UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Charles R. Estes et al
v. Civil No. 19-cv-822-LM Opinion No. 2021 DNH 003 P ECMC Group, Inc.
ORDER
Pro se plaintiffs Charles R. Estes (d/b/a OEM-Tech) and Alia G. Estes bring
this action against defendant Education Credit Management Corporation
(“ECMC”), alleging that ECMC violated federal and state laws in attempting to
collect Alia’s student loan debt. Presently before the court is plaintiffs’ motion for a
ruling of default (doc. no. 45). Plaintiffs assert that ECMC committed a fraud on
the court by falsifying evidence and seek the entry of a default judgment as a
sanction. ECMC objects and seeks an award of costs and attorneys’ fees incurred in
responding to plaintiffs’ motion (doc. no. 48). For the following reasons, the court
denies plaintiffs’ motion as well as ECMC’s request for costs and attorneys’ fees.
DISCUSSION
The court first addresses the plaintiffs’ motion for a ruling of default, then
turns to ECMC’s request for costs and attorneys’ fees. I. Plaintiffs’ Motion for Default
The court has inherent authority to enter a default judgment to sanction a
litigant who commits a fraud on the court. Aoude v. Mobil Oil Corp., 892 F.2d 1115,
1119 (1st Cir. 1989). However, plaintiffs “must surmount a ‘high bar’ to obtain
relief for [a] fraud on the court.” Glenwood Farms, Inc. v. O’Connor, 666 F. Supp. 2d
154, 177 (D. Me. 2009) (quoting United States v. 6 Fox St., 480 F.3d 38, 46 (1st Cir.
2007)); see also 6 Fox. St., 480 F.3d at 47 (“Even such an offense as perjury may not
suffice—instead the type of conduct that would qualify as ‘fraud on the court’ must
be something on the order of bribing a judge.”).
To demonstrate that ECMC committed a fraud on the court, plaintiffs must
show by clear and convincing evidence that ECMC intentionally engaged in an
unconscionable attempt to improperly influence the court or unfairly hamper
plaintiffs’ case. See Aoude, 892 F.2d at 1118; see also, e.g., Hull v. Mun. of San
Juan, 356 F.3d 98, 102 (1st Cir. 2004) (plaintiff committed a fraud on the court
because he “lie[d] substantially and materially in the course of discovery”).
Although entry of default “need not be preceded by other, less drastic sanctions, it is
an extreme remedy, and should not lightly be engaged.” Aoude, 892 F.2d at 1118.
Indeed, because entry of a default judgment “sounds ‘the death knell of the lawsuit,’
district courts must reserve such strong medicine for instances where the defaulting
party’s conduct is correspondingly egregious.” Id. (quoting Damiani v. Rhode Island
Hosp., 704 F.2d 12, 17 (1st Cir. 1983)).
2 Plaintiffs assert that the court should enter a default judgment against
ECMC because ECMC: (1) fabricated documents relating to Alia’s student loan; (2)
presented false testimony a sworn affidavit from an ECMC employee; and (3)
entered false data into the National Student Loan Data System (“NSLDS”). See
doc. no. 45 at 5. The court addresses these contentions in turn.
A. Fabricated Documents
In November 2017—prior to commencement of this action—plaintiffs
corresponded with ECMC by requesting that ECMC substantiate its claim that it
was the guarantor of Alia’s student loan. ECMC responded by, among other things,
producing various documents, including a document that ECMC claimed was a
summary of Alia’s loan, and another document that ECMC claimed was Alia’s
original loan application.
Plaintiffs claim that both documents were falsified. Regarding the loan
summary, plaintiffs claim that ECMC fabricated this document to state that
“ECMC-CA” was the original guarantor of Alia’s loan. Plaintiffs contend that
ECMC admitted it fabricated the loan summary by stating in a subsequent letter
that the California Student Aid Commission (“CSAC”) was the loan’s original
guarantor.1 As for the loan application, plaintiffs assert that ECMC falsified this
1 Plaintiffs also appear to argue that the subsequent letter was fabricated
because it contained “several assertions that the Estes . . . knew to be false.” Doc. no. 45 at 8.
3 document by affixing to it a “True and Exact” stamp in “an attempt to deceive Alia
Estes into accepting this document without questioning its authenticity.” Doc. no.
