Charles R. Estes, et al. v. P ECMC Group, Inc.

2020 DNH 159

• Court: District Court, D. New Hampshire
• Decided: September 16, 2020
• Docket: 19-cv-822-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Charles R. Estes, et al.

v. Civil No. 19-cv-822-LM Opinion No. 2020 DNH 159 P ECMC Group, Inc.

ORDER

Pro se plaintiffs Charles R. Estes (d/b/a OEM-Tech) and Alia G. Estes allege

that defendant Education Credit Management Corporation (“ECMC”) violated

federal and state laws in its attempts to collect Alia Estes’s student loan debt.

ECMC brings four counterclaims against the Estes. Each side moves to dismiss the

opposing side’s claims under Federal Rule of Civil Procedure 12(b)(6). For the

reasons explained below, the court grants in part, and denies in part, the motions to

dismiss.

STANDARD OF REVIEW

Under Rule 12(b)(6), the court must accept the factual allegations in the

complaint as true, construe reasonable inferences in the plaintiff’s favor, and

“determine whether the factual allegations in the plaintiff’s complaint set forth a

plausible claim upon which relief may be granted.” Foley v. Wells Fargo Bank, N.A.,

772 F.3d 63, 71, 75 (1st Cir. 2014) (internal quotation marks omitted). A claim is

facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

On a motion to dismiss, the court ordinarily must not consider any

documents not attached to the complaint or not expressly incorporated

therein. See Ironshore Specialty Ins. Co. v. United States, 871 F.3d 131, 135 (1st

Cir. 2017). There are, however, narrow exceptions to this rule allowing the court to

consider documents the authenticity of which is not disputed by the parties, official

public records, documents central to plaintiffs’ claims, or documents sufficiently

referred to in the complaint. Id.

DISCUSSION

The court first considers ECMC’s motion to dismiss the plaintiffs’ four claims

and then turns to plaintiffs’ motion to dismiss ECMC’s four counterclaims.

I. ECMC’s Motion to Dismiss

The facts as alleged by the Estes are summarized below.

As of 2001, Alia1 (then Alia Maxwell) had several student loans. That year,

she applied for a federal consolidation loan from Washington Mutual Bank using

an application form from Collegiate Funding Services (“Collegiate”). The application

was approved and SLC Student Loan Trust (“SLC”) funded the $21,378 loan as the

“Guarantor of Record.” Alia began repaying the loan in April 2001. In 2006, she

1 The court refers to plaintiffs individually by their first names.

2 married Charles Estes and changed her name from Alia Maxwell to Alia Estes.2 In

2009, the Estes moved to New Hampshire.

In July 2011, the loan was purchased by another lender, Sallie Mae Financial

Services (“Sallie Mae”). Sallie Mae processed the loan until September 2012, at

which point Sallie Mae became Navient Financial Services (“Navient”), and Navient

started processing the loan payments. In October 2012, the Estes contacted Navient

requesting a forbearance due to a change of financial circumstance. The Estes also

informed Navient that recent loan statements had erroneously included late or

accrued fees. Navient agreed to clear the fees from the account and granted Alia a

six-month forbearance with reduced loan payments, after which payments were to

return to the normal amount.

Although the forbearance was supposed to last only six months, the Estes

made reduced loan payments from November 2012 to December 2015.3 The Estes

called Navient many times asking Navient to release them from the forbearance

and restore them to regular loan payments. The Estes also asked Navient to

account for “unexplained fees” that appeared on the loan statements, and to send

them all loan documents related to the transfer from SLC and a payment

transaction history. Doc. no. 1-1 at ¶ 2. Navient rejected plaintiffs’ requests.

2 Charles owns and operates OEM-Tech, Co.

3 The reason the Estes continued making reduced payments beyond the

agreed-upon six-month forebearance—or whether they were precluded from making payments in the pre-forebearance amount—is unclear from the complaint.

3 In January 2016, the Estes received a letter from ECMC4 claiming Alia was

more than six months behind in payments and that she had to act quickly to avoid

default. The letter offered the possibility of zero-dollar loan payments if the Estes

qualified, and instructed the Estes to contact ECMC or Navient. The Estes had

never heard of ECMC and knew they were not behind in their loan payments. They

called Navient and were told that Navient “had no record of ECMC ever being a

party to the loan.” Id. at ¶ 7. Navient explained ECMC was a “competitor” who used

letters like the one the Estes received to “deceptively poach” potential customers. Id.

The Estes claim that, as of April 22, 2016, the loan was in “good standing”

and that they had made 171 consecutive payments totaling $29,544.25. Id. at ¶ 2.

The complaint states both that Navient had “written off” Alia’s loan and that the

loan balance was $13,626.10.5 Id. at ¶ 22.

The Estes did not hear from ECMC again until July 2017 when they received

a “Notice of Default” letter from ECMC. Id. at ¶ 8. The letter stated that because

Alia had failed to meet her student loan repayment obligation, ECMC—as

guarantor of Alia’s loan—had paid a default claim to the lender and taken

assignment of Alia’s loan. The letter did not contain verifiable information about

Alia’s loan. Plaintiffs—having been previously told that ECMC was Navient’s

4 Although it appears from the allegations in the complaint that the loan was

taken out in only Alia’s name, the complaint states that Navient and ECMC were communicating with both Alia and Charles.

5 The complaint does not address why Navient would have “written off” a

loan that was purportedly in good standing.

