          IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA


                                 January 2016 Term

                                                                          FILED
                                    No. 15-0524                        June 3, 2016
                                                                         released at 3:00 p.m.
                                                                       RORY L. PERRY II, CLERK

                                                                     SUPREME COURT OF APPEALS

                                                                          OF WEST VIRGINIA

                                 KAREN ADAMS,

                             Petitioner/Petitioner Below

                                         v.

        PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
            d/b/a American Education Services, a foreign corporation,


                            Respondent/Defendant Below



                   Appeal from the Circuit Court of Putnam County

                       The Honorable Phillip Stowers, Judge

                              Civil Action No. 12-C-43


                                    AFFIRMED



                             Submitted: April 27, 2016

                                Filed: June 3, 2016




John H. Skaggs, Esq.                          Steven L. Thomas, Esq.

THE CALWELL PRACTICE, LC                      Charles W. Pace, Jr., Esq.

Charleston, West Virginia                     KAY CASTO & CHANEY PLLC

Attorney for Petitioner                       Charleston, West Virginia

                                              Attorney for Respondent

JUSTICE WORKMAN delivered the Opinion of the Court.

CHIEF JUSTICE KETCHUM concurs, in part, and dissents, in part, and reserves the

right to file a separate opinion.

                            SYLLABUS BY THE COURT



             1.     “In reviewing challenges to the findings and conclusions of the

circuit court, we apply a two-prong deferential standard of review. We review the final

order and the ultimate disposition under an abuse of discretion standard, and we review

the circuit court's underlying factual findings under a clearly erroneous standard.

Questions of law are subject to a de novo review.” Syl. Pt. 2, Walker v. W. Va. Ethics

Comm’n, 201 W.Va. 108, 492 S.E.2d 167 (1997).



             2.     “Preemption is a question of law reviewed de novo.” Syl. Pt. 1,

Morgan v. Ford Motor Co., 224 W. Va. 62, 680 S.E.2d 77 (2009).



             3.     “Although there can be no crystal-clear, distinctly-marked formula

for determining whether a state statute is preempted, there are two ways in which

preemption may be accomplished: expressly or impliedly.” Syl. Pt. 5, Morgan v. Ford

Motor Co., 224 W. Va. 62, 680 S.E.2d 77 (2009).



             4.     “There are two recognized types of implied preemption: field

preemption and conflict preemption. . . . Implied conflict preemption occurs where

compliance with both federal and state regulations is physically impossible, or where the

state regulation is an obstacle to the accomplishment or execution of congressional

objectives. Syl. Pt. 7, Morgan v. Ford Motor Co., 224 W. Va. 62, 680 S.E.2d 77 (2009).



                                            i
             5.     A claim pursuant to West Virginia Code § 46A-2-128(e) for

unlawful communications regarding a debt is preempted by the federal regulations

governing administration of Federal Family Education Loan Program loans as set forth in

Title 34, Part 682 of the Code of Federal Regulations.



             6.     “Roughly stated, a ‘genuine issue’ for purposes of West Virginia

Rule of Civil Procedure 56(c) is simply one half of a trialworthy issue, and a genuine

issue does not arise unless there is sufficient evidence favoring the non-moving party for

a reasonable jury to return a verdict for that party. The opposing half of a trialworthy

issue is present where the non-moving party can point to one or more disputed ‘material’

facts. A material fact is one that has the capacity to sway the outcome of the litigation

under the applicable law.” Syl. Pt. 5, Jividen v. Law, 194 W. Va. 705, 461 S.E.2d 451

(1995).




                                            ii
WORKMAN, Justice:

              This is an appeal from the February 3, 2015,1 order of the Circuit Court of

Putnam County granting respondent Pennsylvania Higher Education Assistance Agency’s

(hereinafter “PHEAA”) motion for summary judgment. The circuit court found that

PHEAA’s debt collection activity is required by the Federal Family Education Loan

Program (hereinafter “FFELP”) regulations promulgated pursuant to the Higher

Education Act of 1965 (hereinafter “HEA”) and; therefore, petitioner Karen Adams’

(hereinafter “petitioner”) West Virginia Consumer Credit and Protection Act (hereinafter

“WVCCPA”) claim is preempted by federal law.



              Based upon our review of the briefs, legal authorities, appendix record, and

upon consideration of arguments of counsel, we find that petitioner’s cause of action is,

in part, preempted by federal law and that the remainder of her claims do not survive

summary judgment. We therefore affirm the circuit court’s order awarding summary

judgment in favor of PHEAA.



                     I.     FACTS AND PROCEDURAL HISTORY

              Petitioner was born and raised in Lakeland, Florida, where she dropped out

of school in the 11th grade. She remained in the Florida area until 1992, when she

moved to West Virginia. Petitioner is currently receiving social security disability on the

       1
         On April 30, 2015, the circuit court re-entered the order granting summary
judgment for purposes of appellate review inasmuch as the circuit clerk failed to provide
copies to counsel of record.

