Trial - Claimant failed to establish by a preponderance of the credible evidence that Defendant was liable for defamation, fraud, malice, negligence or interference with contractual relations when NYSHESC reported Claimant as being in default on a student loan.
|Claimant(s):||SAMANTHA C. MILNER|
|Claimant short name:||MILNER|
|Footnote (claimant name) :|
|Defendant(s):||STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||CHRISTOPHER J. McCARTHY|
|Claimant's attorney:||Samantha C. Milner, Pro Se|
|Defendant's attorney:||ANDREW M. CUOMO
Attorney General of the State of New York
By: Thomas R. Monjeau, Esq., AAG
|Third-party defendant's attorney:|
|Signature date:||December 23, 2009|
|See also (multicaptioned case)|
Pro Se Claimant, Samantha C. Milner, failed to establish, by a preponderance of the credible evidence, that Defendant, acting through the New York State Higher Education Services Corporation ("HESC"), was liable for defamation of character, fraud, malice, negligence or interference with contractual relations when it reported her as being in default on a student loan. A bifurcated trial, addressing liability issues only, was held at the Court of Claims in Albany, New York on October 5, 2009. There were four witnesses: Claimant; and HESC employees, Alexander Rodriguez, Bruce Fellows, and Brian Matthews.
Ms. Milner asserted that she was defamed by HESC when it denied her request for Tuition Assistance Program ("TAP") financial aid on November 23, 2007 on the grounds that she was in default on a student loan (see Ex. A). The dispute concerns one of several Federal student loans that Claimant obtained from lending institutions that were guaranteed by Defendant through HESC. Most were obtained nearly 20 years ago and have been the subject of prior litigation between the parties (see Matter of Milner v New York State Higher Educ. Servs. Corp., 4 Misc 3d 221 [Ct Cl 2004], affd 24 AD3d 977 [3d Dept 2005]).
The TAP denial letter was issued on account of a $1,700 loan Claimant obtained in 1991 to attend Mildred Elley Business School (the "Mildred Elley loan"). Mr. Rodriguez testified that HESC purchased the Mildred Elley loan from the original lender when Claimant defaulted on it in 1993. He further explained that HESC paid the lender the principal amount, together with any unpaid interest, in the sum of $1,817.36.
Unfortunately, much confusion resulted from the complicated and cumbersome manner in which loans are tracked by HESC's computer database. Problems began when the Mildred Elley loan was not recorded correctly under Ms. Milner's account because HESC was unable to read Claimant's Social Security number from her handwritten loan application (see Ex. 1, p. 33; Ex. 5). When HESC detected that the Mildred Elley loan was not linked to a correct Social Security number, HESC created a second, additional file as a place-holder to flag the loan (the so-called "Pseudo-loan"; see Ex. 1, pp. 66-69; Ex. 9). Limitations imposed by HESC's computer system made it impossible to merge the Pseudo-loan under Claimant's correct Social Security number, after it was ascertained, so long as Claimant was in default on other loans.
By 1998, Claimant had defaulted on a number of student loans obtained through HESC, including the Mildred Elley loan. At that time, Ms. Milner attempted to consolidate those loans under the Federal Direct Consolidation Loan Program (see Ex. 18). Ms. Milner asserted that the Mildred Elley loan was consolidated then (see Claim, ¶ 2). At trial, however, Claimant was more equivocal. At some points, she maintained that she thought and assumed that she had consolidated all of her loans with HESC in 1998. At other times, however, she admitted that she was not permitted to consolidate either the Pseudo-loan or the Mildred Elley loan recorded under an incorrect Social Security number (see Ex. 18) because they were not listed under her correct Social Security number. Claimant contended, in essence, that, but for the incorrect Social Security number, she would have consolidated the Mildred Elley loan along with her other loans in 1998. In any event, the State asserted that the Mildred Elley loan was not consolidated in 1998 (see Ex. 12, ¶ 3) and has never been repaid.
After the 1998 consolidation, it then became possible to reflect the Mildred Elley loan under Ms. Milner's Social Security number in HESC's records. However, further inexplicable delays occurred before HESC finally updated its records in 2004 to identify the Pseudo-loan under Ms. Milner's correct Social Security number (see Ex. 1, pp. 62-64). Nevertheless, a 2007 National Student Loan Data System list of Claimant's student loans continued to reflect both loans and appears to indicate that the full $1,700 disbursement remained outstanding on the Pseudo-loan, while no balance remained on the Mildred Elley loan (Ex. 15, items 13-14).
