Opinion ID: 2402228
Heading Depth: 1
Heading Rank: 2

Heading: The 2001 Complaint

Text: On December 21, 2001, appellants filed their original complaint against Sallie Mae. Although they characterized it as a class action complaint, they concede that they never moved for certification as required by D.C.Super. Ct. Civ. R. 23-I(b)(1). [3] Appellants' original complaint identified both Washkoviak and Dziondziakowski as Wisconsin residents. According to the complaint, Washkoviak acquired a federally guaranteed student loan through the International Beauty Academy, where he was enrolled between 1987 and 1989. Although the Great Lakes Higher Education Corporation originated the loan, Washkoviak consolidated his loans with Sallie Mae in 1992. The complaint further stated that Dziondziakowski, who attended both Marquette University and the University of Wisconsin  Parkside, acquired a federally guaranteed student loan through Sallie Mae, which subsequently refinanced the loan. Both Washkoviak and Dziondziakowski signed promissory notes payable to Sallie Mae. Each listed a Wisconsin address on the note. Washkoviak's promissory note indicated that all payments were to be sent to an address in Merrifield, Virginia, while Dziondziakowski's note instructed her to send her payments to an office in Wilkes-Barre, Pennsylvania. Although both promissory notes contained the following language  this application/promissory note will be governed by Federal Law applicable to consolidation loans  neither included a choice of law provision. The allegations in the complaint concerned the manner in which Sallie Mae collects and discloses late fees. Appellants' promissory notes authorize Sallie Mae to collect a six percent fee for each late payment. According to the complaint, Sallie Mae engages in the practice of pyramiding, by which it applies payments first to all outstanding late fees, and then, only after all late fees have been paid, to the required monthly payment of principal and interest. As a result, if a borrower's payment proves sufficient to cover the borrower's required monthly payment, but insufficient to cover that payment combined with any late fees owed, an outstanding balance, equal to the amount of the unpaid late fees, remains on the required monthly payment. Accordingly, the borrower is subsequently charged additional late fees for failing to pay the entire required monthly payment (including late fees) on the scheduled date. The complaint also said that Sallie Mae misrepresents the manner in which it collects late fees and misleads borrowers about the amount of late fees they owe. Appellants then claimed that Sallie Mae's actions violated D.C.Code § 28-3904(f) (2001), [4] a disclosure provision of the District of Columbia Consumer Protection Procedures Act (DCCPPA), as well as D.C.Code § 28-3310(b)(2) (2001), which prohibits multiple delinquent or late charges for the same delinquent or late periodic installment. They also maintained that Sallie Mae's conduct constituted a breach of contract. In the complaint, appellants claimed that the practices in question were instituted in July 1998 by Sallie Mae Servicing Corporation, identified as a Delaware Corporation which acted as Sallie Mae's agent and follow[ed] uniform, standardized loan servicing policies, procedures and business practices established and authorized by [Sallie Mae], whose business was transacted. . . in the District of Columbia. Sallie Mae filed a motion to dismiss pursuant to D.C.Super. Ct. Civ. R. 12(b)(6). In its motion, Sallie Mae argued, among other things, that federal law preempted the claims brought under the D.C.Code; that choice of law principles and Constitutional concerns precluded consideration of appellants' claims under the law of the District of Columbia; and that appellants had failed to state a claim for breach of contract. On February 28, 2003, the trial court dismissed appellants' complaint, agreeing with Sallie Mae that the counts alleging D.C.Code violations were preempted by federal law and that appellants had failed to state a claim for breach of contract. Although the trial court declined to rule on the choice of law issues, it noted in a footnote: Even if the Court were not holding that these counts were preempted, it would have grave reservations about the viability of applying the District of Columbia's consumer protection law to these transactions, given that Plaintiffs all reside in Wisconsin, attended school there, applied for loans there, executed the promissory notes there, and made payments from there to non-District locations. Plaintiffs would have significant conflicts-of-law hurdles . . . and constitutional ones. On May 6, 2004, we affirmed the trial court's decision. Washkoviak v. Sallie Mae ( Washkoviak I ), 849 A.2d 37 (D.C. 2004). We noted, however, that appellants had failed to rely upon D.C.Code § 28-3904(e), despite making allegations of fraud and misrepresentation during oral argument and in their briefs. [5] It did not appear that federal law preempted a claim under that D.C.Code provision, in contrast to § 28-3904(f), supra note 4. We therefore granted appellants leave to amend their complaint to plead fraud or misrepresentation with particularity. Washkoviak I, 849 A.2d at 38-39.