45 at 7-8. Plaintiffs claim that ECMC committed additional falsification when it
supplied plaintiffs with another copy of the purported loan application in discovery,
this time without the “True and Exact” stamp. As with the loan summary,
plaintiffs claim that ECMC admitted falsification by providing additional
documents contradicting its claim that the loan application bearing the “True and
Exact” stamp was an accurate copy of Alia’s original loan application.
Plaintiffs have failed to show by clear and convincing evidence that ECMC
intentionally fabricated these documents in an attempt to improperly influence the
court or unfairly hamper the plaintiffs’ case. See Aoude, 892 F.2d at 1118. At
bottom, plaintiffs’ claims of falsification boil down to assertions that certain
documents provided by ECMC contain inaccuracies and that the documents
contradict each other. These contentions go to the documents’ accuracy and
reliability; they do not demonstrate by clear and convincing evidence that ECMC
intentionally falsified the documents, let alone that they did so in an attempt to
perpetrate a fraud on the court. See Phinney v. Paulshock, 181 F.R.D. 185, 197-98
(D.N.H. 1998).
Plaintiffs also claim that ECMC fabricated new documents after this court’s
ruling on the parties’ cross-motions to dismiss (doc. no. 34). They claim that ECMC
“altered . . . evidence” in an attempt to shield its collections activities from the
court. Doc. no. 45 at 11. Specifically, they contend that ECMC provided plaintiffs
4 with a new loan summary in discovery that contained headings and information
that differ from the headings and information contained in the November 2017 loan
summary. Plaintiffs note that the original loan summary contains columns for
“Fees Balance,” “Prior Collections Costs,” and “Collections Costs”,” whereas the new
loan summary contains only a column for “Fees and Costs Balance.” Plaintiffs
assert that ECMC altered the titles and number of columns in the new loan
summary to hide its collections activities. Plaintiffs also note that the two loan
summaries contain conflicting information regarding the loan’s principal balance,
among other things.
Plaintiffs fail to demonstrate that ECMC fabricated the new loan summary in
an attempt to deceive the court or unfairly hamper their case. Apart from pointing
out the fact that the two summaries differ in certain respects, plaintiffs offer only
speculation as to the reason that they differ. There is no evidence that ECMC
intentionally altered the loan summary to hide evidence from the court or the
plaintiffs. Thus, plaintiffs have failed to demonstrate by clear and convincing
evidence that ECMC’s production of the new loan summary in discovery amounts to
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Charles R. Estes et al
v. Civil No. 19-cv-822-LM Opinion No. 2021 DNH 003 P ECMC Group, Inc.
ORDER
Pro se plaintiffs Charles R. Estes (d/b/a OEM-Tech) and Alia G. Estes bring
this action against defendant Education Credit Management Corporation
(“ECMC”), alleging that ECMC violated federal and state laws in attempting to
collect Alia’s student loan debt. Presently before the court is plaintiffs’ motion for a
ruling of default (doc. no. 45). Plaintiffs assert that ECMC committed a fraud on
the court by falsifying evidence and seek the entry of a default judgment as a
sanction. ECMC objects and seeks an award of costs and attorneys’ fees incurred in
responding to plaintiffs’ motion (doc. no. 48). For the following reasons, the court
denies plaintiffs’ motion as well as ECMC’s request for costs and attorneys’ fees.
DISCUSSION
The court first addresses the plaintiffs’ motion for a ruling of default, then
turns to ECMC’s request for costs and attorneys’ fees. I. Plaintiffs’ Motion for Default
The court has inherent authority to enter a default judgment to sanction a
litigant who commits a fraud on the court. Aoude v. Mobil Oil Corp., 892 F.2d 1115,
1119 (1st Cir. 1989). However, plaintiffs “must surmount a ‘high bar’ to obtain
relief for [a] fraud on the court.” Glenwood Farms, Inc. v. O’Connor, 666 F. Supp. 2d
154, 177 (D. Me. 2009) (quoting United States v. 6 Fox St., 480 F.3d 38, 46 (1st Cir.
2007)); see also 6 Fox. St., 480 F.3d at 47 (“Even such an offense as perjury may not
suffice—instead the type of conduct that would qualify as ‘fraud on the court’ must
be something on the order of bribing a judge.”).
