Court Opinion

ID: 4353080
Source: CourtListenerOpinion
Date Created: 2018-12-20 22:00:30.478626+00
Date Added: 2024-06-11T14:44:52.534816
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                         To be cited only in accordance with Fed. R. App. P. 32.1

                    United States Court of Appeals
                                   For the Seventh Circuit
                                   Chicago, Illinois 60604
                                  Submitted October 17, 2018*
                                  Decided December 20, 2018

                                              Before

                              DIANE P. WOOD, Chief Judge

                              JOEL M. FLAUM, Circuit Judge

                              FRANK H. EASTERBROOK, Circuit Judge

No. 18-2001                                                      Appeal from the United
                                                                 States District Court for the
WADIE ISSAWI and HANAN ISSAWI,
                                                                 Southern District of Illinois.
     Plaintiffs-Appellants,

               v.                                                No. 17-cv-532-JPG-RJD
                                                                 J. Phil Gilbert, Judge.
PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY,
      Defendant-Appellee.

                                               Order

   Renee Issawi borrowed money from Charter One Bank to attend college. Her par-
ents, Wadie and Hanan Issawi, guaranteed payment by co-signing the loans; one or the
other parent co-signed each of the three loans. The contracts call for the application of
Ohio law. Pennsylvania Higher Education Assistance Agency (doing business as Amer-

   * After examining the briefs and the record, we have concluded that oral argument is unnecessary.
See Fed. R. App. P. 34(a); Cir. R. 34(f).
No. 18-2001                                                                          Page 2

ican Education Services or AES) agreed to service the loans on the Bank’s behalf. In 2016
AES demanded that the Issawis repay the loans and interest, then exceeding $100,000,
because Renee had defaulted. They responded with this suit.

    It began as a claim under the Fair Credit Billing Act, 15 U.S.C. §1666. The Issawis al-
leged that their daughter had forged their names to documents extending the loans’ due
dates, which caused interest to continue running. They faulted AES for not detecting the
forgery and for not alerting them to the extensions. The district court dismissed the
complaint to the extent it rested on §1666, ruling that this statute does not apply to loans
with fixed principal amounts. 2017 U.S. Dist. LEXIS 167322 (S.D. Ill. Oct. 10, 2017). (That
conclusion is not contested on appeal.) The court allowed the Issawis to amend their
complaint to present a claim under state law. Any such claim would rest on the diversi-
ty jurisdiction. 28 U.S.C. §1332.

    The Issawis duly amended, invoking “Consumer Fraud Laws”—though they did
not identify the laws or the states that had enacted them. AES responded that it had
done no more than what the Issawis agreed to. The original loan papers allowed Renee
to extend the due dates without her parents’ consent, so their signatures, whether or not
genuine, were immaterial. And these papers also reflected the Issawis’ agreement that
notices would go only to “the Borrower” (that is, to Renee); the parents, as guarantors,
waived their right to notices. The district court therefore dismissed the amended com-
plaint for failure to state a claim on which relief may be granted. 2018 U.S. Dist. LEXIS
41956 (S.D. Ill. Mar. 14, 2018). The judge thought that Renee’s conduct—forging her
parents’ signatures and failing to pay her debts—may be reprehensible, but AES did not
violate any duty to the Issawis.

    The parties’ appellate briefs agree that this suit comes within the diversity jurisdic-
tion, but they do not provide details. The defendant’s name led us to wonder just what
kind of entity it is—for although a state’s subdivision may be a “citizen of a state” for
the purpose of §1332, a state cannot be a citizen of itself. See Moor v. Alameda County, 411
U.S. 693 (1973). We directed the parties to file supplemental memoranda. AES then re-
versed course and denied that the suit comes within §1332. Its supplemental memoran-
dum contends that it is nothing but an alter ego of the Commonwealth of Pennsylvania.
If so, the district court lacked jurisdiction. AES adds that its prior concession does not
matter, because a litigant cannot waive the absence of subject-matter jurisdiction.

   One problem with AES’s newfound argument is that Pennsylvania law defines it as
a public corporation. 24 Pa. Stat. §5101. That a public corporation receives money from
the state does not make it an alter ego of the state, nor does the fact that money appro-
priated for the benefit of that corporation could be used to pay a judgment. A second
No. 18-2001                                                                            Page 3

problem is that United States ex rel. Oberg v. Pennsylvania Higher Education Assistance
Agency, 804 F.3d 646 (4th Cir. 2015), rejected the precise argument that AES presents to
us. It wants us to disagree with Oberg but is bound by principles of issue preclusion. See
Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979). Although, as AES observes, there are
exceptions to issue preclusion, AES failed to raise them in a timely fashion. Its principal
brief in this court treated itself as a corporation, not as the Commonwealth of Pennsyl-
vania by another name. Litigants may not waive or forfeit the absence of subject-matter
jurisdiction, but assuredly they may forfeit exceptions to the doctrine of issue preclu-
sion. Taylor v. Lawrenceberg, 909 F.3d 177, 182 (7th Cir. 2018). If Oberg is right, then there
is no jurisdictional problem—and AES has forfeited its opportunity to contend that it is
not bound by Oberg. Only after first avoiding issue preclusion could AES try to per-
suade us that Oberg is wrong. It doesn’t get to that stage.

   On the merits, we agree with the district court’s decision for the reasons the judge
gave. The Issawis signed contracts allowing their daughter to extend the time for pay-
ment without their consent; they also waived any right to notice of changes to the loans’
due dates and payment status. The Issawis may have been wronged by their daughter,
but they have not been wronged by AES.

    The Issawis’ further contention that the statute of limitations has run on any attempt
to collect the unpaid balance (and interest) is incorrect. Illinois has a ten-year limit for
suits on contracts, and Ohio has an eight-year limit. 735 ILCS 5/13-206; Ohio Rev. Code
§2305.06. Both states treat the time as starting, after a period of forbearance, when a
demand for payment is made and refused, for until then no default has occurred. AES
did not seek payment from the Issawis until 2016, the same year that Renee refused to
pay what she owes. The demand for payment is accordingly timely.

   Other arguments do not require discussion.

                                                                                   AFFIRMED