In re Fabrizio, Bankruptcy No. 05-13518-TPA.

• Decision Date: 25 April 2007
• Docket Number: Bankruptcy No. 05-13518-TPA.,Adversary No. 06-1041-TPA.
• Parties: In re Anthony Robert FABRIZIO, Debtor, Anthony Robert Fabrizio, Plaintiff v. U.S. Department of Education Borrower Services Department Direct Loans, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

369 B.R. 238

In re Anthony Robert FABRIZIO, Debtor Anthony Robert Fabrizio, Plaintiff v. U.S. Department of Education Borrower Services Department Direct Loans, Defendant.

Bankruptcy No. 05-13518-TPA.

Adversary No. 06-1041-TPA.

United States Bankruptcy Court, W.D. Pennsylvania.

April 25, 2007.

COPYRIGHT MATERIAL OMITTED

Jeff A. Connelly, Esq., for Debtor.

Megan E. Farrell, Esq., for Defendant.

MEMORANDUM OPINION

THOMAS P. AGRESTI, Bankruptcy Judge.

Currently before the Court is the Defendant's Motion for Summary Judgment filed by the U.S. Department of Education Borrower Services Department Direct Loans ("Defendant") seeking dismissal of the Debtor's Adversary Proceeding filed pursuant to 11 U.S.C. § 523(a)(8) in an attempt to discharge a prepetition educational loan. For the reasons expressed below, the Defendant's Motion for Summary Judgment is granted since no genuine issue of material fact exists as to the central claim in this dispute.¹

PROCEDURAL AND FACTUAL HISTORY

On October 2, 2005, the Debtor, Anthony Robert Fabrizio ("Debtor"), filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On February 14, 2006, the Debtor filed a "Motion" pursuant to 11 U.S.C. § 523(a)(8) seeking discharge of approximately $43,000 in consolidated, student loan obligations owed the Defendant, which "Motion" was thereafter amended. On March 1, 2006, the Defendant filed its Response to the Amended Motion in the form of an Answer. The Parties consented to treating the matter as an adversary proceeding. On September 8, 2006, the Defendant filed its Summary Judgment Motion ("Motion") claiming the within dispute was capable of resolution as a matter of law. On December 14, 2006, the Parties filed a Joint Statement of Material Facts.² Thereafter, the Court entertained arguments on the pending Motion.

The Debtor is 51 years of age residing in an apartment located in Erie, Pa. He owns no real property. From 1984 through 1991, the Debtor obtained a number of subsidized Stafford loans as a means to fund his educational pursuits. On January 16, 2004, the Debtor consolidated his outstanding loans into the William D. Ford Direct Loan Program creating a single, total obligation amounting to $40,583.00. After consolidation, the monthly educational loan payments were fixed at $279.02. The Debtor never made any payments on the consolidated loan. As of March 12, 2006, the outstanding balance on the consolidated loan had grown to $42,898.78.

In 1973, the Debtor obtained his high school degree from the Cathedral Preparatory School. In 1989, he received a B.S. in Management and Finance from Gannon University. The Debtor later took classes towards his MBA, but only completed approximately half of the requirements for that degree. In the last ten years, the Debtor has received professional certificates for education in communication, social studies and mathematics from the Commonwealth of Pennsylvania, as well as local certificates in sales consulting and for proficiency in various computer skills.

As of November 1, 2006, the Debtor obtained employment as a car salesman. As stipulated by the Debtor, his net earnings for the month of December, 2006 totaled $2,333.63.³ Prior to that, from March, 2006, through the end of October, 2006, the Debtor was unemployed and during that period received monthly Pennsylvania unemployment compensation benefits in the amount of $1180. Before this recent period of unemployment, for all practical purposes, the Debtor was continuously employed for the prior eighteen (18) year period. The Debtor estimates his average annual income over the last ten (10) years approximated $30,000.⁴

The Debtor currently lives alone. Even though he has twice been married and divorced in 1994 and 2000, he has no current alimony or spousal obligations and there is no indication he has ever been required to make such payments. The Debtor is responsible for monthly child support payments totaling $364 for the care of his 13 year-old son and will be obligated to make those payments for the next five years until his son reaches the age of majority.

