FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHARLES STEPHAN LIMA,

Plaintiff-Appellant,

v.

UNITED STATES DEPARTMENT

OF EDUCATION,

Defendant,

and 

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION,

Defendant-Appellee.

No. 17-16299

D.C. No. 

1:15-cv-00242-KSC

ORDER AND

AMENDED OPINION

Appeal from the United States District Court

for the District of Hawaii

Kevin S. Chang, Magistrate Judge, Presiding

Argued and Submitted October 22, 2019

Honolulu, Hawaii

Filed December 18, 2019

Amended January 13, 2020
2 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

Before: Susan P. Graber, Milan D. Smith, Jr., and

Paul J. Watford, Circuit Judges.

Order;

Opinion by Judge Graber

SUMMARY*

Debt Collection

The panel affirmed the district court’s summary judgment

in favor of the defendant on claims under the Fair Debt

Collection Practices Act and the Due Process Clause.

Defendant, a nonprofit guaranty agency, caused an offset

against plaintiff’s Social Security benefits, to recover on a

judgment it had obtained by assignment after plaintiff

defaulted on his student loans. Under the Higher Education

Act, student loans are guaranteed by guaranty agencies,

which receive guarantees from the United States.

The panel held that, under the FDCPA’s definition of a

debt collector, defendant regularly collected or attempted to

collect debts asserted to be owed or due another. Defendant

was not collecting a debt for its own account, but rather was

collecting a debt for the United States. Nonetheless,

defendant fulfilled the criteria of the fiduciary exception

because it had a broader fiduciary role with respect to

plaintiff’s debt than merely collecting the debt, and its

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 3

collection activity was incidental to its fiduciary obligation to

the Department of Education. Accordingly, defendant was

not a debt collector under the FDCPA.

Assuming without deciding that defendant was a state

actor, the panel held that defendant did not violate plaintiff’s

procedural due process rights because it provided plaintiff

with notice of the debt, of defendant’s intention to seek a

Treasury offset against plaintiff’s Social Security benefits,

and of the means by which plaintiff could respond.

COUNSEL

Amani S. Floyd (argued) and George C. Harris, Morrison &

Foerster LLP, San Francisco, California, for PlaintiffAppellant.

Troy A. Gunderman (argued), ECMC Shared Services

Comp., LLC, Minneapolis, Minnesota; Theodore D. C.

Young, Cades Schutte LLP, Honolulu, Hawaii; for

Defendant-Appellee.
4 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

ORDER

The opinion filed on December 18, 2019, and published

at 2019 WL 6885506, is amended by the opinion filed

concurrently with this order. 

With these amendments, Appellant’s petition for

rehearing is DENIED. No further petitions for panel

rehearing or rehearing en banc may be filed.

OPINION

GRABER, Circuit Judge:

Defendant Education Management Credit Corporation

caused an offset against Plaintiff Charles Lima’s Social

Security benefits, to recover on a judgment obtained after

Plaintiff defaulted on his student loans. Plaintiff filed a civil

action alleging, among other things, violations of the Fair

Debt Collection Practices Act and the Fifth Amendment’s

Due Process Clause. The district court granted summary

judgment to Defendant. We affirm.

BACKGROUND

A. Statutory Framework

The Higher Education Act of 1965 (“Act”) established the

Federal Family Education Loan Program (“Loan Program”),

which the Department of Education (“DOE”) administers. 

Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1030 (9th
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 5

Cir. 2009). Under the Act, lenders provide loans to students

or their parents to help finance higher education. Typically,

those loans are guaranteed by guaranty agencies, which are

“[s]tate or private nonprofit organization[s]” that have

agreements with the Secretary of Education to administer the

Loan Program. 34 C.F.R. §§ 682.200, 682.401(a). Those

agencies, in turn, receive guarantees from the United States. 

