### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE Assigned on Briefs A

pril 16, 1999
VANDERBILT UNIVERSITY v. P AMELA HENDERSON
Appeal from the Circuit Court for Davidson County No. 97C-3945 Thomas W. Brothers, Judge

No. M1998-00929-COA-R3-CV - Filed October 12, 2001

This appeal involves a

dispute b etween Vanderbilt University and one of its graduates ar ising out of two student loans. A

fter the former

student sto

pped repay

in g the loans, Van

derbilt University filed suit in the Davidson County General Sessions Court seeking to recover the principal and interest due, collection co sts, and at torney’s f ees. The gene

ral sessions cour

t awarded Vande

rbilt University

a $9,056.4 3 judgm ent. The former student pe rfected a de no

vo appeal to the Cir

cuit Courtfor Davidson Cou nty. Following a ben ch trial, the tria

l court awarded

Vanderbilt Unive

rsity
a $5,051.56 judgment and established an installment payment plan for the jud gment. T he former studentasserts on this appeal that Vanderbilt University was not entitled to a judgment against her because of its failure to c

omply with the Fair Debt Collection Practices Act and the requirements of the federal student

loan program and because she has fully repaid her loans. We have concluded that the record suppo

rts the trial cour

t’s decision and, t

herefore, aff

irm the judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

W ILLI AM C. K OCH , J R ., J., delivered the opinion of the court, in which B EN H. C ANTRELL , P.J., M.S., and W ILLI

AM B. C AIN , J., joined.
Pamela Henderson, Nashville, Tennessee, Pro Se.

Kev in S . Ke y, Na shv ill e, T enn ess ee, f or t he ap pel lee , Va nde rbi lt U niv ers ity.

OPINION

I.

Pamela Henderson enrolled at Peabody College during the mid-1970s. To help fina nce her ed ucati on, she obtained a $2, 500 loan under the National Direct S

tudent Loan pr

ogram (“NDSL program”) and, in September 1974, executed a $2,500 promissory note payable to Peabody College. In the fall of 1975, Ms. Henderson transferred to Tennessee State Uni ver sity where she remained until the end of the fall semester in 1977. After a two-year hiatus, Ms. Hende rson re-enr olle d at Peabody College in the fall of

1979. By tha

t time, Peabody

College had bec

ome part of Vande

rbilt-2-

Uni vers ity. In August 1979, Ms. Henderson obtained a second $2,500 NDSL loan and executed a pro mis sor y not e paya ble to V and erbi lt U niv ers ity.
Apparently

Ms. Henderson did not continue to pursue her studies on a fu ll-time basis. She didnot graduate from Peabody College until December 1990. She be ganrepaying her two student loans in October 1992. Ms. Henderson failed to make h er August 1993 installment payment but resumedrepaying the

loans the following month. She again stoppe d making her pay

ments in August 1996 but picked back up again in April 1997. Finally, in October 1997, Ms. Henderson stopped repaying her student loans altogether because she had decided that she had repaid these loans “in full over the years.”

Vanderbilt

University attempted to resolve the mat ter informally. When Ms. Henderson rebuffed its overtures, Vanderbilt University filed suit against Ms. Henderson in the Davidson County General Sessions Court seeking the combined balance due on the two NDSL notes, accrued intere st, collecti on costs, and attor ney’s fee s. On November 9, 1 993, after additi onal efforts to resolve the dispute failed , Vanderbilt Unive

rsity obtaine

d a $9,056.43 defa

ult judgment. M s. Hendersonappealed to the Ci rcuit Court for Davidson County where, on June 22, 1998, Vande

rbilt received a $5,051.56 judgment. In accordance with Tenn. Code Ann. § 26-2-216 (2000), the trial court directed Ms. Henderson to pay Vanderbilt Unive

rsity $100 per month until the judgment was paid in full. Ms. Henderson, who has represented herself throughout these proceedings, has appealed.

