UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Charles R. Estes et al

v. Civil No. 19-cv-822-LM Opinion No.

P ECMC Group, Inc.

ORDER

Pro se plaintiffs Charles R. Estes (d/b/a OEM-Tech) and Alia G. Estes bring

this action against defendant Education Credit Management Corporation

(“ECMC”), alleging that ECMC violated federal and state laws in attempting to

collect Alia’s student loan debt. Presently before the court is plaintiffs’ motion for a

ruling of default (doc. no. 45). Plaintiffs assert that ECMC committed a fraud on

the court by falsifying evidence and seek the entry of a default judgment as a

sanction. ECMC objects and seeks an award of costs and attorneys’ fees incurred in

responding to plaintiffs’ motion (doc. no. 48). For the following reasons, the court

denies plaintiffs’ motion as well as ECMC’s request for costs and attorneys’ fees.

DISCUSSION

The court first addresses the plaintiffs’ motion for a ruling of default, then

turns to ECMC’s request for costs and attorneys’ fees. I. Plaintiffs’ Motion for Default

The court has inherent authority to enter a default judgment to sanction a

litigant who commits a fraud on the court. Aoude v. Mobil Oil Corp.,

(1st Cir. 1989). However, plaintiffs “must surmount a ‘high bar’ to obtain

relief for [a] fraud on the court.” Glenwood Farms, Inc. v. O’Connor,

(D. Me. 2009) (quoting United States v. 6 Fox St.,

(1st Cir.

2007)); see also 6 Fox. St.,

(“Even such an offense as perjury may not

suffice—instead the type of conduct that would qualify as ‘fraud on the court’ must

be something on the order of bribing a judge.”).

To demonstrate that ECMC committed a fraud on the court, plaintiffs must

show by clear and convincing evidence that ECMC intentionally engaged in an

unconscionable attempt to improperly influence the court or unfairly hamper

plaintiffs’ case. See Aoude,

; see also, e.g., Hull v. Mun. of San

Juan,

(1st Cir. 2004) (plaintiff committed a fraud on the court

because he “lie[d] substantially and materially in the course of discovery”).

Although entry of default “need not be preceded by other, less drastic sanctions, it is

an extreme remedy, and should not lightly be engaged.” Aoude,

.

Indeed, because entry of a default judgment “sounds ‘the death knell of the lawsuit,’

district courts must reserve such strong medicine for instances where the defaulting

party’s conduct is correspondingly egregious.”

(quoting Damiani v. Rhode Island

Hosp.,

(1st Cir. 1983)).

2 Plaintiffs assert that the court should enter a default judgment against

ECMC because ECMC: (1) fabricated documents relating to Alia’s student loan; (2)

presented false testimony a sworn affidavit from an ECMC employee; and (3)

entered false data into the National Student Loan Data System (“NSLDS”). See

doc. no. 45 at 5. The court addresses these contentions in turn.

A. Fabricated Documents

In November 2017—prior to commencement of this action—plaintiffs

corresponded with ECMC by requesting that ECMC substantiate its claim that it

was the guarantor of Alia’s student loan. ECMC responded by, among other things,

producing various documents, including a document that ECMC claimed was a

summary of Alia’s loan, and another document that ECMC claimed was Alia’s

original loan application.

Plaintiffs claim that both documents were falsified. Regarding the loan

summary, plaintiffs claim that ECMC fabricated this document to state that

“ECMC-CA” was the original guarantor of Alia’s loan. Plaintiffs contend that

ECMC admitted it fabricated the loan summary by stating in a subsequent letter

that the California Student Aid Commission (“CSAC”) was the loan’s original

guarantor.1 As for the loan application, plaintiffs assert that ECMC falsified this

1 Plaintiffs also appear to argue that the subsequent letter was fabricated

because it contained “several assertions that the Estes . . . knew to be false.” Doc. no. 45 at 8.

3 document by affixing to it a “True and Exact” stamp in “an attempt to deceive Alia

Estes into accepting this document without questioning its authenticity.” Doc. no.

45 at 7-8. Plaintiffs claim that ECMC committed additional falsification when it

supplied plaintiffs with another copy of the purported loan application in discovery,

this time without the “True and Exact” stamp. As with the loan summary,

plaintiffs claim that ECMC admitted falsification by providing additional

documents contradicting its claim that the loan application bearing the “True and

Exact” stamp was an accurate copy of Alia’s original loan application.

Plaintiffs have failed to show by clear and convincing evidence that ECMC

intentionally fabricated these documents in an attempt to improperly influence the

court or unfairly hamper the plaintiffs’ case. See Aoude,

. At

bottom, plaintiffs’ claims of falsification boil down to assertions that certain

documents provided by ECMC contain inaccuracies and that the documents

contradict each other. These contentions go to the documents’ accuracy and

reliability; they do not demonstrate by clear and convincing evidence that ECMC

intentionally falsified the documents, let alone that they did so in an attempt to

perpetrate a fraud on the court. See Phinney v. Paulshock,

(D.N.H. 1998).

