Skelly v. U.S. Department of Education

          ORDER (1) GRANTING Plaintiff's MOTION FOR LEAVE TO PROCEED IFP, AND (2) DENYING PLAINTIFF'S MOTION FOR APPOINTMENT OF COUNSEL.

          Hon. Gonzalo P. Curiel United States District Judge

         On September 20, 2019, Plaintiff Marsha D. Skelly (“Plaintiff”), proceeding pro se, filed the instant action against Defendants U.S. Department of Education, Federal Student Aid Commission, and FedLoan Servicing (“Defendants”). Plaintiff seeks relief from further collection of her student loan debt and the return of money deducted from her Social Security Disability Benefits. (ECF No. 1.)^[1] On September 20, 2019, Plaintiff also filed a motion to proceed in forma pauperis (“IFP”) pursuant to 28 U.S.C. § 1915(a), (ECF No. 2), and a motion for the appointment of counsel. (ECF No. 3.) For the following reasons, the Court GRANTS Plaintiff's motion to proceed IFP, but DENIES the motion for appointment of counsel.

         I. Factual Background

         Plaintiff earned a degree in business administration and accounting in 1988. (ECF No. 1 at 2.) Plaintiff incurred $16, 000 in student loan debt during her studies. (Id.) Plaintiff has been unable to work since 1993 due to physical ailments. (Id.) Plaintiff subsequently filed for Chapter 7 Bankruptcy and asserts her debts were discharged in 1994. (Id.) Plaintiff is unsure if she was afforded the opportunity to request an adversary hearing during her bankruptcy proceedings.^[2] (Id.)

         In 1997, the Social Security Administration awarded Plaintiff disability benefits. (Id.) There was a settlement from which the County of San Diego recovered money Plaintiff owed. (Id.) The U.S. Treasury did not challenge the disbursement of the remaining disability settlement funds from Social Security. (Id.)

         In 2008 and 2013, Plaintiff attempted to discharge her loans due to disability but was denied. (Id.) After contacting a U.S. Department of Education ombudsman in 2013, Plaintiff attempted to consolidate her loans. (Id.) However, the Federal Student Aid Commission contests that the loans were consolidated, and the loan summary shows two sets of loans. (Id.) Plaintiff contends that there is only one set of loans outstanding. (Id.) In March of 2017, Plaintiff spoke to a second ombudsman who noted the account was problematic and referred Plaintiff to a third ombudsman without resolution. (Id.)

         On May 18, 2017, Plaintiff received a letter from the Federal Student Aid Commission. (ECF No. 1-2 at 4-6.) Plaintiff was informed her loans could not have been discharged in bankruptcy without an undue hardship determination from the court and that Plaintiff has not provided evidence of such a ruling. (Id. at 4.) The Commission thus concluded Plaintiff's student loan debt was not discharged in bankruptcy.^[3] (Id.)

         Plaintiff asserts her student loan debt, now more than $83, 000, is an extreme financial hardship. (ECF No. 1 at 2; ECF No. 1-2 at 3.) Plaintiff notes that she has been subject to U.S. Treasury offsets to her Social Security and IRS refund checks. (ECF No. 1 at 2.) These offsets to Plaintiff's limited income caused her to relocate multiple times to more affordable properties. (Id.) During the pendency of these offsets, Plaintiff received Medicaid health benefits and Supplemental Nutrition Assistance Program benefits. (Id.)

         II. Whether Plaintiff Has the Ability to Pay Her Filing Fee.

         All parties instituting any civil action, suit, or proceeding in a district court of the United States, except an application for writ of habeas corpus, must pay a filing fee of $400. 28 U.S.C. § 1914(a). An action may proceed despite a plaintiff's failure to prepay the entire fee only if she is granted leave to proceed IFP. Andrews v. Cervantes, 493 F.3d 1047, 1051 (9th Cir. 2007). “The granting or refusing of permission to proceed [IFP] is a matter committed to the sound discretion of the district court.” Smart v. Heinze, 347 F.2d 114, 116 (9th Cir. 1965). To proceed IFP, a plaintiff must submit an affidavit that contains a complete statement of her assets and demonstrates her inability to pay the fee. 28 U.S.C. § 1915(a)(1). The plaintiff need not demonstrate that she is completely destitute. Adkins v. E. I. DuPont de Nemours & Co., 335 U.S. 331, 339-40 (1948).

         Here, Plaintiff declares her current monthly income is insufficient to meet her current expenses. (ECF No. 2.) The Court finds Plaintiff has sufficiently demonstrated her inability to pay the required filing fee pursuant to 28 U.S.C. § 1915(a).

         III. Whether the Complaint States a Claim for Which Relief May Be Granted. A. Legal Standard for Court's Sua Sponte Review.

         When a Plaintiff proceeds IFP, the Court has a sua sponte duty to screen the complaint. 28 U.S.C. § 1915(e)(2). If the complaint is “frivolous or malicious; fails to state a claim on which relief may be granted; or seeks monetary relief against a defendant who is immune from such relief” the court must dismiss the action. See 28 U.S.C. § 1915(e)(2)(B); Calhoun v. Stahl, 254 F.3d 845, 845 (9th Cir. 2001) (“[T]he provisions of 28 U.S.C. § 1915(e)(2)(B) are not limited to prisoners.”) “The language of § 1915(e)(2)(B)(ii) parallels the language of Federal Rule of Civil Procedure [“Rule”] 12(b)(6).” Barren v. Harrington, 152 F.3d 1193, 1194 (9th Cir. 1998).

         Dismissal is warranted under Rule 12(b)(6) if the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”). A complaint may also be dismissed if it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534. While a plaintiff need not give “detailed factual allegations, ” a plaintiff must plead ...