                                            1

basis of severe hypertension, migraine headaches, and mild mental retardation with

marginal illiteracy. In approximately 2007, petitioner began receiving phone calls from a

collection agency regarding a guaranteed student loan (“GSL”) procured in her name

over twenty years prior on November 9, 1986, from Florida Federal Savings & Loan, Inc.

in the amount of $2,500.00 for the purpose of attending PTC Institute in Florida. 2

Petitioner denied entering into any such loan agreement, executing an application or

promissory note bearing her name, or attending college or vocational training.



               Notwithstanding her disavowal of the loan, petitioner entered into a

“rehabilitation agreement,” wherein she agreed to make nine payments of $86.00/month

to remove the “default” status of the loan, which was then owned by the Department of

Education as a federally guaranteed Robert T. Stafford Federal Loan. In 2007, the loan

was sold in a bundle by the Department of Education to SunTrust Bank, at which time

PHEAA became the loan servicer. From June, 2008, to March, 2010, petitioner made

twenty-one additional payments on the rehabilitated loan. Petitioner maintains that she

entered such rehabilitation agreement because the loan servicers threatened to take her

social security if she did not make payments.



               In or around June, 2010, petitioner again began to disavow the loan,

claiming identity theft with regard to the loan application and promissory note. An


      2
          PTC Institute is now defunct.


                                            2

investigation was launched by PHEAA during which petitioner submitted handwriting

samples which were determined by PHEAA to have “similar characteristics” to the

signature on the loan documentation. An investigator for PHEAA scheduled a meeting

with petitioner to facilitate the completion of a police report; before the meeting

commenced, petitioner asked the investigator what the penalty would be for filing a false

report and indicated instead that she would take responsibility for the loan and pay off the

balance.3



              After the identity theft investigation was closed, in April, 2011, petitioner

began to assert that she was entitled to discharge of the loan because she was disabled.

Petitioner submitted her social security award decision in aid of a disability discharge of

her loan, but failed to produce a signed physician’s report of disability, as required. She

retained counsel shortly thereafter; however, PHEAA continued its collection efforts

including written and telephone contact with petitioner.



              Petitioner filed the instant lawsuit seeking a declaratory judgment that the

loan and rehabilitation agreement were “null and void” 4 and damages under the


       3
         At this juncture, however, petitioner appears to retreat from her identity theft
claim. Petitioner’s brief states “[i]t may be [petitioner] signed the forms” and that
petitioner “with her impairments characterized what happened to her as identity theft.”
       4
         Petitioner also sought a declaration that efforts to collect the debt were barred by
a five-year statute of limitations. Petitioner appears to have abandoned such argument in
light of her citation of 20 U.S.C. § 1091a, which preempts statutes of limitations in
actions to collect delinquent federal student loans. Section 1091a(a)(1) states “[i]t is the
(continued . . .)
                                             3

               5
WVCCPA.              After the commencement of this litigation, petitioner received

correspondence from Education Credit Management Corp. (hereinafter “ECMC”), the

loan guarantor, stating that her loan was eligible for an administrative discharge under the

“ability to benefit” regulations, 6 as long as she had not graduated high school nor

obtained a GED. Apparently, in 1995, the Department of Education had rendered a

“blanket discharge” of loans for attendance at PTC Institute entered into from January 1,

1986 through June 30, 1990 for systematic violation of the “ability to benefit”

regulations.       As a result, petitioner executed an application for discharge in which she

swore, under penalty of perjury, that she attended PTC Institute from December 30, 1986




purpose of this subsection to ensure that obligations to repay loans and grant
overpayments are enforced without regard to any Federal or State statutory, regulatory, or
administrative limitation on the period within which debts may be enforced.”
       5
         It appears from the docket sheet included in the appendix record that petitioner
filed three amended complaints, although only one is included in the record. The third
amended complaint (improperly captioned “second amended complaint”) included in the
record also names SunTrust Bank, Collectcorp, and ECMC as defendants. It further
appears from the record that petitioner served and settled with SunTrust Bank, but did not
serve Collectcorp and ECMC. Moreover, the third amended complaint contained in the
record appears to have been withdrawn before the circuit court granted leave to amend.
Accordingly, the complaint under which the parties were operating at the time summary
judgment was granted—the second amended complaint—is not apparently contained in
the record.
       6
        To be eligible for a federal GSL, an applicant must demonstrate an “ability to
benefit” from the education sought by possessing certain minimal requirements as
discussed more fully infra. The Department of Education found that PTC Institute
fraudulently certified that students had the ability to benefit from its programs from 1986­
1990.


                                                4

to June 16, 1987, 7 and that federally guaranteed student loan funds were issued to her or

for her benefit while attending PTC. Accordingly, her loan was discharged and all

payments she made were refunded.



                PHEAA moved for summary judgment, presumably arguing that

petitioner’s claims under the WVCCPA were preempted by the FFELP regulations.8 The

circuit court agreed, finding that the FFELP regulations “provide a detailed statutory and

regulatory governance structure for Federally-insured student loans,” which includes

“minimum uniform due diligence requirements for loan collections[.]” Citing 34 Code of

Federal Regulations section 682.411(o), which states that the FFELP regulations

“preempt any State law, including State statutes, regulations, or rules, that would conflict

with or hinder satisfaction of the requirements or frustrate the purposes of this section,”

the circuit court found that the portions of the WVCCPA upon which petitioner relied

were in conflict with and therefore preempted by federal law. Finding further that

petitioner had afforded herself of the administrative remedies provided by HEA and

FFELP regulations, the circuit court concluded that no further remedy was available to

her. This appeal followed.




