A District Court judge in Ohio has dismissed a consumer’s Fair Debt Collection Practices Act lawsuit against a student loan guaranty agency, granting summary judgment after concluding the agency was not a debt collector because it was pursuing the debt as part of a fiduciary obligation to the Department of Education.
The background: The plaintiff, representing himself, sued the defendant under the FDCPA and asked the court to “stay” the debt, claiming the agency was unlawfully trying to collect a loan he says is invalid.
- The debt stemmed from student loans the plaintiff took out roughly 20 to 25 years ago to attend DeVry University, which were tied to an account with the defendant.
- The plaintiff disputed the debt, saying he could not repay it and that it was invalid, and alleged that the defendant kept pursuing repayment even after he communicated those objections.
- He filed suit seeking injunctive relief and a stay of the debt, arguing the defendant had violated the FDCPA.
- The plaintiff’s filings also included a number of unusual claims, including that he suffered a skull injury in a hotel room in Brazil, that the Chinese Government had agreed to assume his student loan debt, and that the balance was “Chinese debt.”
- The defendant moved to dismiss, arguing it was not a “debt collector” under the FDCPA, and asked the court to treat the motion as one for summary judgment.
The ruling: Judge Michael H. Watson of the District Court for the Southern District of Ohio granted summary judgment to the defendant, finding it fell within the FDCPA’s “fiduciary exception” and was therefore not a debt collector.
- The judge explained that the FDCPA excludes those collecting a debt incidental to a bona fide fiduciary obligation, and that guaranty agencies collecting on behalf of the Department of Education under the Federal Family Education Loan Program qualify for that exclusion.
- Loan records and an affidavit showed the plaintiff completed a federal consolidation loan and promissory note in 2005, consolidating federal Stafford/Ford loans held by the Department of Education, and that the defendant guaranteed those loans. A letter the plaintiff attached to his own complaint described the defendant as “acting as a guarantor on behalf of the U.S. Department of Education.”
- The judge found the plaintiff’s response did not create a genuine factual dispute. Among other arguments, the plaintiff asked the court to strike the agency’s affidavits because they contained the phrase “further affiant sayeth naught,” which he claimed was not English.
- In a footnote, the judge noted that other facts, such as the skull injury in Brazil and the Chinese Government’s purported agreement to assume the loan, were “unimportant to the pending motion.”
