Court Opinion

ID: 4214296
Source: CourtListenerOpinion
Date Created: 2017-10-24 20:02:49.2599+00
Date Added: 2024-06-11T14:41:49.228266
License: Public Domain

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                                    ORIGINAL        ·
                                     Qeourt of jfeberal Qelaint.5
                                        No. 17-343 T                                       FILED
                                   Filed: October 24, 2017
                                                                                          OCT 2 ~ 2017
                                                                                         U.S. COURT OF
                                                                                        FEDERAL CLAIMS
SUSAN FLANDER,
                                                       Motion to Dismiss, RCFC 12(b)(l);
                                                       Lack of Jurisdiction; Discharge of
              Plaintiff,                               Student Loan Debt; Department of
                                                       Education; Motion for Paitial Summary
                                                       Judgment, RCFC 56; Treasury Offset
v.                                                     Program; Offset of Tax Refunds; Illegal
                                                       Exaction
UNITED STATES OF AMERICA,

              Defendant.

       Susan Flander, prose, Garland, TX, plaintiff.

      Douglas T Hoffman, Esquire, United States Department of Justice, Civil Division,
Washington, DC, for defendant.

                                 OPINION AND ORDER

Hodges, Senior Judge.

       Susan Flander sued the United States for discharge of her student loan debt and
return of her tax refunds collected by the Department of Education as offsets for that
debt. She alleges that the United States through the Department of Education ignored her
2002 Chapter 7 bankruptcy, though it would have been Chapter 13. She claims,
moreover, that the Department did not "substantiate" her student loan debt adequately or
aclmowledge that she made certain cash payments toward that debt.

       Defendant filed a motion to dismiss for lack of subject matter jurisdiction pursuant
to Rule 12(b)(l), a motion for partial summary judgment pursuant to Rule 56, and a
motion to dismiss plaintiffs Complaint for violation of Rule 8(a) of this court. Rule 8(a)
requires that pleadings articulate a short and plain statement of the claim. Defendant
requests in the alternative that plaintiff be required to provide a more definite statement
of her pleading pursuant to Rule 12(e).

      Ms. Flander alleges that she filed for bankruptcy in 2002 pursuant to Chapter [13]
and that she made repeated requests for assistance from the Internal Revenue Service

                            7017 1450 ODDO 1346 1833
because of alleged identity theft. She also cites various sections of the Code of Federal
Regulations governing administration of federal student loans.

       Defendant denies that plaintiffs debts were discharged in bankruptcy, and we
have seen no evidence that they were. While bankruptcy court records from the Northern
District of Texas are sparse and ambiguous, it is clear that either she did not pursue her
bankruptcy or it was dismissed early on. In any event, the action terminated without
discharge of plaintiffs education loan debt. 1

       Plaintiff alleges that the United States Department of Education withheld tax
refunds from her by setoff and otherwise took money from her under color of law. For
that reason, we have attempted to analyze this case according to the principles of illegal
exaction. However, the possibility that plaintiffs education debts were discharged in
bankruptcy is an essential factual element of illegal exaction given the facts of this case.
Plaintiff cannot argue that the setoff was illegal or improper without a showing that her
debts were discharged. 2 Records of the Bankruptcy Court in Texas do not show that any
of Ms. Flander's debts were discharged prior to dismissal of her petition. For that reason,
as supplemented by the comments set out below, we GRANT defendant's motion to
dismiss.

                                             BACKGROUND

       Plaintiff received a number of subsidized and unsubsidized Stafford loans to
attend the DeVry Institute of Technology between 1995 and 1999. All of these loans are
in default and they are held by the Department of Education for collection. The
Department of Education sent plaintiff notices of default over several years and advised
her that it would collect on her unpaid loan debt through the Treasury Offset Program.
She did not respond.

       When the Department recovered several payments by offset beginning in 2015,
plaintiff complained that it lacked the authority to collect on her education debt. She
mentioned bankruptcy often in her Complaint and elsewhere, though she has not claimed

1 Defendant notes in particular that the document entitled "Trustee's Final Report and Account," which appears to
assess a Chapter 13 bankruptcy claim, is blank in the fields for "Debtor Discharged" and "Plan Confirmed," and
includes language showing that "the case was DISMISSED PRIOR TO CONFIRMATION on I2/10/2002." Without
a confirmed plan, a dismissed bankruptcy claim discharges no debt.
2 Plaintiff cites the applicable code provision in response to defendant's motion to dismiss and for summary
judgment, even bringing to light that student loan debts are presumptively non-dischargeable:

        Chapter 13 Bankruptcy becomes effective upon confamation, see 11 U.S.C. §§ 1324, 1325, and
        will result in a discharge of the debts listed in the plan if the debtor completes the payments the
        plan requires, see § l328(a). A debtor may obtain a discharge of government-sponsored student
        loan debts only if failure to discharge that debt would impose an 'undue hardship' on the debtor
        and his dependents.§§ 523(a)(8); 1328; see United Student Aid Funds, Inc. v. Espinosa (2010).

