Guillermety v. Secretary of Educ. of U.S., 01-cv-74904.

341 F.Supp.2d 682

Livia I. GUILLERMETY, Glenn D. Edgmon and Fiore Botta, Plaintiffs, v. SECRETARY OF EDUCATION OF THE UNITED STATES and Secretary of Treasury of the United States, Defendants.

No. 01-cv-74904.

United States District Court, E.D. Michigan, Southern Division.

February 27, 2003.

COPYRIGHT MATERIAL OMITTED

Deanne B. Loonin, Boston, MA, for plaintiff.

Jacqueline M. Hotz, Detroit, MI, for defendant.

ORDER

BORMAN, District Judge.

(1) DISMISSING WITHOUT PREJUDICE THE UNITED STATES' COUNTERCLAIM AGAINST PLAINTIFF EDGMON; (2) GRANTING THE UNITED STATES' MOTION FOR SUMMARY JUDGMENT WITH RESPECT TO ITS COUNTERCLAIM AGAINST PLAINTIFF GUILLERMETY; AND (3) DENYING PLAINTIFF GUILLERMETY'S CROSS-MOTION FOR SUMMARY JUDGMENT AS TO THE COUNTERCLAIM

Now before the Court are the parties' cross-motions for summary judgment with respect to the United States' counterclaim against the remaining Plaintiffs — Guillermety and Edgmon. The United States' counterclaim seeks to reduce the Plaintiffs' defaulted student loan obligations to a final judgment. Having reviewed and considered the parties' briefs, and the entire file of this matter, the Court has determined that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(e)(2), this matter will be decided on the briefs. Having considered the entire record, and for the reasons that follow, the Court hereby (1) DISMISSES WITHOUT PREJUDICE the United States' counterclaim against Plaintiff Edgmon; (2) GRANTS the United States' motion for summary judgment with respect to its counterclaim against Plaintiff Guillermety; and (3) DENIES Plaintiff Guillermety's cross-motion for summary judgment as to the counterclaim.

FACTS

The facts relevant to this motion were adequately documented in the Court's prior order granting in part and denying in part Plaintiffs' motion for summary judgment and will not be repeated here. See Guillermety v. Secretary of Education, 241 F.Supp.2d 727, 2002 WL 31962792 (E.D.Mich. Sept.27, 2002).

ANALYSIS

A. Standard of Review

Pursuant to Federal Rule of Civil Procedure 56, a party against whom a claim, counterclaim, or cross-claim is asserted may "at any time, move with or without supporting affidavits, for a summary judgment in the party's favor as to all or any part thereof." FED. R. CIV. P. 56(b). Summary judgment is appropriate where the moving party demonstrates that there is no genuine issue of material fact as to the existence of an essential element of the nonmoving party's case on which the nonmoving party would bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Of course, [the moving party] always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Id. at 323, 106 S.Ct. 2548; Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir.1987).

A fact is "material" for purposes of a motion for summary judgment where proof of that fact "would have [the] effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984) (quoting Black's Law Dictionary 881 (6th ed.1979)) (citations omitted). A dispute over a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Conversely, where a reasonable jury could not find for the nonmoving party, there is no genuine issue of material fact for trial. Id.; Feliciano v. City of Cleveland, 988 F.2d 649, 654 (6th Cir.1993). In making this evaluation, the court must examine the evidence and draw all reasonable inferences in favor of the non-moving party. Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984).

If this burden is met by the moving party, the non-moving party's failure to make a showing that is "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial" will mandate the entry of summary judgment. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548 (1986). The non-moving party may not rest upon the mere allegations or denials of his pleadings, but the response, by affidavits or as otherwise provided in Rule 56, must set forth specific facts which demonstrate that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). The rule requires the non-moving party to introduce "evidence of evidentiary quality" demonstrating the existence of a material fact. Bailey v. Floyd Cty. Bd. of Ed., 106 F.3d 135, 145 (6th Cir.1997); see also Anderson, 477 U.S. at 252, 106 S.Ct. 2505 (holding that the non-moving party must produce more than a mere scintilla of evidence to survive summary judgment).