4 competitor, and knowing that ECMC was not the loan’s original guarantor—decided

to investigate further before responding to ECMC. Plaintiffs later learned ECMC

had reported Alia’s account to collections on July 6 with a stated balance of $15,325.

ECMC did not contact plaintiffs again until early October 2017, when the

Estes received a notice entitled “Notification of Report to Consumer Reporting

Agencies.” Id. at ¶ 11. The notice stated ECMC had reported the default to national

reporting agencies because the Estes had not paid the full balance within 60 days of

receiving the default notice. By this point, the loan balance had purportedly

increased to $19,410. ECMC had not given Alia an option to pay the past due

amount or clear the default status prior to adding $4100 in fees and reporting the

account to collections. In late October, various credt card processing companies

lowered plaintiffs’ credit limits, and Alia’s credit score was subsequently reduced

from 740 to 602. These reductions negatively affected Charles’s business, OEM-

Tech, Co. In late October 2017, plaintiffs wrote ECMC a letter disputing the validity

of ECMC’s claim and requesting an investigation into the validity of the debt.

In November, ECMC sent plaintiffs several documents, one of which stated

“ECMC-CA” was the “Original Guarantor” of Alia’s loan. Id. at ¶ 14. The Estes,

knowing ECMC-CA was not the loan’s original guarantor, believed ECMC had

fabricated the documents. The Estes wrote ECMC disputing the validity of ECMC’s

claim and asking ECMC to prove the stated balance or make a reasonable offer to

finalize the account.

5 In December 2017 and September 2018, ECMC sent plaintiffs letters stating

ECMC held Alia’s defaulted student loan because ECMC had become the “guaranty

agency” for Alia’s account in 2010. Id. at ¶¶ 15-16. In June 2019, ECMC seized

plaintiffs’ 2018 tax refund.

On June 18 2019, the Estes brought this action in state court asserting four

claims against ECMC: (I) violation of New Hampshire’s Unfair, Deceptive or

Unreasonable Collection Practices Act, RSA 358-C:3 (“UDUCPA”); (II) violation of

the Federal Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), and

regulations enacted under the Higher Education Act, 15 U.S.C. § 1070 et seq.

(“HEA”); (III) violation of New Hampshire’s Criminal Fraud statute, RSA 638:1-29;

and (IV) an additional violation of FDCPA, 15 U.S.C. § 1692 et seq. In August 2019,

ECMC removed the case to this court invoking the court’s federal question and

supplemental jurisdiction.

ECMC moves to dismiss each of plaintiffs’ four claims. Because a discussion

of the federal laws implicated in Count II will lay a foundation for the court’s

discussion of Count I, the court switches the order and begins with ECMC’s

arguments concerning Count II.

A. Count II: Violation of FDCPA and HEA Regulations

Plaintiffs contend ECMC violated FDCPA and regulations enacted under

HEA when it resurrected a debt that Navient had written off, failed to follow “due

diligence” guidelines, “deceived” the United States Department of Education

6 (“DOE”) into certifying the debt as a default, and then “deceived” the United States

Treasury into releasing their 2018 federal tax refund to ECMC.6 ECMC moves to

dismiss, arguing that plaintiffs cannot bring a claim under HEA because the Act

does not include a private right of action. ECMC contends with respect to FDCPA

that the Estes cannot recover under that Act because: (1) ECMC is not a “debt

collector,” therefore FDCPA does not apply; and (2) the FDCPA claim is barred by a

one-year statute of limitations.

1. Violation of HEA Regulations

The Estes allege that ECMC violated HEA regulations, see 34 C.F.R. §§

682.206-.208 and 682.411, when it took actions culminating in ECMC’s seizure of

their 2018 tax refund. ECMC moves to dismiss, arguing HEA does not include a

private right of action.

HEA does not expressly provide for a private cause of action but provides for

suit “by or against the Secretary” of Education. 20 U.S.C. § 1082(a)(2). Although the

First Circuit has not explicitly addressed whether a private right of action exists

under HEA, “nearly every court to consider the issue . . . has determined that there

is no express or implied private right of action to enforce any of the HEA's

provisions.” McCulloch v. PNC Bank Inc., 298 F.3d 1217, 1221 (11th Cir. 2002)

6 On the first page of their complaint, the Estes state they are bringing Count

II under both FDCPA and HEA. However, in ¶ 25, where the Estes set forth their “second cause of action,” the Estes only cite HEA and regulations enacted under that Act and do not reference FDCPA. ECMC’s motion to dismiss treats this count as if it were brought under both Acts. For purposes of this order, the court presumes plaintiffs assert both FDCPA and HEA violations in Count II.

7 (collecting cases); see also Sanon v. Dep't of Higher Educ., 453 F. App'x 28, 30 (2d

Cir. 2011); Thomas M. Cooley Law Sch. v. Am. Bar Ass'n, 459 F.3d 705, 710 (6th

Cir. 2006); College Loan Corp. v. SLM Corp., 396 F.3d 588, 598 (4th Cir. 2005);

Slovinec v. DePaul Univ., 332 F.3d 1068, 1069 (7th Cir. 2003) (per curiam);

Labickas v. Ark. State Univ., 78 F.3d 333, 334 (8th Cir. 1996) (per curiam); Parks

Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995); L'ggrke v.

Benkula, 966 F.2d 1346, 1348 (10th Cir. 1992).