       7
           These dates were pre-populated into the application by ECMC.
       8
         Neither the motion for summary judgment, response, reply, nor any hearing
transcript is contained in the appendix record.

                                             5

                           II.    STANDARD OF REVIEW

              This Court has held that

                      [i]n reviewing challenges to the findings and
              conclusions of the circuit court, we apply a two-prong
              deferential standard of review. We review the final order and
              the ultimate disposition under an abuse of discretion standard,
              and we review the circuit court's underlying factual findings
              under a clearly erroneous standard. Questions of law are
              subject to a de novo review.

Syl. Pt. 2, Walker v. W. Va. Ethics Comm’n, 201 W.Va. 108, 492 S.E.2d 167 (1997).

Moreover, inasmuch as the circuit court granted summary judgment on the basis of

preemption, we have further held that “[p]reemption is a question of law reviewed de

novo.” Syl. Pt. 1, Morgan v. Ford Motor Co., 224 W. Va. 62, 680 S.E.2d 77 (2009).

With these standards in mind, we proceed to the parties’ arguments.




                                  III.      DISCUSSION

              This case requires the Court to determine whether petitioner’s WVCCPA

claims are preempted by the regulations promulgated under the FFELP of the HEA. In

general, petitioner argues that any federal preemption as to debt collection practices does

not apply where the loan was invalid at the outset. In response, PHEAA argues that its

collection efforts are federally mandated and that the blanket discharge for petitioner’s

loan merely made it “dischargeable” upon proper application.              PHEAA argues

strenuously that petitioner’s assertions that she did not apply for or accept the loan have




                                            6

been rendered immaterial in light of her sworn affirmation in the discharge application

that she received the funds or they were disbursed for her benefit.



              Title IV of the Higher Education Act of 1965 created the Federal Family

Education Loan Program, which is codified at 20 U.S.C. §§ 1071 to 1087-4, as amended.

This program has been well-summarized as follows:

              Pursuant to the FFEL programs, students attending eligible
              postsecondary schools may borrow money for tuition and
              expenses from participating lenders, such as banks. These
              loans are insured by participating “guaranty agencies” which,
              in turn, are reinsured by the Department of Education. If a
              student fails to repay a FFEL loan, the lender submits all
              relevant records to the guaranty agency and requests
              reimbursement. 20 U.S.C. § 1078(b)-(c). If the guaranty
              agency determines that servicing and collection efforts have
              been properly performed by the lender, it repays the lender
              for the outstanding balance on the loan. 34 C.F.R. §§
              682.406(a)(1) and (3). The guaranty agency then undertakes
              collection efforts of its own, 34 C.F.R. § 682.410(b)(4), and,
              if these are unsuccessful, obtains repayment from the
              Department of Education. 20 U.S.C. § 1078(c); 34 C.F.R. §§
              682.100 and 682.404.

Calise Beauty Sch., Inc. v. Riley, 941 F. Supp. 425, 427 (S.D.N.Y. 1996) (emphasis

added). The purposes of the FFELP are to “(1) enable the Secretary of Education to

encourage lenders to make student loans; (2) provide student loans to those students who

might not otherwise have access to funds; (3) pay a portion of the interest on student

loans; and (4) guarantee lenders against losses.” McCulloch v. PNC Bank, Inc., 298 F.3d

1217, 1224 (11th Cir. 2002).




                                             7

              Before reaching the issue of the preemption of petitioner’s claims, it is

important to note that it is well-established that there is no private cause of action under

the FFELP regulations. See Labickas v. Arkansas State Univ., 78 F.3d 333, 334 (8th Cir.

1996) (“[N]o private right of action is implied under the HEA for student borrowers.”);

L’ggrke v. Benkula, 966 F.2d 1346 (10th Cir. 1992) (finding no private right of action for

student borrowers). Moreover, petitioners make no claim under the federal Fair Debt

Collection Practices Act (hereinafter “FDCPA”). 9         Instead, petitioner’s sole claims

involve the WVCCPA. First, petitioner alleges that PHEAA violated West Virginia Code

§ 46A-2-128(e) (1990), which provides:

              [n]o debt collector shall use unfair or unconscionable means
              to collect or attempt to collect any claim. . . . .[T]he following
              conduct is deemed to violate this section:

              (e) Any communication with a consumer whenever it appears
              that the consumer is represented by an attorney and the
              attorney’s name and address are known . . . .