B. Plaintiff Edgmon

20 U.S.C. § 1087dd provides that "Any agreement between an institution and a student for a [Federal Perkins] loan from a student loan fund assisted under this part ... shall provide that the liability to repay the loan shall be cancelled upon the death of the borrower, or if he becomes permanently and totally disabled as determined in accordance with regulations of the Secretary." 20 U.S.C. § 1087dd(c)(1)(F). On November 12, 2002, Plaintiff Edgmon, upon the Government's request, submitted a second request for an administrative discharge based upon total and permanent disability. (Gov't's Resp. Br. at 2.) Both parties acknowledge that Edgmon was approved for a "conditional discharge" based upon the Secretary's initial determination that Edgmon, according to 34 C.F.R. 674.51,¹ was totally and permanently disabled.² (Id.)

34 C.F.R. § 674.61 provides, in relevant part:

(b) Total and permanent disability.

(1) If the Secretary has made an initial determination that the borrower is totally and permanently disabled, as defined in § 674.51(s), the loan is conditionally discharged for up to three years from the date that the borrower became totally and permanently disabled, as certified by a physician. The Secretary suspends collection activity on the loan from the date of the initial determination of total and permanent disability until the end of the three-year conditional period. If the borrower satisfies the criteria for a total and permanent disability discharge during and at the end of the conditional discharge period, the balance of the loan is discharged at the end of the conditional discharge period and any payments received after the date the borrower became totally and permanently disabled as certified under § 674.61(b)(3) are returned to the sender.

34 C.F.R. § 674.61(b)(1) (emphasis added).

Plaintiff Edgmon argues that the Government's counterclaim must be dismissed because the Secretary's regulations provide that "collection activity" on the loan shall be suspended after a borrower obtains a conditional discharge. The Government disagrees, arguing that (1) certain unspecified guidance "makes it clear" that if collection procedures are ongoing when the borrower applies for total and permanent discharge, the Government need not halt litigation; (2) discharge of a student loan is exclusively an administrative remedy — there is no private cause of action for relief; and (3) the entry of judgment against the Plaintiff Edgmon will not interfere with or delay the administrative discharge of Edgmon's loans.

The Court disagrees with the Government. First, it is true, as discussed in the cases cited by the Government, that a disability discharge of a Federal Perkins Loan must be obtained from the Secretary of Education through the administrative procedures outlined in the Code of Federal Regulations. See United States v. Wright, 87 F.Supp.2d 464, 466 (D.Md.2000); In re Scholl, 259 B.R. 345, 349 (Bankr.N.D.Iowa 2001); In re Bega, 180 B.R. 642, 643-44 (Bankr.D.Kan.1995); United States v. Bertucci, No. 00-0078, 2000 WL 1234560, at *3 (E.D.La. Aug.29, 2000).³ The Government's reliance on these cases, however, is misplaced. In this case, Plaintiff Edgmon did utilize the administrative procedures contained in the Code of Federal Regulations. In fact, Edgmon obtained a conditional discharge. Edgmon merely seeks to enforce the Secretary's own regulation, requiring that collection activity be suspended once this initial determination has been made. Thus, the aforementioned cases are distinguishable from the facts currently before the Court.

The Government's reliance on Green v. United States, 163 F.Supp.2d 593, 598-99 (W.D.N.C.2000), is therefore, also misplaced. There, the court recognized that the administrative discharge of a student loan must be pursued through the administrative process. Id. at 598. As such, the court dismissed the plaintiff's claims so that he could pursue his administrative remedies. Id. The Court, however, permitted the government's motion for summary judgment to proceed, noting that the discharge provisions made no distinction between loans that are in the process of being collected and those that are reduced to judgment. Id. at 598-99. Thus, because the plaintiff could still obtain an administrative discharge of his loan, the court concluded that it was proper to consider the government's motion for summary judgment. Id. at 599.

Unlike Green, the issue in this case is not a party's need to exhaust administrative remedies in order to obtain an administrative discharge — Edgmon has already exhausted the administrative process and obtained a conditional discharge. The Secretary's regulations specifically require that all collection activity be suspended — activity which, as noted below, includes the continuation of litigation to collect an...