In light of the overwhelming weight of authority, the court concludes that

there is no private right of action to enforce HEA regulations. Accordingly, to the

extent Count II is premised on the HEA, it is dismissed.

2. Violation of FDCPA

In Count II, the Estes also allege that, in the course of administratively

seizing plaintiffs’ 2018 tax return, ECMC violated FDCPA. FDCPA was enacted “to

eliminate abusive debt collection practices” by “debt collectors.” 15 U.S.C. § 1692(e).

For example, under FDCPA, a “debt collector may not use any false, deceptive, or

misleading representation or means in connection with the collection of any debt,”

15 U.S.C. § 1692e, and a “debt collector may not use unfair or unconscionable means

to collect or attempt to collect any debt,” 15 U.S.C. § 1692f. An aggrieved plaintiff

may recover actual or statutory damages under FDCPA. See 15 U.S.C. 1692k(a)(1)-

(2).

To recover under FDCPA, the Estes must show that: “(1) they have been the

object of collection activity arising from a consumer debt; (2) the defendant

8 attempting to collect the debt qualifies as a ‘debt collector’ under the Act; and (3) the

defendant has engaged in a prohibited act or has failed to perform a requirement

imposed by the [Act].” Moore v. Mortg. Elec. Registration Sys., Inc., 848 F. Supp. 2d

107, 124 (D.N.H. 2012) (internal quotation marks omitted).

Only element two is relevant here. ECMC argues that plaintiffs cannot

prevail under FDCPA because ECMC is not a “debt collector.” FDCPA defines “debt

collector” as:

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

15 U.S.C. § 1692a(6). Under this definition, an entity has “to attempt to collect

debts owed another before [it] can ever qualify as a debt collector.” Henson v.

Santander Consumer USA Inc., 137 S. Ct. 1718, 1724 (2017). If an entity purchases

debt that is already in default, and then seeks to collect the debt for itself, that

entity is not a debt collector under FDCPA. See id. The definition of debt collector

includes several exemptions, including one for any “officer or employee of a

creditor.” 15 U.S.C. § 1692a(6)(A). FDCPA separately defines “creditor” as one “who

offers or extends credit creating a debt or to whom a debt is owed.” Id. at (4). The

definition of debt collector also excludes “any person collecting or attempting to

collect any debt owed . . . another to the extent such activity is incidental to a bona

fide fiduciary obligation.” Id. at (6)(F)(i).

ECMC asserts that it is a “guaranty agency” under HEA and is therefore not

a debt collector under FDCPA. “Guaranty agency” is a term of art under HEA. See

9 Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1030-31 (9th Cir. 2009)

(explaining history of HEA and the role of “guaranty agencies” in administering the

Federal Family Education Loan Program). A guaranty agency acts as “an

intermediary between the United States and the lender of a student loan.” Id. at

1030. If a borrower defaults on a loan and the lender is unable to collect the debt

despite complying with due diligence requirements, the lender files a claim with the

guaranty agency. See 34 C.F.R. §§ 682.411-.412. The guaranty agency then pays the

lender the unpaid balance of the defaulted loan and the lender assigns the loan to

the guaranty agency. See id. at § 682.410. The guaranty agency can recover most if

not all its losses from the DOE so long as it follows applicable HEA regulations. See

id.; 20 U.S.C. § 1078(c).

Guaranty agencies act as fiduciaries of the DOE when they operate under

HEA regulations. See, e.g., Bennett v. Premiere Credit of N. Am., LLC, 504 F. App'x

872, 878 (11th Cir. 2013) (per curiam); Rowe, 559 F.3d at 1034. Accordingly, many

courts have held that guaranty agencies are not “debt collectors” under FDCPA

because their collection activity is “incidental to a bona fide fiduciary obligation,” 15

U.S.C. § 1692a(6)(F)(i). See, e.g., Bennett, 504 F. App'x at 878; Cadiz v. Educ. Credit

Mgmt. Corp., No. 17-CV-06362, 2019 WL 4254484, at *4 (N.D. Ill. Feb. 21, 2019);

Rowe v. Educ. Credit Mgmt. Corp., 730 F. Supp. 2d 1285, 1289 (D. Or. 2010).

Resolving whether ECMC’s relationship to Alia’s loan is that of a guaranty

agency or a debt collector requires a factual determination. ECMC argues that the

court should make this determination by taking judicial notice that other district

10 courts regard ECMC as a guaranty agency. It is true that other courts have stated

that ECMC is “at least generally speaking” a guaranty agency. Rowe, 559 F.3d at

1032. Here, however, the relevant question is not whether, “generally speaking,”

ECMC is a guaranty agency, but whether, in this particular case, ECMC was

acting as a guaranty agency under HEA. See id. The court cannot resolve this

factual question by relying on decisions other courts have reached on the basis of

different factual records.

ECMC also argues that the court can determine that ECMC is the guaranty

agency for Alia’s loan based in part on a promissory note it attached to its motion to

dismiss. See doc. no. 23-2. ECMC argues this document establishes that CSAC was

the original guaranty agency for Alia’s loan. ECMC also states that, in 2010,

CSAC’s loan portfolio was transferred to ECMC, which means that ECMC is the

guaranty agency for Alia’s loan.

