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ARMSTRONG v. ACCREDITING COUNCIL FOR CONTINUING ED

April 10, 1997

VANESSA ARMSTRONG, Plaintiff,
v.
ACCREDITING COUNCIL FOR CONTINUING EDUCATION & TRAINING, INC., et al., Defendants.



The opinion of the court was delivered by: LAMBERTH

 This case comes before the court on the summary judgment motions of defendant Accrediting Council for Continuing Education & Training (ACCET) and plaintiff Armstrong. Upon consideration of the parties' written submissions and the relevant law, for the reasons set forth below, the court will deny both plaintiff Armstrong's and defendant ACCET's motions.

 I. Factual Background

 Plaintiff Armstrong, together with members of the certified class, are former students of the National Business School (NBS), a vocational school located in the District of Columbia before its closing in 1990. Plaintiff filed this suit in December of 1991 naming several defendants and asserting several causes of action. Plaintiff maintains that defendant ACCET is liable for fraud because ACCET extended the accreditation of NBS without any knowledge of whether the school met ACCET's standards for accreditation.

 The underlying facts of the relationship of ACCET and NBS are undisputed. NBS applied to ACCET *fn1" for accreditation in 1985. Prior to 1985, NBS had been accredited by the Association of Independent Colleges and Schools, but was seeking a new accrediting agency for reasons unrelated to this suit. ACCET granted NBS an accreditation that was to expire after two years. Pl's Exhibit 14, A-3, Minutes of the Accrediting Commission, April 3-5, 1985. The organization's regulations permitted accreditations to be granted for periods of one to five years. During the Commission's discussion, ACCET reviewers expressed several concerns about the Washington, D.C. branch of NBS, and required an interim report from NBS to address the areas of concern which included the curriculum, the instructional materials, the clarity of the school's mission statement, and the school's financial status. Id. According to ACCET, interim reports are required of schools when a situation exists that suggest a school "runs a high risk of not maintaining the desired level of quality." Pl's Exhibit 5, ACCET Application for Continued Recognition, at 62-63. NBS's initial ACCET accreditation was to last until May of 1987. However, ACCET did not review any of the potential problems of NBS before the scheduled expiration and, without an examination, granted NBS a series of automatic extensions. The initial automatic extension was until November of 1987, but the accreditation was automatically extended again to March of 1988, and was automatically extended again until November of 1988, over a year and a half after NBS's original accreditation had expired. Pl's Exhibit 12, Minutes of Accrediting Commission Conference Call; Pl's Exhibit 14, A-9, Minutes of the Accrediting Commission, March, 1987, Pl's Exhibit 14, A-11, Minutes of the Accrediting Commission, November, 1987.

 Named plaintiff Armstrong first became interested in NBS in June of 1988. Deposition of Vanessa Armstrong, p. 41. After an initial interview and a screening test, Armstrong enrolled in NBS and began classes in August of 1988. Id. Armstrong began noticing that NBS did not carry through on all of the school's promises during her first three weeks in class. Id. at 56-57. After the introductory instruction class, Armstrong began to notice more and more problems, and three months after beginning the program, Armstrong began voicing her concerns to the administration of the school. Id. at 70. In May of 1989, Armstrong, along with other students, began complaining about NBS to outside authorities, including D.C. regulatory authorities and the Department of Education. Armstrong never finished her educational program, and ultimately filed this suit.

 II. Procedural Background

 Plaintiff filed this suit on December 10, 1991. In February of 1992, defendant ACCET filed a motion to dismiss for failure to state a claim upon which relief could be granted. In September of 1993, the court granted ACCET's motion to dismiss plaintiff's claim under the D.C. Consumer Protection Procedures Act, but allowed plaintiff's claims for common law fraud and misrepresentation to continue. 832 F. Supp. 419. *fn2" Having considered the arguments of the parties on the dismissal of the case under 28 U.S.C. 1367, the court decided to continue to exercise jurisdiction in July of 1995. A second motion to dismiss was denied in August of 1995, and a class was certified in November of 1995. The case is now before the court on the parties' cross-motions for summary judgment.

 Defendant ACCET moves for summary judgment on several grounds. First, ACCET argues that plaintiff's claim is barred by the statute of limitations. Second, ACCET argues that plaintiff has failed to establish a prima facie case of fraud. Third, ACCET argues that public policy requires the court to not question ACCET's decisions regarding the accreditation of NBS. Armstrong has also moved for partial summary judgment, arguing that summary judgment is appropriate on all issues affecting the class, specifically that the elements of fraud have been established.

 III. Analysis

 A. Standard

 Summary judgment is appropriate where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Inferences drawn from the facts must be viewed in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). If summary judgment is to be denied, there must be evidence on which the jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, 477 U.S. 242, 252, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial," summary judgment may be granted. Celotex, 477 U.S. at 322.

 B. Discussion

 1. Prima Facie Fraud

 Defendant ACCET argues that plaintiff has failed to establish a prima facie case of fraud under D.C. law. More specifically, defendant ACCET argues that plaintiff has failed to establish a single element of the five required for fraud. In her motion, named plaintiff argues that the undisputed facts show that the class has proven all five elements. The court concludes that both parties are wrong. ACCET's most significant problem is the repeated mischaracterization of plaintiff's claim. Plaintiff has never argued that the accreditation of NBS was a promise by ACCET that she would receive a perfect education. Instead, plaintiff has argued that ACCET committed common law fraud when it represented that NBS met accreditation standards when the agency did not have the knowledge to make this statement. While there are factual disputes that preclude summary judgment for the plaintiff class, the court concludes that plaintiff has established a prima facie case of fraud.

 This court must turn to the law of D.C. to determine if plaintiff has a legitimate claim. However, the D.C. courts have not been faced with the legal questions and factual situation now before the court. Thus, the court is placed in the position of determining what the D.C. Court of Appeals would do. Because the D.C. courts have not adhered to the traditional elements of fraud, but have instead shown a willingness to find exceptions when appropriate, the court concludes that plaintiff has established a prima facie case of fraud under D.C. law.

 In the District of Columbia, there are five traditional elements of fraud, each which must be established by clear and convincing evidence which is not equally consistent with either honesty or deceit: (1) a false representation, (2) in reference to a material fact, (3) made with the knowledge of its falsity, (4) with the intent to deceive, and (5) on which action is taken in reliance upon the representation. Blake Construction Co. v. Coakley Co., 431 A.2d 569, 577 (D.C. 1981). The D.C. courts have demonstrated a willingness to expand the meanings of these elements when appropriate situations are presented. For example, the requirement of knowledge of the falsity may be met by a showing that the statements were "recklessly and positively made without knowledge of (their) truth." Howard v. Riggs National Bank, 432 A.2d 701, 706 (1981). Using this approach of appropriate flexibility, the court concludes that plaintiff's claim should survive a motion for summary judgment.

 a. False Representation

 In arguing that plaintiff has failed to establish this element, ACCET makes two assertions. ACCET first argues that ACCET did not make any representations to the students, and second, that plaintiff is unable to show that any representations were false.

 It is true that the students learned of the accreditation through a handbook made and distributed by the school itself, and not directly from ACCET. However, it is important to note that ACCET does not deny that the accreditation was valid. In fact, ACCET both enabled and encouraged NBS to publish its accreditation. In materials published by ACCET entitled "Deriving the Most from your CNCE Accreditation," the agency suggest that schools publicize their accreditations by noting the ...


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