US v. Smith

• Decision Date: 02 September 1994
• Docket Number: Civ. No. 93-00943 DAE.
• Citation: 862 F. Supp. 257
• Parties: UNITED STATES of America, Plaintiff, v. James E. SMITH aka James Edwin Smith, Defendant.
• Court: U.S. District Court — District of Hawaii

862 F. Supp. 257

UNITED STATES of America, Plaintiff, v. James E. SMITH aka James Edwin Smith, Defendant.

Civ. No. 93-00943 DAE.

United States District Court, D. Hawai`i.

September 2, 1994.

Michael Chun, Elliot Enoki, U.S. Attorneys Office, Honolulu, HI, for plaintiff.

James E. Smith, pro se.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND DENYING PLAINTIFF'S MOTION TO COLLECT SURCHARGE

DAVID ALAN EZRA, District Judge.

The court heard the cross motions on August 29, 1994. Defendant appeared on his own behalf; Michael Chun, Esq., appeared on behalf of plaintiff. After reviewing the motions and the supporting and opposing memoranda, the court GRANTS the plaintiff's Motion for Summary Judgment and DENIES the defendant's Motion for Summary Judgment. However, the court DENIES the plaintiff's motion to collect a ten percent surcharge.

BACKGROUND

This case involves the federal government's enforcement, pursuant to the Federal Debt Collection Procedures Act of 1990, of a student loan on which the defendant defaulted more than twenty years ago. On or about September 15, 1966, Defendant James Smith ("Smith" or "defendant") executed and delivered to the University of Chicago a promissory note ("Note"). He received in return the following sums on the following dates: $850.00 (September 15, 1966); $800.00 (December 8, 1966); $850.00 (March 7, 1967); $850.00 (October 3, 1967); $195.00 (March 7, 1968); $1,045.00 (March 21, 1968). His loans totalled, at a three percent annual interest rate, $4,590.00. These loans were made under the United States Department of Education loan guaranty program authorized under Title IV-D of the Higher Education Act of 1965, as amended, 20 U.S.C. §§ 1087aa et seq. and 34 C.F.R. Pt. 674.

After making payments in 1969, 1970, 1971, and 1972, Defendant defaulted on these loans.¹ The remaining unpaid balance on the loans totalled $3,672.00; the unpaid interest at the time of default was $853.74. The United States paid the University of Chicago for the balance in 1979, thereafter acquiring all rights from the University to collect on the Note from defendant. The current unpaid balance on the loan remains $3,672.00; the interest owed as of the date of this hearing is $2,538.65. Administrative collection costs total $87.00. According to the United States, the total amount owed is $6,297.65. The United States has moved for summary judgment to collect this amount. The United States also alleges that Smith is liable for a ten percent surcharge on the debt, pursuant to 28 U.S.C. § 3011. Defendant has cross-moved for summary judgment, claiming that the United States is barred by the statute of limitations and the doctrine of laches from collecting this debt.

STANDARD OF REVIEW

Rule 56(c) provides that summary judgment shall be entered when:

The pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating for the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). However, the moving party need not produce evidence negating the existence of an element for which the opposing party will bear the burden of proof at trial. Id. at 322, 106 S.Ct. at 2552.

Once the movant has met its burden, the opposing party has the affirmative burden of coming forward with specific facts evidencing a need for trial. Fed.R.Civ.P. 56(e). The opposing party cannot stand on its pleadings, nor simply assert that it will be able to discredit the movant's evidence at trial. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987); Fed.R.Civ.P. 56(e). There is no genuine issue of fact "where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citation omitted).

At the summary judgment stage, this court may not make credibility determinations or weigh conflicting evidence. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990). The standard for determining a motion for summary judgment is the same standard used to determine a motion for directed verdict: does the evidence present a sufficient disagreement to require submission to a jury or is it so one-sided that one party must prevail as a matter of law. Id. (citation omitted).

DISCUSSION

Smith contends that the government's action is barred by the statute of limitations. The United States asserts that the action is not time-barred because the Higher Education Technical Amendments of 1991 ("HETA"), codified at 20 U.S.C. § 1091a(a), eliminated all statutes of limitation on actions to recover on defaulted student loans and thereby revived this action against Smith.