When deciding a 12(b)(6) motion, a trial court can review a document other

than the complaint if the document’s authenticity is not in dispute and the factual

allegations in the complaint depend on the document. See Ironshore, 871 F.3d at

135. Plaintiffs allege that Alia applied for a loan in 2001 using an “application form”

from Collegiate, doc. no. 1-1 at 20, and they do not dispute that this form is the

same document that ECMC attached to its motion to dismiss as a “promissory

note,” see doc. no. 23-2. Although the Estes do not agree that the document

constitutes a “promissory note,” they do not dispute the document’s authenticity.

11 The court may, therefore, consider the content of the application form/promissory

note in deciding ECMC’s motion to dismiss.7

The court has reviewed the document. Contrary to ECMC’s assertion, it does

not establish that CSAC was the loan’s original guarantor. Rather, the name in the

“Guarantor, Lender or Program Identification” box is “Collegiate Funding Services,

LLC” and the name CSAC does not appear on the application form.8 Id. Even if

CSAC did appear in the document as the loan’s guarantor, the legible portions of

this document signed in 2001 do not indicate that the loan was transferred to

ECMC in 2010.

Ultimately, whether ECMC qualifies as a guaranty agency under HEA, or a

debt collector under FDCPA, turns on factual questions that will need to be resolved

in discovery. As this is a motion to dismiss, the court construes the facts as alleged

by plaintiffs as true. At this early stage, plaintiffs’ FDCPA claim survives ECMC’s

argument that it is not a debt collector under FDCPA. After discovery, the factual

record regarding ECMC’s relationship to Alia’s loan will be clearer, and the parties

may revisit whether ECMC is a debt collector at summary judgment.

7 ECMC attached additional documents to its motion to dismiss to establish it

is the guaranty agency. However, plaintiffs challenge the authenticity of those documents and characterize them as fabricated and fraudulent. Thus, the court does not consider them.

8 The court cannot read all of the small print on this document. However,

ECMC does not cite, and the court has not found, any portion of the loan application/promissory note stating that CSAC had any legal relationship to Alia’s loan in 2001.

12 3. Statute of Limitations

ECMC also moves to dismiss plaintiffs’ FDCPA claim on the grounds that it

is barred by a one-year statute of limitations. See 15 U.S.C. § 1692k(d) (stating an

action may be brought under FDCPA “within one year from the date on which the

violation occurs”). However, some of the ECMC actions that the Estes cite as

FDCPA violations, for example ECMC’s administrative seizure of the Estes’ 2018

tax return, appear to have taken place less than a year before the Estes filed suit.

Accordingly, a one-year statute of limitations would not bar those portions of

plaintiffs’ claim. Moreover, the United States Supreme Court recently recognized

that although “the statute of limitations in § 1692k(d) begins to run on the date on

which the alleged FDCPA violation occurs,” Rotkiske v. Klemm, 140 S. Ct. 355, 357

(2019), an “equitable, fraud-specific discovery rule” may delay “the commencement

of the statute of limitations in fraud actions,” id. at 361 (citing Merck & Co. v.

Reynolds, 559 U.S. 633, 644 (2010)).

Plaintiffs’ allegations against ECMC sound in fraud. Drawing reasonable

inferences in plaintiffs’ favor, the court cannot conclude at this time that any

portion of plaintiffs’ FDCPA claim is barred by the one-year statute of limitations.

After discovery, and after the parties have had the opportunity to brief the

applicability of an equitable, fraud-specific discovery rule, ECMC may reassert its

statute of limitations argument.

13 In sum, the court grants ECMC’s motion to dismiss Count II to the extent the

claim was brought under HEA but denies ECMC’s motion to dismiss Count II to the

extent it was brought under FDCPA.

B. Count I: New Hampshire’s UDUCPA

In Count I, the Estes allege that ECMC violated New Hampshire’s UDUCPA

when ECMC falsified documents, engaged in fraud, and failed to investigate their

claims. ECMC moves to dismiss, arguing in the alternative that: (1) plaintiffs’ state

law UDUCPA claim is expressly and impliedly preempted by the federal HEA; and

(2) plaintiffs have failed to state a claim under UDUCPA.

1. Preemption

UDUCPA “is the state-law analog to the federal FDCPA.” Dionne v. Fed.

Nat'l Mortg. Ass'n, No. 15-CV-056-LM, 2016 WL 3264344, at *9 (D.N.H. June 14,

2016) (internal quotation marks omitted). It allows a debtor to recover damages for

“unfair, deceptive or unreasonable” debt collection practices by a “debt collector.”

RSA 358-C:2; see RSA 358-C:4; see also Dionne, 2016 WL 3264344, at *9. ECMC

argues that HEA both expressly and impliedly preempts plaintiffs’ UDUCPA claim.

The Supremacy Clause provides that the Constitution, federal statutes, and

treaties constitute “the supreme Law of the Land.” U.S. Const. art. VI, cl. 2. The

Clause “provides a rule of decision for determining whether federal or state law

applies in a particular situation.” Kansas v. Garcia, 140 S. Ct. 791, 801 (2020)

(internal quotation marks omitted). The United States Supreme Court has

14 identified three different types of preemption: express, conflict, and field. Murphy v.

Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461, 1480 (2018) (internal quotation

marks omitted). “[A]ll of them work in the same way: Congress enacts a law that

imposes restrictions or confers rights on private actors; a state law confers rights or

imposes restrictions that conflict with the federal law; and therefore the federal law

takes precedence and the state law is preempted.” Id.

