United States District Court, D. Arizona
ORDER
Honorable Susan M. Brnovich, United States District Judge.
Pending
before the Court is Defendant Pennsylvania Higher Education
Assistance Agency's Motion to Dismiss Pursuant to Rule
12(b)(6). (Doc. 55, “Mot.”). Plaintiff Devin
Andrich filed a Response, (Doc. 76, “Resp.”), and
Defendant filed a Reply, (Doc. 80, “Reply”). Oral
argument was held on August 8, 2019. The Court has now
considered the Motion, Response, and Reply, along with
arguments and relevant case law.
I.
BACKGROUND
Plaintiff
initiated this action on August 31, 2018. (Doc. 1). He filed
a Second Amended Complaint on December 28, 2018, (Doc. 39,
“SAC”), naming as defendants (1) SLM Corporation,
(2) SLM Education Loan Corporation, (3) Navient Solutions,
Inc., (4) Navient Solutions, LLC, (5) Pennsylvania Higher
Education Assistance Agency (“PHEAA”), (6)
Performant Recovery Services, Inc., and (7) DOES I-X, as
individuals or entities. Defendant Performant Recovery
Services, Inc. was dismissed from the action on January 22,
2019. (Doc. 53). Plaintiff refers to Defendants SLM
Corporation and SLM Education Loan Corporation collectively
as “Sallie Mae.” (SAC ¶ 4). Plaintiff refers
to Defendants Navient Solutions, Inc. and Navient Solutions,
LLC collectively as “Navient.” (SAC ¶ 7).
However, due to counsels' representations of entity name
changes that have occurred over the time period at issue, the
Court will refer to Defendants SLM Corporation and SLM
Education Loan Corporation collectively as “SLM.”
The Court will refer to Navient Solutions, Inc. and Navient
Solutions, LLC collectively as “NSL.”
The
following facts are assumed to be true for the purpose of
deciding this Motion.[1]Plaintiff entered into a loan agreement
with SLM on or about October 5, 2003 (the “Loan
Agreement”). (SAC ¶ 18). SLM identified SallieMae
Servicing Corporation as the loan servicer under the Loan
Agreement. (SAC ¶ 31). Sometime between 2003 and 2014,
NSL informed Plaintiff via writing that Plaintiffs Loan
Agreement had been amended or modified to name NSL as
SLM's loan servicer under Plaintiffs Loan Agreement. (SAC
¶ 33). SLM and its assignees entered into an agreement
with PHEAA regarding the consolidation and servicing of
Plaintiffs consolidated student loans (the “Guarantor
Agreement”).[2] (SAC ¶ 39). Plaintiff alleges that he
is an intended third-party beneficiary under the terms of the
Guarantor Agreement. (SAC ¶ 40). Plaintiff alleges that
the terms of the Guarantor Agreement require SLM and its loan
servicer to
• deliver notices and correspondence to the
borrower's permanent address that the borrower provides
to SLM and its loan servicer
• provide the borrower with deferment or forbearance
applications upon the borrower's written request to
Defendant SLM or its loan servicer
• review the borrower's deferment or forbearance
applications, prior to Defendants SLM or its loan servicer
declaring a default under the Loan Agreement with the
borrower
• report to Defendant PHEAA the results of reviewing a
borrower's deferment or forbearance application when
declaring a default under the Loan Agreement with the
borrower
(SAC ¶¶ 41-44).
On July
10, 2015, Plaintiff began serving a 3 1/2-year prison
sentence at the Arizona Department of Corrections. (SAC
¶¶ 49-50). He alleges that he notified NSL of
address changes throughout his time in prison and also
requested deferment or forbearance and that NSL did not
respond to Plaintiff's then-address.
After
Plaintiff's release from prison, he mailed a letter via
United States mail to SLM and NSL updating his permanent
address and requesting a student loan payment deferment or
forbearance. (SAC ¶¶ 66-67). On November 1, 2017,
SLM and NSL mailed a letter to Plaintiff, stating that SLM
and NSL could not approve Plaintiff for a student loan
payment deferment or forbearance under the Loan Agreement
because SLM and NSL declared and entered Plaintiff's
default under the Loan Agreement. (SAC ¶ 68). Upon SLM
and NSL declaring and entering Plaintiff's default under
the Loan Agreement, SLM and NSL subsequently sold or
otherwise assigned its rights under the Loan Agreement to
Defendant PHEAA, the guarantor of the loan. (SAC ¶¶
30, 71). Plaintiff alleges that PHEAA made numerous false
statements to several credit reporting agencies that
Plaintiff defaulted under the Loan Agreement, (SAC ¶
72), and that PHEAA would not cure SLM and NSL's breaches
of the Loan Agreement. (SAC ¶¶ 85, 90).
In his
Second Amended Complaint, Plaintiff brings three causes of
action against PHEAA: (1) Violation of the Fair Credit
Reporting Act (the “FCRA”), 15 U.S.C. § 1681
et seq. (Count Three); (2) Breach of the Loan
Agreement (Count Nine); and (3) Breach of the Guarantor
Agreement (Count Ten).
II.
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