Trudel v. U.S. Dep't of Educ. (In re Trudel)

Decision Date08 August 2014
Docket NumberBAP No. 13–8049.
CourtBankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Sixth Circuit
PartiesIn re Colleen Renee TRUDEL, Debtor. Colleen Renee Trudel, Plaintiff–Appellant, v. United States Department of Education, et al., Defendants–Appellees.

OPINION TEXT STARTS HERE

ON BRIEF: Erin E. Brizius, United States Attorney's Office, Cleveland, OH, James L. Bickett, United States Attorney's Office, Akron, OH, on brief, for Federal Appellee. Scott W. Paris, Keith D. Weiner & Associates Co., LPA, Cleveland, OH, on brief, for Appellee University of Akron. Colleen Renee Trudel, Uniontown, OH, pro se.

Before: HUMPHREY, LLOYD, and PRESTON, Bankruptcy Appellate Panel Judges.

OPINION

JOAN A. LLOYD, Bankruptcy Judge.

Plaintiff–Debtor Colleen Renee Trudel (the Debtor) appeals, pro se, the October 28, 2013 order of the Bankruptcy Court for the Northern District of Ohio (the Bankruptcy Court) determining that the Debtor was not entitled to an undue hardship discharge of her student loans under 11 U.S.C. § 523(a)(8). For the reasons that follow, the Panel affirms the Bankruptcy Court's order.

ISSUES

In this Appeal, the Panel must consider whether the Debtor's student loans are eligible for discharge under the “undue hardship” standard of 11 U.S.C. § 523(a)(8).

JURISDICTION AND STANDARD OF REVIEW

The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497, 103 L.Ed.2d 879 (1989) (citations omitted). “Determinations of dischargeability are final orders for purposes of appeal.” Lowry v. Nicodemus (In re Nicodemus ), 497 B.R. 852, 854 (6th Cir. BAP 2013) (citing Cash Am. Fin. Servs., Inc. v. Fox (In re Fox ), 370 B.R. 104, 109 (6th Cir. BAP 2007)).

Dischargeability determinations, such as whether student loans pose an undue hardship, are conclusions of law reviewed de novo.1Cheesman v. Tennessee Student Assistance Corp. (In re Cheesman), 25 F.3d 356, 359 (6th Cir.1994); Hogan v. George (In re George), 485 B.R. 478, 2013 WL 135274, at *1 (6th Cir. BAP 2013) (table). Under a de novo standard of review, the appellate court determines the law at issue ‘independently of, and without deference to, the trial court's determination.’ Palmer v. Washington Mut. Bank (In re Ritchie), 416 B.R. 638, 641 (6th Cir. BAP 2009) (quoting Gen. Elec. Credit Equities, Inc. v. Brice Rd. Devs., L.L.C. (In re Brice Rd. Devs., L.L.C.), 392 B.R. 274, 278 (6th Cir. BAP 2008)). However, [t]he Panel must affirm the underlying factual determinations unless they are clearly erroneous.” Hart v. Molino (In re Molino), 225 B.R. 904, 906 (6th Cir. BAP 1998). [A] finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (citation omitted) (internal quotation marks omitted). “If two views of the evidence in a case are permissible, the choice between those views made by the fact finder is not clearly erroneous.” Michigan v. City of Allen Park, 954 F.2d 1201, 1213 (6th Cir.1992) (citing United States v. Yellow Cab Co., 338 U.S. 338, 342, 70 S.Ct. 177, 179, 94 L.Ed. 150 (1949)).

FACTS

The Debtor, a fifty-five year old single woman, filed a voluntary chapter 7 bankruptcypetition on June 15, 2012. In Schedule F of her petition, the Debtor listed debts of $129,518.91 for educational loans. 2 The Debtor incurred these loans (the “Student Loans”), while attending the University of Akron between 1988 and 1996, from the United States Department of Education (USDOE) and the University of Akron (collectively, the “Creditors”). The Student Loans have been in default since 1996.

On October 3, 2012, the Debtor, pro se, initiated the underlying adversary proceeding against the Creditors requesting an undue hardship discharge of the Student Loans under 11 U.S.C. § 523(a)(8). The Creditors answered the Debtor's complaint, and the parties completed discovery and stipulated to the admissibility of employment and medical records submitted by the Debtor. Prior to trial, the Debtor submitted a lengthy Proposed Findings of Fact and Conclusions of Law, in which she described a history of medical problems and unsuccessful educational and professional endeavors. The Creditors submitted several exhibits of their own. The case went to trial on May 20, 2013. At the trial, the Bankruptcy Court heard testimony from the Debtor's mother, Betty Daugherty, and the Debtor's son, Daniel Trudel.3

The USDOE and the Debtor also filed post-trial briefs that addressed the Debtor's obligations under the USDOE's Income Contingent Repayment Program (the “ICRP”).4 The USDOE claimed that the Debtor's medical co-pays could be considered in computing her required monthly payments if she were to enter into the ICRP. Post–Trial Brief of the United States of America, June 11, 2013, ECF No. 24, at 7. The Debtor responded that her monthly ICRP payments would amount to $53.00 or less. She arrived at this figure using her salary from a thirty-two hour work week. She also contended that her medical co-pays might not be taken into account should she enroll.

