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O'Neal v. United States of America Inc.

United States District Court, D. Arizona

January 17, 2017

Wendell Dwayne O'Neal, Plaintiff,
United States of America Incorporated, et al., Defendants.


          Honorable G. Murray Snow United Staes District Judge

         Pending before this Court are: Plaintiff's Motion for Recusal (Doc. 13), Plaintiff's Motion for Relief of Judgment (Doc. 17) and Plaintiff's Amended Complaint (Doc. 18). The Court rules on those motions as follows:

         Plaintiff's Motion for Recusal (Doc. 13) is denied.[1] To the extent that Plaintiff's motion is based on this Court's rulings either in this case, or previous cases brought by Plaintiff involving the same subject matter (and many of the same defendants), it provides no justification for recusal. Disqualifying bias or prejudice must stem from something other than “information and beliefs” the judge “acquired while acting in his or her judicial capacity.” United States v. McTiernan, 695 F.3d 882, 891 (9th Cir. 2012) (quoting United States v. Frias-Ramirez, 670 F.2d 849, 853 n.6 (9th Cir. 1982)); accord United States v. Wilkerson, 208 F.3d 794, 799 (9th Cir. 2000). A judge's adverse rulings during the course of proceedings in which disqualification is sought, or in related proceedings, do not constitute a valid basis for the judge's disqualification. Liteky v. United States, 510 U.S. 540, 555 (1995); In re Marshall, 721 F.3d 1032, 1043 (9th Cir. 2013). Thus, Plaintiff's argument that he attempted to add this Court to a previous case involving the same subject matter when he alleges this Court made erroneous rulings is similarly unavailing. See, e.g., United States v. Studley, 783 F.2d 934, 940 (9th Cir. 1986) (“A judge is not disqualified by a litigant's suit or threatened suit against him . . . .”); see also Sullivan v. Conway, 157 F.3d 1092, 1096 (7th Cir. 1998) (“[I]t is improper for a lawyer or litigant . . . to create the ground on which he seeks the recusal of the judge assigned to his case. That is arrant judge-shopping.”).

         Further, the Court's dismissal of Plaintiff's claims against two lawyers from the law firm of Osborn Maledon-Lynne C. Adams and Christina Rubalcava-provide no basis for recusal for the same reasons. In its last order, the Court dismissed these Defendants from this suit because Plaintiff had previously named Ms. Adams and Ms. Rubalcava as defendants in at least two previous lawsuits involving this same transaction. Both of those lawsuits were dismissed with prejudice. (See Doc. 12 at 3.) For similar reasons the Court dismissed with prejudice Plaintiff's claims as to Mark Booker, Sean Dunn, Lynnette Hauck, Apollo Ed. Group Inc., and the University of Phoenix Inc.

         In addition, Plaintiff asks this Court to recuse because, some fourteen years ago, prior to this Court's departure from the practice of law in 2002, the undersigned practiced law at Osborn Maledon. At that time, neither Ms. Adams nor Ms. Rubalcava practiced law there. Plaintiff nevertheless asserts that it creates an appearance of impropriety for this Court to decide a lawsuit against members of a law firm it left more than fourteen years ago. Recusal is only appropriate where a reasonable person with knowledge of all the facts would conclude that the judge's impartiality might reasonably be questioned. Yagman v. Republic Ins., 987 F.2d 622, 626 (9th Cir. 1993). A reasonable person with knowledge of all the facts in this case would not conclude that the judge's impartiality might reasonably be questioned in this matter. Therefore, Plaintiff's motion for recusal is denied.

         The Court further denies Plaintiff's Motion for Relief of Judgment (Doc. 17). The Court believes that Plaintiff's interlocutory appeal to the Ninth Circuit, (Doc. 14), of the same judgment from which the Plaintiff seeks further relief, (Doc. 17), deprives the Court of jurisdiction over the motion. To the extent that this Court has not lost jurisdiction over such matters, the motion is denied as lacking merit.

