Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_18-cv-02766/USCOURTS-azd-2_18-cv-02766-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1681 Fair Credit Reporting Act

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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Devin Andrich, 

Plaintiff, 

v. 

Navient Solutions Incorporated, et al., 

Defendants. 

No. CV-18-02766-PHX-SMB 

ORDER 

Pending before the Court is Defendant Pennsylvania Higher Education Assistance 

Agency’s Motion to Dismiss Pursuant to Rule 12(b)(6). (Doc. 55, “Mot.”). Plaintiff Devin 

Andrich filed a Response, (Doc. 76, “Resp.”), and Defendant filed a Reply, (Doc. 80, 

“Reply”). Oral argument was held on August 8, 2019. The Court has now considered the 

Motion, Response, and Reply, along with arguments and relevant case law. 

I. BACKGROUND 

Plaintiff initiated this action on August 31, 2018. (Doc. 1). He filed a Second 

Amended Complaint on December 28, 2018, (Doc. 39, “SAC”), naming as defendants 

(1) SLM Corporation, (2) SLM Education Loan Corporation, (3) Navient Solutions, Inc., 

(4) Navient Solutions, LLC, (5) Pennsylvania Higher Education Assistance Agency 

(“PHEAA”), (6) Performant Recovery Services, Inc., and (7) DOES I-X, as individuals or 

entities. Defendant Performant Recovery Services, Inc. was dismissed from the action on 

January 22, 2019. (Doc. 53). Plaintiff refers to Defendants SLM Corporation and SLM 

Education Loan Corporation collectively as “Sallie Mae.” (SAC ¶ 4). Plaintiff refers to 

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Defendants Navient Solutions, Inc. and Navient Solutions, LLC collectively as “Navient.” 

(SAC ¶ 7). However, due to counsels’ representations of entity name changes that have 

occurred over the time period at issue, the Court will refer to Defendants SLM Corporation 

and SLM Education Loan Corporation collectively as “SLM.” The Court will refer to 

Navient Solutions, Inc. and Navient Solutions, LLC collectively as “NSL.” 

The following facts are assumed to be true for the purpose of deciding this Motion.1

 

Plaintiff entered into a loan agreement with SLM on or about October 5, 2003 (the “Loan 

Agreement”). (SAC ¶ 18). SLM identified SallieMae Servicing Corporation as the loan 

servicer under the Loan Agreement. (SAC ¶ 31). Sometime between 2003 and 2014, NSL 

informed Plaintiff via writing that Plaintiff’s Loan Agreement had been amended or 

modified to name NSL as SLM’s loan servicer under Plaintiff’s Loan Agreement. (SAC 

¶ 33). SLM and its assignees entered into an agreement with PHEAA regarding the 

consolidation and servicing of Plaintiff’s consolidated student loans (the “Guarantor 

Agreement”).2

 (SAC ¶ 39). Plaintiff alleges that he is an intended third-party beneficiary 

under the terms of the Guarantor Agreement. (SAC ¶ 40). Plaintiff alleges that the terms 

of the Guarantor Agreement require SLM and its loan servicer to

 deliver notices and correspondence to the borrower’s permanent address that the 

borrower provides to SLM and its loan servicer 

 provide the borrower with deferment or forbearance applications upon the 

borrower’s written request to Defendant SLM or its loan servicer 

 review the borrower’s deferment or forbearance applications, prior to Defendants 

SLM or its loan servicer declaring a default under the Loan Agreement with the 

borrower 

 report to Defendant PHEAA the results of reviewing a borrower’s deferment or 

forbearance application when declaring a default under the Loan Agreement with the 

borrower 

(SAC ¶¶ 41–44). 

On July 10, 2015, Plaintiff began serving a 3 1/2-year prison sentence at the Arizona 

Department of Corrections. (SAC ¶¶ 49–50). He alleges that he notified NSL of address 

 

1

 This Order focuses only on the aspects of Plaintiff’s allegations that relate to the counts 

against PHEAA. 

2

 A copy of the Guarantor Agreement has not been submitted with any of the filings. 

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changes throughout his time in prison and also requested deferment or forbearance and that 

NSL did not respond to Plaintiff’s then-address. 