Guaranty agencies, therefore, operate as intermediaries

between the student-loan lender and the United States. Rowe,

559 F.3d at 1030. 

If a borrower defaults on a student loan, the lender must

try to obtain repayment from the borrower. If the lender is

unsuccessful, it can file a claim with the guaranty agency and

be repaid the outstanding balance of the loan. In that

situation, the guaranty agency is assigned the loan from the

lender. The guaranty agency, in turn, is repaid by the DOE in

exchange for undertaking “due diligence” activities to attempt

to collect the debt from the borrower. Id. Those “due

diligence” activities include “locating the defaulting

borrower, offsetting federal and state tax refunds . . .,

initiating administrative garnishment proceedings . . ., and

filing suit against the borrower.” Id. (citing 34 C.F.R.

§ 682.410(b)(6)(i)–(iv)). 

B. Factual Background

Plaintiff obtained three student loans, totaling $8,500, in

the 1970s. The New York State Higher Education Services

Corporation (“NewYork Corporation”) acted as guarantor for

those loans under the Act. Plaintiff defaulted on the loans in

1980. In 1991, New York Corporation obtained a judgment
6 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

against Plaintiff for approximately$14,000,representing both

principal and interest. 

Defendant is a nonprofit guaranty agency under the Act. 

In 2008, the DOE and Defendant agreed that Defendant

would take assignment of certain Loan Program accounts in

which judgments had been obtained by other guaranty

agencies.

Pursuant to that agreement, New York Corporation

assigned its judgment against Plaintiff to Defendant in 2009.1

Through that assignment, Defendant assumed all right, title,

and interest in the judgment, and Defendant became obligated

to satisfy any guaranty responsibilities remaining on the

underlying debt. In August 2009, Defendant notified

Plaintiff, by mail, that the DOE held a claim against him,

which it intended to collect by having the United States

Department of the Treasury (“Treasury”) offset “all payment

streams authorized by law,” including his Social Security

benefits. Plaintiff did not respond. 

In August 2012, Treasury began offsetting Plaintiff’s

Social Security benefits by about $200 per month. Plaintiff

then contacted Defendant and asserted that he did not receive

the 2009 letter and that the debt already had been satisfied. 

1

 Plaintiff alleges and argues that such an assignment did not occur,

but the present record contains no supporting evidence to contradict the

evidence introduced by Defendant.
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 7

Between August 2012 and June 2015, Treasury garnished

approximately $6,900 from Plaintiff’s Social Security

benefits.

In 2015, Plaintiff filed this action against Defendant.2 As

relevant here, Plaintiff claimed violations of the Fair Debt

Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; the

Fifth Amendment’s Due Process Clause; and state law. The

district court granted summary judgment to Defendant on all

federal claims. The court held that Defendant is not subject

to the FDCPA because Defendant is not a “debt collector.” 

The court then held that Defendant is not subject to the Due

Process Clause because Defendant is not a state actor. 

Finally, the district court declined to exercise supplemental

jurisdiction over the state-law claims. Plaintiff timely

appealed.

STANDARDS OF REVIEW

We review de novo the district court’s grant of summary

judgment, and we may affirm on any ground supported by the

record. Chemehuevi Indian Tribe v. Newsom, 919 F.3d 1148,

1150–51 (9th Cir. 2019). We review for abuse of discretion

the district court’s decision to decline supplemental

jurisdiction. Oliver v. Ralphs Grocery Co., 654 F.3d 903, 911

(9th Cir. 2011). 

2 Plaintiff also named the DOE as a defendant, but the parties

dismissed the DOE by stipulation. 
8 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

DISCUSSION

A. Fair Debt Collection Practices Act3

The FDCPA “authorizes private civil actions against debt

collectors who engage in certain prohibited practices.” 

Rotkiske v. Klemm, No. 18-328, slip op. at 1 (U.S. Dec. 10,

2019). Plaintiff seeks statutory damages under § 1692k(a) of

the FDCPA. To obtain damages, Plaintiff first must establish

that Defendant is a “debt collector.” As relevant here, the

FDCPA defines a “debt collector” as “any person . . . who

regularly collects or attempts to collect, directly or indirectly,

debts owed or due or asserted to be owed or due another.” 15

U.S.C. § 1692a(6). Defendant asserts that it is not a debt

collector under that definition. Defendant also argues that,

even if it meets that statutory definition, it is not a debt

collector because it fulfills the criteria of the fiduciary

exception, § 1692a(6)(F). 

We hold that Defendant “regularly collects or attempts to

collect” debts “asserted to be owed or due another.” 

