Tia Michelle Bond v. Def. Fin. & Accounting Serv.

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TIA MICHELLE BOND, Plaintiff, v. DEFENSE FINANCE AND ACCOUNTING SERVICE, Defendant.

No. 3:21-CV-1304-E

United States District Court, N.D. Texas, Dallas Division

February 27, 2024

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

REBECCA RUTHERFORD, UNITED STATES MAGISTRATE JUDGE

This civil action under the Fair Credit Reporting Act (FCRA) arises from Plaintiff Tia Michelle Bond's avowed “long and tortured struggle with [Defendant Defense Finance and Accounting Service (DFAS)] in attempting to get the balance waived” on a debt Bond incurred after enrolling in the United States Navy Nurse Candidate Program. Pl.'s Br. 1 (ECF No. 52). Bond contends that the debt at issue was discharged in bankruptcy and that DFAS's continued reporting to credit agencies that she remains liable for the debt constitutes both negligent and willful violations of the FCRA. Id. DFAS disputes that the debt was discharged and that it violated the FCRA. Id. Both parties filed motions for summary judgment. For the following reasons, the District Court should DENY Bond's Motion (ECF No. 51), GRANT DFAS's Motion (ECF No. 48), and DISMISS Bond's claims with prejudice.

I.

Bond enrolled in the U.S. Navy's Nurse Candidate Program (NCP) on August 3, 2010. Pl.'s App. 1, ¶ 1 (ECF No. 53). The terms of the program required Bond to “enlist in the Navy Reserve, complete a baccalaureate degree in a qualified nursing program within 24 months of enlistment obtain and maintain a license to practice as a registered nurse, and accept an appointment as a commissioned officer in the United States Navy for a period of eight years following completion of the [nursing] program.” Id. ¶ 2. In exchange, Bond would receive financial assistance. Specifically, Bond would be entitled to a $10,000 “accession bonus,” payable in two installments-$5,000 upon her enlistment and $5,000 on the 6-month anniversary of her enlistment. Pl.'s App., Ex. A (ECF No. 53-2); Pl.'s Br., Ex. A (ECF No. 57-2). Additionally, Bond would receive a “continuation bonus of $1,000 per month for each month enrolled as a full-time [nursing] student.” Id. Bond agreed to repay the full amount of the accession and continuation bonuses if she disenrolled from the program “for any reason other than medical” or otherwise failed to meet the program's requirements. Id.

While she was enrolled in the NCP, Bond received the full $10,000 accession bonus and $9,433.33 in monthly continuation-bonus payments. Pl.'s App. ¶ 10 (ECF No. 53). However Bond allegedly became disabled, failed to fulfill certain program academic requirements, and disenrolled from the NCP in 2012. Id. ¶¶ 8, 9.

DFAS, as the debt servicer for the United States military, was assigned Bond's debt upon her disenrollment. Def.'s Br. 1 (ECF No. 49). After DFAS notified Bond that she owed $19,433.33, she commenced her efforts to have the balance waived. Initially, Bond re-enlisted in the Navy Reserves in an attempt to have her debt waived through service. Id. ¶ 11. She applied for a debt waiver with DFAS three times before being informed she was not eligible for a waiver. Id. ¶¶ 12-15. She appealed DFAS's decision to the Defense Office of Hearings and Appeal. See Pl.'s Br., Ex. M (ECF No. 57-14). In her appeal, Bond generally argued that DFAS was not treating her fairly by attempting to collect her debt. Id. She alleged that she had to disenroll from the nursing program due to medical issues. Id. Bond also insisted that she was told she could repay the debt through service in the Navy Reserves. Id.

The Defense Office of Hearings and Appeals sustained DFAS's decision that Bond's debt was ineligible for waiver. See id. In its Recommendation and Administrative Report, the Office explained that Bond did not provide any documentation substantiating her claim that she was told she could repay her debt through service. Id. Additionally, the Office was not persuaded by Bond's medical explanation for disenrollment, since “her medical condition has not stopped her from rejoining the Reserves[,]” and regardless, “[she] had a break in service that disqualified her from the medical clause in the contract.” Id.

Undeterred, Bond continued her efforts to have the debt waived. Her attempts included calling the Department of Defense's Hotline and writing a letter to her congressman. Pl.'s App. ¶¶ 18, 19 (ECF No. 53). DFAS never waived her debt, but DFAS did collect approximately $6,600 through the Department of Treasury Offset Program. See Def.'s App. 080 (ECF No. 50).

On May 19, 2017, Bond filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Colorado. Id. at 082. In her petition, she listed DFAS as an unsecured nonpriority creditor. Id. at 179. She attested that the original amount of her debt was $19,433.33 and that the current amount she owed was $13,020.00. Id.