II. T HE S TANDARD OF R EVIEW

We turn first to the proper sta ndards of review

for the issues pre

sented in this appe

al. Because this is a

n appeal from a

decision made by

the trial court itself following a bench trial, the
now familiar stand ard in Tenn . R. App. P. 13(d) governs our review. This rule contains different standards for re

viewing a trial c

ourt’s decisions r

egarding fa

ctual questions an

d legal questions

. With regard

to a trial c ourt’s findings o f fact, we will re

view the record

de novo and will presume that the findings of fac

t are correct “

unless the preponderance of the evidence is otherwise.” We will also give great weight to a trial court’s factual findings that rest on determinations of cred ibi lit y. In re Estate of Walton , 950 S.W.2d 956, 959 (T enn. 1997); B & G Constr., Inc. v. Polk , 37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). However, if the trial judge has not made a spe

cific finding of fact

on a particular matter, we review the record to determine where the preponderance of the evidence lies without employing a presumption of correctness. Ganzevoor t v. Russell , 949 S.W.2d 293, 296 (Tenn. 1997).
Tenn. R. App. P. 13(d)’s presumption of correctness requires appellate courts to defer to a trial court 's findings of fact. Fell v. Rambo , 36 S.W.3d 837, 846 (T enn. Ct. App. 2000) ; Taylor v. Trans Aero Corp. , 924 S.W.2d 109, 112 (Tenn. Ct. App. 1995). Because of th e presumption, an appellate court is bound to leave a trial court's finding of fact undisturbed unless it determines that the aggregate weight of the evidence demonstra tes that a finding of

fact other than the one found by1 For example, M s. Hende rson states in her reply brief, “T he Appe llant has expre ssed no inter est here in

litigating Vande rbilt or [its lawyer] f or their failure t

o comply with the Fair Debt Collection Procedures . . .. The point is that Vand erbilt has not sh own very m uch comp liance of its man dated resp onsibilities . . ..”
-3- the trial court

is more probably true. Estate of Haynes v. Braden , 835 S.W.2d 19, 20 (Tenn. Ct. App. 1992) (holding that an a ppellate court is b

ound to respect a

trial c ourt's find ings if it cannot determine that the evidence preponderat es otherwise). T

hus, for the evide

nce to preponder

ate against
a trial court's finding of fact, it must support another finding of fact with greater c

onvincing effe

ct.

The presumption of correctness in Tenn. R. App. P. 13(d) applies only to findings of fact, not to conclusions of law. Accordin gly, appe llate courts

review a trial court’s resolution of legal issues without a presumption of correctness and reach their own independent conc

lusions regardi

ng these issues. Johnson v. Johnson , 37 S.W.3d 892, 894 (Tenn. 2001); Nutt v. Champion Int’lCorp. , 980 S.W.2d 365, 3 67 (Tenn. 1998); Hicks v. Cox , 978 S.W.2d 544, 547 (Tenn. Ct. App. 1998) ; McCormick v. Aabakus, Inc. , ___ S.W.3d ___, ___, 2000 WL 1473915, at *1 (Tenn. Sp. Workers Comp. Panel 2000).

III.

M S . H ENDERSON ’ S F AIR D EBT C OLLECTION P RACTICES A CT C LAIM

Ms. Henderson claims that Vanderbilt University was not entitled to a judgment against her because it violated the fed

eral Fair Debt

Collection Practic

es Act. While this

Act prohibits cer

tain debt collection prac

tices and permits d

ebtors to recove

r monetary

damages for vio

lations of its provisions, we have d etermine d that Ms. Henderson has not effectively asserted a claim based on the Act in t his proceed ing.

No mention was made of the Act until Ms. Hende rson’s closing a

rgument in the tr

ial court. At that t ime, and a gain in her appellate briefs, Ms. Henderson has failed to explain with any specificity

how Vanderbilt University violated the Act. 1 This court has app ell ate jur isd ict ion onl y. Tenn. Code Ann. § 16-4-108(a)(1) (1994). As a prudential matter, we will not address claims for relief that have

not been properl

y presente

d to the trial court

. DeLaney v. Thompson , 982 S.W.2d 857, 861 (Tenn. 1998); Green v. Innovative Recovery Servs., Inc. , 42 S.W.3d 917, 919 (T enn. Ct. App. 2000). Because Ms. Henderson neither pleaded nor presented evidence a t trial regardi n g Vanderbilt

University’s alleged violations of the Fair Debt Collection Practic

es Act, she cannot use her claims that Va

nderbilt Universi

ty violated th

e Act to obtain rel

ief on appeal.

