Robinson v. Nat'l Collegiate Student Loan Tr. 2006-2
| Decision Date | 07 April 2021 |
| Docket Number | Civil Action No. 20-cv-10203-ADB |
| Parties | TROY O. ROBINSON and ANTHONY W. SPEARS, on behalf of themselves and all others similarly situated, Plaintiffs, v. NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-2, et al., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
Plaintiffs Troy O. Robinson and Anthony W. Spears (collectively "Plaintiffs") bring this proposed class action against thirteen statutory trusts ("Defendants"), alleging violations of Pennsylvania state law in connection with the interest rates charged on student loans held by the trusts. [ECF No. 1 ("Compl.")]. Currently before the Court is Defendants' motion to dismiss. [ECF No. 34]. For the reasons set forth below, Defendants' motion is GRANTED.
The following facts are taken from the complaint, [Compl.], the factual allegations of which are assumed to be true when considering a motion to dismiss, Ruivo v. Wells Fargo Bank, N.A., 766 F.3d 87, 90 (1st Cir. 2014). In addition, "[w]hile 'a district court is generally limited to considering "facts and documents that are part of . . . the complaint,"' it may also consider 'documents incorporated by reference in [the complaint] . . . .'" Newton Covenant Church v. Great Am. Ins. Co., 956 F.3d 32, 35 (1st Cir. 2020) (citations omitted) (first quoting Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008); then quoting In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 20 (1st Cir. 2003)).
First Marblehead Corporation ("FMC") designs and markets student loan programs and facilitates those programs for banks. [Compl. ¶¶ 24, 26]. In 2001, FMC acquired a loan processing facility run by The Education Resources Institute, Inc. ("TERI"), as well as 75% of the facility's employees. [Id. ¶ 33]. FMC arranged and marketed student loans, and dealt directly with borrowers, [id. ¶¶ 58-60, 89-90], while TERI guaranteed those loans, [id. ¶¶ 36, 39].
PNC Bank, N.A. ("PNC") is one of FMC's clients and is a national bank regulated by the National Bank Act ("NBA"), 12 U.S.C. § 1, et seq. [Compl. ¶¶ 28, 38]. PNC and FMC entered into an agreement (the "Note Purchase Agreement") whereby PNC would sell FMC, or FMC's "designee Purchaser Trust," certain loans. [Id. ¶¶ 39, 41-42, 48; ECF No. 36-1 (copy of Note Purchase Agreement)]. Per the terms of the Note Purchase Agreement, PNC originated the loans described therein, [ECF No. 36-1 at 27], owned the loans "free and clear" and had the right to transfer them, [id. at 29], and warranted that the loans were "in compliance with any applicable usury laws at the time made and as of the time of its sale and assignment by [PNC] to FMC or a Purchaser Trust," [id. at 28].1 In connection with the Note Purchase Agreement, FMC created national collegiate student loan trusts to buy the loans from PNC. [Compl. ¶ 45]. The trusts have no employees and no offices. [Id. ¶ 85]. Once the trusts purchased the loans, they obtained all right, title, and interest in the loans, [id. ¶ 52], though FMC retained a residual interest in the trusts, [id. ¶ 63]. Defendants and FMC are not nationally chartered banks and are therefore not subject to the NBA. [Id. ¶ 23].
In 2006, Robinson took out a loan for $21,000, co-signed by Spears, to help cover his tuition at the University of Phoenix. [Compl. ¶¶ 87, 91, 92]. PNC made the loan, which was disbursed on March 29, 2006 (the "Loan"). [Id. ¶ 87]. The credit agreement between Plaintiffs and PNC (the "Credit Agreement") set out an annual interest rate of 9.368% and indicated that the rate was variable and would be adjusted quarterly. . Over time, the interest rate on the Loan varied from a low of 6.580% to a high of over 9%. [Compl. ¶ 113]. The Credit Agreement included the following provision: . In addition, the Credit Agreement provides that PNC "may assign this Credit Agreement at any time." [ECF No. 36-3 at 6].
The Loan was later assigned to one of the thirteen trusts named as defendants in this dispute, the National Collegiate Student Loan Trust 2006-2 (the "NCT 2006-2 Trust"). [Compl. ¶¶ 97, 115]. FMC created the NCT 2006-2 Trust, which is not affiliated in any way with PNC. [Id. ¶¶ 125, 128]. After the Loan was sold to the NCT 2006-2 Trust, PNC no longer had any involvement with the Loan. [Id. ¶ 122].