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direct! y that the education debts were subject to a stay in bankruptcy or discharged in
bankruptcy. Ms. Flander must have known that her bankruptcy petition had been
dismissed 3 and that none of her debts had been discharged.

       The Department of Education responded to plaintifrs challenges with a summary
of her loans and copies of her promissory notes. Plaintiff asserted that the documentation
provided by the Department of Education as evidence of her debt was insufficient,
claiming that several of the documents she received were "unofficial." She contends that
some did not identify her by name or lacked proper signatures. Plaintiff has not attempted
to show that copies of the promissory notes provided by the Department of Education to
her and to this court are forgeries or otherwise are invalid.

       Plaintiffs arguments seem intended only to confuse or delay defendant or the
court. For example, she states that the Department of Education disbursed her education
loans to other students in error. Yet plaintiff claims that she made payments on those
loans that the Department did not credit her for. Plaintiff also thinks she might have been
a victim of identity theft. Plaintiff has not attempted to support any of these contentions.

                                               DISCUSSION

       Allegations of pro se complaints are held to a less stringent standard than those
drafted by attorneys. See Hughes v. Rowe, 449 U.S. 5, 9 (1980) (ruling that pro se
complaints "however inartfully pleaded are held to less stringent standards than formal
pleadings drafted by lawyers" (internal citations and quotation marks omitted)). Plaintiff
has benefitted from federal court policy mandating that we construe pro se complaints in
a way that allows prose plaintiffs every opportunity to have their cases heard fairly.

        Plaintiffs Complaint as drafted does not include allegations within this court's
jurisdiction. We do not have jurisdiction over discharges in bankruptcy, for example, and
we could not issue an injunction to require that her tax refunds be returned. This court has
cured similar problems by construing such complaints as seeking relief for illegal
exaction, a cause of action for which this court does have jurisdiction. See Wagstaff v.
United States, 105 Fed. Cl. 99 (2012) (construing a prose plaintiffs claim to recover the
amount of her tax refund used for a tax refund offset as an illegal exaction claim and
accepting jurisdiction to hear such a claim); Kipple v. United States, 102 Fed. Cl. 773
(2012) (holding that the court could construe a pro se plaintiffs claim to recover the
amount of a tax refund unlawfully offset as an illegal exaction claim, over which the
Court of Federal Claims has jurisdiction).

3 Defendant's motion to dismiss includes the Notice of Dismissal letter for plaintiffs case (No. 02-33316-SAF-13)
from the Clerk of Court of the United States Bankruptcy Court for the Northern District of Texas dated December
24, 2002. 1t is addressed "TO THE DEBTOR(S), ALL CREDITORS AND OTHER PARTIES IN INTEREST" and
reads: "You are hereby notified that after notice and hearing, an order was entered on Dec. 10, 2002 DISMISSING
these proceedings."

                                                      -3-
       Though plaintiff does not claim an illegal exaction or otherwise adopt this
alternative argument, we construed her Complaint liberally to maintain jurisdiction of her
case. Our effort to assist a pro se plaintiff in accordance with Supreme Court policy has
resulted in delay and confusion in resolving her case.

        Defendant moved to dismiss plaintiffs Complaint for lack of subject matter
jurisdiction. See US CFC Rule 12(b)( 1). Motions to dismiss pursuant to Rule 12(b)(!) are
judged according to a preponderance of the evidence standard. See Reynolds v. Army &
Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988) ("[O]nce the [trial] court's
subject matter jurisdiction [is] put in question ... [the plaintiff] bears the burden of
establishing subject matter jurisdiction by a preponderance of the evidence.").

       The Tucker Act, 28 U.S.C. § 1346, is this court's jurisdictional statute. The
Supreme Court has held that being only a jurisdictional statute, a plaintiff suing the
United States in the Court of Federal Claims must also allege violation of a "money-
mandating" statute or regulation that has been violated - that is a provision that
authorizes the Government to reimburse plaintiff or pay her damages if it is violated.
Defendant argues that plaintiff has not alleged the requisite money-mandating law or
regulation.