IV. V ANDERBILT U NIVERSITY ’ S C OMPLIANCE W ITH NDSL A DMINISTRATI ON AND C OLLECTION R EQUIREMENTS
Ms. Henderson also asserts that Vanderbilt Unive

rsity is not en

titled to a judgmen

t against her because it did not adhere to the f ederal proced

ures and require

ments governing

the NDSL2 Specifically, Ms. Henderson asserts that Vanderbilt University did not provide her the “exi t coun seling” required by 34 C.F.R. § 674. 42(b) (2000) and that t he school’ s bill

ing procedu

res did not

comply wi

th the i nformati on requirements in 34 C.F.R. § 674.43 (2000).
-4- program. 2 These statutes and regulations require participating colleges and universities “to meet the standards of due diligence in the collection of the loans . . ..,” 20 U.S.C.A. § 1080(a) (West 2000); 34 C.F.R. § 674.41(a) (200 0) and provide that c olleges and univ

ersities that do not

meet these standards may be removed from the program. 20 U.S.C.A. § 1080(d), -( h)(1).

Ms. Hendersoncannot use the statutes and regulations governing the administration of the NDSL program to defe

nd again st Vanderb ilt University’s collection efforts. These statutes and regulations exist fo r the fede ral government’s benefit, not for the benefit of the students. United States v. Smith , 862 F. Supp. 257, 26 2 (D. Haw. 1994).

They crea

te no private

right of action

for the borrowers, Morgan v. Markerdowne Corp. , 976 F. Supp. 301, 319 (D.N.J . 199 7); nor do they provide student borrowers with a basis to avoid repaying their debts. United States v. Dwelley , 59 F. Supp. 2d 115, 119 (D. Me. 1999); United States v. Singer , 943 F. Supp. 9, 12 (D.D.C. 1996), aff’d in part, rev’d in part on other grounds , 132 F.3d 1482 (D.C. Cir. 1997); United States v. Sm ith , 862 F. Supp. at 262.

In light of the decisions regarding “due diligence” arguments similar to those Ms. Henderson is asserting in this case, we have determined that she cannot defend against Vanderbilt University’s collection c laim based on the school’s alleged failure comply with every applicable regulatory requirem ent

regarding the conduct of NDSL lenders. Accor dingly, the trial court did not err b y concluding these claimed shortcomings did not provide Ms. Hendersonwith grounds to refuse to pay her NDSL loan.

V. M S . H ENDERSON ’ S D EFAULT

Ms. Henderson also asserts that the trial court erred by finding that she ha d defaulted on her NDSL loans because

she had “rehabilitated” the two loans as permitted by federal regulation. Even though Ms. Henders on may have rehab ilitated h er loans fol lowing herAugust 1993 default, she failedto prove that she rehabilitated the loans following her defaults in August 1996 and October 1997.

Unlike most commercial promissory notes, the two promissory notes Ms. Henderson signed do not expressly

define “default.” They do, however, contain an acceleration provision stating that should the borrower fa

il “to meet a scheduled repayment of any of the installments due on [the] note, th e entire unpaid indebtedness including interest . . . shall, at the option of the lending institution, become immediately due and payable.” The definition of “default” not found in the note is supplied by 34 C.F.R. § 674.2(b) (2000) which defines a “default” as “[t]he failure of a

borrower to

make an installment payment when due or to comply with o ther t erms of the promissory note or written repayment agreement.”3 34 C.F.R. § 674.39(a)(2) (2000) permi ts an educati

