131 F. Supp. 3d 422
D. Maryland2015Background
- Peete-Bey sues ECMC for conversion, MCDCA and MCPA violations over a decades-old student debt from PSI’s for-profit program.
- Loans originated in 1989–1990; PSI refunded only part of tuition; Peete-Bey alleges a refund due but not issued.
- Loans were guaranteed/moved among MHELC, USAF, the Department of Education, and ultimately ECMC after bankruptcy; multiple collections occurred 1995–1998 and later.
- Peete-Bey alleges ECMC collected via offsets and garnishments, including tax refund offsets, 2006–2014, after she allegedly did not owe the full amount due to PSI fraud.
- She filed suit in late 2014 in state court; ECMC removed to federal court and moved to dismiss.
- Court partially grants ECMC’s motion to dismiss, preserving some claims only to the extent based on seizures or communications within three years of filing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HEA preemption bars the state-law claims | ECMC acted as a guaranty agency exercising HEA powers. | ECMC’s status as guaranty agency is unproven; preemption should apply if proven. | Preemption not established; ECMC’s guaranty-agency status not shown. |
| MCDCA claims alleging knowledge of invalid debt and disclosure of information | ECMC knew the PSI debt was invalid and acted with knowledge or reckless disregard. | No plausible allegation that ECMC knew the debt was invalid with regard to Peete-Bey. | MCDCA disclosure and enforcement claims dismissed for failure to plead knowledge with plausibility. |
| MCPA claims premised on alleged deceptive practices | ECMC deceived by collecting on an invalid debt and by misrepresenting offsets. | No reliance or cognizable deception proven; letters about suspending offsets conflicting with allegations. | MCPA claims dismissed; premised-offer/offset letter issues dismissed; related MCDCA-based MCPA claim also dismissed. |
| Statute of limitations for conversion and related MCDCA claims | Conversion and harassment claims accrued within limitations against ongoing collection. | Claims accrued earlier; many pre-dated the filing and are time-barred. | Conversion and remaining MCDCA claim timely only to extent based on seizures/communications within three years of filing; others dismissed. |
Key Cases Cited
- Chae v. SLM Corp., 593 F.3d 936 (9th Cir. 2010) (HEA guarantees and aims of loan program)
- Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113 (11th Cir. 2004) (preemption of state law for guaranty agencies)
- Rowe v. Educational Credit Mgmt. Corp., 730 F. Supp. 2d 1285 (D. Or. 2010) (HEA assignment and guaranty-agency status nuances)
- Fontell v. Hassett, 870 F. Supp. 2d 395 (D. Md. 2012) (MCDCA interpretation in Maryland context)
- Altria Grp., Inc. v. Good, 555 U.S. 70 (U.S. 2008) (state police powers and preemption framework)
- Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591 (Sup. Ct. 2015) (implied conflict preemption standards)
- United States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131 (4th Cir. 2014) (statutory and regulatory context for HEA and related entities)