Nonetheless, we affirm the district court’s grant of summary

judgment because Defendant’s collection activities were

“incidental to a bona fide fiduciary obligation.” 15 U.S.C.

§ 1692a(6)(F)(i). 

1. Defendant “regularly” attempts to collect debts

“owed” to another.

In Henson v. Santander Consumer USA Inc., 137 S. Ct.

1718 (2017), the Supreme Court held that a defendant who

purchased a defaulted loan and sought to collect the debt was

3 The relevant provisions of the FDCPA are included in Appendix A.
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 9

not a “debt collector.” The Court explained that, when

applying the “regularly collects” definition of “debt

collector,” “[a]ll that matters is whether the target of the

lawsuit regularly seeks to collect debts for its own account or

does so for ‘another.’” Id. at 1721. Because the Henson

defendant “purchased defaulted debt for its own account,” the

Court held that the defendant was not a “debt collector.” Id.

at 1724 (emphasis added). 

Whether a lender in Defendant’s position is seeking to

collect a debt for its “own account” is a question of first

impression in our circuit. To answer that question, Henson

requires us to focus on who ultimately would receive the

payments on the debt being collected. See, e.g., Infante v.

Law Office of Joseph Onwuteaka, P.C., 735 F. App’x 839,

842–43 (5th Cir. 2018) (per curiam) (unpublished) (holding

that, because a limited liability corporation has a distinct legal

identity, a lawyer who was collecting debt on behalf of an

LLC that he owned was a debt collector);

4 Bank of N.Y.

Mellon Tr. Co. N.A. v. Henderson, 862 F.3d 29, 34 (D.C. Cir.

2017) (holding that a bank was not a debt collector because

the debt was owed to the bank).

Here, Plaintiff’s debt is owed, or asserted to be owed, to

the United States. The monies obtained from Plaintiff’s

Social Security benefits through Treasury offset belong to the

Treasury, not to Defendant. Instead, the money moves

between federal agencies, and Defendant is notified of the

transfers only for record-keeping purposes. And, even if

Plaintiff had paid the debt, or part of it, the money would

4 Federal Rule of Appellate Procedure 32.1(a) and United States

Court of Appeals for the Fifth Circuit Rule of Appellate Procedure 28.7

permit the citation of unpublished judicial decisions. 
10 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

constitute property of the United States and would end up in

an account owned and controlled by the United States. 20

U.S.C. § 1072(g)(1); 34 C.F.R. § 682.410(a)(1). Though

Defendant possesses all right, title, and interest in the

judgment against Plaintiff, Defendant was not collecting a

debt for its “own account.” Instead, Defendant was collecting

a debt for the United States. 

The record evidences that Defendant “regularly” attempts

to collect debts owed, or asserted to be owed, to the United

States. Under the applicable agreement, Defendant was

obligated to receive accounts like Plaintiff’s for a one-year

period, and Defendant received a long list of such accounts. 

See Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997) (per

curiam) (holding that “a person who, during a single ninemonth period, attempts to collect debts owed another by 639

different individuals ‘regularly’ attempts to collect debts

owed another, and thus is a ‘debt collector’ under

§ 1692a(6)”). 

2. Defendant’s collection activity is incidental to a bona

fide fiduciary obligation.

The FDCPA exempts from the definition of debt collector

“any person collecting or attempting to collect any debt . . .

owed or due another to the extent such activity . . . is

incidental to a bona fide fiduciary obligation.” 15 U.S.C.

§ 1692a(6)(F) (emphasis added). For the fiduciary exception

to apply, Defendant must have a “fiduciary obligation” and

Defendant’s collection activity must be “incidental to” that

fiduciary obligation. Rowe, 559 F.3d at 1032. Plaintiff

concedes, and we agree, that Defendant owes a fiduciary

obligation to the DOE. 
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 11

The “incidental to” requirement prevents fiduciaries

“whose sole or primary function is to collect a debt on behalf

of the entity to whom the fiduciary obligation is owed” from

escaping FDCPA coverage. Id. at 1034. Accordingly, to

qualify for the fiduciary exception, Defendant’s collection

activity “must not be ‘central to’ [its] fiduciary relationship.” 