         The Court does not believe, however, that the interlocutory appeal deprives the Court of jurisdiction over Plaintiff's Second Amended Complaint (“SAC”). (Doc. 18.) As previously mentioned, this lawsuit is based on the same subject matter as others previously filed by Plaintiff that have now been dismissed or are on appeal. Nevertheless, while the Court dismissed Plaintiff's claims as to the newly added Defendants-the United States of America, Inc., the U.S. Department of Education, U.S. Education Secretary Arne Duncan, Serena Amos, FedLoan Servicing Center and attorney Warren Stapleton-it allowed Plaintiff a chance to amend the claims as to those newly added defendants.[2] In response, Plaintiff filed his Second Amended Complaint (“SAC”) on January 9, 2017.

         Nevertheless, Plaintiff's SAC still fails to state any plausible claim against any of the remaining Defendants. Liberally interpreted, the SAC alleges that under its loan programs the United States allowed now-dismissed Defendant Apollo to certify the Plaintiff to receive a Stafford loan to pursue his education with Apollo institutions.[3] The SAC alleges that in certifying Plaintiff for the maximum loan amount under the Stafford loan program Apollo violated Department of Education regulations, and falsified his eligibility so that Plaintiff received a maximum Stafford loan which he subsequently was unable to service, and on which he ultimately defaulted, but which was ultimately discharged in a related proceeding in bankruptcy court.

         Beginning in paragraph 40, Plaintiff alleges that because the United States allowed Apollo to certify Stafford loans, and because Education Secretary Arne Duncan was charged with properly supervising Title IV funding programs including disbursements under these programs, Secretary Duncan and the United States are liable for failing to prevent Apollo from wrongfully certifying Plaintiff's loan eligibility.

         Similarly, the SAC alleges that Serena Amos was assigned by Secretary Duncan to investigate Plaintiff's complaint about Apollo's certification of a loan to him. It further alleges that Secretary Duncan was obliged to properly supervise and train Amos in her investigative function. Liberally read, the Complaint alleges that Amos was “not trained to ascertain any legal issues regarding Stafford loan overpayments, ” and, apparently, as a result, Amos, Secretary Duncan and the United States are liable to Plaintiff for negligence, gross negligence, reckless and wanton disregard against the Plaintiff's civil right to contract for a post-secondary education.

         Both of these claims are frivolous, [4] and given the past history of such complaints already filed by Plaintiff are harassing. They are dismissed with prejudice. Further, the revised Count 1A asserts FCRA and FDCPA claims against the United States. This court can ascertain no FDCPA claims against any Defendant in the SAC. Merely asserting that the Plaintiff has an FDCPA claim against the Defendants does not state such a claim. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         The closest the SAC comes to alleging a FCRA claim is its allegation that Fedloan was a furnisher of information under the FCRA and had inaccurately reported to three credit reporting agencies that the Plaintiff owed $2052.00 in Stafford student loan debt. (Doc. 18 at 11.) As a result, Plaintiff alleges that he has had credit applications denied. (Id. at 12 n. 24.)

         Even assuming Fedloan was a furnisher of information under FCRA, the SAC does not state a cause of action under FCRA. The statute gives no private right of action until the furnisher-in this case Fedloan-receives notice from a credit reporting agency that a consumer disputes the information it provided and the furnisher fails to take appropriate action as a result. “[N]otice of a dispute received directly from the consumer does not trigger furnisher's duties under the statute.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153-54 (9th Cir. 2009). In the absence of such a notice provided to the furnisher by a credit reporting agency, a furnisher has no obligations under the statute that give rise to a private right of action. Id. Plaintiff has made no such plausible allegations.

         Still later the Complaint alleges that because the United States employed Fedloan for Stafford loan management and collection, the United States is liable for any of Fedloan's acts regarding the loss of personal funds Plaintiff should have obtained from the Deputy Trustee, apparently in his bankruptcy. (Doc. 18 at 17.) There is no plausible allegation as to any distribution or credit he should have received from the Deputy Trustee in his bankruptcy that related to the allegedly discharged student loan debt. But, in any event, relief sought for any alleged failure of distributions due in Plaintiff's already completed bankruptcy court action should be sought from the bankruptcy court, not this Court. Additionally, the SAC's allegation that Mr. Stapleton along with Ms. Adams represented Apollo in the bankruptcy and failed to inform the Deputy Trustee that a timely claim had been submitted by third-party creditors does not state a claim under a cognizable legal theory. See In ...

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