Kirk v. ED Fund

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David A. Szwak
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Joined: Thu Jul 13, 2006 11:19 pm

Kirk v. ED Fund

Post by David A. Szwak »

Kirk v. ED Fund
Slip Copy, 2007 WL 2226046
August 01, 2007


WILLIAM A. KNOX, United States Magistrate Judge.
*1 In September 2006, plaintiff Margo Kirk filed suit, pro se, against defendant ED Fund FN1, asserting it misappropriated her income tax refund for payment on a defaulted student loan. She claims she did not authorize the loan, is not responsible for it, and that her credit rating has been damaged by the defendant's actions. Plaintiff did not identify statutes or legal theories supporting her claim, but generally asserts she is entitled to recover money damages for fraud, harassment, defamation of character and a violation of her Seventh Amendment rights.

FN1. ED Fund is a nonprofit corporation founded by the California Student Aid Commission in January 1997. It was organized by the Commission to administer activities associated with the Commission's participation in the federal student loan program.

In March 2007, defendant filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. Alternatively, defendant requested a more definite statement under Fed.R.Civ.P. 12(e.) Shortly after the motion was filed, new counsel entered an appearance for defendant and submitted suggestions in support of dismissal. Initially, defendant asserts that plaintiff failed to set forth any facts in support of her claims and that her claims were unintelligible.

Plaintiff responded in opposition to the motion and set forth facts to support her complaint. Defendant replied, suggesting plaintiff was attempting to assert claims under several federal statutes and that her claims were divided into two categories-those dealing with obtaining the loan and those dealing with matters after the loan was declared in default. As to the first issue, defendant states it was not the lender FN2 and was not involved in processing the loan papers which plaintiff claims were altered after she signed them. Thus, defendant asserts plaintiff has not set forth a claim against it for events occurring when the loan was obtained.

FN2. Defendant states, by way of background information, that Sallie Mae held and serviced the PLUS loan for plaintiff's son until there was a default. After the default, ED Fund was required by statute to pay the default claim and purchase the note. See Doc. 12, Fn. 1.

On the second issue, defendant avers plaintiff has failed to state a claim for events occurring during the collection efforts because (1) there is no private right of action for violations of the Higher Education Act FN3, and (2) federal law authorizes the use of a tax refund to offset a past-due student loan debt. Further, defendant states it is not a debt collector under the Federal Fair Debt Collection Practices Act FN4 (FDCPA) and plaintiff is foreclosed from bringing an action under the Federal Fair Credit Reporting Act FN5 (FCRA) because she did not comply with certain requirements.

FN3. Higher Education Act of 1965(HEA), 20 U.S.C. § 1071 et seq.

FN4. Federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. The FDCPA imposes limitations on debt collectors when collecting on past due debt. 15 U.S.C. § 1692f.

FN5. Federal Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.

Motion to Dismiss Standard

“[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.â€
David Szwak
Chairman, Consumer Protection Section, Louisiana State Bar Association
Bodenheimer, Jones & Szwak
509 Market Street, 7th Floor
Mid South Tower
Shreveport, Louisiana 71101
Fax 318-221-6555
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