Carlotta v. Higher Education Loan Authority of The State Of Missouri Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION - CINCINNATI
RACHEL CARLOTT A, 	Case No. 1:24-cv-73
Plaintiff,
v.
HIGHER EDUCATION LOAN
AUTHORITY OF THE STATE OF
MISSOURI, et al.,
Defendants.
Judge Matthew W. McFarland
ORDER AND OPINION
This matter is before the Court on Defendant Alexus Sponseller's Motion to
Dismiss for Lack of Subject Matter Jurisdiction (Doc. 42). Plaintiff did not file a response
to the Motion, and the time to do so has passed. Thus, this matter is ripe for review. For
the reasons below, Defendant Sponseller' s Motion to Dismiss (Doc. 42) is GRANTED IN
PART.
BACKGROUND
Plaintiff Rachel Carlotta is an Ohio resident and the mother of Defendant Alexus
Sponseller. (Compl., Doc. 1, ,r,r 1, 4.) From 2018 to 2020, Sponseller, also an Ohio resident,
was a student at Bluffton University. (Id. ,r,r 4, 12.) To pay for her education, Sponseller
allegedly engaged in fraud by forging Plaintiff's name and signature to apply for and
obtain federal student loans through Defendant United States Department of Education
("USDE"). (Id.) Plaintiff had no knowledge of these loan applications. (Id.) In total,
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Sponseller obtained four federal student loans totaling $22,761.00, plus interest and fees.
(Id.)
In the summer of 2022, Plaintiff learned about the loans when Defendant Higher
Education Loan Authority of the State of Missouri Inc. ("MOHELA"), a federal loan
servicer, and USDE began reporting the loans on Plaintiff's credit report. (Compl., Doc.
1, ,r,r 2, 13.) After this discovery, Plaintiff contacted Sponseller, who admitted her
fraudulent conduct. (Id. ,r 13.) Plaintiff then submitted declarations of fraud and loan
discharge applications with MOHELA and USDE for Sponseller's loans. (Id. 	,r 14.)
Plaintiff also filed an identity theft and fraud report with local police. (Id.) And, Plaintiff
submitted 	Consumer 	Dispute 	Verifications 	with 	the 	three 	major 	credit reporting
agencies: Defendants Experian, Trans Union, and Equifax. (Id. 	,r,r 5-8, 14.) Plaintiff
provided the three agencies with records and evidence that the loans were fraudulently
obtained and should be removed from her reports. (Id. ,r 14.) Plaintiff alleges that the
loans remain on her credit reports from all three agencies. (Id. ,r 15.)
In her Complaint, Plaintiff brought claims under the Fair Credit Reporting Act
("FCRA") against Experian, Trans Union, and Equifax for violations of 15 U.S.C. §§
1681e(b), 1681i(a)(l), and against MOHELA and USDE for violations of 15 U.S.C. § 1681s-
2(b). She also brought claims of fraud and identity theft against Sponseller under
common law and Ohio Revised Code §§ 2913.49(J), 2307.60. Finally, Plaintiff sought a
declaratory judgment finding that Plaintiff is not liable for any loans with MOHELA and
USDE.
On May 21, 2024, Plaintiff voluntarily dismissed her claims against Trans Union.
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(Doc. 28.) On June 13, 2024, Plaintiff and USDE stipulated to the dismissal without
prejudice of Plaintiff's FCRA claims against USDE. (Doc. 30.) This Court, construing the
stipulation as a motion, granted the dismissal. (Doc. 32.) On July 10, 2024, Plaintiff and
Experian stipulated to the dismissal with prejudice of all claims against Experian. On
March 25, 2025, this Court granted the motions to dismiss of Defendant USDE and
MOHELA (see Order, Doc. 39), dismissing all remaining claims against them. And then,
on April 1, 2025, this Court dismissed the claims against Equifax (see Order, Doc. 41) after
Plaintiff informed the Court that she had resolved the claims against that party (see
Motion, Doc. 40). Accordingly, the only claims that remain are the claims for fraud and
identity theft under common law and Ohio Revised Code §§ 2913.49(J), 2307.60. (Compl.,
Doc. 1, ,r,r 45-56.) Both claims are brought against Defendant Sponseller.
On November 12, 2025, Defendant Sponseller filed a Motion to Dismiss for Lack
of Subject Matter Jurisdiction (Doc. 42). In the Motion, Defendant Sponseller points out
that 	all 	federal 	claims 	have 	been 	dismissed 	and 	only 	state 	law 	claims 	remain;
furthermore, there is no diversity of citizenship between Defendant Sponseller and
Plaintiff. (Motion, Doc. 42, Pg. ID 215-16.) Plaintiff did not file a response in opposition
to this Motion. The Court will now consider Defendant Sponseller' s Motion.
LAW&ANALYSIS
When a defendant brings a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(l), the plaintiff has the burden of proving jurisdiction. Mitchell v. BMI
Federal Credit Union, 374 F. Supp.3d 664,667 (S.D. Ohio 2019). Federal courts have original
jurisdiction over civil actions where the parties are from citizens of different U.S. states
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and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C.
§ 1332(a). Federal courts also have jurisdiction over cases and controversies arising from
the Constitution or the laws of the United States. 28 U.S.C. §§ 1331. Finally, courts have
supplemental jurisdiction over any state law claims that arise from the same case or
controversy as a federal law claim. 28 U.S.C. § 1367.
As established in this Court's previous Order, Plaintiff cannot bring her claims into
federal court under diversity jurisdiction, as both she and Sponseller are Ohio residents.
(Order, Doc. 39, Pg. ID 197; see also Compl., Doc. 1, ,r,r 1, 4.) Consequently, Plaintiff's
claims must "arise under the Constitution, laws, or treaties of the United States." 28
U.S.C. § 1331. While Plaintiff's Complaint asserted federal question jurisdiction, the
federal claims have now been dismissed and only state law claims remain. (See Compl.,
Doc. 1; Docs. 32, 34, 39, 41.) 	Accordingly, under 28 U.S.C. § 1367(c)(3), this court "may
decline to exercise supplemental jurisdiction" over the remaining state law claims.
Indeed, Defendant Sponseller asks that this Court decline to exercise supplemental
jurisdiction over these claims. (Motion, Doc. 42, Pg. ID 215-16.) As Plaintiff failed to
respond and explain why the Court should exercise supplemental jurisdiction here, the
Court finds Defendant Sponseller' s Motion persuasive. It therefore declines to extend
supplemental jurisdiction to the two state law claims that remain.
To the extent that Defendant Sponseller asks this Court to dismiss the case with
prejudice, though, the Court disagrees with this proposed outcome. (See Motion, Doc. 42,
Pg. ID 215.) Dismissals for lack of subject matter jurisdiction are "without prejudice and
leave[] the parties free to seek relief in another forum (subject to any rules of preclusion)."
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Taylor v. Owens, 990 F.3d 493,496 (6th Cir. 2021). Therefore, the Court declines to order a
dismissal with prejudice.
CONCLUSION
For these reasons, the Court ORDERS the following:
1. 	Defendant Sponseller's Motion to Dismiss (Doc. 42) is GRANTED IN
PART;
2. 	Plaintiff's 	claims 	against 	Defendant 	Sponseller 	are 	DISMISSED
WITHOUT PREJUDICE; and
3. 	This case is hereby TERMINATED from the Court's docket.
IT IS SO ORDERED.
UNITED ST ATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
By ~7{A;.;tv: "'1~~
JUDGE MATTHEW W . McFARLAND
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