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Andrich v. Navient Solutions Inc.

United States District Court, D. Arizona

September 3, 2019

Devin Andrich, Plaintiff,
v.
Navient Solutions Incorporated, et al., Defendants.

          ORDER

          HONORABLE SUSAN M. BRNOVICH, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant Navient Solutions, LLC's Motion to Dismiss Pursuant to Rule 12(b)(6). (Doc. 66, “Mot.”). Plaintiff Devin Andrich filed a Response, (Doc. 85, “Resp.”), and Defendant filed a Reply, (Doc. 83, “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). Plaintiff alleges that the following terms are included in the Loan Agreement:

• Plaintiff would update his permanent address with Defendant SLM or its designated assignee when Plaintiff changed permanent mailing addresses. (SAC ¶ 23).
• Plaintiff would notify SLM or its designated assignee when Plaintiff's status changed that would affect Plaintiff's Loan Agreement. (SAC ¶ 24).
• Upon request, SLM or its designated assignee would provide Plaintiff with a deferment application that explains Plaintiff's eligibility requirements to Plaintiff's permanent address. (SAC ¶ 26).
• Plaintiff had a right to defer or postpone repayments to Defendant SLM or its designated assignee, while Plaintiff experienced “an economic hardship as determined by federal law.” (SAC ¶ 27).
• Defendant SLM or its designated assignee was required to grant Plaintiff a forbearance if Plaintiff had “a monthly debt burden for Title IV loans that collectively equal[ed] or exceed[ed] 20% of [Plaintiff's] total monthly gross income.” (SAC ¶ 28).

         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 Plaintiff's Loan Agreement had been amended or modified to name NSL as SLM's loan servicer under Plaintiff's Loan Agreement. (SAC ¶ 33). Additionally, SLM and its assignees entered into an agreement with PHEAA regarding the consolidation and servicing of Plaintiff's consolidated student loans (the “Guarantor Agreement”).[2] (SAC ¶ 39).

         Between 2003 and 2014, Plaintiff notified SLM and NSL of a change in Plaintiff's permanent address approximately three times by notifying SLM and NSL via the mailing address previously provided-P.O. Box 9500, Wilkes-Barre, Pennsylvania 18773-9500 (the “Mailing Address”). (SAC ¶¶ 32, 35). Each time after Plaintiff corresponded, SLM and NSL subsequently caused delivery of forms and correspondence to Plaintiff at Plaintiff's new permanent address. (SAC ¶ 36). Each time between 2003 and 2014 that Plaintiff requested deferment and forbearance forms from SLM and NSL via the Mailing Address, SLM and NSL subsequently caused delivery of deferment and forbearance forms to Plaintiff at Plaintiff's new permanent address.[3] (SAC ¶ 37).

         On July 10, 2015, Plaintiff began serving a 3 1/2-year prison sentence at the Arizona Department of Corrections. (SAC ¶¶ 49, 50). On December 22, 2015, Plaintiff mailed a letter to NSL via the Mailing Address informing NSL of Plaintiff's then-permanent address in Tucson, Arizona and enclosing a form created by NSL that borrowers can use when requesting a student loan payment deferment or forbearance. (SAC ¶¶ 52-54). Plaintiff again mailed a letter to NSL via the Mailing Address on October 21, 2016, informing NSL of Plaintiff's then-permanent address and requesting the status of Plaintiff's student loan payment deferment or forbearance application previously submitted, or alternatively, requesting a student loan payment deferment or forbearance. (SAC ¶¶ 57-59). Between December 22, 2015, and the date of the First Amended Complaint, NSL neither responded to Plaintiff's December 22, 2015 or October 21, 2016 correspondence, nor mailed any correspondence to Plaintiff's then-permanent addresses warning Plaintiff of a pending or possible default under the Loan Agreement. (SAC ¶¶ 56, 61).

         After Plaintiff's release from prison, he mailed a letter to SLM and NSL at the Mailing Address on October 1, 2017 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 their rights under the Loan Agreement to Defendant PHEAA, the guarantor of the Loan. (SAC ¶ 71). Plaintiff alleges that SLM and NSL made numerous false statements to PHEAA that Plaintiff defaulted under the Loan Agreement. (SAC ¶ 69). Plaintiff also alleges that SLM and NSL made numerous false statements to several credit reporting agencies that Plaintiff defaulted under the Loan Agreement. (SAC ¶ 70).

         In his Second Amended Complaint, Plaintiff brings eight causes of action against NSL:

• Count One - violation of the Fair Credit Reporting Act (the “FCRA”), 15 U.S.C. § 1681 et seq., for making false statements to PHEAA;
• Count Two - defamation;
• Count Three - violation of the FCRA for making false statements to Credit Reporting Agencies;
• Count Five - breach of the Loan Agreement;
• Count Six - breach of the covenant of good faith and fair dealing;
• Count Seven - negligent misrepresentation;
• Count Eight - fraud;
• Count Ten - breach of the “Guarantor Agreement.”

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Rule 8(a)(2). Rule 8(a)(2) requires a “short and plain statement of the claim showing that the pleader is entitled to relief, ” so that the defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss if it contains sufficient factual matter, which, if accepted as true, states a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Facial plausibility exists if the pleader sets forth ...


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