                            UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA



 DONALD EDMOND,

            Plaintiff,
                    v.                                     Civil Action No. 10-0578 (JDB)
 AMERICAN EDUCATION SERVICES,

            Defendant.


                                  MEMORANDUM OPINION

        This matter is before the Court on the Motion to Dismiss Submitted by the Pennsylvania

Higher Education Assistance Agency/American Education Services and on plaintiff’s Motion for

Equitable Relief by Specific Performance. For the reasons stated below, the Court will dismiss

Counts I, II, IV and V of plaintiff’s Amended Complaint and will deny plaintiff’s request for

equitable relief.

                                       I. BACKGROUND

        While attending Suffolk University Law School, see Plaintiff’s Amended Complaint

(“Am. Compl.”) ¶ 2, plaintiff obtained a student loan from Bank of America, N.A.; Doris

Muellner, his common-law spouse, id. ¶ 13, was the co-signor. See Motion to Dismiss

Submitted by the Pennsylvania Higher Education Assistance Agency/American Education

Services (“Def.’s Mot.”) [Dkt. #4], Ex. 1 (Cosigned Loan Request/Credit Agreement) at 1 & 2-3

(Note Disclosure Statements) (exhibit numbers designated by the Court).1 The Pennsylvania


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               Ms. Muellner is not a party to this action, and plaintiff lacks standing to bring
claims or to demand relief on her behalf.

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Higher Education Assistance Agency, d/b/a American Education Services (“AES”), serviced the

loans.2 See Am. Compl. ¶¶ 3-4; Def.’s Mot. at 1-2. According to plaintiff, AES erroneously

reported his accounts delinquent to three credit reporting agencies, Am. Compl. ¶ 13, denied his

request for forbearance, id. ¶ 25, and subjected him and Ms. Muellner to “shrill, harassing and

predatory acts” in its attempt to collect the debt, see id. ¶¶ 22-23. He learned of the alleged

delinquency “when Bank of America notified [Ms.] Muellner that the joint credit card account

she shares with [plaintiff] would be subjected to a reduction in available credit” due to the

delinquent student loan. Id. ¶ 14.

       Plaintiff claims that AES breached its covenant of good faith (Count I), violated the Fair

Credit Reporting Act (Count II), defamed him (Count III), engaged in unfair and deceptive

business practices (Count IV), and violated the Fair Debt Collection Practices Act (Count V).

He demands compensatory damages among other relief. See id. at 15.

                                         II. DISCUSSION

                                 A. Dismissal Under Rule 12(b)(6)

       The Federal Rules of Civil Procedure require that a complaint contain “‘a short and plain

statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the

defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957));

accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). Although “detailed factual


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                 AES represents that “National Collegiate Trust is a wholly separate entity which
is not affiliated with AES.” Def.’s Mot. at 1 n.1. Plaintiff does not supply a separate address or
registered agent upon whom service can be effected, and his pleadings do not allege facts
pertaining exclusively to National Collegiate Trust. Accordingly, the Court will dismiss
National Collegiate Trust as a party defendant to this action.

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allegations are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the

grounds of entitle[ment] to relief, a plaintiff must furnish more than labels and conclusions or a

formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555-56 (internal

quotation marks omitted); see also Papasan v. Allain, 478 U.S. 265, 286 (1986). “To survive a

motion to dismiss, 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. __, __, 129 S. Ct. 1937,

1949 (2009) (quoting Twombly, 550 U.S. at 570); Atherton v. District of Columbia Office of the

Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009), cert. denied, 130 S.Ct. 2064 (2010). A complaint is

plausible on its face “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, 129 S. Ct. at

1949. However, “the court need not accept inferences drawn by plaintiffs if such inferences are

unsupported by the facts set out in the complaint.” Kowal v. MCI Commc’ns Corp., 16 F.3d

1271, 1276 (D.C. Cir. 1994). Nor must the court accept “a legal conclusion couched as a factual

allegation.” Iqbal, 129 S. Ct. at 1949-50 (citation omitted); see also Aktieselskabet AF 21.

