Monyak v. Navient Sols., LLC (In re Monyak)
| Decision Date | 02 February 2021 |
| Docket Number | Case No. 19-17712,Adversary Proceeding No. 20-1020 |
| Parties | In re: AMANDA MONYAK, Debtor. AMANDA MONYAK, Plaintiff. v. NAVIENT SOLUTIONS, LLC, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
The court incorporates by reference in this paragraph and adopts as the findings and orders of this court the document set forth below. This document was signed electronically on February 2, 2021, which may be different from its entry on the record.
MEMORANDUM OF OPINION1
In this adversary proceeding, the debtor seeks a declaratory judgment that the debtor's loans held by creditor Navient Solutions, LLC ("Navient") fall outsidethe discharge exception for student loans in 11 U.S.C. §523(a)(8). In the alternative, the debtor asserts that if such loans are subject to § 523(a)(8) they must nevertheless be discharged as imposing an "undue hardship." The parties have filed cross-motions for partial summary judgment on the debtor's first claim for relief—i.e., whether the loans fall within the discharge exception in § 523(a)(8). For the reasons that follow, the Court holds that these loans fall within the discharge exception for "qualified education loans" under § 523(a)(8)(B). Accordingly, the Court grants Navient's motion for partial summary judgment and denies the debtor's motion for partial summary judgment. The debtor's second claim for relief—i.e., whether the debts impose an undue hardship—will be the subject of a trial scheduled for March 10, 2021.
This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (I). The Court has jurisdiction over core proceedings under 28 U.S.C. §§ 1334 and 157(a) and Local General Order 2012-7 of the United States District Court for the Northern District of Ohio.
On December 20, 2019, the debtor filed a Chapter 7 bankruptcy petition (Case No. 19-17712, Docket No. 1). On April 1, 2020, the debtor received a discharge in her main case (Case No. 19-17712, Docket No. 10).
On March 3, 2020, the debtor filed an adversary complaint seeking a declaratory judgment that the debtor's loans held by Navient fall outside the discharge exception for student loans in 11 U.S.C. §523(a)(8). In the alternative, the debtor asserts that if such loans are subject to § 523(a)(8) they must nevertheless be discharged as imposing an "undue hardship" (Adv. No. 20-1020, Docket No. 1). On March 22, 2020, Navient filed its Answer (Adv. No. 20-1020, Docket No. 3). On July 1, 2020, the Court entered an order setting a discovery deadline of October 30, 2020, and trial date for March 10, 2021 (Adv. No. 20-1020, Docket No. 8).
On November 30, 2020, the debtor filed a motion for partial summary judgment on the issue of whether the loans fall within the discharge exception in § 523(a)(8) (Adv. No. 20-1020, Docket No. 10). On December 18, 2020, Navient filed its response and moved for partial summary judgment on the same issue.
Unless otherwise indicated, the following facts are undisputed. The plaintiff-debtor, Amanda Monyak, attended Bowling Green State University from 2004 to 2008, obtaining a bachelor's degree in women's studies. (Docket No. 16, Ex. 2, Pl.'s Response to Def.'s Interrogatory No. 7). While attending the university, the debtor applied for seven loans from Navient to finance her degree which as of the filing of the adversary, had an outstanding balance of $47,447.44. (Docket No. 16, Ex. 2, Admission 1). To secure these funds, the debtor applied through Navient's Signature Student Loan Program which disbursed loan funds to the debtor through the Bowling Green State University Financial Aid Office. (Docket No. 16, Ex. 2, Pl.'s Response to Def.'s Interrogatory No. 25). On each application, there is a section in which the school must certify that:
[T]he borrower is eligible for a Signature Student Loan; that the Total Certified Amount does not exceed the student's cost of attendance minus other financial aid; that the school will, at the request of the lender, provide the lender with subsequent information regarding the borrower's whereabouts; that this School will comply with all applicable loan policies and provisions; and that information provided in Sections A and B is true, complete and correct to the best of my knowledge and belief.
(Docket 16, Ex. 5 A-F). Also contained in each loan document, which the debtor was required to sign, is Section N.4 which states that "I certify that all of the loan proceeds are solely to pay for my qualified higher education expenses at theSchool." (Docket 16, Ex. 5 A-F, Section N.4). In the debtor's own words: (Docket No. 16, Ex. 2, Pl.'s Response to Def.'s Interrogatory No. 23).
Federal Rule of Civil Procedure 56, made applicable to bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7056, provides that a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Fed R. Bankr. P. 7056. Although Rule 56 was amended in 2010, the amendments did not substantively change the summary judgment standard. Newell Rubbermaid, Inc. v. Raymond Corp., 676 F.3d 521, 533 (6th Cir. 2012). "A court reviewing a motion for summary judgment cannot weigh the evidence or make credibility determinations." Ohio Citizen Action v. City of Englewood, 671 F.3d 564, 569 (6th Cir. 2012). "Instead, the evidence must be viewed, and all reasonable inferences drawn, in the light most favorable to the non-moving party." Id. at 570. "A genuine issue of material fact exists 'if the evidence is such that a reasonable jury could return a verdict for the nonmovingparty'." Yeschick v. Mineta, 675 F.3d 622, 632 (6th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 424, 248 (1986)).
"The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other." Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). "Rather, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id.; accord McKay v. Federspiel, 823 F.3d 862, 866 (6th Cir. 2016) ().
Section 523(a)(8) excepts from discharge three categories of education-related debts. These three categories are contained in subdivisions (8)(A)(i), (8)(A)(ii), and (8)(B). Section 523 provides in pertinent part:
11 U.S.C. § 523. Because an education-related debt need only fit within one of the three subdivisions to fall within the discharge exception of § 523(a)(8), if the Court finds that the loans in question fall within one of the subdivisions, it need not address whether the loans fall within the other subdivisions.
In this proceeding, the debtor has focused primarily on whether the loans fall within the second subdivision—§ 523(a)(8)(A)(ii). The debtor asserts that not all private loans which happen to be used for educational expenses are excepted from discharge as an educational benefit under § 523(a)(8)(A)(ii). See In re Crocker, 941 F.3d 206, 224 (5th Cir. 2019) (); accord In re McDaniel, 973 F.3d 1083, 1103 (10th Cir. 2020) ().
On the other hand, Navient has focused on whether the loans fall within the third subdivision—§ 523(a)(8)(B). See In re Conti, 982 F.3d 445, 449 (6th Cir. 2020) ( scope of § 523(a)(8)(B)). If Navient is correct that the loans fall within § 523(a)(8)(B), there is no need to consider whether the loans also fall within § 523(a)(8)(A)(ii).
Section 523(a)(8)(B) excepts from discharge:
[A]ny other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual[.]
11 U.S.C. §523(a)(8)(B). Section 221(d)(1) of the Internal Revenue Code of 1986 provides in pertinent part:
The Sixth Circuit has said that in order to determine...
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