Petitioner claims that PHEAA’s continued contact with her after she advised she was

represented by counsel violates this section. Secondly, petitioner alleges that PHEAA

violated West Virginia Code § 46A-2-127(d) (1997),10 which provides:


       9
         However, in two of her assignments of error, petitioner characterizes her claims
as being under the FDCPA and discusses the Act in her brief. While a cause of action for
violation of the FDCPA premised on collection activity under FFELP is permissible,
there is no question that petitioner pled no such claim in her complaint. Counsel further
indicated during oral argument that these references were “misnomers.”
       10
         Neither complaint provided in the appendix record contains any allegation of
violation of this provision of the WVCCPA. Both complaints reference only West
Virginia Code § 46A-2-128(e). As discussed in n.5, supra, the complaint under which
(continued . . .)
                                              8

              [n]o debt collector shall use any fraudulent, deceptive or
              misleading representation or means to collect or attempt to
              collect claims . . . . [T]he following conduct is deemed to
              violate this section:

              (d) Any false representation or implication of the character,
              extent or amount of a claim against a consumer, or of its
              status in any legal proceeding;

Petitioner claims that PHEAA’s attempt to collect the loan “without confirming that the

original loan had in fact been disbursed” and/or was “enforceable” violates this section.



              With respect to preemption in general, this Court has held that “[a]lthough

there can be no crystal-clear, distinctly-marked formula for determining whether a state

statute is preempted, there are two ways in which preemption may be accomplished:

expressly or impliedly.” Syl. Pt. 5, Morgan, 224 W. Va. 62, 680 S.E.2d 77. Further,

              [t]here are two recognized types of implied preemption: field
              preemption and conflict preemption. . . . Implied conflict
              preemption occurs where compliance with both federal and
              state regulations is physically impossible, or where the state
              regulation is an obstacle to the accomplishment or execution
              of congressional objectives.

Syl. Pt. 7, Id. “A state law may pose an obstacle to federal purposes by interfering with

the accomplishment of Congress’s actual objectives, or by interfering with the methods

that Congress selected for meeting those legislative goals.” Coll. Loan Corp. v. SLM



the parties were operating upon entry of summary judgment does not appear to be
contained in the appendix record. However, PHEAA does not challenge this claim on the
basis that it was not sufficiently alleged in the complaint; therefore, we will accept
petitioner’s characterization of her claim under this section as having been adequately
pled for purposes of our analysis.

                                             9

Corp., 396 F.3d 588, 596 (4th Cir. 2005) (citing Gade v. Nat’l Solid Waste Mgmt. Assoc.,

505 U.S. 88, 103 (1992)). The parties appear to agree that this case involves implied

conflict preemption. However, we are mindful that “[o]ur law has a general bias against

preemption[.]” Gen. Motors Corp. v. Smith, 216 W.Va. 78, 83, 602 S.E.2d 521, 526

(2004). “[B]oth this Court and the U.S. Supreme Court have explained that federal

preemption of state court authority is generally the exception, and not the rule.” In re: W.

Va. Asbestos Litig., 215 W.Va. 39, 42, 592 S.E.2d 818, 821 (2003).



              With respect specifically to preemption of state consumer credit acts by the

FFELP regulations, there appears to be two approaches taken by courts. Some courts

have found preemption of state consumer credit acts on a broad, act-wide basis. In

Brannan v. United Student Aid Funds, Inc., 94 F.3d 1260, 1266 (9th Cir. 1996), the Ninth

Circuit found preemption of the entire Oregon consumer protection act, concluding that

the act “consists of nothing but prohibitions, restrictions and burdens on collection

activity[.]” The Ninth Circuit reasoned that “[i]f student loan guarantors were exposed to

liability under fifty different sets of statutes, regulations and case law, conducting diligent

pre-litigation collection activity could be an extremely uncertain and risky enterprise.”

Id. at 1264. Accordingly, the Ninth Circuit found that the available remedy under the

FDCPA was sufficient to protect borrowers from unlawful collection activity and that

state-level consumer credit protection claims were preempted. Id. at 1266.




                                              10

                Other courts, however, have chosen to examine each specific claim alleged

to determine if it frustrates the purpose of the regulations. Rejecting the Brannan court’s

wholesale preemption approach, the court in Cliff v. Payco General American Credits,

Inc., 363 F.3d 1113, 1129 (11th Cir. 2004) rejected preemption of an “entire state statute

. . . because some of its provisions may actually conflict with federal law.” (emphasis

added). See also Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir. 2015)

(finding state law breach of contract claim did not conflict with or hinder satisfaction of

regulations).



                Federal district courts within West Virginia are likewise divided in their

approach.       In the Southern District, courts have refused to find that the FFELP

regulations completely preempt the WVCCPA, analyzing preemption on a claim-by­

claim basis. See McComas v. Fin. Collection Agencies, Inc., No. 2:96-0431, 1997 WL

118417, at *3 (S.D.W. Va. Mar. 7, 1997) (finding no preemption under particular claim

alleged because FFELP regulations mandating telephone contacts do not give license to

“use abusive or deceptive methods”); Snuffer v. Great Lakes Educ. Loan Servs, Inc., 97

F. Supp.3d 827, 832 (S.D. W. Va. 2015) (recognizing certain conflicts in WVCCPA but

finding no preemption because “barring threatening or fraudulent . . . practices cannot be

said to place a ‘burden’ on pre-litigation debt collection” under the FFELP regulations);

Martin v. Sallie Mae, Inc., No. 5:07-cv-00123, 2007 WL 4305607 (S.D.W. Va. Dec. 7,

2007) (finding preemption only with respect to particular claims alleged). However, the

Northern District has found complete preemption of the WVCCPA by FFELP

                                             11

regulations.   See Seals v. Nat’l Student Loan Program, No. 5:02-cv-101, 2004 WL

3314948 (N.D. W. Va. Aug. 16, 2004) (relying on Brannan, supra).



