MEMORANDUM
Janice Peete-Bey . sues Educational Credit Management Corp. (“ECMC”), al-. leging that it wrongfully collected educational debt Peete-Bey assumed nearly two and a half decades ago. Specifically, she alleges conversion, violations of Maryland’s Consumer Debt Collection . Act (“MCDCA”), and violations of the Maryland Consumer Protection Act (“MCPA”). ECMC has moved to dismiss her complaint, arguing that it is preempted by the Higher .Education Act (“HEA”), that it is untimely, and that it does not state a, claim under either the MCDCA or the MCPA. That motion has been fully briefed, and no hearing is necessary to its resolution. See Local Rule 105.6 (D.Md.2014). - For the reasons explained below, that motion will be granted in part, and denied in part.
BACKGROUND
In her amended complaint, Peete-Bey explains that the PSI Institute (“PSI”) “was a for-profit vocational training program that offered computer and data entry skills.” (Am. Compl. ¶3, ECF No. 13.) In the summer of 1989, Peete-Bey enrolled part-time in classes at PSI, which she financed via 'Student loans issued by Crestar Bank. (See id. at ¶¶ 7-9.) Specifically, Peete-Bey" secured $6,625 in Stafford and Supplemental loans, plus an additional $1,725 in Pell grants. (See id: ¶¶ 19, 26.) The total value of those loans exceeded her tuition costs by $2,480; (See id. at ¶28.)
Although Peete-Bey signed up; for approximately eight months of classes, she alleges that she quit her studies after roughly two months. (See id. at ¶¶ 10-11.) That allegation is contradicted by the transcript she appends to her complaint, which indicates that her course work began on
The Maryland Higher Education Loan Corporation (“MHELC”) originally guaranteed Peete-Bey’s Stafford and Supplemental loans. (See id. at ¶26.) When Peete-Bey' defaulted on those' loans, MHELC paid default claims to Crestar-. (See id. at ¶31.) MHELC later transferred those loans to the United Student Aid Funds (“USAF”) in 1995. (See id. at ¶ 31.) • USAF, in turn, transferred the loans again, this time to the Department of Education, which collected roughly $852.63 from Peete-Bey between 1995 and 1998. (See id.) In early 1998, after Peete-Bey declared bankruptcy,
Peete-Bey alleges that she had no knowledge of these outstanding student loans until 2000. (See id. at ¶ 35.) Although the Department of Education had collected funds from her between 1995 and 1998, she explains that she “had garnishments for other debts, and did not know that the student loan collectors were also potentially garnishing her accounts.”' (Id.) In 2000, however, ECMC wrote PeeteBey, explaining that she owed principal, interest, and collection fees on her outstanding loans. (See id. at ¶ 36.)
In 2004, Peete-Bay successfully filed for bankruptcy. (See id. at ¶ 37.) At. that time, an ECMC representative informed her via phone that she remained responsible for her student loans. (See id.) Beginning in 2006 and continuing through the following year, ECMC offset Peete-Bey’s federal tax returns and garnished her wages. (See id. at ¶ 38.) It engaged in no further collection efforts for the next four years. (See id. at ¶ 39.) In late 2011, however, “ECMC began aggressively calling Ms. Peete-Bey,” stating that her total outstanding balance had risen to $13,322.90. (Id. at ¶ 41; see also id. at ¶ 40.) When 'ECMC attempted to garnish Peete-Bey’s wages, Peete-Bey resisted, explaining that she had dropped out of PSI. (See id. at ¶¶ 42-44.) The following year, ECMC offset Peete-Bey’s tax returns and garnished her wages. (See id. at ¶ 46.)
At some point in 2012, ECMC conducted an administrative wage garnishment hearing outside of Peete-Bey’s presence. (See id. at ¶47.) Peete-Bey asked'for reconsideration. (See id. at ¶ 47.) The next year, she learned that PSI’s former CEO, Irwin Mautner, had been convicted of fraud in 1993 for misreporting student dropout rates to maintain PSI’s accreditation and its students’ eligibility for financial aid. (See id. at ¶¶ 24, 48.) She then sought legal counsel, who filed on her behalf an unpaid refund application with ECMC. (See id. at ¶ 50.) In conversations with Peete-Bey’s attorney, ECMC indicated that it knew of Mautner’s fraud conviction. (See id. at ¶49.) ECMC denied Peete-Bey’s refund application. (See id. at ¶51.) And ECMC twice reconsidered that application at Peete-Bey’s request, affirming its prior denial each time. (See id. at ¶ 43.)
