Goldrich, In re, 1280
| Decision Date | 27 August 1985 |
| Docket Number | D,No. 1280,1280 |
| Citation | 771 F.2d 28 |
| Parties | , 13 Collier Bankr.Cas.2d 468, 27 Ed. Law Rep. 68, Bankr. L. Rep. P 70,702 In re Mart i.l.v.e.s. GOLDRICH, Debtor. Mart i.l.v.e.s. GOLDRICH, Plaintiff-Appellee, v. NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION, Defendant-Appellant. ocket 85-5015. |
| Court | U.S. Court of Appeals — Second Circuit |
Before FEINBERG, Chief Judge, MESKILL and NEWMAN, Circuit Judges.
This case concerns the scope of 11 U.S.C. Sec. 525 (1982), amended by Pub.L. No. 98-353, Sec. 309, 98 Stat. 333, 354 (1984) (section 525), the Bankruptcy Code provision that prohibits discrimination against discharged debtors. Defendant appeals from a judgment of the United States District Court for the Eastern District of New York, Weinstein, C.J., ruling that section 661(6)(b) of New York's Education Law, N.Y. Educ.Law Sec. 661(6)(b) (McKinney Supp.1984), violates section 525 and ordering defendant to process plaintiff's guaranteed student loan application. Because we believe that the bankruptcy court and the district court extended the scope of section 525 beyond the clear bounds of its language, we reverse.
The relevant facts are undisputed. Plaintiff Mart i.l.v.e.s. Goldrich obtained a student loan in 1969 from First National City Bank. The loan was guaranteed by defendant New York State Higher Education Services Corporation (NYSHESC), a corporation authorized by New York Education Law to administer state financial aid programs and guarantee loans for students who meet certain eligibility criteria. N.Y.Educ.Law Sec. 651 et seq. (McKinney Supp.1984). Goldrich did not repay the loan when it matured in 1971 and it was declared in default. In 1972 NYSHESC paid the amount of the default to the bank.
In 1978 NYSHESC obtained a judgment against plaintiff. Approximately two years later Goldrich filed for relief under Title 11, listing the unpaid student loan as one of his outstanding debts. On April 21, 1981 Goldrich was discharged from his dischargeable debts, including the unpaid student loan.
Both before and after his discharge, Goldrich sought additional student loan funds from various New York banks. Although his applications were accepted by the banks, NYSHESC refused to guarantee payment of any additional student loans. NYSHESC relied on N.Y.Educ.Law Sec. 661(6)(b), which provides in pertinent part: "Any student who is in default in the repayment of any student loan, the payment of which has been guaranteed by the corporation ... shall not be eligible for any ... student loan so long as such default status or failure to comply continues."
Goldrich moved to reopen his bankruptcy proceeding in October 1983, seeking to institute an adversary proceeding for injunctive and monetary relief from NYSHESC's repeated denials of loan guarantees. In January 1984, the bankruptcy court reopened the proceeding. Plaintiff, appearing pro se, subsequently filed a complaint alleging that NYSHESC's actions violated section 525 and the teaching of Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971). The bankruptcy court, Goetz, J., held that it had jurisdiction over the suit, that the Eleventh Amendment barred an award of monetary damages but not injunctive relief and that section 661(6)(b) unconstitutionally discriminated against former bankrupts by conditioning the award of student loans on the payment of discharged debts. 45 B.R. 514 (Bkrtcy.E.D.N.Y.1984). Summarizing previous decisions interpreting section 525 and Perez, the court held that extensions of credit are included within the scope of section 525's mandate against discrimination concerning "a license, permit, charter, franchise, or other similar grant." The court also ruled that Goldrich "may probably be awarded attorney's fees and costs despite the bar of the Eleventh Amendment." 45 B.R. at 523. Chief Judge Weinstein accepted the conclusions of the bankruptcy court and ordered NYSHESC to process plaintiff's student loan application without regard to the eligibility provisions of section 661(6)(b). The court also awarded plaintiff costs and attorney's fees. This appeal followed.
At oral argument we questioned whether the State of New York had been offered the opportunity to intervene before the district court pursuant to 28 U.S.C. Sec. 2403(b) (1982). In the absence of evidence of such an offer in the record, we advised the office of the Attorney General that the constitutionality of a state statute was in question. The Attorney General responded by letter indicating that he accepted the views expressed in NYSHESC's brief.
