Hernandez v. Alexander, CV-S-91-705-PMP (LRL).
| Decision Date | 17 December 1993 |
| Docket Number | No. CV-S-91-705-PMP (LRL).,CV-S-91-705-PMP (LRL). |
| Citation | 845 F. Supp. 1417 |
| Parties | Ann HERNANDEZ; Lori Pelligri; Caroline Allen; Diane Elms; Susan Suhr-Gibson; Maribel Rodriquez-Going; Frank Lopp; Bridget Mooney; Nick Napier; Margie Pacheco; and Adriana Wilson, individually and on behalf of all others similarly situated, Plaintiffs, v. Lamar ALEXANDER, in his capacity as Secretary of Education of the United States; Higher Education Assistance Foundation, Inc., a Minnesota Corporation; Texas Education Corporation, d/b/a Southern Technical Institute; Wayne Gilpin, Individually, and in his capacity as Officer of Texas Education Corporation, d/b/a Southern Technical Institute; David Reasor, Individually and as Officer of Texas Education Corporation, d/b/a Southern Technical Institute; Union Bank & Trust Co., Defendants. |
| Court | U.S. District Court — District of Nevada |
Barbara E. Buckley, Nevada Legal Services, Inc., Las Vegas, NV, Raymond Rodriquez, Jon Sasser, Nevada Legal Services, Inc., Carson City, NV, for plaintiffs.
Mark C. Scott, Beckley, Singleton De Lanoy Jemison & List, Las Vegas, NV, for Union Bank.
John E. Leach, Woodburn & Wedge, Las Vegas, NV, for Higher Education Assistance Foundation.
Before the Court is a Motion for Summary Judgment (# 144) filed by Defendant Higher Education Assistance Foundation ("HEAF") on April 30, 1993. Plaintiffs filed an Opposition (# 164) on October 27, 1993. On November 16, 1993, HEAF filed a Reply (# 170).
Also before the Court is Defendant Union Bank & Trust Co.'s ("Union Bank's") Motion for Summary Judgment (# 162) filed on October 26, 1993. Plaintiffs filed an Opposition (# 167) on November 9, 1993. On November 22, 1993, Union Bank filed a Reply (# 172).
Plaintiffs all attended Defendant Southern Technical Institute ("STI") in Las Vegas, Nevada, between April 1989 and April 1990 to participate in a program offering training as a "Psychiatric Assistant." To fund their educations, each Plaintiff obtained a Guaranteed Student Loan ("GSL") through Defendant Union Bank. Plaintiffs now claim to have been defrauded by the school with regard to both the quality of education and the marketability of their degrees. As a result, Plaintiffs seek a declaration from the Court that they may use school related defenses against the lenders and guarantors of the GSL's and are not otherwise required to repay their loans under state and federal law.
In a prior Order (# 57), the Court dismissed all of Plaintiffs' causes of action against Defendants HEAF and Union Bank, except for Counts VII and VIII. As to Count VII, the Court found that Plaintiffs would be allowed to assert all defenses which may be asserted against Defendant STI against the other Defendants to the extent that Plaintiffs could establish the existence of an "origination relationship" between Union Bank and STI. Similarly, as to Count VIII, based upon Nevada law, the Court found:
to the extent that a close connection exists between the school and the lender such that there is an "origination relationship," both Nevada law, Nev.R.Stat. § 394.590(4), and federal law, 34 C.F.R. § 682.206(a), would permit defenses to be asserted against the lender.
Defendants HEAF and Union Bank now come before the Court on Counts VII and VIII and raise the same issue in their respective Motions for Summary Judgment. Defendants argue that, as a matter of law, they are entitled to summary judgment in their favor because Plaintiffs cannot demonstrate that an origination relationship existed between Defendants STI and Union Bank.
Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); California Arch. Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988).
If the party seeking summary judgment meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent's legal theory. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569, (1968); Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270 (9th Cir. 1979). Parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Likewise, "legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment." Id.
A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1305-06 (9th Cir. 1982); Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982).
All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Poller v. CBS, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent's claims. Admiralty Fund v. Tabor, 677 F.2d 1297, 1298 (9th Cir.1982).
The trilogy of Supreme Court cases cited above establishes that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. at 2555 (quoting Fed.R.Civ.P. 1). See also Avia Group Int'l, Inc. v. L.A. Gear Cal., 853 F.2d 1557, 1560 (Fed.Cir.1988).
Plaintiffs argue that they can recover against Defendants HEAF and Union Bank by virtue of the existence of an alleged "origination relationship" between Defendants STI and Union Bank. Both Plaintiffs and Defendants rely upon the definition of an origination relationship provided in the Code of Federal Regulations which states:
34 C.F.R. § 682.200 (1992).1
Defendants urge this Court to find that for an origination relationship to exist under 34 C.F.R. § 682.200, a lender would have to delegate all responsibilities for making a loan to the school. However, this Court finds nothing in the regulation to indicate that all lender functions have to be delegated to the school before an origination relationship may be found to exist. The definition merely requires that "substantial functions or responsibilities normally performed by lenders before making loans" be delegated to the school; it says nothing about the number of lender functions that must be delegated. Consequently, for Plaintiffs to survive summary judgment, they must at least demonstrate that a genuine issue of material fact exists as to whether lender functions were delegated by Union Bank to STI, and that those functions were "substantial" in nature.
Defendants argue that no substantial functions or responsibilities were ever delegated to Defendant STI by Union Bank. Plaintiffs, on the other hand, argue that the following substantial functions were delegated: 1) that STI actually determined the amount of the various loans that were given; 2) that STI verified the identity of the borrower; and 3) that STI completed forms normally completed by the lender, such as signing the promissory note.
After examining the evidence presented in support of Plaintiffs' claims, the Court finds that this evidence is insufficient to raise a genuine issue of material fact, and even if the delegations alleged by Plaintiffs occurred, as a matter of law, they are not sufficiently substantial to give rise to an origination relationship. Consequently, Pl...
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