Peete-Bey filed this lawsuit in the Circuit Court for Baltimore City in late 2014. (See Compl., ECF No. 2.) She alleges (Son-version, as well as violations of the MCDCA and the MCPA. ECMC removed the case to this court. (See Notice of Removal, ECF No. 1.) After ECMC moved to dismiss her complaint, Peete-Bey filed an amended complaint.
ANALYSIS
1. Standard of Review
When ruling on a motion under Rule 12(b)(6), the court must “accept the wellpled allegations of the complaint as true,” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States,
IÍ. HEA Preemption
ECMC first argues that Peete-Bey’s state law claims are entirely preempted by the Higher. Education Act and -its implementing regulations, . which command “guaranty, agencies” to vigorously collect certain educational debts. Because
“The Higher Education Act (HEA) of 1965, now codified at 20 U.S.C. §§ 1001— 1155, was passed ‘to keep the college door open to students of ability, regardless of socioeconomic background.’ ” Chae v. SLM Corp.,
The Secretary of the Department of Education has issued regulations codifying certain due diligence requirements, see, e.g., 34 C.F.R. § 682.410-682.411, pursuant to its statutory authority, 2Ú U.S.C. § 1082(a)(1). After a borrower defaults, the lender must undertake a series of collection efforts prescribed by those regulations. See 34 C.F.R. § 682.411(a). If those “due diligence” efforts fail to secure repayment, then the lender assigns the loan to the guaranty agency, which pays the lender for any outstanding balance on the debt. See 34 C.F.R. §§ 682.102(g), 682.410(b)(5)(vi)(A), 682.412(e)(2), The guaranty agency, in turn, may seek compensation for some or all of its losses from the Department of Education. See, e.g., 20 U.S.C. § 1078(c). But the Department of Education conditions any such reimbursement on the guaranty agency’s completion of a prescribed set of “due diligence” activities designed to collect from the borrower the unpaid balance. See 34 C.F.R. §§ 682.410(b), 682.413(b)(2). Among other due diligence obligations, a guaranty agency must report certain defaults to consume er credit reporting agencies and attempt to offset debtors’ federal income tax refunds and garnish their wages. See 34 C.F.R. § 682.410(b)(5)-(6). If the guaranty agency’s efforts are unsuccessful, then the loan must be assigned to the Department of Education. ' See 34 C.F.R. § 682.409(a). Such an assignment “releases all [the guaranty agency’s] rights and title to that loan.” ' 34 C.F.R. § 682.409(b)(1).
Pursuant to Congress’ power under the Supremacy Clause, “[t]he HEA is riddled with isolated preemptive provisions that expressly preempt certain provisions of state law.” Cliff,
As noted, ECMC invokes those preemption provisions here, arguing that they preclude Peete-Bey’s claims. ■ That argument assumes that ECMC operated as a guaranty agency when it collected her debt. Indeed, ECMC is a guaranty agency, as other courts have recognized, and it often exercises the powers that flow from that status. See, e.g., Bennett v. Premiere Credit of N. Am., LLC,
Federal preemption is an affirmative defense, on which ECMC carries the burden' of proof. See, e.g., Bausch v. Stryker Corp.,
Indeed, the HEA regulations appear inconsistent with that conclusion. As noted, the assignment of a loan to the Department of Education extinguishes a guaranty agency’s “rights and title to that loan.” 34 C.F.R. § 682.409(b)(1). Under those circumstances, the guaranty agency’s .function is at an end and, having assumed the loan’s unpaid balance, the Department of Education itself pursues the debtor. Any subsequent assignment of that loan to a third-party — here, ECMC — would seem to be little more than a contract for debt collection. See 31 C.F.R. § 901.5 (authorizing federal agencies to contract with private collection contractors); see also 34 C.F.R. § 30.1(a)-(b). There is no obvious reason to conclude that such an assignment carries with it the obligations or authority of a guaranty agency under the HEA. If there is some statutory, regulatory, or contractual basis for such a conclusion, ECMC has not carried its burden of presenting that reason to the court.
ECMC’s failure to support its argument with adequate legal authority is especially significant where, as here, it seeks to preclude the enforcement of state consumer protection laws. “When addressing questions of express or implied pre-emption, [courts] begin [their] analysis ‘with the assumption that the historic police powers of the State [are] not to be superseded by the Federal Act unless that was the clear ■ and manifest purpose of Congress.’” Altria Grp., Inc. v. Good,
Given the allegations and arguments before the court, there is no reason to believe that ECMC operated as a guaranty agency when it collected Peete-Bey’s debt. ECMC may well be able to prove that status at some later phase of the proceed
III. Failure to State a Claim
ECMC asserts that Peete-Bey has not alleged sufficient facts to state a claim under either the MCDCA or the MCPA. On the basis of those arguments, the court will dismiss most .of Peete-Bey’s claims under the MCDCA and all of her claims under the MCPA.