After Plaintiff’s release from prison, he mailed a letter via United States mail to 

SLM and NSL updating his permanent address and requesting a student loan payment 

deferment or forbearance. (SAC ¶¶ 66–67). On November 1, 2017, SLM and NSL mailed 

a letter to Plaintiff, stating that SLM and NSL could not approve Plaintiff for a student loan 

payment deferment or forbearance under the Loan Agreement because SLM and NSL 

declared and entered Plaintiff’s default under the Loan Agreement. (SAC ¶ 68). Upon 

SLM and NSL declaring and entering Plaintiff’s default under the Loan Agreement, SLM 

and NSL subsequently sold or otherwise assigned its rights under the Loan Agreement to 

Defendant PHEAA, the guarantor of the loan. (SAC ¶¶ 30, 71). Plaintiff alleges that 

PHEAA made numerous false statements to several credit reporting agencies that Plaintiff 

defaulted under the Loan Agreement, (SAC ¶ 72), and that PHEAA would not cure SLM 

and NSL’s breaches of the Loan Agreement. (SAC ¶¶ 85, 90). 

In his Second Amended Complaint, Plaintiff brings three causes of action against 

PHEAA: (1) Violation of the Fair Credit Reporting Act (the “FCRA”), 15 U.S.C. § 1681 

et seq. (Count Three); (2) Breach of the Loan Agreement (Count Nine); and (3) Breach of 

the Guarantor Agreement (Count Ten). 

II. LEGAL STANDARD 

To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet 

the requirements of Rule 8(a)(2). Rule 8(a)(2) requires a “short and plain statement of the 

claim showing that the pleader is entitled to relief,” so that the defendant has “fair notice 

of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 

550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Dismissal 

under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence 

of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police 

Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal 

theory will survive a motion to dismiss if it contains sufficient factual matter, which, if 

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accepted as true, states a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Facial plausibility exists if 

the pleader sets forth “factual content that allows the court to draw the reasonable inference 

that the defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the 

elements of a cause of action, supported by mere conclusory statements, do not suffice.” 

Id.

 In ruling on a Rule 12(b)(6) motion to dismiss, the well-pled factual allegations are 

taken as true and construed in the light most favorable to the nonmoving party. Cousins v. 

Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as 

factual allegations are not given a presumption of truthfulness, and “conclusory allegations 

of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto 

v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). A court ordinarily may not consider evidence 

outside the pleadings in ruling on a Rule 12(b)(6) motion to dismiss. See United States v. 

Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). “A court may, however, consider materials—

documents attached to the complaint, documents incorporated by reference in the 

complaint, or matters of judicial notice—without converting the motion to dismiss into a 

motion for summary judgment.” Id. at 908. 

III. ANALYSIS 

A. FCRA Violation 

 “Congress enacted the [FCRA] . . . to ensure fair and accurate credit reporting, 

promote efficiency in the banking system, and protect consumer privacy.” Gorman v. 

Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (internal citations and 

quotation marks omitted). “[T]o ensure that credit reports are accurate, the FCRA imposes 

some duties on the sources that provide credit information to [credit reporting agencies], 

called ‘furnishers’ in the statute.” Id. Subsection 1681s-2(b)(1) provides that, after 

receiving a notice of dispute, the furnisher shall:

(A) conduct an investigation with respect to the disputed information; 

(B) review all relevant information provided by the consumer reporting 

agency pursuant to section 1681i(a)(2) of this title; 

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(C) report the results of the investigation to the consumer reporting agency; 

(D) if the investigation finds that the information is incomplete or inaccurate, 

report those results to all other consumer reporting agencies to which the 

person furnished the information and that compile and maintain files on 

consumers on a nationwide basis; and 

(E) if an item of information disputed by a consumer is found to be inaccurate 

or incomplete or cannot be verified after any reinvestigation under paragraph 

(1), for purposes of reporting to a consumer reporting agency only, as 

appropriate, based on the results of the reinvestigation promptly– 

(i) modify that item of information; 

(ii) delete that item of information; or 

(iii) permanently block the reporting of that item of information. 

15 U.S.C. § 1681s-2(b)(1). “These duties arise only after the furnisher receives notice of 

dispute from a CRA; notice of a dispute received directly from the consumer does not 

trigger furnishers’ duties under subsection (b).” Gorman, 584 F.3d at 1154. On inquiry 

by a CRA, a furnisher must “conduct at least a reasonable, non-cursory investigation[.]” 