Express preemption occurs where Congress enacts a statute “containing an

express preemption provision.” Arizona v. United States, 567 U.S. 387, 399 (2012);

see also Pac. Gas & Elec. Co. v. State Energy Res. Conservation and Dev. Comm’n,

461 U.S. 190, 203 (1983) (“It is well-established that within Constitutional limits

Congress may preempt state authority by so stating in express terms.”). Field

preemption occurs when federal law occupies a field of regulation “so

comprehensively that it has left no room for supplementary state legislation.” R.J.

Reynolds Tobacco Co. v. Durham County, 479 U.S. 130, 140 (1986). Finally, conflict

preemption arises where state law actually conflicts with federal law, for example

“where it is impossible for a private party to comply with both state and federal

requirements,” or where state law “stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress.” English v. Gen. Elec. Co.,

496 U.S. 72, 79 (1990) (citation and internal quotation marks omitted).

ECMC relies on theories of express and conflict preemption. With respect to

express preemption, ECMC argues HEA expressly preempts UDUCPA in this case

because a regulation promulgated under HEA states: “The provisions of paragraphs

15 (b)(2), (5), and (6) of this section preempt any State law, including State statutes,

regulations, or rules, that would conflict with or hinder satisfaction of the

requirements of these provisions.” 34 C.F.R. § 682.410(b)(8). However, each of the

cited provisions regulates the behavior of guaranty agencies; the regulation does not

speak to the behavior of debt collectors. For the reasons already stated, the court

has yet to conclude ECMC was acting as the “guaranty agency” for Alia’s loan.

Therefore, even assuming HEA expressly preempts UDUCPA as it pertains to

guaranty agencies, an issue upon which the court need not rule at this time, the

court does not conclude HEA expressly preempts plaintiffs’ UDUCPA claim.

ECMC also argues HEA impliedly preempts UDUCPA under a conflict

preemption theory. This theory likewise relies on a finding that ECMC engaged in

collection efforts as a “guaranty agency” under HEA. It therefore fails for the same

reason ECMC’s express preemption argument fails. After discovery, the factual

record will be clearer, and the parties may raise any remaining preemption issues

at summary judgment.

2. Failure to State a UDUCPA Claim

ECMC next argues the court should dismiss plaintiffs’ UDUCPA claim

because the Estes have not sufficiently alleged any of the three elements of a

UDUCPA claim. The first element of a UDUCPA claim requires a plaintiff to be the

object of “collection activity.” Dionne, 2016 WL 3264344, at *9 (internal quotation

marks omitted). ECMC argues that a portion of plaintiffs’ allegations concerns

conduct that does not qualify as “collection activity” under UDUCPA. Specifically,

16 ECMC points to the allegations concerning ECMC’s assessment of penalties. See

DeSteph v. Conn. Dep’t of Banking, No. 09-11681-MWV, 2009 Bankr. LEXIS 4006,

at *10 (Bankr. D.N.H. Dec. 2, 2009) (noting that “assessing penalties is wholly

different than collecting a debt”). However, as ECMC acknowledges, plaintiffs’

UDUCPA claim is not premised solely on ECMC’s assessment of expenses and

penalties; the Estes allege ECMC also violated UDUCPA by seizing their tax

refund, threatening to garnish Alia’s wages, and creating fraudulent documents.

ECMC concedes these additional allegations could constitute collection activity

under UDUCPA. Therefore, at this stage, the court concludes plaintiffs have

sufficiently alleged this element.

The second element of a UDUCPA claim requires a defendant to be a “debt

collector.” Dionne, 2016 WL 3264344, at *9. UDUCPA defines a “debt collector,” in

part, as an entity “who by any direct or indirect action, conduct or practice enforces

or attempts to enforce an obligation that is owed or due, or alleged to be owed or

due, by a consumer as a result of a consumer credit transaction.” RSA § 358-C:1,

VIII(a). ECMC argues that it is not a “debt collector” under FDCPA and so cannot

be a “debt collector” under UDUCPA. However, UDUCPA’s definition of “debt

collector” is “substantially broader” than FDCPA’s. Doucette v. GE Capital Retail

Bank, No. 14-CV-012-LM, 2014 WL 4562758, at *3 (D.N.H. Sept. 15, 2014). Since

the Estes have plausibly alleged that ECMC is a “debt collector” under FDCPA, it

follows that their allegations under UDUCPA are sufficient.

17 Turning to the third element, ECMC argues the Estes have failed to

adequately plead that ECMC committed any acts prohibited by UDUCPA.

Plaintiffs’ complaint does not specify which section of UDUCPA was violated. But

the Estes allege ECMC purposely misrepresented its relationship to Alia’s loan,

made false statements about Alia’s payment history, told the Estes the loan was in

default when no formal default proceeding had occurred, added unsubstantiated

fees, refused to communicate with them, fabricated documents, and used the

fraudulent documents to seize plaintiffs’ tax return. These alleged acts implicate

several provisions of UDUCPA. See RSA 358-C:3 I(d), IV(d), VII, VIII, X. Accepting

plaintiffs’ factual allegations as true and drawing reasonable inferences in their

favor, the court easily concludes that the Estes have plausibly alleged ECMC

engaged in conduct that violates UDUCPA. ECMC’s motion to dismiss Count I is

denied.9

9 ECMC further argues that Count I should be dismissed as to Charles

because (1) Charles’ alleged damages are outside of UDUCPA’s protection and (2) RSA 358-C:4 indicates that an aggrieved debtor may bring a suit—not their spouse. As to ECMC’s first contention, whether Charles has suffered compensable damages is not an issue that may be resolved at this stage of the litigation. Charles has pled damages under UDUCPA and the court is required to assume the truth of the plaintiffs’ allegations. See In re Fiddler Gonzalez & Rodriguez, P.S.C., 415 F. Supp. 3d 297, 302 (D.P.R. 2019). As to their second contention, UDUCPA contemplates that an an action may be brought “on behalf of an individual debtor.” RSA 358-C:4, I(a). Thus, ECMC’s contention is misplaced.