November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 n.4 (D.C. Cir. 2008) (stating that the court

has “never accepted legal conclusions cast in the form of factual allegations”). “[A] naked

assertion . . . gets the complaint close to stating a claim, but without some further factual

enhancement it stops short of the line between possibility and plausibility.” Twombly, 550 U.S.

at 557.

                           B. Breach of Covenant of Good Faith (Count I)

          “Plaintiff alleges that AES breached its contractual duty to act in good faith by willfully

choosing to inflict harm through deceptive, misleading and predatory behavior and practices it


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knew or should have known would cause harm.” Am. Compl. ¶ 31. AES argues that the

complaint not only fails to allege the existence of a contract between the parties but also “fail[s]

to plead any facts that might constitute an agreement or meeting of the minds between the

plaintiff and AES as a loan servicer, and thus cannot establish an implied contract.”

Memorandum of Law in Support of the Motion to Dismiss Submitted by the Pennsylvania

Higher Education Assistance Agency/American Education Services (Incorrectly Identified as

American Educational Services) (“AES Mem.”) at 3. Further, AES asserts that its contract with

the lender, Bank of America, “does not create contractual privity between AES and [p]laintiff.”

Id. at 4.

        A claim for breach of contract includes four elements: “(1) a valid contract between the

parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4)

damages caused by breach.” Ihebereme v. Capital One, N.A., No. 10-1106, 2010 WL 3118815,

at *3 (D.D.C. Aug. 9, 2010) (quoting Tsinolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C.

2009)) (internal quotation marks omitted). “Under District of Columbia law, every contract

contains within it an implied covenant of both parties to act in good faith and damages may be

recovered for its breach as part of a contract action.” Choharis v. State Farm Fire & Cas. Co.,

961 A.3d 1080, 1087 (D.C. 2008) (citing Murray v. Wells Fargo Home Mortg., 953 A.2d 308,

321 (D.C. 2008)). This implied covenant means that “neither party shall do anything which will

have the effect of destroying or injuring the right of the other party to receive the fruits of the

contract.” Allworth v. Howard Univ., 890 A.2d 194, 201 (D.C. 2006) (citations omitted).

        Here, plaintiff alleges that he “entered into a loan agreement with a private lender,” Am.

Compl. ¶ 2, and that AES is the loan servicer, id. ¶ 3. Aside from his conclusory allegation that


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“AES breached its contractual duty,” id. ¶ 31, nowhere in the complaint does plaintiff allege the

existence of a contract with AES. “Without a contractual duty, there can be no breach of

contract.” Ihebereme, 2010 WL 3118815, at *4. Accordingly, the Court will grant AES’s

motion to dismiss Count I of the Amended Complaint because the pleading fails to adequately

allege a breach of contract claim.3 See Shugart v. Ocwen Loan Servicing, LLC, No.

2:09-cv-1123, 2010 WL 3894155, at *3 (S.D. Ohio Sept. 28, 2010) (dismissing breach of

contract claim against “a servicer of the note and mortgage, not a party to or holder of or

assignee of the note or mortgage,” where conclusory allegation that the servicer breached its

contract with plaintiff “does not suffice to allege the existence of contractual privity between

Plaintiff and [the servicer]”); Griley v. Nat’l City Mortg., No. CIV. 2:10-1204, 2010 WL

3633766, at *6 (E.D. Cal. Sept. 14, 2010) (dismissing breach of contract claim where “plaintiff’s

pleading amounts to bare recitation of the elements of breach of contract”); Burke v. 401 N.

