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Berg v. Access Group, Inc.

United States District Court, E.D. Pennsylvania

September 26, 2014

TAMARA BERG,
v.
ACCESS GROUP, INC., ET AL

MEMORANDUM

R. BARCLAY SURRICK, District Judge.

Presently before the Court are Defendants Access Group, Inc., and PNC Financial Services Group, Inc.'s Motion to Dismiss Plaintiff's Complaint (ECF No. 22), Defendant Kentucky Higher Education Student Loan Corporation's Motion to Dismiss Plaintiff's Complaint (ECF No. 21), and Plaintiff Tamara Berg's Motion to Dismiss Access Group, Inc.'s Counterclaims (ECF No. 28). For the following reasons, Defendants' Motions will be granted, and Plaintiff's Motion will be denied.

I. BACKGROUND

A. Factual History[1]

Plaintiff, a citizen of California, is an individual who financed part of her post-graduate education through student loans. (Compl. ¶ 1; ECF No. 1.) Plaintiff specifically applied for this financial aid through lending programs sponsored by Defendant Access Group, Inc. ("Access Group"), a non-profit corporation incorporated in Delaware with its principal place of business in Pennsylvania. ( Id. at ¶¶ 6, 9.) Through Access Group, Plaintiff obtained three loans from National City Bank: (1) a loan for $800 on April 2, 2000 ("Loan One"); (2) a loan for $28, 026 on August 23, 2000 ("Loan Two"); and (3) a loan for $30, 216 on July 23, 2001 ("Loan Three"). ( Id. at ¶¶ 11-13.)[2] For each loan, Plaintiff and National City Bank entered into a loan contract. (Loan One Contract, Compl. Ex. 1; Loan Two Contract, Compl. Ex. 2; Loan Three Contract, Compl. Ex. 3 (collectively "Loan Contracts").) Access Group was not a party to the Loan Contracts. Access Group also claims Plaintiff entered into a fourth loan contract for $24, 000 on July 16, 1999, which Plaintiff denies. (Compl. at ¶ 14.)

Loan One Contract contains the following language:

1. Guarantee Fee - I will pay a guarantee fee to [National City Bank], which [National City Bank] will forward to The Education Resources Institute, Inc. (hereinafter referred to as "TERI"), to pay for its guarantee of this Promissory Note. I will pay a guarantee fee equal to 6% of the amount of each disbursement.
2. Deducted from Disbursements - At the time [National City Bank] issue[s] any disbursement, [National City Bank] will deduct that guarantee fee from the disbursement. If [National City Bank] do[es] not withhold a fee from the proceeds of the loan and I have not already paid that fee, I agree to pay it when [National City Bank] bill[s] me for it. I will not be entitled to any refund of any guarantee.
3. Supplemental Guarantee Fee - I will pay a supplemental guarantee fee determined by [National City Bank], not to exceed 6.9% of the principal amount advanced to me or paid on my behalf.... The supplemental guarantee fee will be sent to TERI....
4. I acknowledge that the guarantee fee and the supplemental guarantee fee are fair and reasonable charges for the guarantee of my loan, and represent [National City Bank's] actual expenses incurred in obtaining such guarantee, and that [National City Bank] would not make the loan without such guarantee.

(Loan One Sec. G.)

The Loan Two and Loan Three Contracts contain the following similar but slightly different language:

1. I will pay a guarantee fee not to exceed 12.9% of the outstanding principal balance, including accrued interest that has been added to the principal balance... The guarantee fee will be payable on the last day of the Interim Period, after any accrued interest has been added to the principal balance. The guarantee fee will be sent to a party who will guarantee my loan. I agree that you can add the amount of the guarantee fee to the outstanding balance of my loan. I will not be entitled to any refund of the guarantee fee.
2. I acknowledge that the guarantee fee is a fair and reasonable charge for the guarantee of my loan, and represents your actual expenses incurred in obtaining such guarantee, and that you would not make the loan without such guarantee.

(Loan Two Sec. G; Loan Three Sec. G.) Plaintiff has been charged guarantee fees and supplemental guarantee fees of at least $10, 533.70, plus capitalized interest. (Compl. ¶ 22.) Once Plaintiff's loans became payable, she received periodic statements from Access Group directing her to send monthly payments to its loan servicer, Kentucky Higher Education Student Loan Corporation ("KHESLC"). ( Id. at ¶ 4.) KHESLC is an independent de jure municipal corporation and political subdivision of the Commonwealth of Kentucky that provides education loans for students and parents. ( Id. at ¶ 8.)

From February 21, 2003, to around April 4, 2007, Plaintiff paid $25, 064.72 to KHESLC. ( Id. at ¶¶ 6, 22.) On September 11, 2012, Access Group filed suit against Plaintiff in the Superior Court of the State of California, San Diego County to recover the remainder that Plaintiff owed on the Loan Contracts ("California Litigation"). ( Id. at ¶ 6; Access Group Inc. v. Berg, No. 37-2012-103426 (Cal. Sup.Ct. San Diego, filed Sept. 11, 2012).) In the California Litigation, Plaintiff sought proof that Access Group was the real party in interest to the Loan Contracts. (Compl. ¶ 7.) Plaintiff claims Access Group was unable to make that showing and thus the California Court ultimately dismissed Access Group's claims on June 14, 2013. ( Id. at ¶¶ 7, 27.) Access Group was granted leave to amend its complaint but voluntarily dismissed its case against Plaintiff on August 22, 2013. ( Id. at ¶ 27.)