               In light of the strong presumption against preemption, we find the most

reasoned approach is to analyze the particular provisions or claims made under state law

to determine if each conflict with and are therefore preempted by federal law. While the

WVCCPA does place certain constraints on debt collection activity, some of those

constraints render certain actions unlawful on a public policy basis only, while others are

inherently wrongful. 11 To summarily conclude that all of these prohibited practices,

regardless of their nature, burden or hinder the purposes behind the FFELP regulations

elevates form over substance and runs contrary to our established preemption analysis.



A.	    Preemption of Claim Pursuant to West Virginia Code § 46A-2-128(e) Alleging
       Prohibited Telephone Contact

               We therefore begin with petitioner’s claim, pursuant to the WVCCPA, that

PHEAA’s continued communication with her after it was advised that she was

represented by counsel violated West Virginia Code § 46A-2-128(e). With respect to

GSLs under the HEA and FFELP, 34 Code of Federal Regulations § 682.411, as

amended, contains the required collection procedures and activities. At the outset of the


       11
         For example, there is nothing inherently wrongful about contacting a debtor
after he or she is represented by counsel; is it unlawful because the Legislature has
chosen to prohibit it on a public policy basis. On the other hand, using abusive or
harassing methods or misrepresentations to attempt to collect a debt is, under any
construction, wrongful conduct.

                                            12

required collection practices, subsection (a) states that a lender is required to “engage in

at least the collection efforts” described therein. (emphasis added). The remainder of the

regulation describes certain activity which is required—depending on how delinquent a

loan is—and includes required written collection notices, telephone contacts, and

warnings of garnishment or offset proceedings, among other collection activities.

Importantly, subsection (o) provides that “[t]he provisions of this section[] [p]reempt any

State law, including State statutes, regulations, or rules, that would conflict with or hinder

satisfaction of the requirements or frustrate the purposes of this section[.]”



              Moreover, the Department of Education issued a “Notice of Interpretation”

regarding required collection activities, which states that “these regulations preempt State

law regarding the conduct of these loan collection activities.” Stafford Loan,

Supplemental Loans for Students, PLUS, and Consolidation Loan Programs, 55 Fed.

Reg. 40120, 1990 WL 351708 (October 1, 1990). The Notice expressly states that the

collection regulations contained in “34 CFR 682.411 preempt State law, including State

case law, statutes and regulations that are inconsistent with the provisions of these GSL

regulations.” Id. In fact, the Notice specifically discusses claims made under State law

for communications with a borrower after the servicer is notified that the borrowers are

represented by counsel, advising that such claims are preempted. Id.



              Based on the foregoing, this Court finds it clear that petitioner’s claim for

violation of the WVCCPA for continued communication with her after she advised she

                                             13

was represented by counsel is preempted by federal law. The FFELP regulations require

a lender to make “forceful” contacts with a borrower, with no exception for borrowers

represented by counsel. Moreover, the Notice of Interpretation specifically addresses this

situation—a state law claim for contacting a borrower after representation—and states

that it is preempted. As described above, it is critical to note that a lender may not avail

itself of relief provided by the guarantor unless the required regulatory contacts have

been made.     Likewise, a guarantor may not avail itself of the reinsurance by the

Department of Education unless these efforts have been made.             It is therefore an

impossibility to comply with the regulations without running afoul of the WVCCPA in

this regard. Accord Martin, 2007 WL 118417 at *9 (finding that WVCCPA claim based

on post-representation telephone contact was preempted because regulations require such

contact); see also Cliff, 363 F.3d at 1127 (noting that regulations promulgated under HEA

may require lenders to complete a series of contact which are prohibited by a state

consumer credit act). Accordingly, we hold that a claim pursuant to West Virginia Code

§ 46A-2-128(e) for unlawful communications regarding a debt is preempted by the

federal regulations governing administration of Federal Family Education Loan Program

loans as set forth in Title 34, Part 682 of the Code of Federal Regulations.



B.	    Preemption of West Virginia Code § 46A-2-127(d) for False Representation of
       Character, Extent, or Amount

              We turn next to petitioner’s claim pursuant to West Virginia Code § 46A-2­

127(d) prohibiting the “false representation” of the “character, extent, or amount” of a


                                             14

debt to determine if it is preempted by federal law. The Eleventh Circuit has had

occasion to examine the preemptive effect of the FFELP regulations on a similar

provision in Florida’s Consumer Collection Practices Act.