Wabash Venture, LLC, No. 08 C 5330, 2010 WL 2330334, at *2 (N.D. Ill. June 9, 2010) (“The

Court fails to see how, post- Iqbal, a plaintiff could state a claim for breach of contract without

alleging which provision of the contract was breached.”); Johnson v. Homeownership

Preservation Found., No. 09-600, 2009 WL 6067018, at *7 (D. Minn. Dec. 18, 2009)

(Magistrate Report and Recommendation to dismiss a pro se plaintiff’s breach of contract claim

because the amended complaint “failed to plead facts from which this Court could determine that

it was plausible that a contract was formed and breached”), adopted, 2010 WL 1050333 (D.



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               Because plaintiff has failed to allege a breach of contract claim as against AES,
the Court will deny his Motion for Equitable Relief by Specific Performance, through which he
purports to demand the enforcement of modified terms of his loan agreement with Bank of
America.

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Minn. Mar 18, 2010).

                C. Fair Credit Reporting Act and Defamation (Counts II and III)

       Plaintiff describes AES as both a loan servicer, Am. Compl. ¶ 3, and a data furnisher for

purposes of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., Am. Compl. ¶

34. Accepting as true plaintiff’s allegation that AES reported his loan delinquent to the major

credit bureaus, id. ¶ 13; see Plaintiff’s Memorandum in Opposition to Motion to Dismiss (“Pl.’s

Opp’n”) at 6, the Court deems AES a data furnisher subject to the provisions set forth in 15

U.S.C. § 1681s-2. See Carney v. Experian Info. Solutions, Inc., 57 F. Supp. 2d 496, 501 (W.D.

Tenn. 1999) (“[C]ommon sense dictates that the term [data furnisher] would encompass an entity

. . . which transmits information concerning a particular debt owed by a particular consumer to

consumer reporting agencies such as Experian, Equifax, MCCA, and TransUnion.”).

                     1. There Is No Private Right of Action Under the FCRA

       AES argues that plaintiff’s FCRA claim must be dismissed because, as against a data

furnisher, there is no private right of action under the FCRA. AES Mem. at 4-5. Pursuant to the

FCRA, a data furnisher “shall not furnish any information relating to a consumer to any

consumer reporting agency if the person knows or has reasonable cause to believe that the

information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). Nor shall it furnish information if it

“has been notified by the consumer . . . that specific information is inaccurate[,] and . . . the

information is, in fact, inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(B). These provisions “shall be

enforced exclusively as provided under section 1681s . . . by the Federal agencies and officials

and the State officials identified in [15 U.S.C. §] 1681s.” 15 U.S.C. § 1681s-2(d). These

government agencies and officials include the Federal Trade Commission, the Board of Directors


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of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision,

the Administrator of the National Credit Union Administration, and the chief law enforcement

officer of a state. See 15 U.S.C. § 1681s. The FCRA does not provide for a private right of

action, that is, enforcement by an individual. See Banks v. Stoneybrook Apartment, No.

1:99CV00561, 2000 WL 1682979, at *2 (M.D.N.C. June 1, 2000); Carney, 57 F. Supp. 2d at

502; see also Hutchinson v. Delaware Sav. Bank FSB, 410 F. Supp. 2d 374, 384 (D.N.J. 2006)

(concluding that “negative credit ratings and inability to obtain other financing are damages

flowing from [defendants’] alleged . . . delinquency reports to credit bureaus[, and such] conduct

is regulated by FCRA and is therefore preempted by FCRA”). AES’s motion to dismiss

plaintiff’s claims under the FCRA (Count II) will therefore be granted.

                 2. The FCRA Does Not Preempt Plaintiff’s Defamation Claim

       According to plaintiff, AES is responsible for the publication of “factually inconsistent

statements,” Am. Compl. ¶ 37, presumably with respect to the delinquency of his student loan,

which have “injured and continue to injure [him],” id. ¶ 49. He further alleges that, “[t]o the

extent that AES knew or should have known the harm its action would cause . . . [its] actions are

malicious.” Id. ¶ 48. AES moves to dismiss plaintiff’s defamation claim on the ground that the

FCRA preempts it. Def.’s Mem. at 5-6. Plaintiff counters that the FCRA does not preempt all

causes of action for defamation. Pl.’s Opp’n at 7.

