275 B.R. 755 (Bkrtcy.W.D.Va. 2002), 5-01-00061, In re Jordon

Docket NºAdversary No. 5-01-00061.
Citation275 B.R. 755
Party NameIn re Karen Y. JORDON, Debtor. Karen Y. Jordon, Plaintiff, v. Norfolk State University, U.S. Department of Education, Commonwealth of Virginia, and Roy Wolfe, Trustee, Defendants. Bankruptcy No. 5-01-00764.
Case DateMarch 12, 2002
CourtUnited States Bankruptcy Courts, Fourth Circuit

Page 755

275 B.R. 755 (Bkrtcy.W.D.Va. 2002)

In re Karen Y. JORDON, Debtor.

Karen Y. Jordon, Plaintiff,

v.

Norfolk State University, U.S. Department of Education, Commonwealth of Virginia, and Roy Wolfe, Trustee, Defendants.

Bankruptcy No. 5-01-00764.

Adversary No. 5-01-00061.

United States Bankruptcy Court, W.D. Virginia, Harrisonburg Division.

March 12, 2002

Page 756

Darren T. Delafield, Roanoke, VA, for debtor.

Roy V. Wolfe, III, Harrisonburg, VA, trustee.

Page 757

ORDER

ROSS W. KRUMM, Chief Judge.

The issue before the court is whether a state university's assertion of sovereign immunity bars a debtor's complaint to determine the dischargeability of a student loan indebtedness.

Background

On August 31, 2001, Karen Y. Jordon (hereinafter Debtor) filed a complaint to determine the dischargeability of a student loan pursuant to 11 U.S.C. § 523(a)(2)(8). The Debtor accepted financial aid in the form of a Perkins Loan approximately twelve years ago to attend Norfolk State University (hereinafter NSU) where she studied Psychology. The Debtor did not complete her education and subsequently defaulted on loan obligations. NSU refused to release her transcript due to nonpayment of her student loans. The debtor alleges that she has not been able to secure sufficiently gainful employment to enable her to make her loan payments. The Debtor lives with her parents and has custody of and provides care for a minor child. The Debtor requests that the court declare all or part of her indebtedness discharged pursuant to 11 U.S.C. 523(a)(8), 1 or, in the alternative, that the court order NSU to release her transcripts so that she may transfer to another school and complete her education.

On October 4, 2001, NSU filed a motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure arguing that the court lacks subject matter jurisdiction to address the Debtor's complaint. 2 Specifically, NSU contends that it is protected by the cloak of sovereign immunity enjoyed by the Commonwealth of Virginia; thus, the adversary proceeding in this bankruptcy court should be dismissed.

Rulings of Law

The Eleventh Amendment states that "The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const., amend. XI. "Although by its terms the Amendment applies only to suits against a State by citizens of another State, cases [decided by the Supreme Court] have extended the Amendment's applicability to suits by citizens against their own States." Board of Trustees v. Garrett, 531 U.S. 356, 363, 121 S.Ct. 955, 148 L.Ed.2d 866 (2001). See Kimel v. Florida Bd. of Regents, 528 U.S. 62, 72-73, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000); Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U.S. 627, 665, 119 S.Ct. 2199, 144 L.Ed.2d 575 (1999); Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); Hans v. Louisiana, 134 U.S. 1, 15, 10 S.Ct. 504, 33 L.Ed. 842 (1890). The primary safeguard of the Eleventh Amendment prevents nonconsenting States from being sued in federal court by private individuals. See Kimel, 528 U.S. at 73, 120 S.Ct. 631. "The founding generation

Page 758

thought it neither becoming nor convenient that the several States of the Union, invested with that large residuum of sovereignty which had not been delegated to the United States, should be summoned as defendants to answer the complaints of private persons." Alden v. Maine, 527 U.S. 706, 748, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999) (quotations omitted). This immunity is likewise afforded to a State's agencies, which are considered to be arms of the State. See Puerto Rico Aqueduct and Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993).

The filing of a suit against a State generally triggers Eleventh Amendment immunity. In this district, an adversary proceeding, which summons the State to appear in federal court in order to avoid a default judgment, is considered to be a suit for the purposes of sovereign immunity. See University of Virginia v. Robertson, 243 B.R. 657, 665 (W.D.Va.2000) (holding that a debtor's adversary proceeding against the University of Virginia to determine the dischargeability of a debt is a suit for Eleventh Amendment purposes).

Not all proceedings in a federal bankruptcy court, however, invoke Eleventh Amendment immunity. In Virginia v. Collins (In re Collins), 173 F.3d 924 (4th Cir.1999), the court held that a motion to reopen a bankruptcy case, which allowed the bankruptcy court to determine the dischargeability of a debt owed to the Commonwealth of Virginia and which did not name the State as a defendant and did not force the State to appear in federal court against its will, was not a suit that implicated the Eleventh Amendment. In Collins, Virginia obtained a pre-petition judgment against the debtor. The debtor filed a petition under Chapter 7 and listed Virginia's judgment. Virginia did not file a proof of claim, nor did it object when the court released the debtor from all dischargeable debts. Some years later, however, Virginia sued to garnish the debtor's wages to collect on its judgment. The debtor moved to reopen the bankruptcy case to determine if the debt was dischargeable. The Fourth Circuit held that the motion to reopen and the determination that the debt was discharged was not a suit against a State because although Virginia was mailed a copy of the motion, it was not named as a defendant in an adversary proceeding or served with compulsory process. Collins, 173 F.3d at 929-30. Cf. Maryland v. Antonelli Creditors' Liquidating Trust, 123 F.3d 777 (4th Cir.) (stating that confirmation order in Chapter 11 case, which exempted transfers of property from state and local taxes, was not a suit against a State and power of a bankruptcy court to enter such an order derives from jurisdiction over debtors and their estates).

Discussing the Collins and other Fourth Circuit decisions, Senior Judge Kiser...

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1 practice notes
  • 284 B.R. 308 (Bkrtcy.S.D.Fla. 2002), 99-32178-BKC, In re Levin
    • United States
    • Federal Cases United States Bankruptcy Courts Eleventh Circuit
    • September 23, 2002
    ...nonbankruptcy court, a debtor may invoke any defenses provided by the bankruptcy code." Jordon v. Norfolk State Univ. (In re Jordon), 275 B.R. 755, 762 (Bankr.W.D.Va.2002). In the case sub judice, the Debtor is free to argue to the state court that the debt owed to the Defendant has be......
1 cases
  • 284 B.R. 308 (Bkrtcy.S.D.Fla. 2002), 99-32178-BKC, In re Levin
    • United States
    • Federal Cases United States Bankruptcy Courts Eleventh Circuit
    • September 23, 2002
    ...nonbankruptcy court, a debtor may invoke any defenses provided by the bankruptcy code." Jordon v. Norfolk State Univ. (In re Jordon), 275 B.R. 755, 762 (Bankr.W.D.Va.2002). In the case sub judice, the Debtor is free to argue to the state court that the debt owed to the Defendant has be......