Gentleman v. Mass. Higher Educ. Assistance Corp., Case No. 16 C 3096
| Decision Date | 21 September 2017 |
| Docket Number | Case No. 16 C 3096 |
| Citation | 272 F.Supp.3d 1054 |
| Parties | Joseph T. GENTLEMAN, Plaintiff, v. MASSACHUSETTS HIGHER EDUCATION ASSISTANCE CORPORATION d/b/a American Student Assistance, a Massachusetts not for profit corporation, Delta Management Associates, Inc, a Massachusetts corporation, Global Receivables Solutions, Inc., f/k/a West Asset Management, Inc., a Delaware Corporation, and ACS Education Services, a New York Corporation, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
James J. Ayres, Sr., Ayres Law Offices, Ltd., Chicago, IL, for Plaintiff.
Mark E. Shure, Saskia Nora Bryan, Latimer LeVay Fyock LLC, Gregg M. Barbakoff, Maurice Wutscher LLP, Daniel W. Pisani, Morgan Ian Marcus, Sessions Fishman Nathan & Israel, LLP, Maurice Grant, Grant Law, LLC, Berkely Yvonne Cobb, Chicago, IL, Donald S. Maurice, Jr., Maurice Wutscher, LLP, Flemington, NJ, James Kevin Schultz, Sessions Fishman Nathan & Israel LLP, San Diego, CA, for Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Joseph Gentleman ("Gentleman") has filed a complaint alleging a number of statutory and common-law claims against defendants Massachusetts Higher Education Assistance Corporation d/b/a American Student Assistance ("ASA"); Delta Management Associates, Inc. ("Delta"); Global Receivables Solutions, Inc., f/k/a West Asset Management, Inc. ("GRS"); and ACS Education Services ("ACS"). The claims arise in connection with the defendants' attempts to collect payment on a student loan that Gentleman consolidated in 2006. Each of the defendants has separately moved to dismiss the complaint on various grounds.1 For the reasons discussed below, ASA's, GRS's, and Delta's motions are granted in part and denied in part; and ACS's motion is granted in its entirety.
From 1996 through 1998, Gentleman took out a number of student loans to cover educational expenses. The loans were obtained from private lenders pursuant to the Federal Family Education Loan Program ("FFELP" or "the Program"). 20 U.S.C. §§ 1071 to 1087–4. The Program, which has since been discontinued,3 was "a system of loan guarantees meant to encourage lenders to loan money to students and their parents on favorable terms." Chae v. SLM Corp. , 593 F.3d 936, 938–39 (9th Cir. 2010). Under FFELP, students obtained loans from private lenders, but the loans were guaranteed by guaranty agencies, which in turn were reinsured by the federal government. See, e.g ., Bible v. United Student Aid Funds, Inc. , 799 F.3d 633, 640 (7th Cir. 2015).
By March 2006, Gentleman had paid off all of his loans except one, in the amount of $84,355.00. At that time, he received a document entitled "Federal Consolidation Loan Application and Promissory Note." The document offered to "drastically reduce" the interest on his loan, which at the time was 6.25%. However, according to Gentleman, the document did not identify the original consolidating lender; it contained no information about the loan's maturity date or interest rate; and it provided no information about how penalties and other costs would be assessed in the event of a default. Am. Compl. ¶¶ 21–22. Nevertheless, Gentleman executed the documents (apparently, information was provided regarding where the documents should be sent), and between March 2006 and June 2010, he made payments on the loan amounting to $26,538.36.
In early 2010, for reasons not fully explained in the complaint, Gentleman "began to raise serious questions about who loaned him the money, what was the interest rate, how the interest rate was applied, the maturity date of the note and the amount owed because it was impossible to determine how payments were being applied." Id. ¶ 24. Gentleman raised these questions during numerous phone conferences with ACS, the loan servicer at the time, but ACS was unable or unwilling to answer his questions. Gentleman told ACS that he believed that the loan agreement was not enforceable and said that he would make no further payments until his questions about the loan were answered. The complaint alleges that ACS responded "with rude and threatening statements that if payments were not made that ACS or others would make negative reports to credit bureaus in an effort to destroy Gentleman's credit and that Gentleman would be sorry he failed to make payments." Id.