Plaintiff also claims that during the course of the California Litigation, Access Group attested that the guarantee fees and supplemental guarantee fees were never sent to TERI or any other party that guaranteed the Loan Contracts. ( Id. at ¶ 23.) Plaintiff specifically states that in a response to discovery in the California Litigation dated February 20, 2013, Access Group's Christopher Mulvihill, Director Loan Recovery and Collections, stated "[t]here is no guarantee by anyone or any entity related to these [Loan Contracts]." ( Id. at ¶ 24.) In addition, Keith Coughey, Access Group's Vice Present of Risk Management & Financial Analysis, responded to a discovery request on May 20, 2013, asserting that guarantee fees and supplemental guarantee fees charged to Plaintiff were not for a guarantee of the loans by a third party, but were "a pricing mechanism that promotes economic viability." ( Id. at ¶ 25.) Coughey allegedly stated that Plaintiff's loans, and loans made under the same program to other individuals, "will not benefit from a third-party or any other type of repayment guarantee." ( Id. )

B. Procedural History

Plaintiff initiated this action by filing the Complaint on October 11, 2013. (Compl.) Plaintiff brings five claims as an individual and as a class representative, on behalf of those similarly situated. In this capacity, Plaintiff specifically brings suit against all Defendants for intentional misrepresentations, claiming that Defendants misrepresented the amount of actual costs incurred to obtain guarantees for the Loan Contracts (Count II). Plaintiff seeks restitution from all Defendants for any overpayments made under the Loan Contracts (Count III). In addition, she brings a claim against Access Group and PNC for breach of the Loan Contracts (Count I). Plaintiff also brings a claim against Access Group and KHESLC for intentional misrepresentation, claiming those parties misrepresented what entity owned the Loan Contracts (Count IV) and for restitution for payments made to entities that did not own the Loan Contracts (Count V). Finally, Plaintiff brings an additional claim for restitution only in her individual capacity against all Defendants for all payments she made on the July 16, 1999 loan, which she claims that she never executed (Count VI). On January 21, 2012, Access Group and PNC filed a Motion to Dismiss Plaintiff's Complaint. (Access's Mot.) That same day, KHESLC joined Access Group and PNC's Motion and filed its own Motion to Dismiss. (KHESLC's Mot., ECF No. 21.) KHESLC specifically claims that Plaintiff's claims against it must be dismissed because KHESLC is entitled to sovereign immunity. On March 7, 2014, Plaintiff filed a Response in opposition to Defendants' Motions. (Pl.'s Opp'n, ECF No. 27.) On April 14, 2014, Access Group and PNC filed a Joint Reply in support of their Motion (Access's Reply, ECF No. 38) and KHESLC also filed a Reply in support of its Motion (KHESLC's Reply, ECF No. 39).

Also on January 21, 2012, Access Group answered Plaintiff's Complaint and brought Counterclaims against Plaintiff. (Countercl., ECF No. 23.) Access Group brings a breach of contract claim against Plaintiff (Count I) alleging that Plaintiff failed to repay her student loans in accordance with the Loan Contracts that she entered into with National City Bank. In the alternative, Access Group brings a claim for unjust enrichment (Count II) alleging that Plaintiff has unjustly retained the benefits from the July 16, 1999 Loan without paying for them. On March 3, 2014, Plaintiff filed a Motion to Dismiss Access Group's Counterclaims. (Pl.'s Mot., ECF No. 28.) Access Group filed a Response in opposition on April 11, 2014. (Access's Opp'n, ECF No. 36.) On April 23, 2014, Plaintiff filed a Reply in support of her Motion. (Pl.'s Reply, ECF No. 42.)

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 8(a)(2), "a pleading that states a claim for relief must contain a short and plain statement of the claim showing that the pleader is entitled to relief." Failure to state a claim upon which relief can be granted is basis for dismissal of the complaint. Fed.R.Civ.P. 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that merely alleges entitlement to relief, without alleging facts that show entitlement, must be dismissed. See Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009). "This does not impose a probability requirement at the pleading stage, ' but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary elements." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). "A complaint may not be dismissed merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits." McTernan v. City of York, 564 F.3d 636, 646 (3d Cir. 2009).

In determining whether dismissal is appropriate, courts use a two-part analysis. Fowler, 578 F.3d at 210. First, courts separate the factual and legal elements of the claim and accept all of the complaint's well-pleaded facts as true. Id. at 210-11. Next, courts determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "plausible claim for relief." Id. at 211. Given the nature of the two-part analysis, "[d]etermining whether a complaint states a plausible claim for relief will... be a context-specific task that ...


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