Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-02033/USCOURTS-casd-3_17-cv-02033-2/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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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOHN G. PETROU, an individual,

Plaintiff,

v.

NAVIENT CORPORATION, a 

Delaware corporation; SALLIE 

MAE CORPORATION, a Delaware 

corporation; SELAINA A. 

PETROU, an individual; and 

DOES 1 THROUGH 50, inclusive,

Defendants.

Case No.: 17-cv-02033-BTM (JLB)

ORDER GRANTING MOTION TO 

DISMISS AND REMANDING CASE

ECF NO. 5

Defendants Navient Corporation (“Navient”) and Sallie Mae Corporation 

(“Sallie Mae”) have filed a motion to dismiss Plaintiff John G. Petrou’s First 

Amended Complaint. (ECF No. 5). For the reasons discussed below, the Court 

GRANTS Defendants’ motion.

I. BACKGROUND

Plaintiff alleges that his daughter, Selaina A. Petrou, in order to fund her 

undergraduate education, fraudulently obtained two student loans in his name.

(ECF No. 1, Exh. B (“FAC”) ¶ 7-9). According to Plaintiff, on April 26, 2012, his 

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daughter signed a Master Promissory Note, without his consent or knowledge, for 

a Federal Direct PLUS Loan (“Master Promissory Note”) in his name. Id. ¶ 9-10. 

As a result, on April 30, 2012, Sallie Mae distributed $9,752 to the daughter’s 

university, as a Parent Plus Loan under the Master Promissory Note. Id. ¶ 11. In 

May 2013, Plaintiff, at the request of his daughter, faxed additional paperwork to 

her university, believing that she was applying for another student loan under her 

own name. Id. ¶ 13-14. As a result, on May 7, 2013, Sallie Mae distributed another 

$40,253 to the daughter’s university as a Parent Plus Loan under the Master 

Promissory Note. Id. ¶ 14-15. 

On December 18, 2014, Plaintiff received a letter from Navient, the loan

management subsidiary of Sallie Mae, regarding payment of the two Parent Plus 

loans. Id. ¶ 17. On May 15, 2015, Plaintiff sent a letter to Navient disputing the 

legitimacy of the Master Promissory Note. Id. ¶ 18. Navient responded that before 

it could investigate, Plaintiff needed to fill out an Identity Theft Affidavit and file an 

Identity Theft Report with the San Diego police department. Id. ¶ 19. After filing a 

police report, on October 5, 2015, Plaintiff sent Navient the Identity Theft Affidavit 

and all related documentation. Id. ¶ 19-20. On November 12, 2015, Navient 

informed Plaintiff that it could not confirm his claim of identity theft and closed the 

investigation. Id. ¶ 21. Plaintiff alleges that Navient made “minimal effort” in 

investigating his claims and closed the investigation “after only a few attempts” at 

contacting Plaintiff’s daughter, which were unsuccessful. Id. ¶ 41. Plaintiff also 

alleges that he notified the consumer reporting agency (“CRA”) that the loans were 

fraudulently obtained. Id. ¶ 44. 

Navient has attempted to collect payment on the two Parent Plus Loans from 

Plaintiff in the principle amount of $50,015. Id. ¶ 22.

On September 25, 2017, Plaintiff filed his First Amended Complaint in the 

Superior Court of the State of California, County of San Diego, Central Division, 

alleging two causes of action againt Defendants Sallie Mae and Navient: 

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(1) violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681s-2(b) and 

(2) declaratory relief as to the validity of the Master Promisory Note and Plaintiff’s 

obligation to repay the Parent Plus Loans.1Id. ¶ 35-51. 

On October 4, 2017, Defendants Navient and Sallie Mae removed this action 

to this Court on the basis of federal question jurisdiction, citing Plaintiff’s FCRA

cause of action.2(ECF No. 1). 

On October 12, 2017, Defendants Navient and Sallie Mae filed a motion to 

dismiss Plaintiff’s FAC. (ECF No. 5). Defendants argue that Plaintiff has not 

sufficiently alleged a violation of the FCRA and that his cause of action for 

declaratory relief is preempted by the Higher Education Act of 1965 (“HEA”). (ECF 

No. 5-1 at 1).