Id. 

In Rowe, we reversed the dismissal of a complaint for

failure to state a claim under the FDCPA. The plaintiff

claimed that the defendant guaranty agency’s “sole function

was to take assignment of the loan from [another agency] and

to act as a collection agent.” Id. at 1035 (emphasis added). 

We held that, because the only role alleged to have been

played by the guaranty agency was to collect the debt, the

fiduciary exception did not apply. We distinguished between

that alleged collection-only activity and cases in which an

agency guarantees a loan and then attempts to collect on the

loan, holding that the former type of collection activity “is not

‘incidental to’ [the defendant]’s fiduciary duty to the DOE.” 

Id.

This case differs from Rowe because Defendant had a

broader role than merely collecting a debt. When Defendant

took the assignment of Plaintiff’s judgment account,

Defendant took on all outstanding guaranty obligations. For

example, Defendant is obligated to release its judgment

against Plaintiff if Plaintiff’s debt is consolidated,

rehabilitated, or repaid. Defendant also is obligated to

maintain records, report to the National Student Loan

Database System, and properly administer its operating fund. 

Those obligations are not illusory, even if Defendant has not

had to perform some of them. A fiduciary relationship is not

characterized only by what activity has happened to date. 
12 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

Fiduciary relationships naturally include reasonably

foreseeable responsibilities that may arise in the future.5

DOE’s regulations place Defendant on standby should such

fiduciary activities become necessary. Accordingly, we

conclude that Defendant had a broader fiduciary role with

respect to Plaintiff’s debt than merely collecting the debt. 

Therefore, Defendant’s collection activitywas “incidental to”

its fiduciary obligation to the DOE. 

B. Due Process

Plaintiff alleges that Defendant violated his procedural

due process rights by “arbitrarily and maliciously” garnishing

his benefits. Plaintiff seeks a declaratory judgment,

injunctive relief, and damages.

To obtain declarative and injunctive relief,6 Plaintiff must

establish: (1) that he suffered a “constitutional deprivation”

that was “caused by the exercise of some right or privilege

created by the State or by a rule of conduct imposed by the

[S]tate or by a person for whom the State is responsible,” and

(2) that “the party charged with the deprivation [is] a person

5

 By way of analogy, lawyers owe various fiduciary duties that may

be dormant during their representation of clients. For example, lawyers

must inform their clients of settlement offers. If an opposing party never

tenders a settlement offer, a lawyer cannot apprise the client of an offer. 

Yet, even if the lawyer has not received a settlement offer, the lawyer has

a present fiduciary obligation to the client. 

6 Plaintiff cannot recover damages because Defendant is a private

corporation, and actions under Bivens v. Six Unknown Named Agents of

Federal Bureau of Narcotics, 403 U.S. 388 (1971), cannot proceed against

private entities. Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 66, 74

(2001).
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 13

who may fairly be said to be a state actor.” Lugar v.

Edmondson Oil Co., 457 U.S. 922, 937 (1982). Here,

Plaintiff challenges only the district court’s conclusion that

Defendant is not a state actor. 

Assuming, without deciding, that Defendant is a state

actor, we affirm the summary judgment in Defendant’s favor

because Defendant did not violate Plaintiff’s due process

rights. Defendant provided Plaintiff with notice of the debt,

of Defendant’s intention to seek a Treasury offset against

Plaintiff’s Social Security benefits, and the means by which

Plaintiff could respond. See United States v. Alisal Water

Corp., 431 F.3d 643, 657 (9th Cir. 2005) (“At its core, due

process requires that a party have adequate notice and

opportunity to be heard.”). The notice was sent to the proper

address and was, therefore, “reasonably calculated” to ensure

that Plaintiff received it. Poursina v. U.S. Citizenship &

Immigration Servs., 936 F.3d 868, 876 (9th Cir. 2019)

(quoting Farhoud v. INS, 122 F.3d 794, 796 (9th Cir. 1997);

see also Mullane v. Cent. Hanover Bank & Trust Co., 339

U.S. 306, 318 (1950) (“[W]ithin the limits of practicability

notice must be such as is reasonably calculated to reach

interested parties.”). And Defendant’s misstatement, that

Plaintiff’s debt arose from a single loan worth $8,500 rather

than three loans totaling $8,500, does not violate due process. 