On October 28, 2013, the Bankruptcy Court issued a Memorandum Opinion in which it determined that the Debtor was not entitled to a discharge of her educational loans. The Bankruptcy Court first listed a number of findings of fact, as follows:

1. Plaintiff-debtor, through counsel, filed a voluntary chapter 7 bankruptcy petition on June 15, 2012.

2. On her Schedule E–Creditors Holding Unsecured Priority Claims, plaintiff-debtor lists $24,000 in taxes. On her Schedule F–Creditors Holding Unsecured Nonpriority Claims, plaintiff-debtor lists $248,059.16, including $129,518.91 for educational loans. Debtor does not list any real property on her Schedule A and no secured debts on her Schedule D.

3. Plaintiff-debtor is obligated to the USDOE for educational obligations in an amount between $106,595.88 and $130,000.00. Plaintiff-debtor is also obligated to the University of Akron for educational obligations in an amount between $13,000.00 and $24,352.54. (The obligations to the USDOE and the University of Akron will be collectively referred to as the “Student Loans”). The Student Loans were incurred by plaintiff-debtor in attending the University of Akron. Plaintiff-debtor did not receive a degree from the University of Akron.

4. Plaintiff-debtor has never made any voluntary payments on her Student Loans. The only payments received by the United States came from income tax refund intercepts.

5. Plaintiff-debtor is 54 years old and employed as a Credit/Merchandise Specialist for Sterling, Inc. (“Sterling”).

6. Plaintiff-debtor has no dependents.

7. Plaintiff-debtor is paid $12.65 per hour plus overtime, when applicable. Plaintiff-debtor earned $19,680.08 from Sterling in 2012.

8. Plaintiff-debtor lives in a rented residence and resides there with her son and mother. On her Amended Schedule J–Current Expenditures of Individual Debtor(s), plaintiff-debtor reports $600.00 for monthly rent.

9. During trial plaintiff-debtor's mother testified that monthly rent for their residence was $750.00 and that she contributes to the rent in an unspecified amount. Plaintiff-debtor's son testified that he also contributes $400 per month in rent. Mr. Trudell [sic] also testified that it was his intention to move from Ohio so there is a possibility that his contribution to rent will not continue in the future.

10. Plaintiff-debtor suffers from several medical conditions including chronic bronchitis and the beginning stages of emphysema. Plaintiff-debtor also suffers from chronic neck and back pain.

11. In the opinion of her treating physician, plaintiff-debtor is not permanently disabled, is able to perform her job functions at Sterling, is capable of working 4 days a week for 8 hours each day and will not be incapacitated for a single continuous period of time due to her medical condition, including any time for treatment and recovery. USDOE Ex. C and D.

12. The treating physician also opined that it will be medically necessary for plaintiff-debtor to be absent from work during “flare-ups” in her medical condition, that such “flare-ups” would likely occur one time every six months and would last for 3 to 4 days per episode. USDOE Ex. C.

13. Despite suffering from chronic bronchitis and the beginning stages of emphysema, plaintiff-debtor still occasionally smokes cigarettes.

14. The United States offered plaintiff-debtor a discharge from the one time income tax responsibility arising from a loan forgiveness at the conclusion of an ICRP. Plaintiff-debtor refused this offer and chose not to participate in an ICRP because of her concern that enrolling in the program could impair her ability to obtain future credit.Mem. Op. at 4–6, Trudel v. United States Dep't of Educ. Adv Proc. No. 12–05269 (Bankr.N.D.Ohio October 28, 2013), ECF No. 29 (footnotes omitted). The same day, the Bankruptcy Court entered a judgment finding that the Debtor was not entitled to an undue hardship discharge.

The Bankruptcy Court did not make any finding of fact as to whether the Debtor would be able to earn a higher income in the future. According to the Bankruptcy Court, [t]here was no evidence at trial regarding whether any more lucrative employment opportunities were available to plaintiff-debtor at Sterling or whether, in her current position, plaintiff-debtor could expect to earn more...

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