In June 2010, Gentleman stopped making payments, and in March 2011, he received a final notice from ACS stating that, based on an acceleration clause in the loan agreement, the full amount of the loan was now due. Gentleman continued to demand information about the loan, but to no avail. ACS again threatened that if he continued to refuse to make payment, it would destroy his reputation by reporting negative information about him to credit bureaus.
In September 2011, Gentleman began to receive communications from ASA ), demanding immediate payment of the loan balance. Gentleman's experience with ASA was much the same as his experience with ASC: he demanded information about the loan; refused to pay if the information was not forthcoming; and ASA rebuffed his requests and threatened to report him to the credit bureaus if he refused to pay.
ASA eventually referred the debt to collection agencies. In January 2012, Gentleman received a letter from Delta demanding that he pay $102,267.53 (the principal plus $2,240.94 in interest and $15,593.51 in fees). Later, in January 2014, Gentleman began receiving communications from GRS, which informed him that, due to the accrual of additional fees, he now owed $114,900.14. Throughout his dealings with Delta and GRS, Gentleman continued to demand information about the loan, but his questions went unanswered.
Gentleman claims that in addition to sending him written communications, ASA, GRS, and Delta also made repeated calls to his cell phone between 2013 and 2015. He alleges that he initially received calls on a daily basis, and that the calls eventually decreased to twice per month. According to the complaint, the callers refused to tell Gentleman the phone numbers they were calling from, and in some cases, the party on whose behalf they were calling. The calls persisted despite his repeated requests that the defendants stop calling.
The complaint alleges that in 2016, Gentleman contacted a mortgage broker because he was interested in purchasing real estate. At that time, Gentleman learned that his credit report indicated that he had defaulted on his school loan and that he owed both ASA and ACS $127,593.00. As a result, the broker informed Gentleman that he would not be able to "obtain an FHA loan or a loan with the lowest interest rates available." Am. Compl. ¶ 59. In addition, Gentleman claims that his professional reputation was harmed by the fact that he had been "deemed not credit worthy." Id. ¶ 71.
Gentleman contends that the loan agreement is not legally enforceable against him, and asserts that this is why the defendants have refused to answer his questions about the loan. According to Gentleman, the defendants have entered into a conspiracy to collect the debt by harassing him with phone calls and making false reports to credit bureaus, despite their awareness that the loan is not legally enforceable. These allegations form the basis for six causes of action asserted in the complaint. Count I asserts a claim against all of the defendants seeking a declaratory judgment that the loan agreement is unenforceable; Count II asserts that the defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq . ; Count III alleges a claim against all of the defendants for defamation under Illinois law; Count IV alleges that ASA, GRS, and Delta violated the Illinois Consumer Fraud and Deceptive Practices Act (ICFA), 815 ILCS 505/1 et seq . ; Count V claims that ASA violated the Illinois Interest Act, 815 ILCS 205/1 et seq . ; and Count VI charges ASA, GRS, and Delta with violating the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.4
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of a complaint, not its merits. See, e.g. , Gibson v. City of Chicago , 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion, a complaint need only overcome what the Seventh Circuit has characterized as "two easy-to-clear hurdles." E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007). First, the complaint "must describe the claim in sufficient detail to give the defendant fair notice of what the...claim is and the grounds upon which it rests." Id. (). Second, the complaint's "allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level." Id. (citation and quotation marks omitted). The term "plausibility" "in this context does not imply that the district court should decide whose version to believe, or which version is more likely than not." Swanson v. Citibank, N.A. , 614 F.3d 400, 404 (7th Cir. 2010). It means only that "the plaintiff must give enough details about the subject-matter of the case to present a story that holds together." Id.
Count I of the complaint asserts a claim under the Declaratory Judgment Act. 28 U.S.C. § 2201(a), which provides that, "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration." Id. Gentleman seeks a declaration that the promissory note he signed is not enforceable, and that ASA, ACS, GRS, and Delta have no right to enforce any obligation against him.
ACS, GRS, and Delta have separately moved to dismiss Count I for lack of subject-matter jurisdiction under Federal Rule of Civil...
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