18 C. Count III: Violation of New Hampshire’s Criminal Fraud Statute

In Count III, the Estes allege defendants violated New Hampshire’s criminal

fraud statute, RSA 638:1-29, by fabricating documents and presenting a loan

application from an unrelated company as a promissory note to ECMC.10

Defendants move to dismiss, arguing that New Hampshire’s criminal fraud statute

does not include a private cause of action.

If a New Hampshire criminal statute does not have an express provision

allowing for a private right of action, the purpose and language of the statute must

compel the inference that the legislature intended violation of the statute to give

rise to civil liability. See Marquay v. Eno, 139 N.H. 708, 713 (1995). Here, RSA

638:1-29 does not expressly allow for a private right of action and the language of

the statute does not imply that the legislature intended for violation of the statute

to give rise to civil liability. Cf. Rikos v. Procter & Gamble Co., No. 1:11-CV-226,

2013 WL 360330, at *3 (S.D. Ohio Jan. 30, 2013) (finding no private right of action

under RSA 638:6, the Deceptive Business Practices section of New Hampshire’s

criminal fraud statute). Finally, the legislature has enacted other statutes that

10 The first page of plaintiffs’ complaint and ¶ 27 of Count III cite RSA 638:1- 29 as the legal basis for this count. However, in ¶ 26 of Count III, the Estes also cite HEA and 15 U.S.C. § 1681(a), the “Congressional Findings and Statement of Purpose” section of the Fair Credit Reporting Act (“FCRA”). ECMC proceeds in its motion to dismiss as if Count III is brought under RSA 638:1-29. The Estes do not address this discrepancy in their objection. With respect to HEA, there is no private cause of action under that statute. See supra at 9. With respect to FCRA, the Estes have failed to identify any section of that statute that ECMC purportedly violated. The court therefore limits its analysis of Count III to whether it states a claim under RSA 638:1-29.

19 allow civil plaintiffs to bring actions for damages and equitable relief against those

who engage in unfair or deceptive conduct in the course of trade and commerce, see

RSA 358-A:2, -A:10, or debt collectors who attempt to collect debts in an “unfair,

deceptive or unreasonable manner,” RSA 358-C:2, -C:4. For these reasons, the court

concludes that there is no private right of action under RSA 638:1-29. Count III is

therefore dismissed.

D. Count IV: Violation of FDCPA11

In Count IV, the Estes allege ECMC violated 15 U.S.C. § 1692f(6)12 when it

seized plaintiffs’ $2,970 tax return.13 That provision prohibits a “debt collector” from

using “unfair or unconscionable means to collect or attempt to collect any debt,” and

defines the following conduct to be a violation:

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if-- (A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

11 The first page of plaintiffs’ complaint cites both FDCPA and HEA as the

legal basis for this count. However, in ¶ 28 of Count IV, the Estes only cite FDCPA. ECMC proceeds in its motion to dismiss as if plaintiffs bring this only under HEA. The Estes do not address this discrepancy in their objection. With respect to HEA, the court has held, supra at 9, that there is no private cause of action under that statute. The court therefore limits its analysis of Count IV to whether it states a claim under FDCPA.

12 Plaintiffs’ complaint cites 15 USC § 1692a(6).This appears to be a scrivener’s error as the language the Estes quote and rely on is from 15 U.S.C. § 1692f(6).

13 The conduct at issue in this claim, ECMC’s seizure of plaintiffs’ 2018 tax

return, appears to be the same conduct at issue in Count II. ECMC’s motion to dismiss does not argue Count IV is duplicative of Count II.

20 (B) there is no present intention to take possession of the property; or (C) the property is exempt by law from such dispossession or disablement.

15 U.S.C. § 1692f(6). ECMC moves to dismiss on the grounds that this statute has

no private right of action. However, FDCPA's private-enforcement provision,

§ 1692k, authorizes any aggrieved person to recover damages from “any debt

collector who fails to comply with any provision” of FDCPA. 15 U.S.C. § 1692k(a).

Therefore, Count IV may proceed under FDCPA.

II. Estes’ Motion to Dismiss

ECMC asserts four counterclaims against the Estes. Three of the

counterclaims are brought against Alia: Breach of Contract (Count I); Quantum

Meruit (Count II); and Unjust Enrichment (Count III). ECMC asserts the fourth

counterclaim against both plaintiffs under the New Hampshire Consumer

Protection Act, RSA 358-A (“CPA”) (Count IV). Before the court considers each

counterclaim in turn, the court briefly recites the relevant facts as alleged by

ECMC.

ECMC alleges that Alia’s loan was originally guaranteed by CSAC and

serviced by Navient. In November 2010, the DOE assigned the CSAC loan portfolio

to ECMC, at which point ECMC became the new guaranty agency for Alia’s loan.