onal insti

tution to co

nsider a student

’s loan to be rehabilit ated if the student resum es making tim ely monthly pa yments for twelve consecutive months after the default and if the borrow requests rehabilitati on. When a student’s request is approved, the scho ol must “return t he borro wer to regul ar payme

nt st atus. ” 34 C.F. R. § 674.39(b)(1). A student may reh abili tate a defau

lted l oan onl y once.34 C.F.R. § 674.39(e).
-5- Vand erb ilt

University’s business records establish that Ms. Henderson did not make her Au gust 1993 ins tallment pay

ment. This omission wa

s, beyond que

stion, a default on

both notes. Even though she has be

en unable to contr

overt Vanderbil

t U niver sity’s records, Ms. Henderson insists that Vanderbilt cannot base its collection efforts on this de

fault because she rehabilitated her loans by thereafter making timely

payments fo

r twelve consec

utive months. 3 Even if Ms. Henderson
was entitled to have her loan rehabilitated following her August 1993 defa

ult, she defaulte

d again in August 1996 and again in Octobe r 1997. Her earl

ier rehabilitatio

n cannot cure the

se later defaul

ts. Accordin gly, the record contains

ample evidence t

o support the trial c

ourt’s conclusion

that Ms. Henderson had de

faulted on both of h

er NDSL loans

by non-pay

ment.

VI. T HE C ALCULATION OF THE B ALANCE D UE ON M S . H ENDERSON ’ S N OTES

Ms. Henderson’s most substantive arguments involve the manner in which the t rial court determinedthe balance due on her two student loans. She asserts that the trial court’s conclusions that the outstanding principal onher two loans was $3,776.04 was inco rrect for three

reasons. First, she insists that Van

derbilt University

improperly

computed the inter

est on her loans. Second, she insists that Vanderbilt U

niversity mis

applied the pay

ments she made bet

ween Octo

ber 19 92 and October 1997. Third, s he i nsists that she made more payments on these loans than the trial court gave her cre

dit for. The evide

nce fails to suppor

t any of thes

e arguments.

With regard to the computation of the interest on her loans, Ms. Henderson asserts that Vanderbilt

University b

egan charg

ing her interes

t prematurely and commenc ed her repayment period too soon. She points out that the NDSL program requ ires that repay ment be deferred and that interest not accrue while the

borrower is at le

ast a half-time stude

nt. She also points ou

t that students are not require

d to begin repay

ing their loans un

til nine months afte

r they cea se to be at least halftime students. Unfortunately, Ms. Henderson has failed to demonstrate how Vanderbilt University’s conduct was incon

sistent with these p

rovisions.

Ms. Henderson requested several deferments of her obligation to repay he r loans on the ground that she was at least a half-time student. These deferments expired in June 1 981. When Vanderbilt

University r

eceived no furth

er requests for

deferment, it

began charg

ing Ms. Henderson interest on her loans in June 19 81. Even th ough Ms. Henderson may have still been in school when Vanderbilt

started charging interest on her first NDSL

note, she never p

roved that she wa

s going to school at least half time a nd, therefore,

that she was elig

ible for a continu

ing deferment o

f interest. Without this evidence, her claim that Vanderbilt University comput ed the inter est on her loans improperly

must fail.4 On two occasions after filing this appeal, Ms. H enderson sought this court’s p ermi ssion to supplement the

appellate record with copies of p ersonal che cks and oth er financial inform ation that she ha d failed to introduce at trial. We denied he r requests be cause these m aterials do no t qualify as post-ju dgment facts under Tenn. R. App. P. 14 and because the scope of our f actual revi

ew i s limited to thecontents of the appellate re cord bro ught before this court in conformance with Tenn. R. App. P. 24, 25, and 26. Richmond v. Richmond , 690 S.W.2d 534, 535 (Ten n. Ct. App. 1985). Notwithstanding our ear lier denial of her motions, Ms. Henderson has appended the excluded evidentiary material to her brief. W e have not consider

ed these ma

terial s because t

hey are n ot properl

y part of the appel

late re cord.

