[Cite as Adams v. Univ. of Cincinnati, 2015-Ohio-4853.]




                              IN THE COURT OF CLAIMS OF OHIO



DEBRA ADAMS

        Plaintiff

        v.

UNIVERSITY OF CINCINNATI

        Defendant

Case No. 2014-00919-AD

Clerk Mark H. Reed

MEMORANDUM DECISION

        {¶1} This matter is before the court as a result of a complaint filed by Debra
Adams on November 21, 2014 against the University of Cincinnati, hereinafter “the
University”. In her claim, Ms. Adams seeks total damages in the amount of $5,149.43,
which includes reimbursement for a tax liability owed the Internal Revenue Service in
the amount of $1,413.00, interest owed on a 2002 student loan totaling $1,633.49 and
reimbursement of a check issued in 2002 for $2,102.94. The University of Cincinnati
filed an investigation report with this court on January 30, 2015 and thereafter Ms.
Adams filed a response on February 27, 2015.
        {¶2} The documents filed by the parties are not inconsistent regarding the
essential facts of the case.           The parties do, however, differ on the issue of legal
responsibility.
        {¶3} The facts that gave rise to this case began in 2002 when claimant’s
daughter, Branda Combs, enrolled as a student at the University. In order to help pay
for her daughter’s education, Ms. Adams took out a series of three Parent Plus loans in
November 2002, December 2002, and April 2003.                Each of the loans were in the
amount of $2,814.94 for a total of $8,444.82.             The April 2003 loan, however was
returned to the lender when Brenda Combs withdrew from school.                The total loan
amount for the Parent Plus loans in question, therefore, was $5,629.88.
       {¶4} A subsequent audit of the University’s Federal Family Loan Program
determined that the University did not properly administer loans for students like Branda
Combs who had withdrawn from school before completing their education. As a result
of this finding, a series of rather complicated accounting entries were required by
auditors to bring the University in compliance with federal regulations. As a result of this
audit, the University ended up forgiving the $5,629.88 in Parent Plus loans owed by Ms.
Adams. Because the debt was cancelled, a 1099-C form for the tax year 2012 was
forwarded to the United States Internal Revenue Service showing a debt of $5,629.88,
owed by Debra Combs n/k/a Debra Adams, as being discharged by the University.
Because the Internal Revenue Service regards discharged debt as income to the
taxpayer, Ms. Adams apparently incurred $1,413.00 in income taxes as a result of the
$5,629.88 having been forgiven.
       {¶5} It is the position of the claimant that the University of Cincinnati should
reimburse her for the taxes owed the IRS as a result of the cancellation of the loan, as it
was the University’s failure to account for the loan properly that gave rise to the tax
consequences she now faces.         However, it must be pointed out that the tax that
claimant now owes is a result of the University forgiving a debt of $5,629.88. If the
University of Cincinnati had accounted for the loan properly, the claimant would owe or
more likely already have paid the $5,629.88 amount, with interest, to the lender. By
cancelling the loan, the University has essentially given the claimant a windfall of
$5,629.88. She will, by IRS rules, be required to pay taxes on this amount. Having thus
received the benefit, she will have to comply with IRS rules as a result. Therefore, Ms.
Adams, not the University of Cincinnati, is responsible for the taxes owed the IRS.
       {¶6} Similarly, claimant disputes her liability for the accumulated interest on the
discharged debt. However, whether claimant had paid the original debt, or as here, had
the debt otherwise discharged, she still would have owed interest on the principal. That
the debt was discharged now, rather than paid over the course of time, is really a
Case No. 2014-00919-AD                    -3-              MEMORANDUM DECISION


distinction without a difference.   Therefore, Ms. Adams is also responsible for the
interest owed on her loans.
      {¶7} Finally, claimant disputes that the University, when completing the audit of
the student loan account in question, determined that it had already refunded the sum of
$2,102.94 in 2002 to the claimant. The claimant denies ever receiving the money. The
University, however, produced a cancelled check to Debra Combs for this amount with
claimant’s signature as an endorsement on the back of the check. Ms. Combs stated in
her response that the check was sent to her daughter’s address and her daughter must
have signed her mother’s name and placed the funds into her own account.
Regardless, whether Ms. Combs or her daughter cashed the check, the University
properly discharged its responsibility. If Ms. Combs has a claim for reimbursement for
this amount, it is against her daughter who apparently, without her mother’s knowledge
or consent, signed her mother’s name and used the funds for her own benefit.
      {¶8} Therefore, for the reasons set forth above, the claim must fail and the
complaint filed November 24, 2014 is dismissed.




                        IN THE COURT OF CLAIMS OF OHIO



DEBRA ADAMS

      Plaintiff

      v.

UNIVERSITY OF CINCINNATI

      Defendant
Case No. 2014-00919-AD

Clerk Mark H. Reed

ENTRY OF ADMINISTRATIVE DETERMINATION
         Having considered all the evidence in the claim file, and for the reasons set forth
in the memorandum decision filed concurrently herewith, judgment is rendered in favor
of defendant. Court costs are assessed against plaintiff.




                                                  ________________________________
                                                  MARK H. REED
                                                  Clerk


Entry cc:

Debra Adams                                       Katherine A. Miefert, Assistant
4562 Trenton Franklin Road                        General Counsel
Middletown, Ohio 45042                            University of Cincinnati
                                                  246 University Hall
                                                  51 Goodman Drive, PO Box 210661
                                                  Cincinnati, Ohio 45221-0661
Filed 3/27/15
Sent to S.C. Reporter 11/24/15