Alia made 171 monthly payments, totaling $29,544.25, and then received a six-

month forbearance which expired on February 14, 2016. Alia made no payments

21 after the forbearance expired. When the loan became more than 270 days past due,

it entered default and Navient filed a default claim. ECMC, as the guaranty agency

for the loan, paid the lender the balance of the default claim: $15,325.03. Because

Alia’s loan has an interest rate of 8.25%, as of August 2019, the loan balance had

grown to approximately $18,500.

The Estes move to dismiss all four counterclaims under Federal Rule of Civil

Procedure 12(b)(6). The Estes also argue that ECMC’s counterclaims are “frivolous

and brought forth in bad faith as retaliation for being sued.” Doc. no. 24 at 3. The

court discusses ECMC’s four counterclaims below.

A. Count I: Breach of Contract

The purported contract at issue in this counterclaim is the promissory note

that Alia signed in March 2001 when she applied for her federal consolidation loan.

ECMC argues that when Alia signed the promissory note, she agreed to pay the

loan plus interest, other applicable fees, and the cost of collecting on her debt.

ECMC asserts that Alia materially breached the terms of this agreement when she

failed to pay back her defaulted loan.

The Estes move to dismiss, arguing that the purported “promissory note” is

only a loan application, and not a contract, because it “lacks terms of an actual

agreement” such as the “interest rate, length of term, amount to be funded, total

amount to be repaid and/or monthly payment amounts.” Doc. no. 24 at 6. The Estes

22 also argue that, even if the promissory note is a contract, ECMC cannot bring its

breach of contract claim because it was not a party to the promissory note.

In order to state a breach of contract claim under New Hampshire law, a

plaintiff “must allege sufficient facts to show (1) that a valid, binding contract

existed between the parties, and (2) that [defendant] breached the terms of the

contract.” Wilcox Indus. Corp. v. Hansen, 870 F. Supp. 2d 296, 311 (D.N.H. 2012).

For a valid contract to exist, there must be “offer, acceptance, consideration, and a

meeting of the minds.” Durgin v. Pillsbury Lake Water Dist., 153 N.H. 818, 821

(2006). “A breach of contract occurs when there is a failure without legal excuse, to

perform any promise which forms the whole or part of a contract.” Poland v.

Twomey, 156 N.H. 412, 415 (2007) (internal quotation marks omitted).

ECMC did not attach the loan application/promissory note to its answer and

counterclaims; however, ECMC attached the document to its motion to dismiss

plaintiffs’ claims. See doc. no. 23-2. The court may consider the document at this

stage of the case because ECMC’s counterclaim explicitly relies upon the document

and neither party disputes its authenticity. See Ironshore, 871 F.3d at 135.

“A promissory note is a contract to which basic principles of contract law

apply.” De Gaetano v. Lapinski, Civ. No. 08-294-B-W, 2009 WL 1032856 (D. Me.

Apr. 16, 2009); see Turner v. Shared Towers VA, LLC, 167 N.H. 196, 202-03 (2014).

The one-page document attached to ECMC’s motion to dismiss is titled “Federal

Consolidation Loan Application and Promissory Note,” has a section on “Repayment

23 Options,” has another section titled “Promissory Note” that states “THIS IS A

LOAN THAT MUST BE REPAID,” and ends with the signature of an “Alia G.

Maxwell” on the “borrower’s signature” line. Doc. no. 23-2. Accepting the facts in

ECMC’s counterclaim as true and construing them in the light most favorable to

ECMC, the court concludes it is plausible that Alia’s loan application constitutes a

contract that Alia breached by failing to make loan payments.

The Estes next argue the court should dismiss ECMC’s breach of contract

claim because ECMC was not a party to the contract at issue. Under New

Hampshire law, as a general rule, a non-party to a contract has no remedy for

breach of the contract. See Sunapee Difference, LLC v. State, 164 N.H. 778, 784

(2013). ECMC acknowledges that it was not originally a party to the promissory

note, but alleges that it stepped into the shoes of the original guarantor after the

DOE assigned it the loan in November 2010. At this stage, ECMC has plausibly

alleged it has standing to bring this claim for breach of contract. After discovery, the

factual record will be clearer with regard to ECMC’s relationship to the loan and

the parties may revisit this issue at summary judgment. The court denies plaintiffs’

motion to dismiss counterclaim I.

24 B. Counts II and III: Quantum Meruit and Unjust Enrichment14

ECMC alleges Alia received a benefit in the form of the loan, that ECMC paid

a default claim after Alia stopped making payments on the loan, and that it would

therefore be unjust if Alia did not repay ECMC. ECMC argues it is entitled to

recover the amount of its default payment plus interest, costs, expenses and

attorneys’ fees under two quasi-contractual theories: quantum meruit and unjust

enrichment.

“Quantum meruit is a restitutionary remedy intended for use by contracting

parties who are in material breach and thus unable to sue on contract.” R. J. Berke

& Co., Inc. v. J.P. Griffin, Inc., 116 N.H. 760, 764 (1976) (internal quotation marks

omitted). A valid claim in quantum meruit requires that: “(1) services were

rendered to the defendant by the plaintiff; (2) with the knowledge and consent of

the defendant; and (3) under circumstances that make it reasonable for the plaintiff

to expect payment.” Gen. Insulation Co. v. Eckman Constr., 159 N.H. 601, 612

(2010) (internal quotation marks omitted).

