Dunn v. Nelnet et al

1
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
CHRISTINA LEAS DUNN 	PLAINTIFF
V. 	CASE NO. 5:25-CV-5107
NELNET 	DEFENDANT
OPINION AND ORDER
Now before the Court are Defendant Nelnet’s Motion to Dismiss (Doc. 10), which
the Court previously took under advisement, and pro se Plaintiff Christina Leas Dunn’s
Motion to Declare Nelnet in Noncompliance (Doc. 58), Motion to Compel and for
Sanctions (Doc. 59), and Motion for Clarification (Doc. 62). Each of these motions is fully
briefed.
This case concerns Ms. Dunn’s student loan debt and Nelnet’s collection efforts
and reporting of the same. Ms. Dunn concedes that she took out the student loans at
issue around 2009. However, she believes, in essence, that Nelnet does not have the
power to collect on this debt or report it to credit bureaus because Nelnet has not shown
her the right paperwork. This belief stems from earlier bankruptcy proceedings. In 2013,
Ms. Dunn filed for Chapter 13 bankruptcy in this district. See In re Christina Leas Dunn,
No. 5:13-BK-73596 (Bankr. W.D. Ark. 2013). Nelnet, who claims to be the authorized
servicer of her student loans, filed a proof of claim. Ms. Dunn filed an objection asserting
that Nelnet's proof of claim did not have adequate supporting documentation connecting
Nelnet to any debt owed by Ms. Dunn. Id. ECF 40. Nelnet did not respond to Ms. Dunn's
objections or appear at the hearing thereon, and the bankruptcy court sustained her
objection. Id. ECF 89, ¶ 1. Nelnet filed an amended proof of claim, which Ms. Dunn
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 1 of 10 PageID #:
<pageID>

2
objected to for failing to resolve the original deficiencies. Id. ECF 142. The Court again
sustained the objection. Id. ECF 218. Nelnet did not file a second amended proof of claim.
About a year later, in 2015, Ms. Dunn voluntarily dismissed her bankruptcy petition. Id.
ECF 306. No bankruptcy plan was confirmed, and no money was disbursed to creditors.
Id. ECF 309.
Eight years later in 2023, Ms. Dunn sent a letter to Nelnet asserting that, pursuant
to the bankruptcy court's order sustaining her objections, Nelnet did not have "standing"
to collect on her student loan debt. (Doc. 2-2). Nelnet continued making efforts to collect
on Ms. Dunn's loans and notified her of its determination that her credit records, including
the outstanding student loan debt, were accurate. (Docs. 2-3 & 2-8). This lawsuit
followed.1 Ms. Dunn accuses Nelnet of fraud and deceptive trade practice under Arkansas
law and of violating the Fair Debt Collections Practices Act (“FDCPA”). Nelnet asked the
Court to dismiss all her claims under Rule 12(b)(6). (Doc. 10). After the hearing on this
and other motions, in consideration of Ms. Dunn’s position as a pro se litigant, the Court
directed Nelnet to produce “the document(s) authorizing it to service Ms. Dunn’s loan.”
(Doc. 57, p. 5).
Nelnet timely responded with a number of documents, including its contract with
the Department of Education to service student loans, the result of a search in the
National Student Loan Data System identifying Nelnet as the loan servicer for Ms. Dunn’s
loans, Ms. Dunn’s payment history to Nelnet for the loans, and correspondence between
Nelnet and Ms. Dunn in 2011 through 2013. The Court does not consider these
1 Ms. Dunn also sued the credit bureaus for reporting her student loan debt. The Court
previously dismissed all claims against the credit bureaus. See Doc. 57.
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 2 of 10 PageID #:
<pageID>

3
documents for purposes of Nelnet’s Motion to Dismiss (Doc. 10), but will revisit them
when it reaches Ms. Dunn’s motions. Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d
978, 982 (8th Cir. 2008) (“When ruling on a motion to dismiss under Rules 12(b)(6) . . . ,
a district court generally may not consider materials outside the pleadings.”).
To avoid dismissal under Federal Rule of Civil Procedure 12(b)(6), the “complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks
omitted). In ruling, the Court must “accept as true all facts pleaded by the non-moving
party and grant all reasonable inferences from the pleadings in favor of the nonmoving
party.” Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012) (quotation marks
omitted). However, “courts ‘are not bound to accept as true a legal conclusion couched
as a factual allegation.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting
Papasan v. Allain, 478 U.S. 265, 286 (1986)). A claim is plausible on its face when “the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.
As the Court will discuss below, Ms. Dunn’s claims do not survive Nelnet’s motion
regardless of whether Nelnet has proved its authority to service Ms. Dunn’s debt because
factual allegations supporting unrelated elements of each of her claims are absent. But
Ms. Dunn also makes claims about the current legal status of her student loan debt—that
it is void or, alternately, unenforceable by Nelnet. For Ms. Dunn’s benefit as a pro se
litigant, the Court will endeavor to clarify why her legal conclusions to this effect are
incorrect or irrelevant to her case against Nelnet.
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 3 of 10 PageID #:
<pageID>