Plaintiffs also claim that ECMC fabricated new documents after this court’s

ruling on the parties’ cross-motions to dismiss (doc. no. 34). They claim that ECMC

“altered . . . evidence” in an attempt to shield its collections activities from the

court. Doc. no. 45 at 11. Specifically, they contend that ECMC provided plaintiffs

4 with a new loan summary in discovery that contained headings and information

that differ from the headings and information contained in the November 2017 loan

summary. Plaintiffs note that the original loan summary contains columns for

“Fees Balance,” “Prior Collections Costs,” and “Collections Costs”,” whereas the new

loan summary contains only a column for “Fees and Costs Balance.” Plaintiffs

assert that ECMC altered the titles and number of columns in the new loan

summary to hide its collections activities. Plaintiffs also note that the two loan

summaries contain conflicting information regarding the loan’s principal balance,

among other things.

Plaintiffs fail to demonstrate that ECMC fabricated the new loan summary in

an attempt to deceive the court or unfairly hamper their case. Apart from pointing

out the fact that the two summaries differ in certain respects, plaintiffs offer only

speculation as to the reason that they differ. There is no evidence that ECMC

intentionally altered the loan summary to hide evidence from the court or the

plaintiffs. Thus, plaintiffs have failed to demonstrate by clear and convincing

evidence that ECMC’s production of the new loan summary in discovery amounts to

a fraud on the court. See Aoude,

.

B. Presenting False Testimony in an Affidavit

ECMC previously filed a motion to dismiss in this litigation. In support of its

motion, ECMC submitted an affidavit prepared by Colleen Yanez, Litigation

Specialist for ECMC. Doc. no. 23-1. Yanez states in the affidavit that the same

5 loan application plaintiffs claim ECMC fabricated is “a true and accurate copy” of

Alia’s original loan application. Id. at ¶ 12. As with plaintiffs’ claim that ECMC

fabricated documents, plaintiffs state that ECMC’s submission of Yanez’s affidavit

entitles plaintiffs to a default judgment because the affidavit is contradicted by

other documents. However, while plaintiffs may take issue with the affidavit’s

accuracy or reliability, they have failed to demonstrate by clear and convincing

evidence that ECMC submitted it in an unconscionable attempt to improperly

influence the court or hamper plaintiffs’ case. See Aoude,

.

C. Entering False Data in NSLDS

NSLDS is the United States Department of Education’s database for student

aid. It receives data on student loans from various sources, including guaranty

agencies, and provides centralized access to loan information. Plaintiffs allege that

ECMC falsified NSLDS by altering the database to state that “ECMC-CA” was the

original guarantor of Alia’s loan. However, plaintiffs submit no evidence, apart

from speculation, in support of this contention. They have therefore failed to

demonstrate that ECMC committed a fraud on the court by falsifying NSLDS. See

Aoude,

.

6 D. Conclusion

Because the plaintiffs have failed to demonstrate that ECMC committed a

fraud on the court, the court declines to sanction ECMC by entering a default

judgment. Plaintiffs’ motion for a ruling of default is denied.

II. ECMC’s Request for Attorney’s Fees

ECMC seeks an award of costs and attorneys’ fees it incurred in responding

to plaintiffs’ motion for a default judgment. Generally, “attorneys’ fees are not

recoverable by a party unless statutorily or contractually authorized.” Mullane v.

Chambers,

(1st Cir. 2003). However, a court has the inherent

power to award attorneys’ fees against a party that has “acted in bad faith,

vexatiously, wantonly, or for oppressive reasons.” Whitney Bros. Co. v. Sprafkin,

(1st Cir. 1995) (quoting Chambers v. NASCO, Inc.,

, 45-46

(1991)). The court must exercise great restraint in awarding attorneys’ fees for bad

faith conduct, and should award fees only sparingly and for egregious

circumstances. Mullane,

(quotation omitted).

Here, the court does not find that these pro se plaintiffs filed their motion for

default in bad faith or for vexatious, wanton, or oppressive reasons. Plaintiffs state

that they had concerns about the accuracy of ECMC’s litigation materials and that

they contacted the American Bar Association for direction as to how to make the

court aware of their concerns. According to plaintiffs, it was suggested that a

motion for default may be an appropriate procedural mechanism to bring this issue

7 to the court’s attention. In these circumstances, the court finds that these pro se

plaintiffs acted in good faith. ECMC’s request for costs and attorneys’ fees is

therefore denied.

CONCLUSION

Plaintiffs’ motion for a ruling of default (doc. no. 45) is denied, as is ECMC’s

request for costs and attorneys’ fees incurred in responding to plaintiffs’ motion

(doc. no. 48).

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

January 6, 2021

cc: Chares R. Estes, pro se Alia G. Estes, pro se Counsel of Record.

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