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Commonwealth v. Pennsylvania Higher Education Assistance Agency (Lawyers Weekly No. 09-019-18)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1784CV02682-BLS2 ____________________ COMMONWEALTH OF MASSACHUSETTS v. PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY d/b/a FedLoan Servicing ____________________ MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS The Commonwealth of Massachusetts has sued the Pennsylvania Higher Education Assistance Agency (PHEAA) for engaging in allegedly unfair and deceptive acts and practices against Massachusetts student loan borrowers. It appears to be undisputed that PHEAA, although originally established to help provide student loans and grants for Pennsylvania residents, has become one of the largest student loan servicers in the country and now manages the federal student loan accounts of hundreds of thousands of Massachusetts residents under a contract with the United States Department of Education. The Commonwealth claims that PHEAA violated the federal Consumer Financial Protection Act and G.L. c. 93A by charging and collecting amounts not owed by borrowers, failing to process borrowers’ applications for income driven repayment plans in a timely and accurate manner, and failing to properly count borrowers’ qualifying payments under the Public Service Loan Forgiveness program. PHEAA has moved to dismiss this action on several grounds. The Court will DENY this motion because it is not convinced that PHEAA is an arm of the Commonwealth of Pennsylvania and shares in its sovereign immunity, that PHEAA cannot be sued under G.L. c. 93A or that its alleged misconduct is exempt from c. 93A because it is affirmatively permitted by federal law, or that the United States Department of Education is an indispensable party. 1. Background—PHEAA’s Enabling Act. Certain aspects of the enabling act that created PHEAA provide background relevant to PHEAA’s claims that it is entitled to invoke the Commonwealth of Pennsylvania’s sovereign immunity and that it cannot be sued under G.L. c. 93A because it is a public entity. – 2 – PHEAA was established by the Pennsylvania Legislature as “a public corporation and government instrumentality.” 24 Pa. Stat. § 5101. It is authorized to make, guarantee, and service student loans. Id. § 5104(3). By statute, PHEAA has substantial financial and operational independence from the Commonwealth of Pennsylvania. PHEAA can spend money “for any of its purposes” without needing any legislative appropriation. Id. § 5104(3). Although PHEAA must deposit its revenues “in the State Treasury,” it may use its funds whenever it wants “at the discretion of the board of directors for carrying out any of the corporate purposes of the agency.” Id.; see also id. § 5105.10 (PHEAA’s loan servicing, loan repayment, and other revenues are held within State Treasury in a segregated “Educational Loan Assistance Fund,” are all “appropriated to [PHEAA’s] board,” and “may be applied and reapplied as the board shall direct and shall not be subject to lapsing”). And PHEAA may […]

Fortress, Inc. v. Massachusetts Emergency Management Agency (Lawyers Weekly No. 09-025-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION No. 2014-3904 BLS 1 FORTRESS, INC. vs. MASSACHUSETTS EMERGENCY MANAGEMENT AGENCY MEMORANDUM AND ORDER ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT The sole theory of defendant’s motion for summary judgment is that plaintiff, Fortress, Inc., did not qualify for special consideration of its bid for a contract because its principal place of business was not in Massachusetts. If Fortress did not qualify for special consideration, its claim for breach of contract against defendant, Massachusetts Emergency Management Agency (“MEMA”), based on losing the bid, fails. Whether Fortress’s principal place of business was in Massachusetts is the subject of approximately 25 numbered paragraphs of the parties’ Joint Statement of Undisputed Facts (“JSUF”). Notwithstanding the title of the JSUF suggesting that the facts are undisputed, at least 15 of those paragraphs are expressly disputed, either by MEMA or by Fortress. Thus, the issues before the court are (a) whether the disputed paragraphs of the JSUF are properly supported as required under Superior Court Rule 9A, and (b) whether the existence of the dispute is material such that summary judgment must be denied. This case arises out of a dispute between Fortress and MEMA regarding a Request for Responses (“RFR”) issued by MEMA in May 2014. The RFR solicited bids to provide Standard 1 Operating Procedure manuals for the Commonwealth’s emergency operations centers. The RFR indicated that it was targeted to solicit bids from small businesses participating in the Commonwealth’s Small Business Purchasing Program (“SBPP”). The RFR stated that MEMA intended “to evaluate bid responses from and to award a contract to a SBPP-participating business(es) who submit a bid that meets or exceeds the solicitation criteria only.” If no SBPP qualified vendors submitted a responsive bid, MEMA reserved the right to award the contract to a non-SBPP business. Fortress submitted a bid to the RFR as a SBPP qualified vendor. Fortress had previously registered as a SBPP qualified vendor through an online form on the website of the Commonwealth’s Operational Services Division (“OSD”). MEMA, however, awarded the contract to a different vendor who was not qualified as a SBPP vendor. MEMA determined that Fortress was not qualified as a SBPP vendor because its principal place of business was not in Massachusetts. When Fortress’s bid was evaluated as a non-SBPP bid, it scored lower than the winning bid of a different non-SBPP vendor. MEMA moves for summary judgment on the single ground that Fortress did not qualify as a SBPP vendor. Absent such qualification, MEMA argues that Fortress’s claim fails. The reason Fortress does not qualify, according to MEMA, is because Fortress’s principal place of business was not in Massachusetts. The SBPP was established in 2010 by […]

Adams v. Congress Auto Insurance Agency, Inc. (Lawyers Weekly No. 11-177-16)

NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 15-P-452 Appeals Court MARK ADAMS vs. CONGRESS AUTO INSURANCE AGENCY, INC. No. 15-P-452. Middlesex. March 10, 2016. – December 21, 2016. Present: Kafker, C.J., Vuono, & Henry, JJ. Negligence, Insurance company, Employer, Foreseeability of harm, Causation, Retention of employee, Entrustment, Emotional distress. Damages, Emotional distress. Consumer Protection Act, Responsibility of employer. Practice, Civil, Summary judgment, Motion to amend. Civil action commenced in the Superior Court Department on April 16, 2013. Motions for summary judgment and to amend the complaint were heard by Peter B. Krupp, J. Henry P. Sorett for the plaintiff. Jeffrey S. Robbins for the defendant. HENRY, J. This case arose from an employee’s improper use of confidential information accessed through her workplace computer. The employee gave that information to her boy friend, who used it to intimidate a witness, Mark Adams. Adams brought this action against the employer, Congress Auto Insurance Agency, Inc. (Congress Agency or agency). A Superior Court judge dismissed four of his five claims. The case proceeded to discovery on the remaining claim against the agency that alleged negligent failure to safeguard Adams’s personal information. The same judge subsequently granted the agency’s motion for summary judgment on the remaining count and in the same memorandum and order denied Adams’s motion to amend his complaint to reinstate the dismissed claims and to add a claim for violation of 18 U.S.C. §§ 2721-2725. Adams appealed. We affirm in part and reverse in part. Summary judgment. “The standard of review of a grant of summary judgment is whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to judgment as a matter of law.” Lev v. Beverly Enterprises-Massachusetts, Inc., 457 Mass. 234, 237 (2010) (Lev), quoting from Cargill, Inc. v. Beaver Coal & Oil Co., 424 Mass. 356, 358 (1997). The burden rests on the defendant, as the moving party, to affirmatively demonstrate the absence of a genuine issue of material fact on every relevant issue. Ibid. Facts. Viewed in the light most favorable to Adams, as required at this stage of the proceedings, the summary judgment record discloses the following facts. The Congress Agency hired Elizabeth Burgos in August, 2003, as a customer service representative, promoting her to […]