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Snyder v. Alltran Education Inc.

United States District Court, S.D. West Virginia, Charleston Division

December 16, 2019

TAMARA J. SNYDER, Plaintiff,



         Pending before the Court is Plaintiff's Motion to Remand.[1] (ECF No. 9.) For the reasons discussed more fully below, the Court GRANTS the motion but DENIES fees and costs.

         I. BACKGROUND

         This action arises out of a dispute over the servicing of Plaintiff Tamara J. Snyder's (“Plaintiff”) student loan. Plaintiff became delinquent on her consolidated federally subsidized student loan payments, and the United States Department of Education referred her debt to Defendant Alltran Education, Inc., d/b/a Enterprise Recovery Systems, Inc. (“Alltran”) for collection. (ECF No. 1-1 at 6, ¶¶ 5-6.) Plaintiff alleges she contacted Alltran to request a rehabilitation agreement to bring her loan current, and Alltran allegedly agreed to allow Plaintiff to make reduced payments for nine months, after which time her loan would be deemed current. (Id. ¶¶ 7, 9.) Plaintiff asserts she made timely rehabilitation payments, but Alltran breached the agreement by placing her loan in default. (Id. ¶¶ 10-12.) Once her loan was placed in default, Plaintiff alleges she incurred damages, including default charges and wage garnishment. (Id. at 7, ¶¶ 14-16.)

         On March 11, 2019, Plaintiff filed her Complaint in the Circuit Court of Kanawha County, West Virginia, alleging breach of contract and unfair debt collection claims arising under the West Virginia Consumer Credit Protection Act (“WVCCPA”). (Id. at 7-10, ¶¶ 17-35.) Specifically, Count I of the Complaint alleges a breach of contract claim arising under West Virginia law for Alltran's alleged unilateral breach of the rehabilitation agreement. (Id. at 7-8, ¶ 21.) Count II asserts an unconscionable debt collection claim in violation of WVCCPA Section 46A-2-128. (Id. at 8, ¶ 25.) Plaintiff alleges Alltran “wrongfully offset Plaintiffs federal income tax refund in April 2015; placed her loan in default status; and caused Plaintiff to incur over $12, 000 in default charges.” (Id. ¶ 24.) Next, Count III alleges Alltran made misrepresentations in connection with the collection of debt in violation of WVCCPA Section 46A-2-127(d). (Id. at 9, ¶ 27.) Count IV asserts a claim for illegal charges based on Alltran's alleged attempted “collection of costs not provided by the terms of the obligation” in violation of WVCCPA Section 46A-2-128(c). (Id. ¶ 29.) Finally, Count V asserts a claim for estoppel based on the damages Plaintiff alleges she suffered in her reliance on Alltran's statement that the rehabilitation payments would bring her loan current. (Id. at 9-10, ¶¶ 31-34.)

         Defendant removed this case to this Court on April 11, 2019. (ECF No. 1.) In the Notice of Removal, Defendant asserts that the sole basis for this Court's jurisdiction is federal question pursuant to 28 U.S.C. § 1331. (Id. at 2, ¶ 4.)

         Plaintiff filed her motion to remand on May 30, 2019. (ECF No. 9.) Defendant filed its Response on June 20, 2019. (ECF No. 16.) Plaintiff filed her Reply on June 27, 2019. (ECF No. 19.) Defendant filed its motion to file sur-reply and/or to amend its notice of removal on July 3, 2017. (ECF No. 20.) As such, this motion is fully briefed and ripe for the Court's consideration.


         Under 28 U.S.C. § 1331, federal district courts have original jurisdiction “of all civil actions arising under the constitution, laws, or treaties of the United States.” The right to remove a case from state to federal court is provided under 28 U.S.C. § 1441, and states, in relevant part, that a defendant may remove “any civil action brought in a state court of which the district courts of the United States have original jurisdiction.”

         Because removal infringes on state sovereignty, federal courts strictly construe the removal statute and resolve all doubts in favor of remanding the case to state court. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941); see also Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (“Because removal jurisdiction raises significant federalism concerns, we must strictly construe removal jurisdiction.” (citation omitted)); Able v. Upjohn Co., 829 F.2d 1330, 1332 (4th Cir. 1987) (stating that “congressional desire to restrict removal has been understood to require that doubts about the propriety of removal be resolved in favor of retained state court jurisdiction”). Further, “[i]f the plaintiff challenges removal . . . the defendant ‘bears the burden of demonstrating that removal jurisdiction is proper.'” Scott v. Cricket Commc'ns, LLC, 865 F.3d 189, 194 (4th Cir. 2017) (quoting Strawn v. AT&T Mobility LLC, 530 F.3d 293, 296 (4th Cir. 2008).


         A. Substantial Federal Question

         The sole issue before the Court is whether Plaintiff's state law claims raise a substantial federal question such that jurisdiction can be established.[2] Plaintiff argues Defendant has failed to demonstrate that her claims raise a substantial federal question. (ECF No. 19 at 3.) Defendant responds that, while all Plaintiff's causes of action are based on state law, these claims are interrelated and require a determination of whether a rehabilitation agreement was formed. (ECF No. 16 at 4.) Defendant further argues that the question of whether a rehabilitation agreement was formed requires interpretation of the Higher Education Act (“HEA”), specifically 20 U.S.C. § 1078-6 and 34 C.F.R. §§ 685.211(f) and 682.405, which is a substantial federal question. (Id.)

         The well-pleaded complaint rule has long governed whether a case “arises under” federal law. See, e.g., Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28 (1974); Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (explaining that, absent diversity of citizenship, removal to federal court is proper only if a federal question is apparent on the face of the plaintiff's well- pleaded complaint). The well-pleaded complaint rule “makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.” Caterpillar, 482 U.S. at 392. However, the Supreme Court has long recognized that federal question jurisdiction also exists in a case in which state law creates the cause of action if the “plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.” Columbia Gas Transmission Corp. v. Drain, 191 F.3d 552, 557 (4th Cir. 1999) (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1, 27-28 (1983)); see also Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808-09 (1986); Smith v. Kansas City Title & Tr. Co., 255 U.S. 180, 199 (1921); Int'l Sci. & Tech. Inst., Inc. v. Inacom Commc'ns, Inc., 106 F.3d 1146, 1154 (4th Cir. 1997). The substantial federal question doctrine ‚Äúcaptures the commonsense notion that a ...

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