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HICA Educ. Loan Corp. v. Rivera

United States District Court, E.D. New York

November 4, 2014


For the Plaintiff: Frank Steven Tate, Esq., FRANK STEVEN TATE, North Massapequa, NY.

For the Defendant: Scott Lockwood, Esq., SCOTT LOCKWOOD, North Babylon, NY.

Page 209


Denis R. Hurley, Senior United States District Judge.

Plaintiff HICA Education Loan Corporation (" HICA" ) commenced this action against defendant Carlos J. Rivera (" Rivera" ) seeking " enforcement of an indebtedness arising under the United States Health Education Assistance Loan ([" HEAL" ]) Program (42 U.S.C. § § 292/294 et seq. and the Federal Regulations set forth in 42 C.F.R. Part 60" (the " HEAL Statutes and Regulations" ). (Compl. ¶ 3.) Presently before the Court is defendant's motion to dismiss plaintiff's Complaint pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. For the reasons set forth below, the motion is granted.


" The HEAL program is a Federal program [enacted] to provide 'student loan insurance for students in . . . eligible institutions,'" particularly for students in various medical fields. (Def.'s Mem. in Supp. at 1 (citing 42 U.S.C. § 292).) These loans can be made by schools, banks, credit unions, state agencies, and other institutions eligible as lenders, 42 C.F.R. 60.1(b), and the borrower is to " repay the loan in accordance with the repayment schedule" [agreed upon by the lender and the borrower] 42 C.F.R. 60.8(b)(4). The Secretary of the Department of Health and Human Services " insures each lender or holder for the losses of principal and interest it may incur" should a borrower default on the loan. 42 CFR § 60.1(c). If the borrower defaults on the loan, " the borrower's loan is then assigned to the Secretary [of the Department of Health and Human Services] . . . [and] at that time, the United States Government becomes the borrower's direct creditor and will actively pursue the borrower for repayment." 42 C.F.R. 60.8(b)(4).

Here, the defendant borrower signed six (6) promissory notes (the " Notes" ), totaling over $44,000, pursuant to the provisions of the HEAL Statutes and Regulations. Subsequently, the Notes were sold, transferred, and assigned to plaintiff by the Student Loan Marketing Association (" SLMA" ). At some point in time, defendant failed to make the payments that were due and owing under the terms of the Notes, and despite demand for payment, has not repaid those sums. Plaintiff now seeks to recover the unpaid principal together with unpaid interest on the notes, the sum of which is over $46,000.

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I. Legal Standard

A defendant may move to dismiss a suit for lack of subject matter jurisdiction under Rule 12(b)(1) " when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The plaintiff has the burden to prove subject matter jurisdiction by a preponderance of the evidence. Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005). In reviewing a motion to dismiss under Rule 12(b)(1), the Court must accept all facts in the complaint as true. Town of Babylon v. Fed. Hous. Fin. Agency, 699 F.3d 221, 227 (2d Cir. 2012).

II. Whether Subject Matter Jurisdiction Exists

In the Complaint, plaintiff asserts that " [j]urisdiction is proper under 28 U.S.C. § 1331 because Plaintiff's claims arise under the Constitution, laws, or treaties of the United States" as " Plaintiff seeks enforcement of an indebtedness arising under the [HEAL Statutes and Regulations]." (Compl. ¶ 3.) Defendant, however, argues that the Court does not have subject matter jurisdiction over plaintiff's claims because this case does not " arise under" the HEAL Statutes and Regulations. (Def.'s Mem. in Supp. at 1.) Defendant contends that " [t]he statute and regulations involving the HEAL program and relied upon by the Plaintiff create no rights, no duties and no responsibilities between the parties." ( Id. at 2.) Defendant bases its argument on the Supreme Court's ruling in Gunn v. Minton, where the Court analyzed " whether a state law claim alleging legal malpractice in the handling of a patent case must be brought in federal court" since " [f]ederal courts have exclusive jurisdiction over cases 'arising under any Act of Congress relating to patents'" pursuant to 28 U.S.C. 1338(a). 133 S.Ct. 1059, 1062, 185 L.Ed.2d 72 (2013). In Gunn, the Court emphasized that the " arising under" phrase in both 28 U.S.C. § 1331 and § 1338 have been interpreted identically. Id. at 1064. Moreover, the Court explained that a case can " arise under" federal law when " federal law creates the cause of action asserted." Id. In addition, however, the Court clarified that in some instances " where a claim finds its origins in state rather than federal law . . . arising under jurisdiction still lies." Id. To further explain this basis for jurisdiction, the Court expounded upon a prior holding in Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) stating " federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court ...

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