       With certain exceptions, “no consumer may bring any action or proceeding in the nature

of defamation . . . with respect to the reporting of information against . . . any person who

furnishes information to a consumer reporting agency . . . except as to false information

furnished


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with malice or willful intent to injure such consumer.” 15 U.S.C. § 1681h(e) (emphasis added);

see 15 U.S.C. § 1681t(b)(1)(F); Hukic v. Aurora Loan Servs., 588 F.3d 420, 434 (7th Cir. 2009)

(quoting 15 U.S.C. § 1681(h)); Avery v. United States, 534 F. Supp. 2d 40, 42 (D.D.C. 2008)

(concluding that negligence claim against federal agencies which allegedly provided false

information pertaining to plaintiff’s student loan payment history was preempted under 15

U.S.C. § 1681h(e) because the complaint did not allege malice or willful intent).

       Here, plaintiff does allege that AES’s actions were “malicious considering that AES was

given opportunities to act reasonably and knowingly refused,” Am. Compl. ¶ 48, and this

allegation is sufficient to survive AES’s motion to dismiss. Hence, the motion to dismiss

plaintiff’s defamation claim (Count III) will be denied without prejudice.

                     D. Unfair and Deceptive Business Practice (Count IV)

       Plaintiff alleges that AES violated the District of Columbia Consumer Protection

Practices Act (“CPPA”), D.C. Code § 28-3901 et seq., through its “inadequate, incompetent and

inefficient handling of [his] lawful and reasonable complaints, inquiries, disputes and requests

for information” pertaining to his loan. Am. Compl. ¶ 40. Specifically, plaintiff contends that

AES “failed to offer timely, affordable or reasonable mitigation options [and] continued unfair

harassment of plaintiff [and the co-signor] by accelerating [the loan] in the midst of a material

dispute as to whether the entire agreement had been materially breached by AES’ actions.” Id. ¶

42. AES responds that the CPPA is inapplicable because the statute “only governs transactions

between a merchant and a consumer involving the sale of goods or services,” and here there

exists no consumer-merchant relationship. AES Mot. at 6.

       The CPPA “was designed to police trade practices arising only out of consumer-merchant


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relationships,” Howard v. Riggs Nat’l Bank, 432 A.2d 701, 709 (D.C. 1981), and it “has been

interpreted to only supply consumers with a cause of action against merchants who provide them

with goods or services,” Calvetti v. Antcliff, 346 F. Supp. 2d 92, 103 (D.D.C. 2004) (citing

Athridge v. Aetna Cas. & Sur. Co., 163 F. Supp. 2d 38, 55 (D.D.C. 2001), rev’d in part on other

grounds, 351 F.3d 1166 (D.C. Cir. 2003)). If, as plaintiff alleges, AES services a loan extended

by Bank of America, plaintiff is not a consumer seeking relief as against a merchant with whom

he contracted for services.

        Although the CPPA sets forth several examples of unlawful trade practices, see D.C.

Code § 28-3904, plaintiff does not specify the trade practice in which AES allegedly engaged,

and from the Court’s review, none of the enumerated practices appear to cover AES’s alleged

mishandling of plaintiff’s inquiries and disputes about his loan. Therefore, because the

complaint fails to state a claim under the CPPA, the Court will grant the motion to dismiss Count

IV of the Amended Complaint.

                         E. Fair Debt Collection Practices Act (Count V)

        Plaintiff alleges that he and Ms. Muellner “were subjected to shrill, harassing and

predatory acts instigated and controlled by AES,” Am. Compl. ¶ 22, in an effort to collect “a

debt it knew or should have known to be in dispute,” id. ¶ 24. He states that AES “through its

authorized agent . . . engaged in collections practices that harassed, intimidated and harmed

plaintiff . . . by placing robo-collections calls, ‘parking’ misleading and injurious statements on

plaintiff’s credit file and mailings,” id. ¶ 44, resulting in “significant harm and injury,” id. ¶ 45,

in violation of the Fair Debt Collection Practices Act (“FDCPA”), see 15 U.S.C. § 1692, et seq.