5 34 C.F.R. § 674.46(a)(2), (3) (2000).
-6- Ms. Henderson also

insists that Vanderbilt University misapplied her payments on her two studentloans. W hile she does not explain precisely how Vanderbilt University misapplied her payments,

Ms. Henderson asserts that shestopped pay ing on her two loa

ns in October 1997 b

ecause she believed that she had paid her loans in full. On several occasions, she expressed surpris

e that the principal balanceof her loans was n ot decreasing

as fast as she thought it should have. However, the fac t that Vanderbilt w as not applyi

ng her pay

ments exclusively

to the principal of

her loans is notevidence of wrongdoing. 3 4 C.F.R. § 674.33(a )(4) (2000) req

uired Vanderbil

t University

to apply Ms . Henders on’s installment pa yments first

to its collection costs, second to acc rued late charges, third to accrued interest, and finally to the remaining principal. Be cau se Ms. Hend erson failedto present any

evidence that Vanderbilt University did not apply her pay ments in accordance with34 C.F.R. § 674.33(a)(4), the trial court pr operl y disregarded her claim that Vanderbilt had misapplied the pay

ments she had made

on her NDSL loa

ns.
Fin all y, Ms. Henderson insists t hat the trial cour

t should have given her

credit for $7,590

in payments on her two notes ra

ther than $5,415.0

6. The only e

vid ence regarding Ms. Henderson’s payments introduced at trial were the student loan reco rds int rod uced by Va nde rbi lt U niv ers ity. Ms. Hendersondid notoffer cancell ed checks or re

ceipts to contrad

ict Vanderbilt Un

iversity’s r

ecords. Acco rdi ngly, the trial court based its calcula

tions on Vanderbil

t University ’s records afte r expressly finding that Ms. Henderson’s uncorroborated testimony regarding the payments on her loans was not credible. We decline to second-guess the trial court’s credibility dete rmination or

to hold the trial court in error for basing its calculations on the only evidence in the re cord. 4

VII. T HE J UDGMENT FOR V ANDERBILT U NIVERSITY ’ S C OLLECTION C OSTS Despite the provision in the promissory notes obligating her to pay Vande

rbilt University

“all attorney’sfees and other costs and charges necessary for the collection of any amount not paid when due,” Ms. Henderson arg

ues that the trial c

ourt erred by

awarding Vand

erbilt University

$1,200 in attorney’sfees and collection costs. She insists thatthese costs are “ far beyon d the limit of what is permissible

by the Higher Education Act provisions . . ..” Ms. Henderson’s reliance on the federal regulations governing NDSL loans is misplaced.

The applicable federal regulat ions authorize educational lenders such as Vanderbilt to sue defaulting student borrowers such as Ms. Henderson. 5 Lenders who d o so “shall assess

against and attempt to recover from

the borrower al

l litigation costs,

including attorn

ey’s fees , court costs, and6 34 C.F.R. § 674.47(e)(6)(i)-(iv).
-7-

other related costs, to the ex tent permitted under ap plicable law . . ..” 34 C .F. R. §§ 67 4.46(b)(1), 674.47(b). If the educa

tional lender fa

ils to recoup all of

its collection cost

s from the defaul

ti n g studentborrower, the educational lender may seek reimburs ement of t he unpaid costs from the federal government. However, the regulations cap the amount of reimbursement an educa tional lender may

obtain from the fe

deral governm

ent. 6

The regulations upon which Ms. Henderson bases her argumen t that th e judgment for Vanderbilt

University’s collection costs is too high do not apply to Vanderbilt Uni versity’s su

it against her. They come into play only if Vanderbilt undertakes to charge back any of her loan or its collection costs against the federal government. Accordingly , Ms. Henderson’s argument that the federal regu

lations do not permit

the collection costs awarded in this case is without mer

it.

VIII.

We affirm the judgment and remand the case to the trial court for whatever f u rther proceedings may be required. We tax the costs of this appeal to Pamela Henderson for which execution, if necessary, may issue.

_____________________________ WILLIA M C. KOCH, JR., JUDGE