II. STANDARD

A. F.R.C.P. 12(b)(6) Failure to State a Claim

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should 

be granted only where a plaintiff's complaint lacks a “cognizable legal theory” or 

sufficient facts to support a legal claim. Balistreri v. Pacifica Police Dept., 901 F.2d 

696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of 

material fact in plaintiff's complaint are taken as true and construed in the light 

most favorable to the plaintiff. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 

1484 (9th Cir. 1995). Although detailed factual allegations are not required, factual 

allegations “must be enough to raise a right to relief above the speculative level.” 

Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). Only a complaint that states a 

plausible claim for relief will survive a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 

662, 679 (2009).

 

1 Plaintiff, in his FAC, also alleges fraud against his daughter, Selaina Petrou.

2 On October 13, 2017, Defendant Selaina Petrou consented to and joined the notice of removal. (ECF No. 7). 

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III. DISCUSSION

A. Fair Credit and Reporting Act

Plaintiff specifically alleges that Defendants violated § 1681s-2(b) of the

FCRA, which states that for furnishers of credit information, “[a]fter receiving 

notice . . . of a dispute with regard to the completeness or accuracy of any 

information provided by a person to a consumer reporting agency, the person 

shall conduct an investigation with respect to the disputed information.” 15 U.S.C. 

§ 1681s-2(b)(1)(A). The investigation must be “reasonable.” Gorman v. Wolpoff & 

Abramson, LLP, 584 F.3d 1147, 1157 (9th Cir. 2009). However, the duty to 

conduct a reasonable investigation only “arises when [a furnisher] receives a 

notice of dispute from a CRA. Such notice must include all relevant information 

regarding the dispute that the CRA has received from the consumer.” Id. (internal 

quotations omitted). “[N]otice of a dispute received directly from the consumer 

does not trigger furnishers' duties under subsection (b).” Id. at 1154. 

Plaintiff’s FAC does not allege that Defendants received any notice of a 

dispute from a CRA. Therefore, Plaintiff has not alleged facts that would trigger 

Defendants’ duty to conduct a reasonable investigation.3 See Drew v. Equifax 

Info. Servs., LLC, 690 F.3d 1100, 1106 (9th Cir. 2012) (“[plaintiff’s] direct 

complaint to [furnisher] . . . would not have triggered any duty since it was 

unaccompanied by CRA notification”); Steinmetz v. Gen. Elec. Co., 2009 WL 

2058792, at *3 (S.D. Cal. July 13, 2009) (while plaintiff alleged he “initiated a 

dispute with the CRAs,” his claims were “missing a key link [because] he never 

allege[d] the CRAs actually gave notice of his dispute to [defendant] directly”). 

Without this key link, Plaintiff has not adequately alleged a violation of the FCRA.

 

3 Plaintiff appears to assert that Defendants’ duty to investigate was triggered when they became aware of 

Plaintiff’s injury through communications between Plaintiff and Defendants. See FAC ¶ 44,45. 

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Further, “[t]o state a claim under the FCRA, [a plaintiff is] required, at a 

minimum, to allege factual content showing an inaccuracy in his credit report.” 

Banks v. ACS Educ., 638 F. App'x 587, 590 (9th Cir. 2016) (citing Gorman v. 

Wolpoff & Abramson, LLP, 584 F.3d 1147, 1160 (9th Cir. 2009)). See also

Mortimer v. JP Morgan Chase Bank, Nat. Ass'n, 2012 WL 3155563, at *3 (N.D. 

Cal. Aug. 2, 2012) (plaintiff’s “claim [was] insufficiently alleged because [plaintiff 

had] not asserted that [defendant] reported incomplete or inaccurate information 

in the first place”); Nissou-Rabban v. Capital One Bank (USA), N.A., 2016 WL 

6804995, at *4 (S.D. Cal. Sept. 21, 2016) (“Plaintiff must assert that the reported 

information was incomplete or inaccurate to adequately allege her FCRA claim.”).

Plaintiff has not sufficiently alleged that his credit report was incomplete or 

inaccurate.

Plaintiff simply alleges that “these loans appear on [his] credit report and 

will continue to jeopardize [his] credit rating as he attempts to rectify the 

situation.” FAC ¶ 23. Construed in the light most favorable to Plaintiff, the 

statement appears to allege that the credit report is incomplete or inaccurate 

because the loans should not appear on his credit report due to his unajudicated 

claim of identity theft. However, the unadjudicated claim of identity theft, alone, is 

insufficient factual content to show an inaccuracy in Plaintiff’s credit report. 20 

U.S.C. § 1087(c)(1) provides that

[i]f a borrower who received, on or after January 1, 1986, a loan 

made, insured, or guaranteed under this part and the student 

borrower, or the student on whose behalf a parent borrowed, is 

unable to complete the program in which such student is enrolled due 

to the closure of the institution or if such student's eligibility to borrow 

under this part was falsely certified by the eligible institution or was 

falsely certified as a result of a crime of identity theft . . . then the 

Secretary [of Education] shall discharge the borrower's liability on the 

loan (including interest and collection fees) by repaying the amount 

owed on the loan.