4
Ms. Dunn’s initial theory of this case was that the bankruptcy court’s orders
sustaining her objections to Nelnet’s proof of claim voided said claim. This is incorrect for
at least three reasons.
First, a finding that a creditor’s proof of claim is deficient does not mean that the
creditor “is forever barred from establishing the claim.” Matter of Stoecker, 5 F.3d 1022,
1028 (7th Cir. 1993). Second, whatever effect the bankruptcy court’s orders might have
had if Ms. Dunn had completed a Chapter 13 plan, she did not do so. “[A] Chapter 13
case cannot bring about any permanent reordering of property and contract rights, partial
or comprehensive, until the debtor meets a threshold requirement: entitlement to a
discharge, by ‘complet[ing] . . . all payments under the plan’ pursuant to 11 U.S.C.
§ 1328(a).” In re Scheierl, 176 B.R. 498, 505 (Bankr. D. Minn. 1995). Third, the bankruptcy
proceedings would not have voided Nelnet’s interest even if Nelnet filed no proof of claim
at all and Ms. Dunn subsequently completed a Chapter 13 plan because “[s]tudent loans
are not ordinarily dischargeable under Chapter 13.” In re Bender, 368 F.3d 846, 847 (8th
Cir. 2004) (citing 11 U.S.C. §§ 523(a)(8), 1328(a)(2)).
Ms. Dunn has also claimed ignorance of Nelnet’s ownership or servicing authority
of the debt and is attempting to place the onus on Nelnet to prove its interest. Her chief
complaint on this front is that Nelnet failed to produce the original promissory note and a
chain of assignments between Bank of America (who made the loan) and itself. She does
not affirmatively allege that Nelnet is not the authorized loan servicer—just that it might
not be because it has not proved that it is. But a plaintiff, by filing a lawsuit, cannot force
a defendant to produce evidence of the lawfulness of its conduct before the plaintiff has
even alleged conduct that violates the law. This is exactly the kind of fishing expedition
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 4 of 10 PageID #:
<pageID>

5
that Rule 12(b)(6) is meant to prevent. Where, as here, Ms. Dunn has haled Nelnet into
court, Nelnet has no burden to preemptively prove the validity of a debt. Instead, Ms.
Dunn must allege facts supporting the conclusion that Nelnet’s conduct in connection with
the debt violated the law. She has not done so.
But even assuming Nelnet has no enforceable interest in Ms. Dunn’s student
loans, her claims still fail.
Ms. 	Dunn 	first 	claims 	that 	Nelnet 	committed 	fraud 	and 	fraudulent
misrepresentation. Under Arkansas law, fraud has five elements:
(1) a false representation of a material fact; (2) knowledge that the
representation is false or that there is insufficient evidence upon which to
make the representation; (3) intent to induce action or inaction in reliance
upon the representation; (4) justifiable reliance on the representation; and
(5) damage suffered as a result of the reliance.
Tyson Foods, Inc. v. Davis, 347 Ark. 566, 580 (2002). Fraudulent misrepresentation has
the same elements. Wofford v. Goslee, 2001 WL 1507303, at *3 (Ark. Ct. App. Nov. 28,
2001). Ms. Dunn has not made out the fourth or fifth elements, justifiable reliance on the
representation 	resulting 	in 	damage, 	because 	she 	has 	not 	relied 	on 	Nelnet’s
representations. Instead, she has denied their veracity. Dugan v. Cureton, 1 Ark. 31, 41
n.1 (1837) (“If a party to whom a misrepresentation was made knew it to be false he can
claim nothing on account of it.”). Her claims are based on harm she suffered because
nonparties 	like 	banks 	relied 	on 	Nelnet’s 	representations 	to 	assess 	Ms. 	Dunn’s
creditworthiness. But she cannot assert a fraud claim based on the reliance of others.
“The maker of a fraudulent misrepresentation is not liable to one who does not rely on
that misrepresentation. This is a lack of causal relation in its simplest form.” MFA Mut. Ins.
Co. v. Keller, 274 Ark. 281, 285 (1981).
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 5 of 10 PageID #:
<pageID>

