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Winne v. National Collegiate Student Loan Trust 2005-1

United States District Court, D. Maine

January 11, 2017




         The Plaintiff, Jane C. Forrester Winne, moves pursuant to Federal Rule of Civil Procedure 15(a)(2) to amend her complaint for a second time. ECF No. 64. The Proposed Second Amended Complaint adds three plaintiffs, seventeen defendants, and three causes of action, in addition to providing additional information in support of class certification. Id. at 1. Defendants Citizens Bank, N.A.[1] (“Citizens”), U.S. Bank National Association (“US Bank”), PNC Bank, N.A. (“PNC”), National Collegiate Student Loan Trust 2005-1 (“NCSLT 2005-1”), National Collegiate Student Loan Trust 2005-3 (“NCSLT 2005-3”), Transworld Systems, Inc. (“Transworld”), and Turnstile Capital Management, LLC (“Turnstile”) oppose the motion. ECF No. 71; ECF No. 72, ECF No. 73; ECF No. 74. Oral argument on the motion was held before me on November 17, 2016.

         I. BACKGROUND

         Winne's First Amended Complaint centered on debt collection activities related to two private student loans that Winne allegedly took out in 2004 and 2005. She contends that NCSLT 2005-1 and NCSLT 2005-3 are attempting to collect on these loans, having purportedly acquired them from Citizens and PNC, respectively. Winne denies receiving the proceeds from the loans and claims she has never made a payment toward either loan. She seeks to certify the suit as a class action on behalf of “vulnerable Maine students who are being unlawfully pursued on alleged private student loan debts they do not owe, were fraudulently procured, or both.” ECF No. 3 at 2.

         The proposed Second Amended Complaint would join three additional plaintiffs who also claim to have been the subjects of debt collection efforts related to private student loans allegedly owned by various National Collegiate Student Loan Trusts (“NCSLTs”). It would add fifteen NCSLTs as defendants, as well as Wilmington Trust Company, a statutory trust that is allegedly an owner trustee of the NCSLTs, and The First Marblehead Corporation, a company that is alleged to have served as Administrator to the NCSLTs. The Proposed Second Amended Complaint also includes new causes of action for fraud, fraudulent concealment, and breach of contract.

         Three of the defendants named in the First Amended Complaint-Citizens, PNC, and U.S. Bank-moved to dismiss the claims against them. I have addressed those motions in a separate order, dated January 11, 2017, that grants dismissal as to Citizens and PNC, and denies dismissal as to U.S. Bank. See ECF No. 109.


         A. Legal Standard

         After the time for amendments as a matter of course has passed, a party may amend its pleading with leave of the court, which should be freely given “when justice so requires.” Fed.R.Civ.P. 15(a)(2). Accordingly, leave to amend should be granted where there is no “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); see also Chiang v. Skeirik, 582 F.3d 238, 244 (1st Cir. 2009). If leave to amend is sought before discovery is complete and neither party has moved for summary judgment, a proposed amendment will be denied if the amendment fails to state a claim and is, therefore, futile. See Hatch v. Dept. for Children, Youth and Their Families, 274 F.3d 12, 19 (1st Cir. 2001). “Futility” is gauged by the criteria of Federal Rule of Civil Procedure 12(b)(6) governing motions to dismiss for failure to state a claim. Id.

         To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In considering the merits of a motion to dismiss, the Court must accept as true all well-pleaded factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Gargano v. Liberty Intern. Underwriters, Inc., 572 F.3d 45, 48 (1st Cir. 2009). The complaint must contain facts that support a reasonable inference “that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “If the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quotation and internal citations omitted).

         Allegations of fraud and fraudulent concealment are subject to the higher pleading standard of Federal Rule of Civil Procedure Rule 9(b). See Fed. R. Civ. P. 9(b). The complaint must “be specific about the ‘time, place, and content of an alleged false representation[.]'” Murtagh v. St. Mary's Reg'l Health Ctr., 2013 WL 5348607, at *6 (D. Me. Sep. 23, 2013) (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985)). Mere conclusory allegations will not satisfy the particularity requirement. See Hayduk, 775 F.2d at 444. Rule 9(b) also requires that plaintiffs identify a basis for inferring scienter on the part of the defendant. N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009).

         B. Citizens' Objection

         Citizens objects to Winne's motion to amend the complaint on the ground that the amendment would be futile. ECF No. 71 at 6. Citizens claims that none of the causes of action asserted against it in the Proposed Second Amended Complaint state a claim sufficient to survive a motion to dismiss under Rule 12(b)(6). Id. Winne and the additional plaintiffs propose claims against Citizens under the Truth in Lending Act, 15 U.S.C.A. § 1601, et seq., and the Maine Unfair Trade Practices Act, 5 M.R.S.A. § 205-A, et seq. (2016), as well as common law claims alleging fraud, fraudulent concealment, and breach of contract. ECF No. 64-1 at 45-50.

         1. Truth in Lending Act (“TILA”) and Maine Unfair Trade Practices Act (“MUTPA”)

         I analyzed the claims against Citizens under TILA and the MUTPA in my separate order on Citizens' motion to dismiss, and found that the TILA claim is time-barred by the statute of limitations and the MUTPA claim may not be asserted against a bank such as Citizens. ECF No. 109 at 2-6. There is nothing contained in the proposed Second Amended Complaint that changes this analysis. Accordingly, with respect to the TILA and MUTPA claims asserted against Citizens, Winne's motion to amend the complaint is denied as futile.

         2. Fraud

         To state a claim for fraud under Rule 9(b), the Plaintiffs must plead facts which, if true, would demonstrate that Citizens made a false statement of material fact, with knowledge of its falsity or reckless disregard for its truth or falsity, with the purpose of inducing the Plaintiffs to rely on the statement, and the Plaintiffs must have in fact justifiably relied on it and suffered damages. See Rutland v. Mullen, 2002 ME 98, ¶ 14, 798 A.2d 1104.

         The only statement alleged in the proposed Second Amended Complaint that can be attributed to Citizens is the disclaimer on the Loan Request/Credit Agreement, which states that the loan agreement is a consumer credit transaction. ECF No. 64-1 at 30, ¶ 203. Plaintiffs claim that this statement is false, because the loans were in fact “pipeline loans feeding a huge commercial beast, ” rather than consumer transactions. Id. at 48, ΒΆ 311. This metaphor appears to refer to loans ...

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