                In Cliff, the loan servicer garnished the borrower’s wages for failure to

make payments under a rehabilitation agreement. 363 F.3d at 1117-18. The borrower

brought suit alleging violation of the FDCPA, including an allegation that the loan

servicer “falsely represent[ed] the character, amount or legal status” of the debt, and the

Florida Consumer Collection Practices Act prohibiting enforcement of a debt that is “not

legitimate.” Id. at 1118 n.4 (citing Fla. Stat. §559.72(9)). The Eleventh Circuit rejected

wholesale preemption of state consumer protection claims observing that “many

provisions of state consumer protection statutes do not conflict with the HEA or its

regulations, and many state law provisions . . . actually complement and reinforce the

HEA.” Id. at 1130. In addressing a similar violation as that alleged herein, the Cliff court

reasoned that

                [f]or us to conclude that this provision of the Florida Act
                [prohibiting enforcement of non-legitimate debts] hinders the
                completion of the sequence of collection activities, we would
                have to first conclude that the regulations require a third-party
                debt collector to attempt to collect a debt that it knows is not
                legitimate or to assert the existence of a legal right that it
                knows does not exist. We are certain that the HEA and its
                regulations do not contemplate third-party debt collectors
                attempting to collect debts that are not legitimate or asserting
                rights that do not exist.




                                               15

Id. at 1129. See also Bible, 799 F.3d at 654 (rejecting preemption where borrower’s state

law claim was “not attempting to require more of the defendant than was already required

by the HEA and its regulations”); Coll. Loan Corp., 396 F.3d at 598 (rejecting argument

permitting lender to “enter into a contract that invoked a federal standard as the indicator

of compliance, then to proceed to breach its duties thereunder and to shield its breach”

through preemption).



              We find the Eleventh Circuit’s reasoning compelling. There would appear

to be nothing which would conflict with or frustrate the requirements and purposes of the

HEA and FFELP by also precluding under State law, making a “false representation”

about the “character, extent or amount” of a debt. While certain due diligence collection

activities are required by the FFELP regulations, making “false representations” about the

nature of a debt is certainly not one of them. We therefore find that the circuit court erred

in concluding that this claim was federally preempted.



C.     Viability of Petitioner’s Claim for “False Representation” of the Debt

              Having determined that petitioner’s claim pursuant to West Virginia Code §

46A-2-127(d) is not federally preempted, we nonetheless find it appropriate to determine

whether such claim survives summary judgment.12 As noted above, petitioner contends


       12
          See Gentry v. Mangum, 195 W. Va. 512, 519, 466 S.E.2d 171, 178 (1995) (“[I]t
is permissible for us to affirm the granting of summary judgment on bases different or
grounds other than those relied upon by the circuit court.”).


                                             16

that her loan was “invalid” and/or “unenforceable” at the outset because it was subject to

discharge and therefore any collection action on the loan was tantamount to a “false

representation” as to the “character, extent, or amount” of the debt. In response, PHEAA

maintains that petitioner’s loan was, at best, potentially dischargeable pursuant to the

administrative remedies provided under the FFELP. PHEAA further contends that it was

merely the loan servicer and therefore unaware that the loan was subject to a blanket

discharge. To analyze the viability of petitioner’s claim, an overview of petitioner’s

attempts at obtaining discharge relief from the debt, along with a discussion of the

discharge provisions under federal regulations, is helpful.



              With respect to loan discharges, 34 Code of Federal Regulations § 682.402,

as amended, outlines the requirements for a discharge of a GSL for death, disability,

closed school, false certification, unpaid refunds, and bankruptcy payments. Petitioner

attempted to obtain discharges in this case on three separate bases: disability, false

certification due to identity theft, 13 and false certification due to lack of “ability to

benefit.”




       13
          The record is unclear regarding the circumstances under which petitioner
contends her identity was stolen. At times, the record below indicates that petitioner
suggested that her identity was stolen by someone in Florida. However, petitioner
likewise ardently insists that the indictment and conviction of a Florida Federal Savings
& Loan officer for activities related to its GSL program in the early 1990s suggests that
her loan documentation was falsified by the lender. The only “evidence” offered on this
issue is an 11th Circuit reported case affirming the officer’s conviction. See U. S. v.
Harmas, 974 F.2d 1262 (11th Cir. 1992). However, this case plainly reveals that the
(continued . . .)
                                            17

              Section 682.402(c) governs discharges for “total and permanent disability.”

At the time of petitioner’s disability discharge application, section 682.402(c)(2) (2010)

provided that to obtain such a discharge, “[t]he borrower must submit to the Secretary an

application for a total and permanent disability discharge on a form approved by the

Secretary” which must contain “[a] certification by a physician . . . that the borrower is

totally and permanently disabled[.]” Although petitioner bemoans the inadequacy of

PHEAA’s response to her attempts to obtain relief from the loan, there seems to be no

dispute that petitioner failed to complete the application process, submitting only her

social security disability decision, but no physician’s statement.

officer engaged in activities designed to falsify collection activities on delinquent loans,
rather than falsifying loan documents themselves.

       Moreover, it is unclear whether petitioner even continues to maintain this position.
See n.3 supra. In her discharge application for false certification of “ability to benefit”
which petitioner signed under penalty of perjury, she avers that she either received the
loan proceeds or they were paid for her benefit. Regardless, however, like her non­
compliant attempt at obtaining a disability discharge, it is undisputed that petitioner did
not establish identity theft in the manner required by the regulations.

