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Bossier Parish Sch. Bd. v. Pioneer Credit Recovery, Inc.

Court of Appeal of Louisiana, Second Circuit

January 14, 2015

BOSSIER PARISH SCHOOL BOARD, Plaintiff-Appellee
v.
PIONEER CREDIT RECOVERY, INC., Defendant-Appellant

Appealed from the Twenty-Sixth Judicial District Court for the Parish of Bossier, Louisiana. Trial Court No. 137861. Honorable Michael Nerren, Judge.

AFFIRMED.

WALTER D. WHITE, Counsel for Appellant.

ROLAND V. McKNEELY, III, Counsel for Appellee.

Before WILLIAMS, MOORE and PITMAN, JJ.

OPINION

Page 1008

[49,525 La.App. 2 Cir. 1] MOORE, J.

Pioneer Credit Recovery Inc., a collection agency, appeals a judgment ordering it to repay the Bossier Parish School Board (" BPSB" ) $5,055.93, the amount BPSB erroneously sent to Pioneer pursuant to a federal order of withholding (administrative wage garnishment) after the order was released. We affirm.

Factual and Procedural Background

Nancy White, a former BPSB employee, defaulted on her United Student Aid Funds student loan. United Student Aid retained Pioneer, a subsidiary of Sallie Mae, to collect. In June 2010, Pioneer sent BPSB the order of withholding, directing it to withhold from Ms. White's earnings an amount sufficient to pay off her defaulted $1,339.09 loan, and to forward the withheld funds to Pioneer each pay period. BPSB complied, taking $459.63 out of Ms. White's paycheck each month starting in August 2010. By October 10, the default amount was paid off. On October 27, Pioneer sent BPSB a federal release order of withholding, authorizing it to stop withholding and forwarding funds. BPSB stopped withholding money from Ms. White's check, but through clerical error continued sending $459.63 a month, out of BPSB's funds, to Pioneer. By the time the error was detected, in September 2011, BPSB had overpaid $5,055.93 to Pioneer. In October, BPSB finally advised Pioneer of the error and demanded a refund; Pioneer responded that it had already " refunded" the overpayment directly to Ms. White.

BPSB filed this suit in January 2012 to recover the overpayment. In later pleadings, it argued that recovery was based on the theory of payment [49,525 La.App. 2 Cir. 2] of a thing not owed, La. C.C. arts. 2299 and 2300. Pioneer admitted that it had received the overpayments but argued that BPSB was solely at fault for failing to comply with the federal guidelines for withholdings, 20 U.S.C. § 1095a and 34 C.F.R. 682.410(b)(9), and for disregarding the release of order of withholding. Pioneer's director of portfolio management stated by affidavit that it had refunded all overpayments directly to Ms. White, under the mistaken belief that the money was hers. BPSB argued that in point of fact, the overpayments were public funds.

The matter proceeded to trial on joint stipulations. The district court rendered a written opinion citing La. C.C. art. 2299, " A person who has received a payment for a thing not owed to him is bound to restore it to the person from whom he received it[,]" and Revision Comment (b) to that article, " Louisiana courts interpreting this provision have correctly ordered persons who received things or payments not owed to return them to the persons who made the delivery or the payment." The court found that the person who made the payment was BPSB, not Ms. White. It further found that Pioneer's direct payments to Ms. White were made " under Pioneer's sole discretion in an attempt to remedy the overpayment," but did not amount to restoring it to the person from whom Pioneer received it. The court concluded

Page 1009

that Pioneer's obligation was to restore the $5,055.93 to the original sender, BPSB, and ...


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