14 At this point, because the parties dispute whether ECMC had a contractual

relationship with the Estes, ECMC may plead breach of contract claims (Count I) and quasi-contractual claims (Counts II and III) in the alternative. Cf. Androscoggin Valley Reg'l Refuse Disposal Dist. v. R.H. White Constr. Co., No. 15- CV-434-LM, 2017 WL 1906612, at *5 (D.N.H. May 8, 2017) (dismissing quasi- contractual quantum meruit and unjust enrichment claim because parties acknowledged their relationship was governed by a contractual agreement); Turner, 167 N.H. at 202 (finding that equitable remedies such as unjust enrichment were not available when the parties’ relationship was controlled by an express contract). If the parties learn through discovery that the parties’ relationship was contractual, then these equitable remedies may not be available. The parties may revisit this issue after discovery.

25 “A plaintiff is entitled to restitution for unjust enrichment if the defendant

received a benefit and it would be unconscionable for the defendant to retain that

benefit.” Nat'l Emp’t Serv. Corp. v. Olsten Staffing Serv., Inc., 145 N.H. 158, 163

(2000). “The party seeking restitution must establish not only unjust enrichment,

but that the person sought to be charged had wrongfully secured a benefit or

passively received one which it would be unconscionable to retain, and unjust

enrichment generally does not form an independent basis for a cause of action.”

Gen. Insulation Co., 159 N.H. at 611 (quoting 42 C.J.S. Implied Contracts § 10, at

17 (2007)). Damages for unjust enrichment are “measured by the value of what was

inequitably retained” whereas, in quantum meruit, the damages “are based on the

value of the services provided by the plaintiff.” Id. at 612.

Plaintiffs’ motion to dismiss ECMC’s counterclaims appears to be premised

on their assertion that ECMC lacks a sufficient relationship to the loan to recover

under either a contractual or quasi-contractual claim. However, because ECMC

alleges that it paid the default claim on Alia’s loan, the court concludes it is

plausible that Alia received a benefit that makes her liable to ECMC under a quasi-

contractual theory. The court therefore denies plaintiffs’ motion to dismiss

counterclaims II and III.

C. Count IV: New Hampshire’s CPA

ECMC argues the Estes have engaged in an unfair method of competition or

deceptive trade practice in violation of CPA,

26 RSA 358-A, by repeatedly demanding that ECMC prove that it is entitled to

payment. ECMC asserts the Estes are trying to force ECMC to abandon its claim

because doing so would be less expensive than the cost of defense or collection.

ECMC asserts that because plaintiffs’ complaint states Charles is acting on behalf

of his business, OEM-Tech, this case has a sufficient nexus to commerce to support

a CPA claim. The Estes move to dismiss on the grounds that this counterclaim is

retaliatory and that their conduct does not violate any provision of the CPA.

The CPA provides in relevant part that “[i]t shall be unlawful for any person

to use any unfair method of competition or any unfair or deceptive act or practice in

the conduct of any trade or commerce within this state.” RSA 358-A:2. In addition to

this general proscription, the CPA sets forth a list of specific types of conduct that

qualify as unfair or deceptive trade practices. See id. The CPA defines “trade” and

“commerce” as including “the advertising, offering for sale, sale, or distribution of

any services and any property, tangible or intangible, real, personal or mixed, and

any other article, commodity, or thing of value wherever situate.” RSA 358–A:1, II.

The New Hampshire Supreme Court has observed that the general

proscription of the CPA “is broadly worded, and not all conduct in the course of

trade or commerce falls within its scope.” State v. Moran, 151 N.H. 450, 452 (2004).

To determine whether a commercial action that is not specifically delineated is

covered by the CPA’s general proscription, New Hampshire uses a “rascality test.”

Id. “Under the rascality test, the objectionable conduct must attain a level of

27 rascality that would raise an eyebrow of someone inured to the rough and tumble of

the world of commerce.” Id. (internal quotation marks omitted).

Here, even assuming ECMC has plausibly alleged plaintiffs’ conduct has the

requisite connection to commerce, the court concludes ECMC has failed to plausibly

allege that conduct constitutes an “unfair or deceptive act or practice.” RSA 358-A:2.

ECMC does not attempt to fit plaintiffs’ conduct into any of the specific categories

enumerated in the Act and none of the categories seem to apply. Although ECMC

may find plaintiffs’ repeated demands for information to be objectionable, “selfish

bargaining and business dealings will not be enough to justify a claim for damages”

under the CPA. Barrows v. Boles, 141 N.H. 382, 390 (1996). In addition, “[a]n

ordinary breach of contract claim does not present an occasion for the remedies

under the Consumer Protection Act.” Id. ECMC has failed to plausibly allege that

plaintiffs’ conduct rises to the level of rascality that would “raise an eyebrow of

someone inured to the rough and tumble world of commerce.” Moran, 151 N.H. at

452 (internal quotation marks omitted). For these reasons, the court dismisses

counterclaim IV.

CONCLUSION

For the foregoing reasons, ECMC’s motion to dismiss (doc. no. 23) is granted

in part and denied in part: the motion is granted as to Count III and the portion of

Count II that alleges a claim under HEA, but is otherwise denied. Plaintiffs’ motion

28 to dismiss (doc. no. 24) is granted in part and denied in part: the motion is granted

as to claim IV, but is otherwise denied.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

September 16, 2020

cc: Counsel of Record.