Id. at 1157. In order to state a claim under 15 U.S.C. § 1681s-2(b), plaintiff must 

plead the following four elements . . . against a credit furnisher: 

(1) a credit reporting inaccuracy existed on plaintiff’s credit

report; (2) plaintiff notified the consumer reporting agency that 

plaintiff disputed the reporting as inaccurate; (3) the consumer 

reporting agency notified the furnisher of the alleged 

inaccurate information of the dispute; and (4) the furnisher 

failed to investigate the inaccuracies or further failed to comply 

with the requirements in 15 U.S.C. 1681s-2(b)(1)(A)–(E). 

Cook v. Mountain Am. Fed. Credit Union, No. 2:18-CV-1548-HRH, 2018 WL 3707922, 

at *3 (D. Ariz. Aug. 3, 2018) (internal quotation marks and citations omitted). “[A]n item 

on a credit report can be ‘incomplete or inaccurate’ . . . ‘because it is patently incorrect, or 

because it is misleading in such a way and to such an extent that it can be expected to 

adversely affect credit decisions.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 

890 (9th Cir. 2010) (quoting Gorman, 584 F.3d at 1163). 

Plaintiff alleges that PHEAA violated 15 U.S.C. § 1681s-2(b)(1) by failing “to 

conduct a reasonable investigation” after being notified by Equifax, Experian, and 

TransUnion of Plaintiff’s dispute. (SAC ¶¶ 117, 119). He also alleges that PHEAA failed 

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to update the incomplete or inaccurate information that had been disputed. (SAC ¶ 122). 

In its Motion, PHEAA argues that Plaintiff cannot state a claim under Section 1681s-2(b) 

because he cannot plead the first element of the cause of action—that there was an 

inaccuracy on his credit report. (Mot. at 6). PHEAA argues that Plaintiff alleged that he 

missed loan payments while in prison and “does not contend that he actually received a 

forbearance or deferment or otherwise made his payments.” (Mot. at 8). In response, 

Plaintiff argues that “[b]ecause Defendants failed to satisfy conditions precedent to 

declaring a default of Plaintiff’s loan agreement, no Defendant can enter or otherwise 

enforce a default under Plaintiff’s loan agreement.” (Resp. at 9). 

PHEAA cites to Fluegge v. Nationstar Mortgage, LLC, where the court stated that 

plaintiff could not show that the allegedly adverse information was inaccurate. No. 12-

CV-15500, 2015 WL 4430062, at *11 (E.D. Mich. July 20, 2015). That court reasoned 

that a mortgage remained in force even if the plaintiff could state a claim for breach of 

contract, and that the reports that plaintiff was in default on the Note were therefore 

accurate. Id. The same reasoning applies here. Plaintiff does not deny that the account 

was in default, but rather argues that he should have been granted a deferment. As pleaded, 

Plaintiff has not alleged that the information was “patently incorrect” or “misleading,” as 

there is no question that the account was in default. Accordingly, Plaintiff cannot satisfy 

the first element of this cause of action and Count Three is dismissed as to PHEAA. 

B. Breach of the Loan Agreement 

PHEAA argues that Plaintiff cannot allege that it breached the Loan Agreement 

simply by contending that PHEAA failed to cure SLM’s and NSL’s breaches of the Loan 

Agreement. (Mot. at 9). PHEAA further argues that nothing in the Loan Agreement 

required PHEAA to cure any pre-assignment breaches. (Id.). In response, Plaintiff does 

not contest PHEAA’s assertion, but rather argues that he can plead breach of another 

written agreement which he obtained through discovery. The Court therefore dismisses 

Count Nine in its entirety. 

C. Breach of the Guarantor Agreement 

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In Count Ten, Plaintiff asserts a claim for Breach of the Guarantor Agreement. In 

his Response and at oral argument, Plaintiff withdrew this Count. 

IV. LEAVE TO AMEND 

 Before the Court ruled on this motion, Plaintiff filed a “Motion to Amend 

Complaint.” (Doc. 108). Therefore, the Court will not grant or deny leave to amend to 

Plaintiff in this ruling but will instead consider Plaintiff’s later filed request when fully 

briefed. 

 Accordingly, 

IT IS ORDERED granting Defendant Pennsylvania Higher Education Assistance 

Agency’s Motion to Dismiss Pursuant to Rule 12(b)(6), (Doc. 55), and denying Plaintiff’s 

request to amend, pending ruling on his Motion to Amend. 

 Dated this 16th day of August, 2019. 

Case 2:18-cv-02766-SMB Document 116 Filed 08/16/19 Page 7 of 7