Crucially, Plaintiff does not allege that he obtained this necessary false 

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certification discharge. See United States v. Lopez, 2013 WL 12090619, at *3 

(N.D. Cal. May 28, 2013) (“20 U.S.C. § 1087 is an exclusive administrative 

remedy. The case law is clear that no private cause of action is created under 20 

U.S.C. § 1087.”). The inclusion of undischarged student loans in Plaintiff’s credit 

report cannot be incomplete or inaccurate, particularly prior to any resolution of 

Plaintiff’s identity theft claim. 

Further, it is clear that even with leave to amend his FAC, Plaintiff would 

not be able to allege that he obtained a false certification discharge. “In the case 

of an individual whose eligibility to borrow was falsely certified because he or she 

was a victim of the crime of identity theft and is requesting a discharge,” one of 

the required documents to be provided to the Secretary of Education is “a copy of 

a local, State, or Federal court verdict or judgment that conclusively determines 

that the individual who is named as the borrower of the loan was the victim of a 

crime of identity theft.” 34 C.F.R. § 685.215. In his response to Defendants’ 

motion to dismiss, Plaintiff states that he “is properly seeking to disclaim the 

loans” and that his current cause of action against Selaina Petrou for fraud is 

intended to obtain a judgment for purposes of 34 C.F.R. § 685.215. See

Opposition to Motion to Dismiss at 7. As long as Plaintiff’s fraud claim is pending, 

he cannot seek a false certification discharge. Therefore, Plaintiff’s FCRA claim 

against Defendants is, at best, premature.

Defendants’ motion to dismiss Plaintiff’s FCRA claim is GRANTED. The 

claim is dismissed with prejudice. The Court finds that no amendment can cure 

the deficiencies of the FAC, as Plaintiff cannot yet allege that he obtained a 

discharge for the student loans.

B. Declaratory Relief

Plaintiff’s remaining cause of action against Defendants is for declaratory 

relief. A party seeking declaratory relief must show an actual controversy 

regarding a matter within the federal court's jurisdiction. Calderon v. Ashmus, 523 

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U.S. 740, 745 (1998). Plaintiff argues that his “claim against NAVIENT for 

violation of the FCRA under section 1681s-2(b) forms the basis for the 

declaratory relief request against NAVIENT.” (ECF No. 9 at 6). However, 

Plaintiff’s request fails because his FCRA cause of action is subject to dismissal, 

and declaratory relief is not an independent claim.

Further, even assuming Plaintiff had adequately pled a claim under the 

FCRA, Plaintiff’s request for declaratory relief would not be available to him. See 

Purcell v. Spokeo, Inc., 2014 WL 4187157, at *6 (C.D. Cal. Aug. 25, 2014) (“To 

[the] extent [plaintiff’s declaratory relief claim] is premised on [defendant’s] 

alleged violation of the FCRA, equitable relief is not available.”); Yeagley v. Wells 

Fargo & Co., at *2 (N.D. Cal. Jan. 23, 2006) (“By limiting the remedies for private 

right of actions [under the FCRA] to damages and attorneys' fees Congress 

demonstrated that it did not intend for private litigants to obtain injunctive or 

declarative relief.”).

Therefore, Defendant’s motion to dismiss Plaintiff’s declaratory relief claim 

is GRANTED.4

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4 The Court need not and does not address Defendants’ contention that Plaintiff’s declaratory relief claim is 

preempted by the HEA.

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IV. CONCLUSION AND ORDER

For the foregoing reasons, the Court GRANTS Defendants’ motion to 

dismiss. Plaintiff’s causes of action for violations of the FCRA and declaratory relief 

are dismissed with prejudice. Because the only cause of action that now remains 

is Plaintiff’s allegation of state law fraud against Selaina A. Petrou, there is no 

longer federal question jurisdiction. Therefore, the Court remands the remainder 

of this action to the Superior Court of the State of California, County of San Diego, 

Central Division.

 

IT IS SO ORDERED.

Dated: June 15, 2018

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