On August 21, 2017, the bankruptcy court issued a Chapter 7 discharge order. Id. at 090-91. The discharge order reads: “A discharge under 11 U.S.C. § 727 is granted to: Tia Michelle Bond.” The order includes a section entitled “Explanation of Bankruptcy Discharge in a Chapter 7 Case.” In this section, the bankruptcy court states that “[m]ost debts are covered by the discharge, but not all.” Id. at 090. The order further explains that the information in the order “is only a general summary of the bankruptcy discharge; some exceptions exist. Because the law is complicated, you should consult an attorney to determine the exact effect of the discharge in this case.” Id. at 091.

Even before she received the bankruptcy court's discharge order and throughout 2018 and 2019, Bond disputed her debt with various entities. A DFAS employee responsible for responding to bankruptcies began investigating Bond's case. Id. at 110, 208. The employee contacted an attorney in DFAS's Office of General Counsel to inquire about whether Bond's debt had been discharged in bankruptcy. The attorney determined that while the accession bonus debt was discharged, the continuation bonus debt was not discharged. According to the DFAS attorney, the continuation bonus constituted an educational stipend and, thus, it could only be discharged with a finding of undue hardship. See id. at 111-13; 11 U.S.C. § 523(a)(8)(A)(ii)).

Bond filed complaints with the Indiana Attorney General in November 2017 and February 2018, claiming that her entire debt with DFAS had been discharged in bankruptcy. Def.'s App. 131-38 (ECF No. 50-2). The Indiana Attorney General's Office forwarded Bond's complaints to DFAS, and DFAS's Office of General Counsel again explained its position that the continuation bonus was an educational stipend and Bond's obligation to repay could not be discharged absent a finding from the bankruptcy court that Bond would suffer undue hardship if the debt was not discharged. Id. at 141-42. The Indiana Attorney General's Office closed its investigation upon receiving DFAS's response. Id. at 141.

Bond also contacted DFAS directly to dispute her debt. She alleged that “the [bankruptcy] court and her congressman and the judge said [her debt] was dischargeable[.]” Id. at 111.

On August 8, 2019, Bond sent a dispute letter to Equifax, a credit reporting agency. Pl.'s App., Ex. A (ECF No. 53); Pl.'s Br. Ex. HH (ECF No. 53-33). In the letter, she complained that her credit report was incorrect as it listed a balance owed on a debt to DFAS when that debt had been discharged in bankruptcy. Pl.'s Br. Ex. HH. She requested that the debt be removed, that her balance be listed as $0.00, and that Equifax add a notation that her debts were included in her Chapter 7 bankruptcy and discharged by the bankruptcy court's August 2017 discharge order. Id.

When her credit report continued to reflect a balance on the DFAS debt, Bond filed her Complaint in this civil action on June 7, 2021, alleging that DFAS willfully and negligently violated the FCRA.^[1] Compl. ¶¶ 64-84 (ECF No. 1). Bond sues DFAS as a furnisher of information to credit reporting agencies and alleges that DFAS violated 15 U.S.C. § 1681s-2(b). Id. ¶ 69.

Specifically, she alleges DFAS failed to conduct a full and proper investigation into her dispute with a credit reporting agency. Id. Further, Bond alleges DFAS reported inaccurate information to a credit reporting agency-she claims that DFAS reported the continuation bonus as a debt, which “is inaccurate since it fails to indicate that [her] DFAS debts were discharged in a bankruptcy proceeding.” Compl. ¶ 19; Def.'s App. 189. Bond claims that, as a result of DFAS's continued reporting of the debt after her Chapter 7 bankruptcy, she was turned down for car loans, a mortgage, and credit card applications. Pl.'s App., ¶ 82 (ECF No. 53). She also claims she suffered from anxiety and emotional distress “due to the toll years of disputes with DFAS had taken on her.” Id. ¶ 91.

Initially, DFAS sought to dismiss Bond's claims on grounds that the FCRA does not clearly and unequivocally waive sovereign immunity and thus the Court lacks jurisdiction over Bond's claims against it. See Def. Mot. (ECF No. 21). The Court disagreed and denied DFAS's motion.^[2] Thereafter, DFAS filed an answer. See Answer (ECF No. 27). The parties conducted discovery and participated in an unsuccessful settlement conference.

DFAS filed its Motion for Summary Judgment (ECF No. 48) and accompanying brief in support on March 3, 2023. Bond filed her Motion for Summary Judgment (ECF No. 51) and accompanying brief in support on March 10, 2023. Both Motions are fully briefed and ripe for consideration.

II.

Summary judgment is proper when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Where, as here, a...