6
Her statutory fraud claims are also defective. She cites three Arkansas statutes,
though she does not identify particular claims within them, but the Court will nonetheless
discuss each. First, she cites Arkansas Code § 5-37-227, which prohibits various forms
of identity fraud and theft. Section 5-37-227 is primarily a criminal provision, although it
does permit private enforcement as available under the Arkansas Deceptive Trade
Practices Act (“ADTPA”).2 Id. § 5-37-227(g)(2). Assuming Ms. Dunn has a cause of action
under § 5-37-227, she has not alleged facts showing a violation. Section 5-37-227 forbids
using another person’s identifying information “to create, obtain, or open a credit account,”
skimming payment cards or transferring payment information without authorization, and
obtaining another person’s identifying information without authorization and using it for
any unlawful purpose. None of the facts Ms. Dunn has alleged could conceivably fit within
this statute.
2 While a lay person like Ms. Dunn may expect that anyone can sue someone else for
breaking the law, it’s a bit more complicated than that. Instead, lawmakers decide who
gets to sue for violations of a particular law. Some laws, like criminal laws, can only be
enforced in court by the government. The victim of a crime cannot prosecute the
perpetrator. Other laws, like the ADTPA, can be enforced by certain private citizens. The
ADTPA allows suit by a “person who suffers an actual financial loss as a result of his or
her reliance on the use of a practice declared unlawful” by the ADTPA. Ark. Code Ann.
§ 4-88-113(f)(1)(A). A person who does not suffer an actual financial loss because of a
deceptive trade practice cannot sue the deceitful trader. Take, for example, the case of
Parnell v. FanDuel, Inc., 2019 Ark. 412 (2019). There, the plaintiff opened an account on
FanDuel, a sports-betting website, and deposited $200 in his account after seeing a
FanDuel advertisement telling “new subscribers that if they deposited $200 into their
account, FanDuel would match their deposit with $200.” Id. at *2–3. FanDuel did not
match his deposit. Id. The Arkansas Supreme Court held that the plaintiff had no cause
of action under the ADTPA even if the ad was deceptive because he had not suffered an
actual loss—he could just withdraw the $200 he had deposited. Id. at *5–6.
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 6 of 10 PageID #:
<pageID>

7
Second, she cites Arkansas Code § 5-37-201, which criminalizes forgery. This
provision has no private enforcement mechanism—it is just a criminal statute. Ms. Dunn
cannot sue to enforce this statute.
Third, Ms. Dunn cites the entire ADTPA, Arkansas Code § 4-88-101 et seq. She
does not identify any specific ADTPA provision under which she is suing. But under any
provision, private enforcement is available only to a “person who suffers an actual
financial loss as a result of his or her reliance on the” deceptive practice. Ark. Code Ann.
§ 4-88-113(f)(1)(A). As with her fraud claims, Ms. Dunn has not alleged that she relied on
Nelnet’s alleged misstatements, and she cannot sue under the ADTPA based on harm
caused to her by the reliance of others.
Finally, Ms. Dunn brings various claims under the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. §§ 1692e–g. Each of these provisions applies only to a “debt
collector.” “Debt collector” is a carefully defined term in the FDCPA. It expressly excludes
“any person collecting or attempting to collect any debt owed or due or asserted to be
owed or due another to the extent such activity . . . concerns a debt which was not in
default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F).
Ms. Dunn has not asserted that her student loans were in default at the time the
loan holder obtained them. Accordingly, she has not alleged facts sufficient to support a
reasonable inference that Nelnet is liable for violating the FDCPA. See Somlar v. Nelnet
Inc., 2017 WL 35703, at *3 (E.D. Mo. Jan. 4, 2017).
Ms. Dunn asks the Court to grant her leave to file an amended complaint. Under
Rule 15(a)(2), the Court “should freely give leave [to amend] when justice so requires.”
“A district court may appropriately deny leave to amend where there are compelling
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 7 of 10 PageID #:
<pageID>