Meanwhile, Claimant filed for bankruptcy in 2003 and HESC transferred the Mildred Elley loan to Educational Credit Management Corporation ("ECMC"), which is part of the United States Department of Education (see Ex. 12, ¶ 3). Mr. Rodriguez confirmed that no money was paid to HESC as a result of the transfer. He further testified that a review of Claimant's account indicated that no voluntary payments ever were made by Ms. Milner with respect to the Mildred Elley loan from the time of the default and purchase by HESC in 1993, until HESC assigned it to ECMC in 2003. Mr. Fellows also confirmed that the Mildred Elley loan was in default at the time it was transferred to ECMC.
Further confusion resulted because HESC initially assigned to ECMC paperwork relating to the Pseudo-Loan, rather than the documentation for the Mildred Elley loan (see Ex. 1, pp. 14-18, 36). Mr. Fellows testified that he reviewed Ms. Milner's account in April 2008 and again found entries for both loans. Claimant's loan history was corrected at that time to remove the Pseudo-loan and to reflect ECMC as the holder of the Mildred Elley loan (see Ex. 1, pp. 18-20). Mr. Fellows said that he participated in a conference call with Claimant and ECMC on April 14, 2008. He explained to Ms. Milner that: the loan assigned to ECMC was not a duplicate; it was the Mildred Elley loan; the Mildred Elley loan had not been part of her earlier loan consolidation; and she still owed the debt. In recognition of "the complications in this matter," however, Mr. Fellows said that HESC offered to forgive all interest ($1,054) owed by Claimant through the date of assignment (see Ex. 1, p. 14). Mr. Fellows stated that Claimant declined that offer and indicated that she didn't think that she should have to pay the loan at all.
"At the outset, the gravamen of an action in defamation is an injury to reputation" (PJI 3:23 at 197 ). When a claimant alleges that his or her reputation has been injured as a result of defendant's statements, such claimant "is relegated to whatever remedy he [or she] might have under the law of defamation and cannot recover under principles of negligence" (Colon v City of Rochester, 307 AD2d 742, 744 [4th Dept 2003], appeal dismissed and lv denied, 100 NY2d 628 ).
A defamation action is premised upon a false statement, published by defendant to a third party without privilege, with fault measured by at least a negligence standard, and such statement caused either special damages, or constituted defamation per se (Roche v Claverack Coop. Ins. Co., 59 AD3d 914, 916 [3d Dept 2009]; see Dillon v City of New York, 261AD2d 34, 37-38 [1st Dept 1999]).
A statement that someone is in default on a debt is not libelous per se (Douglas v Weber, 106 Misc 338, 339 [Sup Ct New York Special Term 1919]; see Brown v Reed, 10 Misc2d 289, 291 [Sup Ct Kings County 1957]). "Special damages contemplate 'the loss of something having economic or pecuniary value' " (Liberman v Gelstein, 80 NY2d 429, 434 , quoting Restatement [Second] of Torts, § 575, comment b). A full and accurate enumeration of the special damages alleged is required and failure to itemize them constitutes an insufficient statement of such special damages (Drug Research Corp. v Curtis Publ. Co., 7 NY2d 435, 440-441 ; Larson v Albany Med. Ctr., 252 AD2d 936, 939 [3d Dept 1998]).
"Truth provides a complete defense to defamation claims" (Dillon v City of New York, 261 AD2d 34, supra at 39; see Ingber v Lagarenne, 299 AD2d 608, 609 [3d Dept 2002], lv denied 99 NY2d 507 ). However, in defamation actions that concern a private claimant and speech that relates purely to matters of private concern, such as this Claim, it appears that the common-law rule still governs so that defendant has the burden of affirmatively pleading and proving the truth of the statement (Bingham v Gaynor, 203 NY 27, 34 ; see CPLR §3018; Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C3018:14 at 156; 2009 Cumulative Pocket Part C3018:16  at 132; PJI 3:33).
"Fraud is established where a defendant knowingly misrepresents a material fact, someone justifiably relies upon that misrepresentation and the plaintiff is thereby injured" (Roche v Claverack Coop. Ins. Co., 59 AD3d 914, supra at 918).