As of January 4, 2007, the Debtor incurred monthly living expenses of $1,188.⁵ The Debtor managed to significantly reduce his expenses from those experienced during his previous six month period of unemployment. At the time of argument on the Motion, Debtor's Counsel contended that although Hearing Ex. A properly reflected his current expenses, Debtor's expenses were expected to increase now that the Debtor had obtained what appears to be regular employment. Also at the time of argument, and for purposes of resolving the pending Motion, the Defendant stipulated to the admission of Exhibit A to Document No. 27 as appropriately reflecting the Debtor's current expenses. The Defendant did note for the Court that since the filing, the Debtor reaffirmed a $6,519 loan for a 1995 Cadillac Sedan De-Ville with an estimated fair market value of $1,675 as co-signor "with a friend." The monthly payment for this obligation was itemized on Hearing Ex. A as $108 per month. At argument, through his Counsel, the Debtor stipulated that the Debtor was making the full payment since the vehicle was acquired for his personal use.

Finally, the Debtor admits he has no physical or mental disabilities or other personal limitations that would in any way impair his ability to maintain future, gainful employment.

STANDARD OF REVIEW

The standard for determining a motion for summary judgment is set forth in Fed. R.Civ.P. 56, which is made applicable to adversary proceedings through Fed. R. Bankr.P. 7056. Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories and admissions that are part of the record, in addition to affidavits, demonstrate the absence of any genuine issue of material fact thereby entitling the moving party to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate if no material, factual issue exists and the only issue before the court is a legal issue. Earth-Data Int'l of N.C., L.L.C. v. STV Inc., 159 F.Supp.2d 844 (E.D.Pa.2001); In re Air Nail Co., Inc., 329 B.R. 512 (Bankr. W.D.Pa.2005). An issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Dongelewicz v. First Eastern Bank, 80 F.Supp.2d 339, 343 (M.D.Pa.1999). In deciding a motion for summary judgment, the Court must view the facts in a light most favorable to the non-moving party. United States v. Isley, 356 F.Supp.2d 391 (D.N.J.2004). The moving party, moreover, bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Once the moving party satisfies its burden of establishing a prima facie case for summary judgment, the non-moving party must respond with contrary evidence and do more than raise some metaphysical doubt as to material facts, otherwise judgment will be entered in favor of the movant. Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir.1998) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). No issue for trial exists, in fact, unless the non-moving party can adduce sufficient evidence favoring it on the disputed factual issue such that a reasonable jury could only return a verdict in its favor. See Celotex, 477 U.S. at 322, 106 S.Ct. 2548. "It is important to note that, even if a genuine factual dispute is shown to exist, such showing may not necessarily suffice to preclude the entry of a summary judgment. Indeed, the mere existence of some alleged factual dispute will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." In re Allegheny Health, Educ. and Research Foundation, 321 B.R. 776, 789 (Bankr.W.D.Pa.2005). Also, where the movant is either the defendant or the party without the burden on the underlying claim, as is the case here, the movant has no obligation to produce evidence negating its opponent's case. In re Air Nail Co., Inc., 329 B.R. 512, 528 (Bankr.W.D.Pa.2005); National State Bank v. Federal Reserve Bank, 979 F.2d 1579, 1581-82 (3d Cir.1992).

DISCUSSION

As a general rule, discharge of a student loan indebtedness is not available to a debtor seeking relief under the Bankruptcy Code. However, an exception to this general rule is found in § 523(a)(8) ⁶ of the Code which provides in relevant part:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —

...

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents, for —

(A)(i) an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

...

11 U.S.C. § 523(a)(8) (emphasis added).

While Congress did not specifically define the phrase "undue hardship" in the Bankruptcy Code, the meaning of the "term" is "settled law" in the Third Circuit since the decision rendered in Pennsylvania Higher Education Assistance Agency v. Faish (In re Faish,) 72 F.3d 298 (3d Cir.1996). In Faish, for purposes of § 523(a)(8,) the Court of Appeals for the Third Circuit adopted the "undue hardship" test as originally set forth in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir.1987).⁷

Under this test, "undue hardship" requires a showing that: (1) the debtor cannot maintain, based on current income and expenses, a minimal standard of living for himself and his dependents if forced to repay...