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Schuster v. SLM Corp.

United States District Court, D. Maryland

October 23, 2017



          Catherine C. Blake, United States District Judge

         The plaintiff, Eric Schuster, has sued the defendant, SLM Corporation, (“SLM”), claiming that SLM negligently allowed his daughter to use him as a co-signer on seven student loan agreements without his consent. He also requests that the court enter a declaratory judgment clarifying his relationship to the seven loans. SLM has moved to dismiss these claims. The court will grant SLM's motion.


         The claim arises out of seven loan agreements, amounting to $114, 600, that the plaintiff's daughter entered and to which she included the plaintiff as a co-signer without his consent. (Am. Compl., ECF No. 3, ¶ 5-26). SLM allegedly approved these loans without verifying that Schuster had agreed to co-sign them. (Id. at ¶ 27). Schuster discovered his loan liability only after he was contacted by SLM for payment. (Id. at ¶ 28).

         Schuster now invokes the court's diversity jurisdiction to sue SLM alleging that it negligently approved his daughter's loans without verifying the authenticity of his co-signature.[1]SLM moves to dismiss the claim under Fed.R.Civ.P. 12(b)(6) arguing that because it does not owe a duty to Schuster it could not have committed negligence and, even if a duty did exist, SLM was not the proximate cause of his injuries. (Mot. to Dismiss, ECF No. 5).

         Standard of Review

         To survive a motion to dismiss, the factual allegations of a complaint “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). “To satisfy this standard, a plaintiff need not ‘forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements.” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation omitted). “Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is ‘probable, ' the complaint must advance the plaintiff's claim ‘across the line from conceivable to plausible.'” Id. (quoting Twombly, 550 U.S. at 570). And the plaintiff typically must do so by relying solely on facts asserted within the four corners of his complaint. Zak v. Chelsea Therapeutics Intern., Ltd., 780 F.3d 597, 606-07 (4th Cir. 2015).


         SLM argues that Schuster's case should be dismissed because it did not owe a duty to protect Schuster from fraud and, even if it did, it was not the proximate cause of Schuster's injury. Because this case arises under the court's diversity jurisdiction it must look to Maryland law for governing negligence principles.

         A. Duty

         Under Maryland law, a plaintiff alleging negligence must prove four elements: duty, breach, causation, and damages. Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 451 Md. 600, 610 (2017). Generally, whether a duty exists turns on an examination of “the nature of the harm likely to result from a failure to exercise due care and . . . the relationship that exists between the parties.” Id. at 611 (internal quotations omitted). In cases in which there are “no safety concerns and the risk [is] purely economic, ” Maryland courts have “refrained from finding a tort duty absent . . . an intimate nexus.” Id. at 614 (internal quotations omitted).

         An intimate nexus exists if there is contractual privity or its equivalent or some “linking conduct” between a defendant bank and a plaintiff.[2] Id. at 620. Although a contractual relationship will satisfy the standard, banks do not typically owe a duty to their customers beyond whatever contractual relationship might bind them. Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 778-79 (4th Cir. 2013). Indeed, “[c]ourts have been exceedingly reluctant to find special circumstances sufficient to transform an ordinary contractual relationship between a bank and its customer into a fiduciary relationship or to impose any duties on the bank not found in the loan agreement.” Id. at 778 (quoting Parker v. Columbia Bank, 568 A.2d 521, 532 (Md. Ct. Spec. App. 1992)).

         In the case of non-customers, by contrast, courts apply the “well-established rule . . . that a bank . . . does not owe a duty to a non-customer with whom it has no direct relationship” absent special circumstances. Nat'l Grange Mut. Ins. Co. v. Verizon's Benefits Ctr., 541 F.Supp.2d 745, 749-50 (D. Md. 2008); see also Eisenberg v. Wachovia Bank, 301 F.3d 220, 226 (4th Cir. 2002) (considering North Carolina law); Iglesias v. Pentagon Title & Escrow, LLC, 51 A.3d 51, 67-68 (Md. Ct. Spec. App. 2012). A close relationship and reliance on a bank's “exercise of due care, ” if a bank “knew or should have known of the plaintiff's reliance” on its conduct, are both circumstances that may give rise to an intimate nexus. Balfour, 451 Md. at 619-21.

         Schuster makes two arguments to support the existence of a duty on the part of SLM to protect him from fraud. First, he argues that SLM owed him a duty because both parties are members of a prior loan agreement, which Schuster did consent to co-sign, and that, because of this previous agreement, SLM should have recognized that the new email address and phone number his daughter provided for him on the fraudulent loan agreements were phony. And second, he claims that SLM owed him a duty because it had ...

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