Plaintiffs filed their complaint on February 3, 2020. [Compl.]. On April 30, 2020, Defendants moved to dismiss the complaint, [ECF No. 34], which Plaintiffs opposed, [ECF No. 41]. Defendants then filed a reply brief. [ECF No. 42]. On November 20, 2020, Defendants filed a notice of supplemental authority, [ECF No. 43], which led to additional briefing by both parties, [ECF Nos. 44, 45, 48]. In response to a request from the Court, [ECF No. 51], the parties submitted additional materials on April 1, 2021, [ECF No. 52, 53].
In reviewing a motion to dismiss under Rule 12(b)(6), the Court must accept as true all well-pleaded facts, analyze those facts in the light most favorable to the plaintiff, and draw all reasonable factual inferences in favor of the plaintiff. See Gilbert v. City of Chicopee, 915 F.3d 74, 80 (1st Cir. 2019). "[D]etailed factual allegations" are not required, but the complaint must set forth "more than labels and conclusions." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The alleged facts must be sufficient to "state a claim to relief that is plausible on its face." Id. at 570.
"To cross the plausibility threshold a claim does not need to be probable, but it must give rise to more than a mere possibility of liability." Grajales v. P.R. Ports Auth., 682 F.3d 40, 44-45 (1st Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A determination of plausibility is 'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. at 44 (quoting Iqbal, 556 U.S. at 679). "[T]he complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible." Hernandez-Cuevas v. Taylor, 723 F.3d 91, 103 (1st Cir. 2013) (quoting Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 14 (1st Cir. 2011)). "The plausibility standard invites a two-step pavane." A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (citing Grajales, 682 F.3d at 45). First, the Court "must separate the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited)." Id. (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). Second, the Court "must determine whether the remaining factual content allows a 'reasonable inference that the defendant is liable for the misconduct alleged.'" Id. (quoting Morales-Cruz, 676 F.3d at 224).
In evaluating a motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure, the Court must determine whether the facts as alleged in the complaint, "taken at face value," support subject matter jurisdiction. Gordo-González v. United States, 873 F.3d 32, 35 (1st Cir. 2017). The Court "appl[ies] a standard of review 'similar to that accorded to a dismissal for failure to state a claim' under subsection 12(b)(6)." Rodriguez v. Mass. Parole Bd., No. 16-cv-11113, 2017 U.S. Dist. LEXIS 24705, at *5-6 (D. Mass. Feb. 22, 2017) (quoting Menge v. N. Am. Specialty Ins. Co., 905 F. Supp. 2d 414, 416 (D.R.I. 2012)). The Court must "accept the factual averments of the complaint as true, and construe those facts in the light most congenial to [Plaintiffs'] cause." Royal v. Leading Edge Prods., 833 F.2d 1, 1 (1st Cir. 1987). "Dismissal can be justified only if it clearly appears that no colorable hook exists upon which subject matter jurisdiction can be hung." Id. Even so, "a plaintiff who seeks to bring her suit in a federal forum bears the burden of establishing that the federal court has subject-matter jurisdiction." Klimowicz v. Deutsche Bank Nat'l Tr. Co., 907 F.3d 61, 64 (1st Cir. 2018).
Plaintiffs bring the following claims against Defendants: unlawful interest in violation of Pennsylvania law, 41 Pa. Stat. Ann. § 201 (Count One); breach of contract (Count Two); breach of the duty of good faith and fair dealing (Count Three); and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Stat. Ann. §§ 201-1, et seq. (Count Four). [Compl. ¶¶ 164-77]. In addition, Plaintiffs seek injunctive and declaratory relief, as well as restitution, treble damages under the relevant statutes, and attorneys' fees. [Id. ¶¶ 178-81, 183].2 Plaintiffs' theory is that FMC structured loans through PNC, thereby taking advantage of PNC's status as a nationally chartered bank to avoid interest rate caps imposed by state usury laws. [Compl. at 2-3]. If PNC was not the true lender, under Plaintiffs' theory, then the interest rate charged by the NCT 2006-2 Trust (which is not a national bank) violated Pennsylvania law, which governs the Credit Agreement and sets a maximum interest rate of 6% on loans of under $50,000. [Id.].
Defendants move to dismiss Plaintiffs' claims under Rule 12(b)(1) for lack of subject matter jurisdiction, arguing that Plaintiffs lack standing as to all but the NCT 2006-2 Trust. [ECF No. 35 at 15]. Plaintiffs maintain that, in the context of a class action, they may represent other, unnamed plaintiffs...
To continue reading
Request your trial