Goodman v. Coronado Student Loan Trust

Background

Ashley Theresa Goodman sued Coronado Student Loan Trust, Pennsylvania Higher Education Assistance Agency (PHEAA), and American Education Services (AES), alleging one violation of the Federal Debt Collection Practices Act (FDCPA) involving her student loans. AES serviced the loans, and PHEAA was AES’s parent company. The opinion states that Coronado owned the loans after they were sold and assigned to it.

Goodman attended the Art Institutes of California and the Art Institute of Pittsburgh from 2008 to 2011 and took out student loans for that education. She defaulted on the loans in 2019 and filed for Chapter 13 bankruptcy on November 22, 2019. The lenders did not file claims on their own behalf. Goodman’s bankruptcy counsel filed claims for the lenders and later objected to them. Because the creditors did not appear in connection with the objections, the bankruptcy court disallowed the claims. The bankruptcy court’s orders did not address the merits of the claims. Goodman alleged that the defendants continued trying to collect the debt after learning of those orders.

AES and PHEAA—not Coronado—filed the motion addressed in this opinion. The opinion states that Coronado appeared likely to answer the complaint, but the court did not rule on Coronado’s position in this order.

Legal standard

The court reviewed the motion under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint states a legally sufficient claim. At this stage, the court accepts the complaint’s factual allegations as true and asks whether they plausibly show that the defendants are liable.

Analysis

An FDCPA claim requires a plaintiff to show that: (1) the plaintiff was the target of collection activity involving a consumer debt; (2) the defendant was a “debt collector” as the FDCPA defines that term; and (3) the defendant committed an act or omission prohibited by the statute.

The dispute concerned the second element. The FDCPA generally defines a debt collector as a person whose business principally involves collecting debts or who regularly collects debts owed to someone else. The definition excludes a person collecting a debt that was not in default when that person obtained it.

AES argued that it began servicing Goodman’s loans before they were in default. Goodman argued that the record did not establish when default occurred and that default may have occurred when late fees were assessed in July 2019. She also argued that AES and PHEAA began servicing the loans after Coronado acquired them in December 2019. The court noted that Goodman had not alleged that AES began servicing the loans only when Coronado acquired them, so the sale date did not establish when AES began servicing them.

The records attached to Goodman’s complaint showed payments to AES as early as 2012 and regular payments through July 2019, when late fees were charged. A January 11, 2012, AES statement also showed that AES was servicing the loans by that date. The court treated July 2019 as the earliest possible default date supported by the record, while noting that an overdue debt is not necessarily already in default.

Because AES began servicing the loans well before July 2019, the court held that AES was not a “debt collector” under the FDCPA. The court also concluded that Goodman could not successfully amend her complaint to show otherwise because the record established that the loans were not in default when AES began servicing them. PHEAA was dismissed because Goodman’s claim against it was based on a theory that a parent company was responsible for AES’s conduct; since AES was not a debt collector, the court concluded that PHEAA was not one either.

Disposition

The court granted AES and PHEAA’s motion to dismiss. It dismissed with prejudice the claims against AES and PHEAA in Goodman’s complaint and terminated those defendants from the action. The court did not reach the defendants’ additional arguments because dismissal on the debt-collector issue resolved the motion.