HICA Educ. Loan Corp. v. Rodriguez

• Decision Date: 21 July 2014
• Docket Number: Civil No. 14–1127 SEC.
• Court: U.S. District Court — District of Puerto Rico
• Parties: HICA EDUCATION LOAN CORPORATION, Plaintiff, v. Martha M. RODRIGUEZ, Defendant.

31 F.Supp.3d 351

HICA EDUCATION LOAN CORPORATION, Plaintiff

v.Martha M. RODRIGUEZ, Defendant.

Civil No. 14–1127 SEC.

United States District Court, D. Puerto Rico.

Signed July 21, 2014.

Miguel A. Maza–Perez, San Juan, PR, for Plaintiff.

Artha M. Rodriguez, Toa Alta, PR, pro se.

OPINION AND ORDER

SALVADOR E. CASELLAS, Senior District Judge.

Uncertain of its jurisdiction, the Court ordered the plaintiff to show cause why this putative federal-question suit to recover on a promissory note should not be dismissed. Docket # 7. The plaintiff having showed cause, Docket # 9, and after reviewing the filings and the applicable law, this case is DISMISSED for want of subject-matter jurisdiction.

Factual and Procedural Background

On February 14, 2014, HICA Education Loan Corporation brought this suit against pro se defendant Martha M. Rodríguez seeking to recover monies owed under a promissory note governed by the United States Health Education Assistance Loan Program (HEAL), 42 U.S.C. § 292 et seq. Docket # 1. HICA, the current holder of the note, seeks to collect the unpaid portion of the notes and interest, which, as of November 26, 2013, totals $12,831.52. Id. ¶ 11 Unlike other (recent) occasions, see HICA Educ. Loan Corp. v. De–Jesus, No. 13–1285, 2014 WL 2435833 (D.P.R. May 30, 2014) (exercising diversity jurisdiction under 28 U.S.C. § 1332 and granting HICA's summary-judgment motion), HICA's only jurisdictional hook in this case is federal-question jurisdiction, 28 U.S.C. § 1331 —allegedly, under the HEAL program and regulations. See Docket # 1, ¶ 3 (citing 42 U.S.C. § 292 et seq. ; 42 C.F.R. Part 60).

Yet this court recently called into doubt this jurisdictional ground, “given the apparent consensus among district courts that ‘neither HEAL nor the federal regulations create a federal cause of action for nonpayment of a HEAL loan,’ ” De–Jesus, 2014 WL 2435833, *1 n. 1 (citation omitted). And because “federal courts, as courts of limited jurisdiction, may not presume the existence of subject matter jurisdiction, but, rather, must appraise their own authority to hear and determine particular cases,” e.g., Cusumano v. Microsoft Corp., 162 F.3d 708, 712 (1st Cir.1998), HICA was ordered to show cause why this case should not be dismissed on that ground.

HICA timely showed cause, positing that subject-matter jurisdiction is proper. Docket # 9. The gravamen of its argument is that because its “claim is dependent upon the construction and application of federal laws and federal regulations,” id., p. 5, it sufficiently involves a federal question.

Standard of Review

It should go without saying that “[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3). Even if the parties “have disclaimed or have not presented” issues that go to a court's subject-matter jurisdiction, the Supreme Court has made plain, a federal court is nevertheless obligated to consider them on its own accord. Gonzalez v. Thaler, ––– U.S. ––––, 132 S.Ct. 641, 648, 181 L.Ed.2d 619 (2012) ; Macera v. Mortgage Elec. Registration Sys., Inc., 719 F.3d 46, 48 (1st Cir.2013). While the courts must ordinarily give a plaintiff prior notice before ordering a sua sponte dismissal on this ground, Griffiths v. Amtrak, 106 Fed.Appx. 79, 80 (1st Cir.2004) (per curiam), once the plaintiff is faced with a subject-matter jurisdiction challenge, it undoubtedly bears the burden of demonstrating its existence. See CE Design Ltd. v. Am. Econ. Ins. Co., 755 F.3d 39, 44–45 (1st Cir.2014). In this context, “[t]he jurisdictional question is determined from what appears on the plaintiff's claim....” Ortiz–Bonilla v. Federación de Ajedrez de Puerto Rico, Inc., 734 F.3d 28, 34 (1st Cir.2013) (emphasis omitted) (citing Templeton Bd. of Sewer Comm'rs. v. Am. Tissue Mills of Massachusetts, Inc., 352 F.3d 33, 37 (1st Cir.2003) ).

Applicable Law and Analysis

Where, as here, no diversity of citizenship exists between the parties, “jurisdiction turns on whether the case falls within ‘federal question’ jurisdiction.” Ortiz–Bonilla, 734 F.3d at 34 ; see 28 U.S.C. § 1331. Congress has authorized the federal district courts to exercise original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States,” 28 U.S.C. § 1331 ; see Municipality of Mayaguez v. Corporacion Para el Desarrollo del Oeste, Inc., 726 F.3d 8, 13 (1st Cir.2013).

