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JACKSON v. CULINARY SCH. OF WASHINGTON

January 6, 1993

MICHAEL JACKSON, et al. Plaintiffs,
v.
CULINARY SCHOOL OF WASHINGTON, et al. Defendants.



The opinion of the court was delivered by: CHARLES R. RICHEY

 I. INTRODUCTION

 II. DISCUSSION

 A. Because the Defendants have established the absence of any specific facts tending to show the existence of an agency relationship between the Department of Education and the Culinary School here involved, the Plaintiffs may not recover on the basis of such a relationship.

 B. Because the Defendants have shown the absence of any evidence that the lenders delegated any substantial lender functions or responsibilities to the School, no special relationship can exist between the lenders and the School. Consequently, the Plaintiffs may not prevent the Secretary of Education from collecting on the student loans in this case on the basis of the nonexistent special relationship.

 C. Because the Plaintiffs concede that they have no evidence of preferential treatment rising to the level of a "Quid Pro Quo" between the School and the other Defendants, there can be no claim upon which relief can be granted under D.C. Code § 28-3809(a)(3) against the Secretary, guaranty agencies, or lenders.

 D. The Omission of the FTC Holder Notice is not fatal to Defendant's position herein, and this ministerial technicality does not give rise to a claim upon which relief can be granted pursuant to D.C. Code § 28-3904.

 1. Because the Defendants have established that the failure to include the FTC Holder Notice does not make the promissory contract unreasonably favorable to the Defendants, and the Plaintiffs have not set forth evidence that the contract was unreasonably favorable to the Defendants, the omission of the Notice is not an unconscionable trade practice under § 28-3904(r).

 2. Plaintiffs' claim under § 28-3904(x) must fail because this section applies only to goods and not to services, which are here involved.

 III. CONCLUSION

 OPINION OF CHARLES R. RICHEY UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION

 The Court has before it several Motions for Summary Judgment, the opposition thereto, the replies, and upon consideration thereof, the Court has decided for the reasons hereinafter set forth to grant the Defendants' Motions for Summary Judgment. *fn1"

 The Plaintiffs have already obtained an entry of default against the Culinary School of Washington and from Barkev Kibarian, the Chairman of the School's Board of Directors. The Plaintiffs also reached a private accomodation with the Defendant Ohio Student Loan Commission, which was dismissed from the case on September 9, 1992. They now seek to obtain relief against the Secretary of Education, various state and private guaranty lending agencies, and two lenders, namely, Crestar Bank and the Fifth Third National Bank of Toledo, Ohio.

 The Court proceeds under the summary judgment standard set forth in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor," id. at 255, but "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48.

 The burden rests with the moving party "to show initially the absence of a genuine issue concerning any material fact." Adickes v. S.H. Kress and Co., 398 U.S. 144, 159, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). The moving party may demonstrate the absence of any genuine issues of material fact in two ways. First, the moving party may, through affidavits, depositions, or other supporting evidence, negate an essential element of the non-movant's claim or claims. Id. at 159-60. Second, the moving party may, through similar documentation, point out to the court the absence of evidence to support an essential element of the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In other words, "the moving party must explain its reasons for concluding that the record does not reveal any genuine issues of material fact . . . ." Bias v. Advantage Int'l, Inc., 284 U.S. App. D.C. 391, 905 F.2d 1558, 1560 (D.C. Cir.), cert. denied, 498 U.S. 958, 112 L. Ed. 2d 397, 111 S. Ct. 387 (1990). When the moving party meets its burden through either one of the above methods, the non-moving party must then go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S. at 325. "When the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). In this case, the Defendants have established, through their submitted materials, that the Plaintiffs will not be able to meet their burden of proof at trial. The Plaintiffs, on the other hand, have not shown that there is a genuine issue of material fact for trial.

 After careful review of the record the Court must conclude that the Plaintiffs may not recover against the Secretary or the Banks or the state or private guaranty agencies because these entities had no involvement in the allegedly fraudulent activities of the two Defendants against whom the Plaintiffs already have a default. Moreover, the terms of the loan documents do not violate local or federal law so as to give rise to a claim for which relief may be granted in the Federal Courts against the Defendants remaining in the case because the terms of the loans are not unconscionable nor do they constitute a deceptive trade practice insofar as the guaranty agencies, the two Banks, and the Secretary are concerned.

 Merely because there may have been a higher than usual default rate on the student loans here involved, as the Plaintiff alleges, it cannot be disputed on this record that the current Defendants had no knowledge of the alleged fraudulent activities of the Culinary School in question or its Board. These current Defendants are so far detached from the cause of the Plaintiffs here that they cannot and should not be found liable for conduct they had nothing to do with in the first place. The Court takes some satisfaction in the fact that, in the future, schools such as the one here involved will not be eligible to participate in student loan programs if the schools maintain a high student loan default rate. 20 U.S.C. § 1085(a)(3) (Supp. 1992).

 Some of the Defendants, namely the Secretary of Education, Higher Education Assistance Foundation, Great Lakes Higher Education Corporation, Nebraska Student Loan Program, Inc., and Texas Guaranteed Student Loan Corporation, have filed counterclaims against some of the Plaintiffs to recover amounts allegedly due on the student loans. Currently, there is no dispositive motion before the Court with respect to those counterclaims. At this point, the Court is unable to determine the precise amounts of those counterclaims and the particular Plaintiffs against whom the counterclaims have been made. The papers submitted in the case thus far have not specified the amounts because the counterclaims have been a side issue in the case.

 In the Court's discretion, the Court will dismiss the counterclaims without prejudice. The purpose of Rule 13 of the Federal Rules of Civil Procedure, which governs counterclaims, is to "prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters." Southern Constr. Co. v. Pickard, 371, U.S. 57, 60 (1962) (emphasis added). All of the common matters of this suit have been resolved. The instant Opinion and accompanying Order have resolved the common issues of law in this case. At issue now are the actual amounts to which the Defendants are entitled to claim on the outstanding loans.

 The Court sees no reason to require the Defendants to resolve each one of these different claims in the same litigation. It would be unwise and inefficient, as well as unfair to all the parties involved, to attempt to adjudicate such specific issues in a large, combined proceeding such as this one, with a large number of Plaintiffs and Defendants. These amounts may be litigated separately when and if the need for the same arises. Consequently, the Court will ...


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