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Edna Benis, Pamela Sites, Todd Marek v. Sallie Mae

August 24, 2011

EDNA BENIS, PAMELA SITES, TODD MAREK, PLAINTIFFS,
v.
SALLIE MAE, INC., ALLIANCE ONE, INC., WINDHAM PROFESSIONALS INC., ALLIANCE ONE, INC., DOING BUSINESS AS ALLIANCE ONE RECEIVABLES MANAGEMENT, INC., OXFORD MANAGEMENT SERVICES, DEFENDANTS.



The opinion of the court was delivered by: United States District Judge Hon. Otis D. Wright, II

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PURSUANT TO RULE 12(b)(6) [93]

I. INTRODUCTION

Currently before the Court is Defendant, Sallie Mae, Inc.'s, Motion to Dismiss Plaintiffs Pamela Sites, Edna Benis and Todd Marek's (collectively known as "Plaintiffs") Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 93.) The Court deems the matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. For the following reasons, the Court GRANTS in part, and DENIES in part, Sallie Mae's Motion.

II. BACKGROUND

Todd Marek ("Marek" or "Plaintiff"), attended Brooks Institute of Photography ("Brooks") from July 2004 through August 2007. (SAC ¶¶ 1, 5.) To finance his education, Marek obtained six private student loans from Defendant Sallie Mae ("Sallie Mae"), two of which were co-signed by Edna Benis (Marek's grandmother), and three of which were co-signed by Pamela Sites (Marek's mother). (SAC ¶¶ 5, 11-13.) Allegedly, Sallie Mae placed Pamela Site's signature on the loan documents without her permission. (SAC ¶ 27.) The initial principal of the six loans allegedly totaled $120,445. (SAC ¶ 1.)

Plaintiffs allege that during the "Interim Period,"*fn1 the time during which no payments were due on the loans, Sallie Mae sent letters to Plaintiffs that unilaterally changed the loans' contractual terms and failed to explain the potential impact capitalized interest could have on the loans.*fn2 In fact, once the "Repayment Period" began, Capitalized Interest was added to the principal, and by September 2008, the balance of the loans rose to $168,418. (SAC ¶ 23.) Marek was unable to make payments on the loans after the increases and soon defaulted. (SAC ¶ 24.) The loans were then allegedly sold to Alliance One, Inc. ("Alliance"), Windham Professionals, Inc. ("Windham") and Oxford Management Services ("Oxford" collectively known as "Debt Collectors"). (SAC ¶ 24.) Plaintiffs allege around September 22, 2009, Edna Benis paid $14,667 to Sallie Mae, through Alliance, as payment in full for two of the loans. (SAC ¶ 25.)

However, Plaintiffs allege, Alliance still attempted to collect on the two loans after Edna Benis made the September 22nd payment. (SAC ¶ 29.)

III. LEGAL STANDARD

A. Rule 12(b)(6)

"To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint generally must satisfy only the minimal notice pleading requirements of Rule 8(a)(2)." Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). Rule 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Mere "labels and conclusions" or a "formulaic recitation of the elements of a cause of action will not do." Id. Rather, to overcome a 12(b)(6) motion, "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, 129 S.Ct. 1937, 1949 (2009) (internal quotations omitted). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement of relief." Id. (citation and quotations omitted).

B. Rule 9

"In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b). The allegations must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). The required specificity includes the "time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citations omitted).

IV. DISCUSSION

Sallie Mae seeks to dismiss Plaintiffs' second cause of action - breach of contract, as well as Plaintiff's first cause of action - fraud and deceit. Each ...


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