Pertinently, one of the two ways—and by far the most common scenario—in which an action comes within federal question is when federal law creates the cause of action asserted. Gunn v. Minton, –––U.S. ––––, 133 S.Ct. 1059, 1064, 185 L.Ed.2d 72 (2013). “A suit,” Justice Holmes famously wrote almost a century ago, “arises under the law that creates the cause of action,” American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 60 L.Ed. 987 (1916) —which explains why this type of action is modernly called a “direct federal question,” Rhode Island Fishermen's Alliance, Inc. v. Rhode Island Dep't Of Envtl. Mgmt., 585 F.3d 42, 48 (1st Cir.2009).¹ And it is of course Congress who has the power to create private rights of action to enforce federal law, e.g., Mims v. Arrow Financial Services, LLC, ––– U.S. ––––, 132 S.Ct. 740, 748, 181 L.Ed.2d 881 (2012), so “[w]ithout [Congressional intent], a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute.” Alexander v. Sandoval, 532 U.S. 275, 286–87, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001) ; see also id. at 286 (noting that an implied private right of action can only exist where Congress sought to provide both a private right and a private remedy). As a result, “[r]egulations alone cannot create private rights of action; the source of the right must be a statute.” Buck v. Am. Airlines, Inc., 476 F.3d 29, 33 (1st Cir.2007).

HICA bets the house on one claim: “Because [the] defendant has failed to make payments that are due and owing under the terms of the Note,” the complaint's sole count reads, “[she] is in default under the terms of the Note and has violated the HEAL Statutes and Regulations.” Docket # 1, ¶ 10. So HICA couches its sole claim not on a breach-of-contract theory under Puerto Rico law, but, rather, on the existence (or not) of a direct cause of action under federal law based on the alleged HEAL violations. See id. “Because a default on a HEAL program loan is a violation of the Code of Federal Regulations,” goes the argument, “the Court has subject matter jurisdiction over Plaintiff's claim.” Docket # 9, p. 1 (footnote omitted).

This argument does not withstand scrutiny. The HEAL statute does not “clearly evince[ ] congressional intent to bestow such a ... [private right of action].” Iverson v. City Of Boston, 452 F.3d 94, 100 (1st Cir.2006) (citing Sandoval, 532 U.S. at 286–87, 121 S.Ct. 1511 ). Quite the contrary—Congress appears to have enacted the HEAL program for a discrete and narrow reason: To provide “Federal insurance of educational loans to graduate students in ... [certain] fields of medicine....” 42 C.F.R. § 60.1(a). Broadly speaking, moreover, the HEAL regulations simply establish the contractual agreement between the parties.² But apart from prescribing that (admittedly federally regulated) contractual regime, nothing in the HEAL statute or its regulations suggests that Congress intended to create a federal cause of action (implied or otherwise) to collect on HEAL loan. See San Juan Cable LLC v. Puerto Rico Tel. Co., Inc., 612 F.3d 25, 32 (1st Cir.2010). “This language, read naturally, does no more than confirm the statutorily authorized rights of enforcement—and those rights do not include private rights of action.” Bonano v. E. Caribbean Airline Corp., 365 F.3d 81, 84 (1st Cir.2004) ; see MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486, 496 (1st Cir.2013) (“Where an independent duty of care exists, the violation of a statute or regulation can provide evidence of a breach of that duty, even if the statute or regulation itself does not create a private right of action.”). Moreover, “[i]t is the nature of the action before the court, not the nature of the loan program, that establishes the existence or absence of federal jurisdiction.” Inter–Am. Univ. of Puerto Rico, Inc. v. Concepcion, 716 F.2d 933, 934 (1st Cir.1983) (dismissing, for want of federal-question jurisdiction, collection action for student debt under federal loan program). Yet HICA's show-cause response ignores these legal precepts, thereby failing to grapple with the irrefragable proposition that the nature of this case “is merely a dispute between a person entitled to enforce a note and a borrower.” HICA Ed. Loan Corp. v. McKinney,

No. 10–1205, 2011 WL 10653873, *1 (W.D.Mo. July 18, 2011). The upshot is that neither the HEAL statute nor its regulations furnish a cause of action “for a plaintiff to sue an individual who has violated a statutory or regulatory requirement.” HICA Educ. Loan Corp. v. Danziger, 900 F.Supp.2d 341, 343 (S.D.N.Y.2012) (citing 42 U.S.C. § 292 et seq. ; 42 C.F.R. Part 60).

In reaching this conclusion, the court does not write on a clean slate. The vast majority of district courts that have squarely considered this issue have held that “neither the HEAL statute nor its regulations provide an express federal cause of action for a plaintiff to sue an individual who has violated a statutory or regulatory requirement.” HICA Educ. Loan Corp. v. Meyer, No. 12–4248, 2014 WL 1694928, *2 (S.D.N.Y. Apr. 23, 2014) ; accord, e.g., HICA Educ. Loan Corp. v. Mittelstedt, No. 12–512, 2013 WL 2112233, *2 (W.D.Wis. May 15, 2013) ; Danziger, 900 F.Supp.2d at 343 ; HICA Educ. Loan Corp. v. Merzenich, No. 12–0412, 2012 WL 8134359, *2 (D.Ariz. June 27, 2012) ; HICA Ed. Loan Corp. v. Waters, No. 11–1262, 2011 WL 10653941 (C.D.Cal. Nov. 7, 2011) ; McKinney, 2011 WL 10653873, *1.³ So too here, it follows...