To demonstrate that ECMC committed a fraud on the court, plaintiffs must
show by clear and convincing evidence that ECMC intentionally engaged in an
unconscionable attempt to improperly influence the court or unfairly hamper
plaintiffs’ case. See Aoude, 892 F.2d at 1118; see also, e.g., Hull v. Mun. of San
Juan, 356 F.3d 98, 102 (1st Cir. 2004) (plaintiff committed a fraud on the court
because he “lie[d] substantially and materially in the course of discovery”).
Although entry of default “need not be preceded by other, less drastic sanctions, it is
an extreme remedy, and should not lightly be engaged.” Aoude, 892 F.2d at 1118.
Indeed, because entry of a default judgment “sounds ‘the death knell of the lawsuit,’
district courts must reserve such strong medicine for instances where the defaulting
party’s conduct is correspondingly egregious.” Id. (quoting Damiani v. Rhode Island
Hosp., 704 F.2d 12, 17 (1st Cir. 1983)).
2 Plaintiffs assert that the court should enter a default judgment against
ECMC because ECMC: (1) fabricated documents relating to Alia’s student loan; (2)
presented false testimony a sworn affidavit from an ECMC employee; and (3)
entered false data into the National Student Loan Data System (“NSLDS”). See
doc. no. 45 at 5. The court addresses these contentions in turn.
A. Fabricated Documents
In November 2017—prior to commencement of this action—plaintiffs
corresponded with ECMC by requesting that ECMC substantiate its claim that it
was the guarantor of Alia’s student loan. ECMC responded by, among other things,
producing various documents, including a document that ECMC claimed was a
summary of Alia’s loan, and another document that ECMC claimed was Alia’s
original loan application.
Plaintiffs claim that both documents were falsified. Regarding the loan
summary, plaintiffs claim that ECMC fabricated this document to state that
“ECMC-CA” was the original guarantor of Alia’s loan. Plaintiffs contend that
ECMC admitted it fabricated the loan summary by stating in a subsequent letter
that the California Student Aid Commission (“CSAC”) was the loan’s original
guarantor.1 As for the loan application, plaintiffs assert that ECMC falsified this
1 Plaintiffs also appear to argue that the subsequent letter was fabricated
because it contained “several assertions that the Estes . . . knew to be false.” Doc. no. 45 at 8.
3 document by affixing to it a “True and Exact” stamp in “an attempt to deceive Alia
Estes into accepting this document without questioning its authenticity.” Doc. no.
45 at 7-8. Plaintiffs claim that ECMC committed additional falsification when it
supplied plaintiffs with another copy of the purported loan application in discovery,
this time without the “True and Exact” stamp. As with the loan summary,
plaintiffs claim that ECMC admitted falsification by providing additional
documents contradicting its claim that the loan application bearing the “True and
Exact” stamp was an accurate copy of Alia’s original loan application.
Plaintiffs have failed to show by clear and convincing evidence that ECMC
intentionally fabricated these documents in an attempt to improperly influence the
court or unfairly hamper the plaintiffs’ case. See Aoude, 892 F.2d at 1118. At
bottom, plaintiffs’ claims of falsification boil down to assertions that certain
documents provided by ECMC contain inaccuracies and that the documents
contradict each other. These contentions go to the documents’ accuracy and
reliability; they do not demonstrate by clear and convincing evidence that ECMC
intentionally falsified the documents, let alone that they did so in an attempt to
perpetrate a fraud on the court. See Phinney v. Paulshock, 181 F.R.D. 185, 197-98
(D.N.H. 1998).
Plaintiffs also claim that ECMC fabricated new documents after this court’s
ruling on the parties’ cross-motions to dismiss (doc. no. 34). They claim that ECMC
“altered . . . evidence” in an attempt to shield its collections activities from the
court. Doc. no. 45 at 11. Specifically, they contend that ECMC provided plaintiffs
4 with a new loan summary in discovery that contained headings and information
that differ from the headings and information contained in the November 2017 loan
summary. Plaintiffs note that the original loan summary contains columns for
“Fees Balance,” “Prior Collections Costs,” and “Collections Costs”,” whereas the new
loan summary contains only a column for “Fees and Costs Balance.” Plaintiffs
assert that ECMC altered the titles and number of columns in the new loan
summary to hide its collections activities. Plaintiffs also note that the two loan
summaries contain conflicting information regarding the loan’s principal balance,
among other things.
