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United States District Court, Northern District of California, San Francisco Division

July 28, 2003


The opinion of the court was delivered by: Susan Illston, United States District Court Judge


Louis A. Piccone ("Piccone"), plaintiff, and the United States of America, Department of Education ("Education"), defendant, hereby stipulate and agree as follows:


A. On November 8, 1991, Piccone executed two promissory notes (the "Student Loans") for attendance at George Washington University Law School. The first loan was a "Stafford" loan in the principal amount of $7,500. The second was a "Supplemental Loan for Students" in the principal amount of $4,000. The Student Loans were made by Norwest Bank and underwritten by Great Lakes Higher Education Guaranty Corporation ("Great Lakes").

B. Piccone made payments on the Student Loans when they came due, but on or about September 1998, the loans became delinquent and entered a default status. In 2001, Great Lakes assigned the defaulted loans to Education.

C. Piccone maintains in the Complaint and Demand for Jury Trial filed on January 6, 2003 (the "Complaint"), that after making payments for approximately six years, he accepted an invitation by Sallie Mae, a servicer on the loans, to pay his Student Loan electronically. He further alleges that Salle Mae failed to withdraw his payment electronically, his Student Loans went into default, and that default status was thereafter reported by Sallie Mae and Education to various credit reporting agencies. Piccone seeks damages for violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., defamation, and breach of contract.

D. Education denies that it is liable to Piccone on any theory set forth in the Complaint or on any other theory.


1. Payment of Student Loans

Contemporaneously with the execution of this Settlement Agreement, plaintiff Piccone shall pay to defendant Education the sum $10,556.00 by cashier's check or money order made payable to the United States Treasury. Payment shall be made to the United States Attorney's Office, 450 Golden Gate Avenue, 10th Floor, do Stephen L. Johnson, AUSA. This payment shall be in full settlement and satisfaction of any and all claims, demands, rights, and causes of action in favor of Education arising under the Student Loans.

2. Credit Report

Defendant Education agrees, within 45 days of receiving the payment required by paragraph 1, to report Piccone's Student Loans as "Paid In Full" (or similar language) to appropriate consumer credit reporting agencies. Education cannot, however, change credit reports that it or any other party or predecessor in interest made prior to the date of this Settlement Agreement, and Piccone fully understands that is so.

3. Dismissal

Piccone shall deliver to defendant's counsel a fully executed Request for Dismissal with prejudice of the above captioned lawsuit at the time he makes the payment required by paragraph 1. A form of Request for Dismissal acceptable to the Education is attached to this Settlement Agreement as Exhibit "A".

4. No Admission of Liability

This Settlement Agreement shall not constitute an admission of liability or fault on the part of the United States, its agents, servants, or employees, and is entered into by both parties for the purpose of compromising disputed claims and avoiding the expenses and risks of litigation.

5. Defense to Subsequent Action

This Settlement Agreement may be pled as a full and complete defense to any subsequent action or other proceeding involving any person or party which arises out of the claims released and discharged by the agreement.

6. Parties Bear Own Costs and Fees

The parties agree that each shall bear its own costs, fees, and expenses in connection with the lawsuit and this Settlement Agreement.

7. Release

Piccone accepts the terms of this Settlement Agreement as full settlement and satisfaction of the above-captioned lawsuit and releases and forever discharges the United States and any and all of its past and present agencies, officials, employees, agents, attorneys, their successors and assigns, from any and all rights, claims, and demands of any kind and nature whatsoever, whether suspected or unsuspected, at law or in equity, known or unknown, arising out of the allegations set forth in plaintiffs pleadings in this action, including any claims for libel, slander, breach of contract or violation of the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.). By this release, however, Piccone does not release any party who acted as servicer or holder of the Student Loans prior to their assignment to Education, including but not limited to Sallie Mae and any collection agency involved in the collection of the Student Loans including but not limited to National Asset Management, Inc.

8. Cal. Code Civ. P. § 1542 Waiver

The provisions of California Civil Code Section 1542 are set forth below:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."
Piccone having been apprized of the statutory language of Civil Code Section 1542, and fully understanding the same, nevertheless elects to waive the benefits of any and all rights he may have pursuant to the provision of that statute and any similar provision of federal law. Piccone understands that, if the facts concerning the student loans, plaintiffs alleged injury and the liability of the government for damages pertaining thereto are found hereinafter to be other than or different from the facts now believed by them to be true, the Settlement Agreement shall be and remain effective notwithstanding such material difference.

9. Entire Agreement, No Further Representations or Warranties

This Settlement Agreement shall constitute the entire agreement between the parties, and it is expressly understood and agreed that the Settlement Agreement has been freely and voluntarily entered into by the parties hereto with the full opportunity to obtain the advice of counsel to explain the legal effect of this agreement. The parties further acknowledge that no warranties or representations have been made on any subject other than as set forth in this Settlement Agreement and, in particular, Education has not made any representation to Piccone regarding his ability to repair or improve his credit rating following implementation of this agreement. This Settlement Agreement may not be altered, modified or otherwise changed in any respect except by writing, duly executed by all of the parties or their authorized representatives.





Plaintiff Louis A. Piccone having entered into a Settlement Agreement with the U.S. Department of Education, and the U.S. Department of Education not having answered, by this pleading dismisses defendant U.S. Department of Education as a party defendant, pursuant to Federal Rule of Civil Procedure 41(a)(1), with prejudice.


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