AES moves to dismiss plaintiff’s claims under the FDCPA on the ground that its provisions do


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not apply to a loan servicer. AES Mem. at 7.

       For purposes of the FDCPA, the term “debt collector” means “any person who uses any

instrumentality of interstate commerce or the mails in any business the principal purpose of

which is the collection of any debts, or who regularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). The

term excludes:

                 any person collecting or attempting to collect any debt owed or due
                 or asserted to be owed or due another to the extent such activity (i) is
                 incidental to a bona fide fiduciary obligation or a bona fide escrow
                 arrangement; (ii) concerns a debt which was originated by such
                 person; (iii) concerns a debt which was not in default at the time it
                 was obtained by such person; or (iv) concerns a debt obtained by
                 such person as a secured party in a commercial credit transaction
                 involving the creditor

15 U.S.C. § 1692a(6)(F) (emphasis added). Plaintiff does not allege that his account was in

default, and AES relies on this omission to argue that it is excluded from the FDCPA’s coverage.

AES Mem. at 7. Plaintiff counters that “[d]efault is not the sole state of debt that triggers the

protections of the FDCPA,” Pl.’s Opp’n at 10, but he does not contend that AES would be

covered under any other provision of the FDCPA.

       Absent an allegation that plaintiff’s loan was in default when AES acquired it, AES is not

a debt collector and thus is not subject to the FDCPA. Brumberger v. Sallie Mae Servicing

Corp., 84 Fed. Appx. 458, 459 (5th Cir. 2004) (per curiam) (affirming dismissal of FDCPA

claim against student loan servicer because “[b]y its plain terms the FDCPA does not apply”

absent an allegation that plaintiff “was in default at the time Sallie Mae began servicing his

loans”); Ramirez-Alvarez v. Aurora Loan Servs., LLC, No.01:09cv1306, 2010 WL 2934473, at

*5 (E.D. Va. July 21, 2010) (granting summary judgment for mortgage loan servicer, which was

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not a debt collector for purposes of the FDCPA because it “received the debt in question while it

was not in default”); Mondonedo v. Sallie Mae, Inc., No. 07-4059, 2009 WL 801784, at *5 (D.

Kan. Mar. 25, 2009) (granting summary judgment for loan servicer which “obtained the loans

originated by [a bank] for servicing prior to default and is exempt from liability under the

FDCPA”); see also Taggart v. Wells Fargo Home Mortg., Inc., No. 10-cv-00843, 2010 WL

3769091, at *11 (E.D. Pa. Sept. 27, 2010) (“Loan servicers are not “debt collectors” under the

FDCPA unless the debt being serviced was in default at the time the servicer obtained it.”). The

Court will dismiss Count V of the Amended Complaint because AES, as a loan servicer, is not a

covered debt collector under the FDCPA absent an allegation that plaintiff’s account was in

default when AES acquired it.

                                       III. CONCLUSION

       The Court concludes that plaintiff ’s Amended Complaint fails to state claims under the

Fair Credit Reporting Act, the District of Columbia Consumer Protection Practices Act, and the

Fair Debt Collection Practices Act, and, therefore, Counts II, IV and V will be dismissed. In

addition, because the pleading fails to state a breach of contract claim, Count I will be dismissed.

Remaining, then, is the defamation claim set forth in Count III, which may proceed as against

AES at this time, given the allegation of malice in the Amended Complaint. An Order

accompanies this Memorandum Opinion.



                                                         /s/
                                              JOHN D. BATES
DATE: October 28, 2010                        United States District Judge




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