The Court has considered all of the evidence, including a review of the exhibits and listening to the witnesses testify and observing their demeanor as they did so. At the outset, the Court wishes to stress that it shares Claimant's evident frustration with the confusion caused by HESC's complex and cumbersome computer database, confusion that was compounded when HESC initially assigned to ECMC documentation relating to the Pseudo-loan, rather than the Mildred Elley loan. Nevertheless, the Court finds that Claimant failed to establish, by a preponderance of the credible evidence, that Defendant defamed her.
First, Claimant failed to establish "the time, manner and persons to whom the publication [of the November 23, 2007 TAP letter] was made" (Wadsworth v Beaudet, 267 AD2d 727, 729 [3d Dept 1999]). To establish publication, "it is not enough to show that defendant disseminated the defamatory communication; it must also be shown that a third party read it or heard it" (Vogel v State of New York, 187 Misc2d 186, 188 [Ct Cl 2000]). Here, the TAP letter was addressed to Ms. Milner and does not indicate that a third party was copied on the correspondence (see Ex. A). Claimant, likewise, testified about her receipt of the letter (see also Ex. 1, p. 3, § 19). No evidence was presented, however, that either the TAP letter itself, or the statement that Claimant was in default, was ever communicated to, or read by, a third party.
Claimant did present evidence that the Mildred Elley loan and the Pseudo-loan both were listed on the Federal student loan database in 2007 (see Ex. 15). That document does not indicate, however, the source of the information recorded, or the date(s) when it was received. The same may be said about Claimant's Federal Institutional Student Information Record. While the default is noted, the source and date(s) of the information are not (see Ex. 1, pp. 38, 41). In addition, the notation on the bottom of Exhibit 15 indicates that it was printed from a Federal government internet site on September 13, 2007. The Federal Institutional Student Information Record is dated September 14, 2007. In other words, both documents were dated over two months before the TAP letter was generated on November 23, 2007. Thus, the Court determines that the entries in the above-referenced documents cannot reflect the TAP letter that is the subject of this litigation.
Moreover, while Claimant suggested that Defendant reported her default on the Federal student loan database in 2007 (see Ex. 1, p. 4, § 26), at another point, when she opposed Defendant's motion to dismiss made at the conclusion of her case, Ms. Milner intimated that it was ECMC that reported the offending information. The Court finds, further, that it cannot determine from this record when and from whom such data was received and whether they may represent prior statements that pertain to the earlier litigation. Thus, the Court concludes that Claimant failed to establish publication of the allegedly defamatory statement.
Second, Claimant pleaded that she was damaged in the amount of $40,000 (see Claim). Elsewhere, she stated that her compensatory damages measured $140,000 (see Ex. 1, p. 12, § 9). In either case, round figures, without an itemization, represent an assertion of general and not special damages. As such, they are not legally sufficient (Drug Research Corp. v Curtis Publ. Co., 7 NY2d 435, supra at 441; Larson v Albany Med. Ctr., 252 AD2d 936, supra at 939; Boyle v Stiefel Labs., 204 AD2d 872, 875 [3d Dept 1994]).
Finally, with respect to the question of the truth or falsity of the statement that Claimant was in default, Defendant failed to plead truth or justification as an affirmative defense. Thus, the Court concludes that the State waived that defense. The Court notes, however, that the record demonstrates that Claimant never repaid the Mildred Elley loan.
Turning to the asserted negligence cause of action, this Court previously determined that "the essential nature of Ms. Milner's defamation action is readily discernable from her Claim" (Milner v State of New York, Ct Cl, Claim No. 114828, Motion No. M-76008, April 22, 2009, McCarthy, J. [UID No. 2009-040-033]). "Defamation does not occur by accident" and such an action is not "transformed into one for negligence merely by" calling it by that name (Iafallo v Nationwide Mut. Fire Ins. Co., 299 AD2d 925, 927 [4th Dept 2002]). Thus, the Court now concludes that Claimant is restricted to the remedies available to her under that action and she cannot recast it as a claim for negligence.
Finally, the record does not support Claimant's causes of action sounding in fraud or interference with contract.
Accordingly, the Court determines that Claimant failed to establish by a preponderance of the credible evidence that Defendant defamed her and the Claim is dismissed. All motions and cross-motions are denied as moot. All objections upon which the Court reserved determination during trial, and not otherwise addressed herein, are now overruled.
The Chief Clerk is directed to enter judgment accordingly.
December 23, 2009
Albany, New York
CHRISTOPHER J. McCARTHY
Judge of the Court of Claims