See Bank of America, NT & SA v. PENGWIN, 175 F.3d 1109,

1119 (9th Cir. 1999) (holding that a foreclosure notice that

stated the wrong location of a vessel and that failed to

mention fishing rights did not violate due process because the

notice was nonetheless “reasonably calculated” to apprise

interested parties of the action and afford them an opportunity

to object). 
14 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

C. Supplemental jurisdiction

Because no federal claims remain, the district court did

not abuse its discretion by declining to exercise supplemental

jurisdiction over Plaintiff’s state-law claim. See Whalen v.

McMullen, 907 F.3d 1139, 1153 (9th Cir. 2018) (holding that

the district court did not abuse its discretion when it declined

to exercise supplemental jurisdiction over a state-law claim

when the plaintiff’s only federal claim was dismissed on

summary judgment). 

AFFIRMED.
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 15

APPENDIX A

Relevant provisions of the FDCPA.

15 U.S.C. § 1692a(6):

The term “debt collector” means any person

who uses any instrumentality of interstate

commerce or the mails in any business the

principal purpose of which is the collection of

any debts, or who regularly collects or

attempts to collect, directly or indirectly,

debts owed or due or asserted to be owed or 

due another. Notwithstanding the exclusion

provided by clause (F) of the last sentence of

this paragraph, the term includes any creditor

who, in the process of collecting his own

debts, uses any name other than his own

which would indicate that a third person is

collecting or attempting to collect such debts.

For the purpose of section 1692f(6) of this

title, such term also includes any person who

uses any instrumentality of interstate

commerce or the mails in any business the

principal purpose of which is the enforcement 

of security interests. The term does not

include--

(A) any officer or employee of a creditor

while, in the name of the creditor,

collecting debts for such creditor;
16 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

(B) any person while acting as a debt

collector for another person, both of

whom are related by common ownership

or affiliated by corporate control, if the

person acting as a debt collector does so

only for persons to whom it is so related

or affiliated and if the principal business

of such person is not the collection of

debts;

(C) any officer or employee of the United

States or any State to the extent that

collecting or attempting to collect any

debt is in the performance of his official

duties;

(D) any person while serving or

attempting to serve legal process on any

other person in connection with the

judicial enforcement of any debt;

(E) any nonprofit organization which, at

the request of consumers, performs bona

fide consumer credit counseling and

assists consumers in the liquidation of

their debts by receiving payments from

such consumers and distributing such

amounts to creditors; and

(F) any person collecting or attempting to

collect any debt owed or due or asserted to

be owed or due another to the extent such

activity (i) is incidental to a bona fide

fiduciary obligation or a bona fide escrow
LIMA V. EDUC. CREDIT MANAGEMENT CORP. 17

arrangement; (ii) concerns a debt which

was originated by such person; (iii)

concerns a debt which was not in default

at the time it was obtained by such person;

or (iv) concerns a debt obtained by such

person as a secured party in a commercial

credit transaction involving the creditor.

15 U.S.C. § 1692k(a):

Except as otherwise provided by this section,

any debt collector who fails to comply with

any provision of this subchapter with respect

to any person is liable to such person in an

amount equal to the sum of--

(1) any actual damage sustained by such

person as a result of such failure;

(2)(A) in the case of any action by an

individual, such additional damages as the

court may allow, but not exceeding

$1,000; or

(B) in the case of a class action, (i) such

amount for each named plaintiff as could

be recovered under subparagraph (A), and

(ii) such amount as the court may allow

for all other class members, without

regard to a minimum individual recovery,

not to exceed the lesser of $500,000 or 1

per centum of the net worth of the debt

collector; and
18 LIMA V. EDUC. CREDIT MANAGEMENT CORP.

(3) in the case of any successful action to

enforce the foregoing liability, the costs of

the action, together with a reasonable

attorney’s fee as determined by the court.

On a finding by the court that an action

under this section was brought in bad faith

and for the purpose of harassment, the

court may award to the defendant

attorney’s fees reasonable in relation to

the work expended and costs.