United States District Court, District of Maryland
SHAHIN S. SHAHIN
XEROX CORPORATION, et al.
DEBORAH K. CHASANOW, United States District Judge
Presently pending and ready for review in this debt collections case is a motion to dismiss filed by Defendants SLM Corporation (“SLM”), Navient Solutions, Inc., f/k/a Sallie Mae, Inc. (“Sallie Mae”), and Student Assistance Corporation (“Student Assistance Corp.”). (ECF No. 5). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion to dismiss will be granted in part and denied in part.
Plaintiff Shahin S. Shahin alleges that he suffers from a number of complex medical problems,  which have rendered him disabled and have caused him to be unemployed since February 5, 2008. (ECF No. 1 ¶ 2). Plaintiff currently receives Social Security disability payments. (Id.). At the time Plaintiff became disabled, he had six outstanding student loans. (ECF No. 1 ¶ 3). Two of Plaintiff’s loans were guaranteed by the United States Department of Education, and the remaining four loans were guaranteed by Defendant United Student Aid Funds Inc. (“USA Funds”). (ECF No. 1 ¶ 3 and 1-16). Five of the six loans were discharged due to Plaintiff’s “total and permanent disability.”(ECF Nos. 1 ¶ 21 and 1-22, at 2-3). At issue in this case is the sixth loan (“the Loan”) that was not discharged and is guaranteed by USA Funds. (ECF Nos. 1 ¶ 10 and 1-21).
On May 29, 2014, Plaintiff, proceeding pro se, filed this suit against six Defendants: USA Funds, Xerox Corporation (“Xerox”), Affiliated Computer Services (“ACS”), SLM, Sallie Mae, and Student Assistance Corp. In his complaint, Plaintiff alleges that his application requesting that the Loan be discharged was improperly denied. As a result of this improper denial, he alleges that his credit has been damaged because he was improperly reported to the national credit reporting agencies for defaulting on the Loan. In addition, Plaintiff alleges that due to Defendants’ failure to discharge the Loan, his Social Security disability check was improperly garnished to collect on the Loan, causing him harm. (ECF No. 1, at 4-5). Plaintiff has asserted both diversity and federal question jurisdiction and purports to state various claims arising from Defendants’ alleged actions and inactions, including: “fraud, negligence, civil conspiracy, tort, breach of contract, abuse of power, intentional infliction of emotional stress, malicious defamation, injuries malicious fals[e]hood.” (Id. at 5).
On July 7, 2014, SLM, Sallie Mae, and Student Assistance Corp. (collectively “Defendants”) filed a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).(ECF No. 5). The motion is fully briefed. (ECF Nos. 33 and 34). The other Defendants in this case, USA Funds, Xerox, and ACS have filed answers, and the pending motion does not pertain to them. (ECF Nos. 23 and 32).
A brief overview of the relationship between the Defendants and the Loan, and a history of the Loan is in order. From 2009 until September 2012, Plaintiff’s Loan servicer was ACS and the Loan guarantor was USA Funds. During this time period, Plaintiff contacted Student Assistance Corp. to request deferment of his Loan payments. (ECF Nos. 1-4; 1-9; and 1-12). Student Assistance Corp. directed Plaintiff to send his Loan deferment paperwork to his Loan “Lender/Servicer, ” ACS. (Id.). Between 2009 and 2012, Plaintiff received numerous letters from ACS informing him that he was delinquent on his loans, and discussing why his loan deferral or discharge paperwork was inadequate. (ECF Nos. 1-5; 1-7; 1-10; 1-13; 1-14; and 1-15). Plaintiff attaches documents that show that his application for a discharge of the Loan was denied at least four times by ACS on December 7, 2009 (ECF No. 1-7), July 27, 2010 (ECF No. 1-10), August 9, 2011 (ECF No. 1-14), and June 14, 2012 (ECF No. 1-15). ACS rejected all of Plaintiff’s applications due to various alleged defects, including that the application did not include his doctor’s signature or the contact information for his Power of Attorney. (ECF Nos. 1 ¶¶ 9-11; 1-10; 1-13; and 1-14). During this time period, Plaintiff received notification from Student Assistance Corp. that his loan for the account ending in 2858 was past due. (ECF Nos. 1 ¶ 10 and 1-9). Plaintiff received a final letter from ACS on June 14, 2012, stating: “We regret that we are unable to process your request.” (ECF No. 1-15).
Several months later, on September 21, 2012, Plaintiff received a letter informing him that his Loan was purchased “as a default claim by the guarantor of the loan(s), USA Funds” and that his new loan servicer was Sallie Mae. (ECF No. 1-16, at 1). The letter demanded repayment of $4, 354.08, the total balance of his Loan, within 60 days and threatened to pursue debt collections actions if the Loan was not repaid. (Id. at 1-2). Plaintiff responded to Sallie Mae stating he had attempted several times to file a discharge application with ACS, only to have those attempts rejected. (ECF Nos. 1 ¶ 16 and 1-17). Plaintiff also stated in the letter that ACS reported him to a credit agency, ruining his credit. (ECF No. 1-17). In response, Sallie Mae sent Plaintiff a “Total and Permanent Disability” application with instructions to complete the form and return it. (ECF No. 1-18). Plaintiff does not indicate whether he ever submitted a new application to Sallie Mae.
On December 9, 2012, Plaintiff sent a letter requesting a judicial review from Sallie Mae, stating that ACS made a mistake in 2009 by not processing his Loan discharge application. (ECF No. 1 ¶ 18). He states in this letter that “Sallie Mae’s action or inaction to resolve this issue and [its] sending the account to [a] collection agency [has] added insult to injury.” (ECF No. 1-19). On December 20, 2012, Sallie Mae responded to Plaintiff stating, “In regard to the disability form you recently sent our office, please note that the form has been denied. Further information is needed from your physician. . . We have received an outdated form that can not be used to process your Total and Permanent Disability Cancellation Request.” (ECF No. 1-20, at 1). In this letter, Sallie Mae enclosed a new form for Plaintiff to fill out. (Id. at 2).
On January 1, 2013, Sallie Mae sent another letter to Plaintiff informing him that the guarantor of the loan, USA Funds, had reported the default of Plaintiff’s loan to the national consumer reporting agencies. (ECF No. 1-21, at 1). This letter also stated that “USA Funds, and Sallie Mae acting on behalf of USA Funds, may take a number of actions to collect on this obligation, including one or more of the following:  contacting your employer seeking garnishment of your wages[.]” (Id.) More than a year later, on February 26, 2014, the Department of the Treasury, at the apparent request of Sallie Mae or USA Funds, began garnishing $164.85 from Plaintiff’s monthly Social Security disability income. (ECF No. 1 ¶ 22 and 1-22, at 1).
II. Standard of Review
The purpose of a motion to dismiss under Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A plaintiff’s complaint need only satisfy the standard of Rule 8(a), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “Rule 8(a)(2) still requires a ‘showing, ’ rather than a blanket assertion, of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 n.3 (2007). That showing must consist of more than “a formulaic recitation of the elements of a cause of action” or “naked assertion[s] devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted).
At this stage, all well-pleaded allegations in a complaint must be considered as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and all factual allegations must be construed in the light most favorable to the plaintiff, see Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). In evaluating the complaint, unsupported legal allegations need not be accepted. Revene v. Charles Cnty. Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989). Legal conclusions couched as factual allegations are insufficient, Iqbal, 556 U.S. at 678, as are conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not ‘show[n] . . . that the pleader is entitled to relief.’” I ...