8
reasons such as undue delay, bad faith, or dilatory motive, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the non-moving
party, or futility of the amendment.” Moses.com Sec., Inc. v. Comprehensive Software
Sys., Inc., 406 F.3d 1052, 1065 (8th Cir. 2005). “[P]arties should not be allowed to amend
their complaint without showing how the complaint could be amended to save the
meritless claim.” Wisdom v. First Midwest Bank, 167 F.3d 402, 409 (8th Cir. 1999).
Here, Ms. Dunn has made no such showing. Months have passed since Ms. Dunn
received Nelnet’s documentation, during which she has filed other motions but not sought
leave to amend or explained what additional facts or claims could save her case.
Moreover, amendment would be futile. Having filed her original complaint and made
admissions on the record, she cannot amend her complaint to assert facts within her
knowledge that are inconsistent with her prior allegations and admissions. See Wagstaff
& Cartmell, LLP v. Lewis, 40 F.4th 830, 841 (8th Cir. 2022) (upholding finding of bad faith
where a party “attempt[ed] to change some admissions to denials on material allegations
made in the [c]omplaint” (second alteration in original)).
With respect to her Arkansas fraud and statutory claims, she cannot now claim
justifiable reliance on Nelnet’s statements when her previous allegations and admissions
show knowledge of their purported falsity.3 With respect to her FDCPA claims, she
3 To the extent Ms. Dunn wishes to amend her complaint to assert claims based on
payments made to Nelnet in reliance on its purportedly false assertions that it is entitled
to collect her student loan payments, those claims would be time barred. The statute of
limitations is three years for common law fraud and five years for the statutory claims.
Dupree v. Twin City Bank, 300 Ark. 188, 192 (1989); Ark. Code Ann. § 4-88-115. The
alleged invalidity of Nelnet’s interest became known to Ms. Dunn at the latest by 2015
when she dismissed her 2013 bankruptcy case, a decade before this litigation was filed.
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 8 of 10 PageID #:
<pageID>

9
admitted at the hearing that she took out these loans and that she made payments on
them before her 2013 bankruptcy petition. The Court sincerely doubts that Ms. Dunn could
assert that her loans were in default at the time Nelnet began servicing them without
running afoul of Federal Rule of Civil Procedure 11(b). Nelnet’s Motion to Dismiss (Doc.
10) is GRANTED.
Moving on to Ms. Dunn’s more recent filings, she asks the Court to declare Nelnet
in noncompliance with the Court’s order to produce documentation (Doc. 58); to compel
Nelnet to produce “the signed promissory note(s), valid allonge(s), and complete chain of
assignment for Plaintiff’s alleged loans” and to sanction Nelnet if it fails to comply (Doc.
59);4 and to clarify whether the Court’s order required Nelnet “to produce loan-specific
documentation establishing its authority to service Plaintiff’s individual loans, as opposed
to generic servicing contracts and database entries” (Doc. 62).
As previously described, Nelnet timely provided, among other things, its servicing
contract, Department of Education records identifying Nelnet as the servicer of record for
Ms. Dunn’s specific loans, and records of Ms. Dunn’s payments to Nelnet. Nelnet
contends that it need not and cannot prove it is the loan holder because it is, as it has
always maintained, merely the authorized loan servicer. Ms. Dunn believes these
documents are inadequate to establish Nelnet’s authority for a number of reasons.
First, she asserts that a promissory note and valid chain of assignment are
required before a creditor can enforce a debt. That may be true, but this is not an
4 Nelnet points out in its response to this motion that none of Ms. Dunn’s cited case law
actually exists, and Nelnet believes the citations to be AI hallucinations. (Doc. 60, ¶ 15).
Ms. Dunn admits in her reply that the citations were incorrect and claims to have corrected
them (Doc. 61, ¶ 7), but she did not file an amended or corrected motion.
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 9 of 10 PageID #:
<pageID>

10
enforcement action by Nelnet against Ms. Dunn—it is Ms. Dunn’s action against Nelnet.
Nelnet was directed to provide “the document(s) authorizing it to service Ms. Dunn’s loan,”
not the documents it would need in an enforcement action.
Second, Ms. Dunn complains that Nelnet has failed to provide any borrower-
specific documentation 	because, she says, 	the borrower-specific 	entries 	from the
National Student Loan Data System are inadmissible hearsay. A document does not need
to be admissible to be discoverable or to be responsive to a discovery order. Fed. R. Civ.
P. 26(b)(1) (“Information within this scope of discovery need not be admissible in evidence
to be discoverable.”). Nelnet’s production complied with the Court’s Order, and Ms. Dunn
has not alleged a plausible claim, so she is not entitled to further discovery. Ms. Dunn’s
Motions (Docs. 58, 59 & 62) are DENIED.
While the Court is sympathetic to the difficult position of student loan borrowers, it
does not appreciate Ms. Dunn’s attempt to game her way to a get-out-of-debt-free card.
She admits she took out these loans, and she admits she did not repay them. Nelnet is
not breaking the law by reporting as much.
For the foregoing reasons, Nelnet’s Motion to Dismiss (Doc. 10) is GRANTED, and
Ms. Dunn’s Motions (Docs. 58, 59 & 62) are DENIED. This case is hereby DISMISSED
WITHOUT PREJUDICE.
IT IS SO ORDERED on this 25 th day of February, 2026.
___________________________________
TIMOTHY L. BROOKS
CHIEF UNITED STATES DISTRICT JUDGE
Case 5:25-cv-05107-TLB Document 66 Filed 02/25/26 Page 10 of 10 PageID #:
<pageID>