NYSHESC contends that the lower courts erred in interpreting the statutory language to include extensions of credit within the scope of the statute's enumeration. Plaintiff argues that the "fresh start" policy embodied in section 525 is served by preventing creditors from considering past defaults in making decisions concerning future extensions of credit. We disagree with plaintiff and the lower courts as to the prohibition against consideration of prior bankruptcies in credit decisions because we believe that the language of section 525 may not properly be stretched so far beyond its plain terms. Therefore, we reverse the decision of the district court.
Section 525 states in pertinent part [A] governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against ... a person that is or has been a debtor under this title ... solely because such bankrupt or debtor is or has been a debtor under this title ..., has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title.
The legislative history indicates that section 525 "codifies the result of Perez v. Campbell, 402 U.S. 637 (1971)." S.Rep. No. 989, 95th Cong., 2nd Sess. 81, reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5867 (hereinafter S.Rep.). In Perez, the Supreme Court held that a state financial responsibility law conditioning reinstatement of a driver's license after an accident on repayment of a tort judgment, despite discharge of that debt in bankruptcy, unconstitutionally conflicted with the fresh start policy of the federal bankruptcy laws. Perez, 402 U.S. at 652, 654, 91 S.Ct. at 1713. In codifying this result, Congress extended the protection against discrimination in the awarding of a license to include a "permit, charter, franchise, or other similar grant." The scope of protection represented by those undefined terms has not yet been clarified.
Significantly, section 525 does not promise protection against consideration of the prior bankruptcy in post-discharge credit arrangements. We believe that this omission was intentional. A credit guarantee is not a license, permit, charter or franchise; nor is it in any way similar to those grants. Had Congress intended to extend this section to cover loans or other forms of credit, it could have included some term that would have supported such an extension. We are reluctant to probe beyond the plain language of the statute. Although the exact scope of the items enumerated may be undefined, the fact that the list is composed solely of benefits conferred by the state that are unrelated to credit is unambiguous. Congress' failure to manifest any intention to include items of a distinctly different character is also unambiguous. In the absence of ambiguity, no further inquiry is required. Garcia v. United States, --- U.S. ----, ----, 105 S.Ct. 479, 482, 83 L.Ed.2d 472 (1984); Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981); United States v. Payden, 759 F.2d 202, 204 (2d Cir.1985); United States v. Holroyd, 732 F.2d 1122, 1125 (2d Cir.1984).
This conclusion would ordinarily end our analysis, for no resort to legislative history is necessary where the statutory language clearly resolves the dispute. See United States v. Oregon, 366 U.S. 643, 648, 81 S.Ct. 1278, 1280, 6 L.Ed.2d 575 (1961). However, Judge Goetz's reliance on legislative history in reaching her conclusion, despite her agreement with the plaintiff as to the meaning of the language, prompts us to comment on that history.
Congress intended to allow courts to continue "developing the Perez rule." S.Rep. at 81, 1978 U.S.Code Cong. & Ad.News at 5867. I...
To continue reading
Request your trial
- U.S. Small Bus. Admin. v. Roman Catholic Church of the Archdiocese of Santa Fe
-
In re Taylor
...16 See H.R.Rep. No. 103-835, at 58 (1994), reprinted in 1994 U.S.C.C.A.N. 3340, 3367 (indicating that the section overruled In re Goldrich, 771 F.2d 28 (2nd Cir.1985), which held that § 525(a) did not apply to student 17 Section § 365(e)(1) states: Notwithstanding a provision in an executor......
-
In re Morrow, Bankruptcy No. LA 95-14358. Adv. No. 95-04174-ES.
...of the provision to cover only discrimination based on non-payment of a discharged debt. The Commissioner also cited In re Goldrich, 771 F.2d 28 (2nd Cir.1985) which followed a similar approach. The Debtor argued that he never submitted his rights under § 525 before the state court since it......
- Springfield Hosp., Inc. v. Guzman
-
§ 5.03 Analysis of the Act
...choice." (Citations omitted.) [632] Electro-Minatures v. Wendon Co., 771 F.2d 23, 28 (2d Cir. 1985) (applying Connecticut law).[633] Id., 771 F.2d at 28.[634] See N. 253 supra.[635] See, e.g., University Computing v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir. 1974).[636] See, e.g., U.S.......