Schuster v. Sallie Mae Bank

          MEMORANDUM

          JAMES K. BREDAR, CHIEF JUDGE

         Eric Schuster filed suit against Defendants Navient Solutions, LLC, Sallie Mae Bank, SLM Corporation, Sallie Mae Bank Inc., Equifax Inc., Equifax Consumer Services, LLC, Equifax Information Services, LLC, Experian Data Corp., Experian Information Solutions, Inc., Experian Service Corp., and Trans Union LLC alleging violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681, et seq., as well as defamation, negligence, and invasion of privacy/ false light. Schuster sought dismissal of his claims related to all parties except for those related to Sallie Mae Bank ("SMB").

         Schuster alleges that his daughter listed him as a co-signer on her student loans without his permission. He claims he has been damaged by SMB's reporting to credit agencies regarding his status as a co-signer on these loans. Schuster seeks actual, statutory, and punitive damages, as well as reasonable attorney's fees and costs. Schuster also seeks a declaratory judgment concerning his status as a co-signer on these loans.

         SMB filed a motion to dismiss and a motion for sanctions, and the matters are fully briefed. No hearing is required. See Local Rule 105, 6 (D. Md. 2018). For the reasons set forth below, SMB's motion to dismiss will be granted, and SMB's motion for sanctions will be denied.

         I. Background^[1]

         This is the second case Schuster has brought in this Court against a Sallie Mae company challenging his status as a co-signer on seven of his daughter's student loans. See Schuster v. SLM Corp., Civ. No. CCB-17-2108, 2017 WL 4777708 (D. Md. Oct. 23, 2017) (Blake, J.). In both cases, Schuster alleges that his daughter listed him as a co-signer on her student loans without his permission. (Compl. ¶ 31, ECF No. 1; First Compl. ¶ 26, Mot. Dismiss Ex. A, ECF No. 35-4.) And, in both cases, Schuster seeks to hold a Sallie Mae entity liable for the harm he has experienced resulting from these allegedly fraudulently-procured loans.

         On August 17, 2017, Schuster filed an amended complaint in his first suit alleging that SLM Corporation ("SLM") was liable for negligence in issuing these student loans. (First Compl. ¶¶ 31-33, Mot. Dismiss Ex. A.) He also requested a judgment declaring: (1) Schuster "is not a cosigner or co-obligor regarding any of the Loans;" and (2) "[a]ny reporting to a credit reporting agency that Plaintiff is a co-signer on any Loan and/or that Plaintiff is delinquent on any Loan be removed." (Id. at 4-5.) Judge Blake granted the motion to dismiss, holding that banks do not have a duty to protect noncustomers (such as Schuster) from fraud absent an intimate nexus between the two, which did not exist between Schuster and SLM.^[2] Schuster, 2017 WL 4777708, at *l-3. Judge Blake also denied Schuster's request for a declaratory judgment because she found Schuster had no "plausible substantive claims." Id. at *3 n.6.

         On November 21, 2018, Schuster filed his complaint in the current suit. After consenting to termination of the other Defendants (ECF Nos. 24, 36, 49, 55, 56), SMB is the last remaining defendant. In his complaint, Schuster states that he "sent formal, written disputes" on or about May 31, 2018 to Navient Solutions, Inc., Sallie Mae, SMB, SLM Corporation, and credit reporting agencies ("CRAs") Equifax, Experion, and TransUnion regarding his status as co-signer on his daughter's student loans. (Compl. ¶ 39.) Equifax and Experian responded that either "Sallie Mae" or "Sallie Mae Inc." had verified that the student loans were accurately attributed to Schuster. (Id. ¶¶ 41-42.) TransUnion responded that it had investigated Schuster's complaint and would continue to report the student loans on Schuster's credit report. (Id. ¶ 40.) As a result of this reporting, Schuster states that he was denied a credit card. (Id. ¶ 43.)

         Schuster alleges SMB violated the FCRA by failing to properly investigate whether he was a co-signer on the aforementioned loans, failing to share the information it received from Schuster contesting his status as a co-signer with CRAs, and reporting inaccurate information to CRAs with regard to his status as a co-signer. (Compl. ¶ 57.) Schuster also alleges SMB is liable for defamation and invasion of privacy/false light for making false oral and written communications to CRAs and attorneys regarding his status as a co-signer. (Id. ¶¶ 69-77, 90-93.) Finally, Schuster alleges that SMB was negligent by violating the FCRA, failing to communicate to CRAs that Schuster was not a co-signer on the loans, and "[c]ontinuing to report the inaccurate information 1 to [CRAs] despite having knowledge of the inaccuracies." (Id. ¶¶ 82-5.)

         Schuster seeks a declaratory judgment stating he "is not a co-signer or co-obligor with regard to any of the Loans." (Id. at 23.) He also requests an order directing SMB to: (1) "immediately delete all of the inaccurate information from Plaintiffs credit reports and files"; (2) "cease reporting the inaccurate information to any and all persons and entities to whom [SMB] report[s] customer credit information"; and (3) "send to all persons and entities to whom [SMB] ha[s] reported Plaintiff's inaccurate information updated and corrected credit report information." (Id.)

         SMB filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and a motion for sanctions pursuant to Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1691. The Court will address each motion in turn.

         II. Motion to Dismiss

         A. Legal Standard

         SMB filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Mot. Dismiss at 1, ECF No, 35.) A complaint must contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Ashcroft v. Iqbal,556 U.S. 662, 678 (2009) (quoting BellAtl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. An inference of the mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. Courts must "accept the well-pled allegations of the complaint as true, . . . constru[ing] the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra, 120 F.3d at 474. "A pleading that offers 'labels and conclusions' or . . . 'naked assertion[s]' devoid of 'further factual ...