A. MCDCA Claims
“The MCDCA ‘protects consumers against certain threatening and underhanded methods used by debt collectors in attempting to recover on delinquent accounts.’” Stewart v. Bierman,
ECMC contests these claims on the ground that Peete-Bey has not alleged facts plausibly showing that ECMC knew of the invalidity of her debt.
Peete-Bey retorts that the MCDCA is less tolerant of a defendant’s ignorance of the law than of the facts. True, “the term ‘knowledge’ in the Act does not immunize debt collectors from liability for mistakes of law.” Bradshaw v. Hilco Receivables, LLC,
. Accordingly,- Peete-Bey’s claim that ECMC violated the MCDCA’s prohibitions on disclosure of false information and attempting to enforce a right with , knowledge it does not dismiss will be dismissed for failure to state a claim.
B. MCPA Claims
The MCPA prohibits certain deceptive trade practices, including representations that “ha[ve] the capacity, tendency, or effect of deceiving or misleading consumers” and omissions of “material fact if the failure deceives or tends to deceive.” Md.Code Ann., Com. Law § 13-301(1), (3). Peete-Bey alleges a host of violations of those proscriptions, each of which ECMC contests, ■ “To state a claim under the MCPA, plaintiffs must adequately allege ‘(1) an unfair or deceptive practice or misrepresentation that is (2) relied upon, and (3) causes them actual injury.’ ” Currie v. Wells Fargo Bank, N.A.,
Peete-Bey first asserts that ECMC’s efforts “to collect an invalid debt based on PSI’s false or misleading written statements ... had the capacity, tendency or effect of deceiving or misleading consumers.” (Am. Compl. ¶ 86 (emphasis added).) Relatedly, she alleges that offsetting her tax returns and garnishing her wages “to collect a fraudulent for-profit trade school debt is an unfair or deceptive trade practice,” and that ECMC’s failure to inform her of Mautner’s fraud conviction constituted a deceptive omission. (Id. at ¶¶ 88-89.) Those allegations are seemingly . premised on PSI’s fraud, not ECMC’s deception. As Peete-Bey explains in her opposition, sfie alleges that ECMC’s conduct was “false and deceptive because [it] demanded payments on an invalid deb.t.” (Opp. Mot. Dismiss 29.) Peete-Bey cites no authority suggesting that Maryland courts would recognize such a cause of action, and independent research has netted none. But even if such a representation constitutes a deceptive trade practice under Maryland law — which
Peete-Bey next alleges that ECMC deceived her by falsely representing that it would not offset her 2013 federal income tax return. (See Am. Compl. ¶ 87.) She alleges that ECMC sent her two identical letters — one in early January 2014, the other in early April of that year — “stating that it had advised the IRS that it would not offset her taxes.” (Id. at ¶ 56; see also id. at ¶ 58.) Nevertheless, her federal tax returns were offset on April 4. (See id. at ¶ 57.) The letters appended to Peete-Bey’s complaint, however, contradict her characterization of them. Those letters advised that “there may be some delay before [ECMC’s] request for suspension takes effect, as the Treasury Department must complete a number of steps to implement this request.” (See Compl. Exs. 13, 14.) More importantly, the letters explained that, even “if offset action is suspended on your debt at this time,” ECMC “will reinstate the request for offset, without further notice, if the circumstances on which this suspension is based change.” (Id. (emphasis added).) In other words, the letters expressly stated that her tax return may well be offset, notwithstanding ECMC’s suspension, either because of the Treasury Department’s delay in processing that suspension or" because ECMC reinstated its offset request. Even on a motion to dismiss, this court is “not obliged to accept allegations that .., ‘contradict matters properly subject to judicial notice or by exhibit.’” Massey v. Ojaniit,
Last, Peete-Bey brings an MCPA claim premised on her'separate allegation that ECMC violated the MCDCA. The MCPA permits such claims. See Md.Code Ann., Com. Law § 13 — 301(14)(iii). But because the court will dismiss the MCDCA allegations on which that MCPA claim is based, it too will be dismissed.
^
For these reasons, the court will dismiss two of Peete-Bey’s three claims under the MCDCA and all of her claims under the MCPA.
