, see Pub. Sch. Ret. Sys. Of Missouri, 640 F.3d at 827-28.
But other portions of the enabling legislation give the state significant control over MOHELA. For example, the Statute authorizes the governor to appoint five members of the seven member board. Mo. Rev. Stat. § 173.360. The other two members of the board are prescribed by statute. Id. The first must be a member of the coordinating board for higher education and the second must be the Commissioner of Higher Education. Id. Additionally, MOHILA is assigned by statute to the Missouri Department of education, which requires MOHELA to provide a yearly report on its income, expenditures, bonds, and other forms of indebtedness issued. Mo. Rev. Stat §§ 173.445. The statute also limits MOHELA's ability to sell certain loans without approval of the Missouri Department of Higher Education, Mo. Rev. Stat. § 173.385.1(8), and imposes restrictions on how it conducts its business, including placing limitations on investments, requiring distributions to the Lewis and Clark Discovery Fund, and placing limitations on Stafford loan origination. Mo. Rev. Stat. §§ 173.385-392.
Based on my reading of the Missouri Higher Education Loan Authority Act, I think the first factor weighs slightly in MOHELA's favor. Although MOHELA enjoys many of the freedoms of a political subdivision, like the ability to sue and be sued and issue revenue bonds, the State still exercises significant political and operational control over MOHELA.
Now I must consider whether the state would be legally or functionally liable for a judgment against MOHELA. See U.S. ex rel Oberg v. Pennsylvania Higher Educ. Assistance Agency, 804 F.3d 646, 652 (4th Cir. 2015). The parties do not dispute that MOHELA, not the State, is legally...
To continue reading
Request your trial