       To receive an identity theft-based “false certification” discharge, the borrower’s
sworn statement must certify that the borrower did not sign the promissory note, did not
receive the loan proceeds, and must include a copy of a “local, State, or Federal court
verdict or judgment that conclusively determines that the individual who is named as the
borrower of the loan was the victim of a crime of identity theft[.]” § 682.402(e)(3)(v)(A)
through (C). If no such judicial determination is available, the borrower may submit
“[a]uthentic specimens of the signature of the individual” and “[a] statement of facts that
demonstrate, to the satisfaction of the Secretary, that eligibility for the loan in question
was falsely certified as a result of the crime of identity theft[.]” § 682.402(e)(3)(v)(D)(1)
and (2). As noted above, it was determined that the handwriting specimens given were
consistent. Moreover, given petitioner’s refusal to make out a police report for fear of
penalty for a false report, she did not complete the required steps to receive such a
discharge.


                                             18

                A “false certification” discharge works similarly. “[F]alse certification”

under the regulations includes situations where an individual did not have the “ability to

benefit” from the training or education because he or she did not meet the applicable

requirements. §§ 682.402(e)(1)(i)(A). 14 The latter constitutes the basis upon which

petitioner applied for and was granted a discharge in the case sub judice.             Section

682.402(e)(3) plainly states as follows with regard to the steps required of a borrower to

qualify for an “ability to benefit” discharge:

                Except as provided in paragraph (e)(15) of this section, to
                qualify for a discharge of a loan under paragraph (e) of this
                section, the borrower must submit to the holder of the loan a
                written request and a sworn statement . . . under penalty of
                perjury . . . .

(emphasis added). The sworn statement must aver that the borrower “[r]eceived . . . the

proceeds of any disbursement of a loan disbursed” and “did not meet the applicable

requirements for admission on the basis of ability to benefit . . . .” § 682.402(e)(3)(ii)(A)

and (B). 15 Students enrolled prior to July 1, 1987, were deemed to have the “ability to


       14
            20 U.S.C. § 1087(c) (2010) provides:

                If a borrower who received, on or after January 1, 1986, a
                loan made, insured, or guaranteed under this part and . . . if
                such student's eligibility to borrow under this part was falsely
                certified by the eligible institution or was falsely certified as a
                result of a crime of identity theft, or if the institution failed to
                make a refund of loan proceeds which the institution owed to
                such student's lender, then the Secretary shall discharge the
                borrower's liability on the loan
       15
        An exception to the necessity of a discharge application exists under section
682.402(e)(15), providing for “[d]ischarge without an application”:
(continued . . .)
                                                19

benefit” if they had a high school diploma, GED, or satisfied criteria adopted by the

lending institution to determine if the student had the ability to benefit. 34 C.F.R. §

682.402(e)(13)(ii)(A); 34 C.F.R. § 668.4-668.6 (1986).16



              What the foregoing demonstrates quite clearly is that although a GSL may

ultimately be subject to discharge, it is incumbent upon the borrower to apply for such

discharge and provide the requisite information to substantiate the discharge. 17 These

requirements apply to a discharge on any basis—including a false certification “ability to

benefit” discharge. The regulations contain no exceptions for loans subject to a “blanket

discharge” and, in fact, the discharge petitioner ultimately obtained pursuant to the



              A borrower’s obligation to repay all or a portion of an FFEL
              Program loan may be discharged without an application from
              the borrower if the Secretary, or the guaranty agency with the
              Secretary’s permission, determines that the borrower qualifies
              for a discharge based on information in the Secretary or
              guaranty agency’s possession.

(emphasis added). Petitioner does not argue, nor does the appendix record establish, that
this regulation entitled her to a discharge without application.
        16
           Even if they met these criteria, however, students were deemed not to have the
“ability to benefit,” if because of a “physical or mental condition, age, or criminal record”
they were unable to meet the requirements for employment in their State of residence in
the occupation for which the training program was intended.                    34 C.F.R. §
682.402(e)(13)(iii)(B).
       17
         Therefore, contrary to petitioner’s apparent belief, the “blanket discharge” did
not serve to void the borrowers’ loans ab initio. Rather, to the extent a borrower falls
within this “blanket” time period of attendance at PTC Institute, his or her burden of
proof of false certification is mitigated and, upon proper application containing the
required averments, he or she is entitled to discharge.


                                             20

blanket discharge was administered precisely as the regulations contemplate.

Accordingly, petitioner’s foundational argument upon which her claim for “false

representation” is premised is fatally flawed. Petitioner’s loan was neither “invalid” nor

“unenforceable,” but rather, subject to discharge upon compliance with the regulations.

Although petitioner made such a claim for discharge and completed the discharge process

as prescribed in the regulations, until that occurred, her loan remained enforceable and

subject to the collection efforts mandated by the regulations. As for petitioner’s multiple,

incomplete or aborted attempts to obtain a discharge, PHEAA was not relieved of its

regulatory collection obligations simply because petitioner raised the specter of a

potential discharge.18 Therefore, petitioner has failed to identify a “false representation”

made by PHEAA regarding the loan based on its eligibility for discharge.