IV. Statute of Limitations
Peete-Bey initiated this lawsuit in mid-November 2014. (See Compl., ECF No. 2). ECMC argues that she filed her complaint too late, after the statute of limitation has run on all her claims. Having dismissed most of Peete-Bey’s MCDCA claims and all of her MCPA claims on separate grounds, the court will analyze the timeliness of only her conversion claim and her claim that ECMC violated the MCDCA “by pursuing Ms. Peete-Bey’s debt for over eighteen years when the right to collect it did not exist.” (Am. Compl. ¶ 78,)'
“[C]onversion claims are governed by Md.Code § 5-101 of the Courts and, Judicial Proceedings Article ..., which provides that ‘[a] civil action at law shall be filed within three years from the date it accrues unless another profusion of the Code provides a different period of time within which an action shall be commenced.’ ” Llanten v. Cedar Ridge Counseling Ctrs., LLC,
ECMC first argues that this conversion claim is barred on the ground that Peete-Bey’s “right to a refund, if any, accrued in 1989 or 1990, when she left PSI.” (Mot. Dismiss 19.) That argument misconstrues the nature of the wrong Peete-Bey alleges. “A defendant converts a plaintiffs personal property where the defendant intentionally exerts. ‘ownership dr dominion over [the plaintiff’s personal property in denial of or inconsistent with the [plaintiff’s right to [the plaintiffs personal] property.’ ” Thompson v. UBS Fin. Servs., Inc.,
.E.CMC next asserts that PeeteBey’s conversion claim accrued in 2006, when ECMC first began offsetting her tax refunds and garnishing her wages. Notably, however, Peete-Bey alleges that ECMC received no payments on her debt between 2008 and the end of 2011. {See Am. Compl. ¶ 39.) It resumed its collection efforts only in late 2011, offsetting her tax returns and garnishing her wages in 2012, and offsetting her tax return in 2014. {See id. at ¶¶46, 57.) Those collection efforts appear to constitute distinct seizures. Pending further development of the record, the court declines to dismiss Peete-Bey’s conversion claim to the extent it is premised on seizures that occurred within three years of the filing of her complaint. To the extent it is based on seizures predating that period, however, it will be dismissed.
As to Peete-Bey’s remaining MCDCA claim, “[t]he statute of limitations for filing [such a claim] is three years.” Kouabo v. Chevy Chase Bank, FSB,
ECMC argues that Peete-Bey’s claim accrued eighteen years ago, when ECMC “first began its attempts to collect on the account.” (Mot. Dismiss 20.) But that interpretation ignores the gravamen of her .claim, which implies that ECMC’s communications were abusive precisely because they persisted for over eighteen years, not that any such communications were abusive at the beginning of that period. Alternatively, it argues that her claim accrued
Accordingly, Peete-Bey’s conversion claim and remaining MCDCA claim are dismissed only to the extent they are based on seizures or communications that occurred three years before she filed her complaint.
CONCLUSION
For the reasons stated above, the court will grant in part and deny in part ECMC’s motion to dismiss. Most of Peete-Bey’s claims under the MCDCA and all of her claims under the MCPA will be dismissed, while her conversion claim and MCDCA communication claim will continue to the extent they are premised on seizures or communications occurring within three years of this lawsuit’s initiation.
A separate order follows.
Notes
. That bankruptcy was never approved. '(See id. at ¶ 33.)
. Peete-Bey’s filing of an amended complaint moots that initial motion to dismiss. (See ECF No. 11.) It will accordingly be denied.
. " ‘[A] federal agency acting within the scope of its congressionally delegated authority may pre-empt state regulation’ and hence render
. In her complaint, Peete-Bey alleges that "ECMC is a federal guaranty agency with many state offices____” (See Am. Compl. ¶ 2.) ECMC suggests that this allegation constitutes a concession that ECMC acted in that capacity when it collected Peete-Bey’s debt. Not so. On a motion to dismiss, all reasonable inferences are drawn in the plaintiff’s favor. See, e.g., Ibarra,
. In this regard, it is not pertinent that in Rowe the Department of Education directed ECMC to receive assignments from the previous guarantor. See Rowe,
. In a declaration appended, to its motion to dismiss, an ECMC employee asserts that the Department of Education's assignment of Peete-Bey’s loans "included ECMC assuming all of the responsibility of a guarantor of Plaintiff’s student loans.” (Mot. Dismiss, Klisch Decl. ¶ 5, ECF No. 14-6.) To the extent ECMC offers that cónclusoiy statement as proof of the nature of the contract between ECMC and the Department of Education, it is not cognizable on a motion to dismiss.
. Stewart and the cases on which it relies' may be in some tension with Fontell v. Hassett,
. She also alleges violation of the MCDCA’s prohibition on abusive communication. As she puts it in her complaint, ECMC violated that prohibition "by pursuing Ms. Peete-Bey’s debt for over eighteen years when the right to collect it did not exist.” (Am. Compl. ¶ 78.) That provision does not expressly require knowledge, and so falls outside the scope of ECMC’s objection to her complaint.