Opinion ID: 2402228
Heading Depth: 1
Heading Rank: 3

Heading: The 2004 Amended Complaint

Text: On September 15, 2004, appellants filed their amended complaint. Although they titled it, First Amended Class Action Complaint, they once again failed to move for class-action certification pursuant to D.C.Super. Ct. Civ. R. 23-I(b)(1). [6] In this amended complaint, appellants alleged intentional misrepresentation, reckless misrepresentation, and negligent misrepresentation, in violation of the common law of the District of Columbia, as well as of D.C.Code §§ 28-3904(e) [7] and 3905, [8] both of which are sections of the DCCPPA. [9] The amended complaint repeated appellants' claims that Sallie Mae had engaged in the practice of pyramiding, or imposing multiple late charges for as little as one late payment of principal and interest by the borrower. The amended complaint also alleged that Sallie Mae makes affirmative misrepresentations that cause borrowers to incur late fees continuously. These purported misrepresentations include: indicating on a borrower's monthly statement that the balance of late fees is zero, even if a late fee has been assessed; informing a borrower that Sallie Mae will charge late fees if the borrower fails to make payments, when, according to the complaint, Sallie Mae charges late fees regardless of whether borrowers make payments; and deceptively excluding from the total amount due specified on borrowers' monthly invoices any deficienc[ies] caused by the late fees. According to appellants, these misrepresentations can potentially lead a borrower into believing that he or she is making a payment sufficient to cover the entire monthly installment when, in fact, although it may prove sufficient to cover principal and interest, it is insufficient to cover those amounts combined with any late fees owed. If this occurs, an outstanding balance remains on the principal, and additional late fees are assessed against that balance. Appellants' amended complaint omitted the assertion, made in the original complaint, that the challenged policies were instituted in 1998. Unlike the original complaint, moreover, the amended complaint failed to identify the schools that appellants attended and through which appellants obtained their loans. Furthermore, the amended complaint no longer contended merely that Sallie Mae Servicing Corp. had instituted the policies in question. This time appellants alleged that Sallie Mae had instituted and mandated the policies and procedures yielding the violations in the District of Columbia, and that all such policies and procedures emanate from the District of Columbia. Appellants did, however, reassert that Sallie Mae Servicing Corp. follow[ed] uniform, standardized loan servicing policies, procedures and business practices established and authorized by [Sallie Mae]. And they added that Sallie Mae Servicing Corp. had originally been established by Sallie Mae as a division, and that Sallie Mae and Sallie Mae Servicing Corp. were currently under the same corporate ownership. Again, Sallie Mae filed a motion to dismiss pursuant to D.C.Super. Ct. Civ. R. 12(b)(6) and R. 41(b), arguing among other things that appellants could not demonstrate the existence of contacts between the transactions at issue and the District of Columbia sufficient to establish that the District of Columbia had a greater governmental interest in applying its law than Wisconsin had. Appellants countered that the complaint sufficiently established that the District of Columbia had the greater interest because Sallie Mae is by virtue of federal law a `resident' of the District of Columbia, and that the deceptive and unfair policies and practices at issue in this case were formulated and conceived by Sallie Mae in the District of Columbia, were directed by Sallie [sic] from the District of Columbia, and emanated from Sallie Mae in the District of Columbia. Sallie Mae replied that, as a result of the Student Loan Marketing Reorganization Act of 1996, it no longer had any employees in 1998, the year in which the original complaint alleged that Sallie Mae had implemented the challenged policies. According to Sallie Mae, because it had no employees in 1998, none was (or could have been) located in the District of Columbia. Sallie Mae's motion to dismiss referenced the factual assertions appellants had included in their original complaint but omitted from their amended complaint. To demonstrate that appellants lived, attended school, and obtained their loans in Wisconsin, and that appellants' loans were serviced outside of Washington, D.C., Sallie Mae attached appellants' promissory notes to its motion to dismiss. Later, as an attachment to its reply to appellants' opposition to the motion, Sallie Mae supplied an affidavit from Sallie Mae, Inc.'s Vice President of Policy in which she stated that, to the best of her knowledge, the decision to implement the policy at issue was not made in the District of Columbia, and that neither Sallie Mae, Sallie Mae Servicing Corporation, nor Sallie Mae, Inc., ever had processed loans or payments in the District of Columbia, received loan applications or payments in the District of Columbia, or mailed statements from the District of Columbia. [10] Appellants responded by chiding Sallie Mae for attempting to introduce purported facts extrinsic to the complaint, arguing that Sallie Mae should not be allowed to treat this motion as one for summary judgment. On December 27, 2004, the trial court granted Sallie Mae's motion to dismiss. In response to appellants' arguments that Sallie Mae had relied improperly upon factual assertions extrinsic to the pleading, the trial court referred to a comment in its order dismissing appellants' original complaint. There, the court had reasoned that the promissory notes may be considered without altering the procedural posture of the Motion because they are documents that are indisputably authentic; are in [appellants'] possession, and are part of the contracts specifically referenced in the complaint. The trial court also concluded that it could consider any facts alleged in the first complaint but omitted from the amended complaint. The trial court did not expressly address the propriety of Sallie Mae's inclusion of the affidavit. The trial court analyzed the choice of law issues by applying the modified governmental interest analysis we articulated in District of Columbia v. Coleman, 667 A.2d 811, 816 (D.C.1995). The trial court examined consumer protection statutes from Wisconsin and the District of Columbia and determined that both jurisdictions have essentially equal interests in protection of consumers. [11] The trial court also considered the place where the injury occurred, the place where the conduct causing the injury occurred, the domicile, residence, nationality, place of incorporation and place of business of the parties, and the place where the relationship is centered. The trial court first found that the alleged injury occurred in Wisconsin, where Plaintiffs lived and were forced to make higher payments. The court then noted that [t]he conduct causing the injury arguably occurred in Virginia and Pennsylvania, where the loans were processed [12] but acknowledged that it could also be said to have occurred in the District, where Defendant's policy was formulated. Next, the trial court observed that [t]he domicile and residence of Plaintiffs is Wisconsin and that [b]y statute, defendant's principal office is required to be in the District, and it is deemed to be a resident of the District for purposes of venue and jurisdiction. Nonetheless, according to the trial court: [A]ll of the activity related to [appellants'] loans occurred in Defendant's offices outside the District. In fact [appellants] alleged in their original Complaint that the improper policy of imposing late fees was adopted in 1998, but, under the Student Loan Marketing Association Reorganization Act of 1996, [Sallie Mae] ceased to have any employees before 1998, and all of its functions were transferred to other affiliates, which are not alleged to be located in the District. Finally, the trial court stated that the relationship is centered in Wisconsin, where all of the critical activity occurred. Summarizing the situation, the trial court said that the only significant point raised by [appellants] in favor of their position is that the federal statute deems [Sallie Mae] a resident of the District for venue and jurisdiction purposes. In the trial court's opinion, [t]hat is not enough when weighed against the other factors counseling against the application of District law. Concluding that the factors militate in favor of not applying the District's laws, the trial court dismissed the statutory counts with prejudice and the common law fraud counts without prejudice, granting appellants permission to file another amended complaint for fraud and misrepresentation under Wisconsin common law and consumer protection law. Appellants declined to file another amended complaint, choosing instead to bring this appeal. [13]