United States v. Olavarrieta
6 Fed. R. Serv. 3d 1319, 812 F.2d 640 (1987)
Rule of Law:
In a collection action for federally insured student loans, the government's six-year statute of limitations accrues when it pays the lender; furthermore, a defendant's third-party complaint is proper under Fed.R.Civ.P. 14(a) only if the third party's liability is dependent on the main claim, not if it constitutes a separate and independent action, and a state university's capacity to be sued is determined by state law.
Facts:
- Inter-National Bank of Miami issued federally insured student loans totaling $4,000 to Jose Olavarrieta under the Higher Education Act of 1965.
- Jose Olavarrieta defaulted on these loans.
- The United States, as guarantor, paid off Jose Olavarrieta’s liability to Inter-National Bank of Miami on March 3, 1979.
- Jose Olavarrieta had enrolled in the Cuban American Lawyers’ Institute (CALI) program at the University of Florida, a program designed to qualify Cuban refugees who had practiced law in Cuba to sit for the Florida bar examination.
- Jose Olavarrieta claimed the University of Florida breached its contract and violated the Higher Education Act by failing to award him a J.D. degree.
- Jose Olavarrieta did not dispute that he borrowed the money and signed the promissory notes for the student loans.
Procedural Posture:
- The United States sued Jose Olavarrieta in district court to collect the unpaid balance and interest on his federally insured student loans.
- Olavarrieta filed a third-party complaint against the University of Florida, and subsequently amended it to include the Board of Regents of the Division of Universities of the Florida Department of Education, seeking indemnification.
- The district court granted the University of Florida's motion to dismiss, finding it lacked capacity to be sued, among other grounds.
- The district court granted the Board of Regents' motion to dismiss, finding the claims time-barred and failing to state a claim.
- Olavarrieta appealed both dismissal orders to the Eleventh Circuit.
- The United States moved for summary judgment in the district court.
- The district court granted the government's motion for summary judgment on the issue of liability.
- Olavarrieta appealed the summary judgment order to the Eleventh Circuit.
- The district court subsequently entered a final judgment, including the amount owed, in favor of the United States.
- Olavarrieta filed a timely notice of appeal to the final judgment to the Eleventh Circuit.
- All three of Olavarrieta's appeals were consolidated by the Eleventh Circuit.
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Issue:
Did the district court correctly dismiss a student loan borrower's third-party claims against a state university and its Board of Regents, and correctly grant summary judgment to the United States for the repayment of defaulted federally insured student loans, despite the borrower's assertions regarding the statute of limitations and the eligibility of his educational program?
Opinions:
Majority - PER CURIAM
Yes, the district court correctly dismissed the third-party claims and granted summary judgment to the United States because the University of Florida lacked capacity to be sued, the third-party claims against the Board of Regents were not proper under Rule 14(a), the government's claim was not barred by the statute of limitations, and Olavarrieta's educational program was eligible under the Higher Education Act. First, the court confirmed jurisdiction over Olavarrieta's appeals, noting that premature appeals from dismissals of third-party claims were cured by the subsequent final judgment as they were amenable to certification under Fed.R.Civ.P. 54(b), and a premature appeal from summary judgment on liability was cured by a notice of appeal filed after the final judgment determining damages. Second, the court held that the district court properly dismissed the third-party complaint against the University of Florida because, under Florida law (Fed.R.Civ.P. 17(b)), the University lacks the capacity to be sued in its own name; this capacity is bestowed upon the Board of Regents. Third, the court found the district court correctly dismissed the third-party complaint against the Board of Regents because Olavarrieta's claim for breach of contract or fraud regarding a J.D. degree was a separate and independent action, not dependent on his liability for the student loans, and thus not a proper third-party claim under Fed.R.Civ.P. 14(a). Moreover, his civil rights conspiracy allegations were conclusory and not raised in the district court. Fourth, the court affirmed the summary judgment for the government, ruling that the six-year statute of limitations for the United States (28 U.S.C.A. § 2415(a)) accrues when the government pays the lender (March 3, 1979), not when it becomes a holder-in-due-course, making the suit filed on February 15, 1985, timely. Finally, the court concluded that the CALI program was an eligible institution under the Higher Education Act (20 U.S.C.A. § 1085) because it provided post-secondary education leading toward a recognized occupation, specifically preparing individuals to sit for the Florida bar examination.
Analysis:
This case provides important clarifications on federal procedural rules and substantive law concerning government-guaranteed student loans. It reinforces the specific jurisdictional requirements for curing prematurely filed appeals, highlights the strictures of Rule 14(a) regarding the dependent nature of third-party claims, and definitively establishes the accrual date for the statute of limitations in federal student loan collection actions. Furthermore, it clarifies the interpretation of 'eligible institutions' under the Higher Education Act, demonstrating that programs leading to professional qualification, even if not a traditional degree, can qualify for federal funding.