              As to PHEAA’s actual knowledge of the blanket discharge, the undisputed

material facts establish that PHEAA was merely the loan servicer and did not originate


       18
        Duties which arise upon receipt of reliable information suggesting a borrower
may be discharge-eligible are outlined in section 682.402(e)(12), which provides that

              if the lender is notified by a guaranty agency or the Secretary,
              or receives information it believes to be reliable from another
              source indicating that a current or former borrower may be
              eligible for a discharge under paragraph (e) of this section, the
              lender shall immediately suspend any efforts to collect from
              the borrower . . . [and] inform the borrower of the procedures
              for requesting a discharge.

(emphasis added). However, if the borrower fails to avail herself of the discharge
process, collection “shall resume.” § 682.402(e)(12)(ii).

                                             21

the loan, nor did SunTrust Bank, with whom PHEAA contracts. The loan was sold in a

bundle of loans from the federal government as “rehabilitated” loans, i.e. loans that were

once in default, but payments had been resumed. Moreover, as petitioner herself notes,

the agreement between the Department of Education and SunTrust Bank purportedly

governing sale of petitioner’s promissory note represents that the loans being sold were

“eligible for guarantee.” That is to say, the rehabilitated loans were valid and capable of

being reimbursed by the guarantor, upon default, pursuant to 34 C.F.R. 682.401(b)(5)

(“The guaranty agency shall guarantee . . . 100 percent of the unpaid principal balance of

each loan guaranteed for loans disbursed before October 1, 1993”). Moreover—again, as

argued by petitioner—the governing regulations provide that rehabilitated loans are based

upon “enforceable” promissory notes.      As a rehabilitated loan sold pursuant to the

regulations and the agreement with the Department of Education, there is nothing which

would suggest to PHEAA that the loan was based upon anything other than a valid,

enforceable note, eligible for guarantee. Therefore, rather than supporting petitioner’s

position, these items merely reinforce her lack of proof that PHEAA knew that the loan

was potentially dischargeable and that their collection efforts were effectively a “false

representation” about the loan.



              In fact, the only purported indicia of PHEAA’s knowledge of the blanket

discharge contained in the appendix record is unauthenticated letters in an unrelated

matter by and between an attorney for various unknown individuals, the Department of

Education, and PHEAA from 1995 regarding the PTC Institute blanket discharge as

                                            22

pertained to those individuals’ loans. The source of these letters is unknown and it is

wholly unclear whether these letters were properly part of the record below. However,

even assuming that this tenuous evidence establishes that PHEAA was institutionally “on

notice” of the PTC Institute blanket discharge, petitioner has failed to adduce any

evidence that PHEAA knew, at the time of its collection efforts, that petitioner attended

PTC Institute. At a minimum, before this Court, petitioner has failed to demonstrate an

issue of fact as to whether PHEAA had institutional knowledge that petitioner’s loan was

potentially subject to discharge under the PTC Institute blanket discharge. As PHEAA

points out, it received only the promissory note underlying the loan for purposes of

servicing the loan and the promissory note contained in the appendix record does not

contain the name of the educational institution for which the loan funds were utilized. It

is well-established that evidence of a promissory note alone is sufficient to establish a

prima facie obligation. See U. S. v. Irby, 517 F.2d 1042 (5th Cir. 1975).



              Accordingly, we find that petitioner has failed to demonstrate that PHEAA

made any false representation about the character, extent, or amount of her loan as

prohibited by West Virginia Code § 46A-2-127(d). As this Court has made clear many

times, “the party opposing summary judgment must satisfy the burden of proof by

offering more than a mere ‘scintilla of evidence.’” Williams v. Precision Coil, Inc., 194

W. Va. 52, 60, 459 S.E.2d 329, 337 (1995) (quoting Anderson v. Liberty Lobby, Inc., 477

U. S. 242, 252 (1986)). Further, “a genuine issue does not arise unless there is sufficient

evidence favoring the non-moving party for a reasonable jury to return a verdict for that

                                            23

party.” Syl. Pt. 5, in part, Jividen v. Law, 194 W. Va. 705, 708, 461 S.E.2d 451, 454

(1995). To create a trialworthy issue, “the non-moving party [must] point to one or more

disputed ‘material’ facts. A material fact is one that has the capacity to sway the outcome

of the litigation under the applicable law.” Id. Given that petitioner has failed to adduce

evidence of a triable issue regarding whether PHEAA made a false representation

regarding her loan, summary judgment is appropriate.19



                                  IV.    CONCLUSION

              For the reasons stated herein, we therefore affirm the circuit court’s

February 3, 2015, order.



                                                                                  Affirmed.




       19
          Petitioner also argues, at length, that the rehabilitation agreement does not
qualify as a “novation” such as to “save” the “invalid loan.” This argument is immaterial
because petitioner has failed to establish that the loan was “invalid” at any pertinent point
in time. The rehabilitation agreement, which occurred before PHEAA’s involvement in
the loan, is therefore irrelevant to the analysis. Additionally, petitioner argues that her
admissions about receipt of the loan proceeds in the application for discharge should not
be considered because the application is a “contract of adhesion” which is
“unconscionable.” Although it is highly questionable whether the discharge application
constitutes a contract to which an unconscionability analysis would apply, our resolution
of this matter is not dependent upon the admissions contained therein and therefore, we
decline to address this issue further.

                                             24