        Plaintiff contends that a provision of the Tucker Act mandates money payments in
tax refund actions. The court has jurisdiction over "[a]ny civil action against the United
States for the recovery of any internal-revenue tax alleged to have been erroneously or
illegally assessed or collected." 28 U.S.C. § 1346(a)(l). The Tucker Act does not create
substantive rights to money payments. Rather, when a substantive right enforceable
against the United States for money damages exists by virtue of a separate source of
substantive law, the Act confers jurisdiction to this court. See United States v. Testan, 424
U.S. 392, 398 (1976).

        Plaintiff points to 31 U.S.C. § 3716 as a potential money-mandating statute. That
statute authorizes the Treasury Offset Program whereby agencies of the federal
government can recover debts by way of setoff. The section plaintiff highlights requires
only that proper notice be given where an agency employs the setoff provisions of that
law. Plaintiff would not be entitled to recover damages due to deficient notice in violation
of 31 U.S.C. § 3716 or obtain cancellation of her debts even if the notice provision were
violated. The statute does not contain money-mandating language tied to deficient or
insufficient notice in the Department of Education's administration of the offset program.
Baker v. United States, 123 Fed. Cl. 203, 205-206 (2015) (citing McNeil v. United States,
78 Fed. Cl. 211, 228 (2007) ("Sections ... , and 3716 are not money-mandating sources
of jurisdiction in this court."), ajj"d, 293 Fed. Appx. 758 (Fed. Cir. 2008) (unpublished
per curiam)).

                                            -4 -
        Defendant anticipated in its pleadings that the court could construe plaintiffs
allegations as an illegal exaction claim. Therefore, defendant requests summary judgment
on that claim because plaintiff has not shown that she can prevail on the key elements of
that legal theory. That is, plaintiffs debts were discharged in bankruptcy and the
Department of Education did not substantiate her obligations to the Agency.

        Plaintiff responds to defendant's assessment of her bankruptcy documents by
stating, "the Chapter 13 plan issued was paid in full for litigation in attempts to settle by
both debtors." It is difficult to know what this means. Like other assertions that Ms.
Flander has made in this case, this one puts together words that only appear to have
meanmg.

        Ms. Flander contends that the Department of Education has not satisfactorily
substantiated "entitlement to funds," claiming that defendant has falsified records and
"manipulate[ d] [her] student records and other personal identity information." She says
that if the court accepts defendant's "pathetic argument of 'lack of jurisdiction,' then
justice is not served." She would then "request[] criminal investigation and prosecution
of defendants on the grounds of theft of refunds for continued violation under 15 U.S.C. §
1692k(a)."

        The preliminary plan for banlauptcy payments under Chapter 13 - which plaintiff
insists shows that her debt was "paid in full" according to its terms - appears to be a
proposed Chapter 13 banlauptcy payment plan and not a summation of payments made
or proof of payment in accordance therewith. Plaintiff has provided no basis for her belief
that a September 13, 2016 letter to her from the Department of Education or the
promissory notes attached are fraudulent or false.

        We have construed plaintiffs Complaint in such a way that we could accept
jurisdiction and offer relief if appropriate. However, she has not provided evidence or
even made clear arguments that support her contentions that the signed promissory notes
produced by defendant were forged or fraudulently obtained. We have no evidence that
the Department of Education was not assigned those notes properly and in the normal
course.

                                     CONCLUSION

        This court does not have jurisdiction over plaintiffs claims for discharge of her
student loan debt or for monetary relief equivalent to the tax refund offsets paid to the
Department of Education. We construed plaintiffs prose Complaint as a claim for illegal
exaction to evaluate her arguments within a context that is common in this court's
jurisdiction.

       Plaintiff cannot establish the key element that she needs to argue that defendant's
offset was improper - that her educational debts were discharged in banlauptcy. She

                                            -5-
cannot show that the promissory notes, on which the Department of Education relies to
prove her debt, are fraudulent, or that assigning those debts via the Treasury Offset
Program was improper.

     Defendant's motion to dismiss for lack of subject matter jurisdiction is
GRANTED. Defendant's motion for partial summary judgment is moot and therefore is
DENIED. The Clerk of Court will dismiss plaintiffs Complaint. No costs.

      IT IS SO ORDERED.

                                              Thomas C. Wheeler
                                              Judge, for
                                              Robert H. Hodges, Jr.
                                              Senior Judge

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