Prior to HETA, the statute of limitations period for suits to recover on defaulted student loans was six years, commencing on the date the loan was assigned to the Department of Education. See Higher Education Act of 1965 ("HEA"), as amended by the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), codified at 20 U.S.C. § 1091a(a)(4)(B) & (C); U.S. v. Menatos, 925 F.2d 333, 335 (9th Cir.1991). When Congress enacted HETA, it meant not only to replace but also to nullify this limitations period:

(1) It is the purpose of this subsection to ensure that obligations to repay loans and grant overpayments are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.

(2) Notwithstanding any other provision of statute, regulation, or administrative limitation, no limitations shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action initiated or taken.

20 U.S.C. § 1091a(a)(1) & (2) (emphasis added).

The Ninth Circuit addressed the issue herein raised by Smith earlier this year. U.S. v. Phillips, 20 F.3d 1005 (9th Cir.1994). In Phillips, the Ninth Circuit unequivocally interpreted the effect of HETA on previously recognized limitations periods:

Congress provided that actions to collect on defaulted student loans were no longer subject to any statute of limitations. See 20 U.S.C. § 1091a(a) (footnote omitted). Moreover, Congress made HETA effective as if it were enacted under COBRA. See HETA § 3(c), Pub.L. No. 102-26, 105 Stat. 123, 125. (footnote omitted). By doing so, Congress not only eliminated COBRA's six-year statute of limitations period, but also revived all actions which otherwise would have been time-barred. See 20 U.S.C. § 1091a(a); see also U.S. v. Hodges, 999 F.2d 341, 341-42 (8th Cir.1993) (government could bring action to recover on defaulted student loan even though loan was defaulted in 1969 and loan was assigned to government in 1983 and would have been time-barred under the six-year limitations period); U.S. v. Glockson, 998 F.2d 896, 897 (11th Cir.1993) (same; "Congress intended the HETA amendments to apply retroactively to all student loan collection actions"); U.S. v. Mastrovito, 830 F.Supp. 1281, 1282-84 (D.Ariz.1993) (same); U.S. v. Davis, 801 F.Supp. 581, 583-84 (M.D.Ala.1992) (same); U.S. v. Wall, 794 F.Supp. 350, 351-52 (D.Or.1992) (same).

Id. at 1007.

The subsection of HETA which effectively incorporated the HETA amendments into COBRA, section 3(c), originally read:

The amendments made by this section shall be effective as if enacted by COBRA and shall apply to any actions pending on or after the date of enactment of HETA that are brought before November 15, 1992.

However, this subsection was amended in 1992 to eliminate the November 15, 1992 "sunset date." Pub.L. No. 102-325, § 1551, 106 Stat. 838 (1992). Hence, the HETA amendments apply to all debt collections on defaulted student loans, whenever brought, thereby reviving otherwise time-barred actions.

Under these authorities, there is no doubt that a statute of limitations cannot bar the United States from bringing this action against defendant. "The Amendments of 1991 and 1992 are clear and straightforward, providing that no limitation shall terminate the period within which an action may be filed." Mastrovito, 830 F.Supp. at 1283. Defendant's assertion that the United States' claim should be barred by the six-year statute of limitations applicable when Smith both incurred the debt and first defaulted on his loan payments simply has no merit in light of the unambiguous statutory language and expressed Congressional intent found in the statute. "Courts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: `judicial inquiry is complete.'" Connecticut Nat'l Bank v. Germain, 503 U.S. 249, ___, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) (quoting Rubin v. U.S., 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981)). Furthermore, the Supreme Court has held that the repeal of a statute of limitations on personal debts does not deprive a debtor of property in violation of the Fourteenth Amendment. Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209, 29 L.Ed. 483 (1885) (cited in Hodges, 999 F.2d at 342).²

Finally, the defendant argues that the University of Chicago and the United States have not met the due diligence requirements imposed by law for debt collectors.³ 20 U.S.C. § 1080(a) (1990) provides, in relevant part:

The initial lender and beneficiary of the government insurance shall be required to meet the standards of due

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