Plaintiffs fail to demonstrate that ECMC fabricated the new loan summary in
an attempt to deceive the court or unfairly hamper their case. Apart from pointing
out the fact that the two summaries differ in certain respects, plaintiffs offer only
speculation as to the reason that they differ. There is no evidence that ECMC
intentionally altered the loan summary to hide evidence from the court or the
plaintiffs. Thus, plaintiffs have failed to demonstrate by clear and convincing
evidence that ECMC’s production of the new loan summary in discovery amounts to
a fraud on the court. See Aoude, 892 F.2d at 1118.
B. Presenting False Testimony in an Affidavit
ECMC previously filed a motion to dismiss in this litigation. In support of its
motion, ECMC submitted an affidavit prepared by Colleen Yanez, Litigation
Specialist for ECMC. Doc. no. 23-1. Yanez states in the affidavit that the same
5 loan application plaintiffs claim ECMC fabricated is “a true and accurate copy” of
Alia’s original loan application. Id. at ¶ 12. As with plaintiffs’ claim that ECMC
fabricated documents, plaintiffs state that ECMC’s submission of Yanez’s affidavit
entitles plaintiffs to a default judgment because the affidavit is contradicted by
other documents. However, while plaintiffs may take issue with the affidavit’s
accuracy or reliability, they have failed to demonstrate by clear and convincing
evidence that ECMC submitted it in an unconscionable attempt to improperly
influence the court or hamper plaintiffs’ case. See Aoude, 892 F.2d at 1118.
C. Entering False Data in NSLDS
NSLDS is the United States Department of Education’s database for student
aid. It receives data on student loans from various sources, including guaranty
agencies, and provides centralized access to loan information. Plaintiffs allege that
ECMC falsified NSLDS by altering the database to state that “ECMC-CA” was the
original guarantor of Alia’s loan. However, plaintiffs submit no evidence, apart
from speculation, in support of this contention. They have therefore failed to
demonstrate that ECMC committed a fraud on the court by falsifying NSLDS. See
Aoude, 892 F.2d at 1118.
6 D. Conclusion
Because the plaintiffs have failed to demonstrate that ECMC committed a
fraud on the court, the court declines to sanction ECMC by entering a default
judgment. Plaintiffs’ motion for a ruling of default is denied.
II. ECMC’s Request for Attorney’s Fees
ECMC seeks an award of costs and attorneys’ fees it incurred in responding
to plaintiffs’ motion for a default judgment. Generally, “attorneys’ fees are not
recoverable by a party unless statutorily or contractually authorized.” Mullane v.
Chambers, 333 F.3d 322, 337 (1st Cir. 2003). However, a court has the inherent
power to award attorneys’ fees against a party that has “acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.” Whitney Bros. Co. v. Sprafkin, 60
F.3d 8, 13 (1st Cir. 1995) (quoting Chambers v. NASCO, Inc., 501 U.S. 42, 45-46
(1991)). The court must exercise great restraint in awarding attorneys’ fees for bad
faith conduct, and should award fees only sparingly and for egregious
circumstances. Mullane, 333 F.3d at 338 (quotation omitted).
Here, the court does not find that these pro se plaintiffs filed their motion for
default in bad faith or for vexatious, wanton, or oppressive reasons. Plaintiffs state
that they had concerns about the accuracy of ECMC’s litigation materials and that
they contacted the American Bar Association for direction as to how to make the
court aware of their concerns. According to plaintiffs, it was suggested that a
motion for default may be an appropriate procedural mechanism to bring this issue
7 to the court’s attention. In these circumstances, the court finds that these pro se
plaintiffs acted in good faith. ECMC’s request for costs and attorneys’ fees is
therefore denied.
CONCLUSION
Plaintiffs’ motion for a ruling of default (doc. no. 45) is denied, as is ECMC’s
request for costs and attorneys’ fees incurred in responding to plaintiffs’ motion
(doc. no. 48).
SO ORDERED.
__________________________ Landya McCafferty United States District Judge
January 6, 2021
cc: Chares R. Estes, pro se Alia G. Estes, pro se Counsel of Record.