Hunter v. The Education Resources Institute, Inc.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
TERRY HUNTER,
Debtor. 	No.13-03-16034 SA
TERRI HUNTER,
Plaintiff,
v. 	Adv. No. 07-1057 S
THE EDUCATION RESOURCES
INSTITUTE, INC.,
Defendant.
MEMORANDUM OPINION ON DEFENDANT’S
MOTION TO DISMISS
This matter is before the Court on Defendant’s Motion to
Dismiss (doc 20), Plaintiff’s Response (doc 21) and Defendant’s
Reply (doc 22). 	The complaint in this adversary seeks a
declaration that Plaintiff’s student loan obligation is
discharged because Defendant filed an untimely proof of claim
that was disallowed. 	Defendant appears through its attorney
Kevin Hammar. 	Plaintiff appears through his attorney Shay
Meagle. 	This is a core proceeding. 	28 U.S.C. § 157(b)(2)(I).
Motions to dismiss are provided for by Bankruptcy Rule
7012(b), which incorporates Fed.R.Civ.P. 12(b). 	In ruling on a
motion to dismiss, the Court must accept all well-pleaded
allegations as true and must construe them in the light most
favorable to the plaintiff. 	Alvarado v. KOB-TV, L.L.C. (Channel
4 News), 493 F.3d 1210, 1215 (10 th Cir. 2007)(quoting David v.
City & County of Denver, 101 F.3d 1344, 1352 (10 th Cir. 1996).)
Conclusory allegations are not accepted as true, however. 	Hall
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v. Bellmon, 935 F.2d 1106, 1110 (10 th Cir. 1991). 	In this case
no relevant facts are in dispute because they are all taken from
the record of the main bankruptcy case. 	Therefore, the outcome
of this motion depends on the legal sufficiency of the complaint.
The complaint in this case alleges, and the Court therefore
takes as true, the following:
1. 	Plaintiff filed the underlying Chapter 13 case on July 31,
2003.
2. 	The deadline to file Proofs of Claim for nongovernmental
units was December 2, 2003.
3. 	Defendant was listed on Debtor’s Schedule F and was given
notice of the bankruptcy case.
4. 	Plaintiff filed his Chapter 13 Plan (“Plan”) on August 27,
2003.
5. 	Plaintiff’s Plan specifically provided that the allowed
claim of Defendant shall be paid in full after payment of
all allowed administrative priority claims, secured claims
and priority claims. 	See Plan ¶2(v).
6. 	(The Complaint has no paragraph 6.)
7. 	Plaintiff’s Plan also specifically provided that “[a]ny
claim filed after the bar date set forth in the Notice of
the 11 USC § 341 meeting is deemed provided for by
confirmation of the Plan and shall receive the sum of zero
($0.00) in full satisfaction of its claim.” 	See Plan ¶5.
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1Pursuant to § 501(c), Plaintiff/Debtor could have (timely)
filed a proof of claim for Defendant in order to make the plan
fully effective.
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8. 	Defendant did not file an objection to the Plan.
9. 	On December 22, 2003, the Court entered an Order Confirming
Chapter 13 Plan as Modified by the Order (doc 29 in the main
bankruptcy case).
10. 	The December 22, 2003 Order Confirming Plan did not modify
paragraphs 2(v) or 5 of the Plan.
11. 	Defendant filed a Proof of Claim on July 20, 2004 (Claim 5)
in the amount of $9,800.47, unsecured. 	On the same date
Defendant’s counsel filed a Notice of Entry of Appearance
and Request for Notice (main case, doc 64).
12. 	Defendant’s Proof of Claim was filed more than seven (7)
months after the claims bar date 1 .
13. 	The Chapter 13 Trustee filed an Objection to Defendant’s
claim (“Objection”) on the basis that it was filed after the
deadline. 	The Objection included a notice of deadline to
respond to the objections (main case, doc 67).
14. 	Defendant did not respond to the Objection.
15. 	On September 27, 2004, the Court entered an Order Granting
the Trustee’s Objection to Defendant’s claim (main case, doc
74).
16. 	Pursuant to the terms of the confirmed Plan, which was
served on Defendant and to which Defendant did not object,
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its allowed claim was to be paid in full through the Plan,
and would have been paid in full in the Plan if Defendant
had filed a timely Proof of Claim. 	The rest of paragraph 16
of the complaint is a conclusory allegation that Defendant’s
claim is deemed satisfied and should be discharged when
Plaintiff completes his Plan and receives a discharge; the
Court does not take this conclusory allegation as true.
DISCUSSION
On September 24, 2007, the Court of Appeals for the Tenth
Circuit issued its opinion in Educational Credit Mgt. Corp. v.
Mersmann (In re Mersmann), 505 F.3d 1033 (10 th Cir. 2007)(En
banc). 	Mersmann overruled Andersen v. UNIPAC-NEBHELP (In re
Andersen), 179 F.3d 1253 (10 th Cir. 1999), which had held that
confirmation of a Chapter 13 plan that contained specific
language that there was undue hardship such that student loans
would be discharged would be res judicata on the issue, thus
allowing for discharge of the student loan without the required
adversary proceeding under Section 523(a)(8). 	Mersmann makes it
clear that “discharge by declaration” in a chapter 13 plan is no
longer effective to discharge a student loan. 	“When a debt is
not automatically dischargeable, Bankruptcy Rule 7001(6) commands
that the debt must not be discharged without an adversary
proceeding.” 	Mersmann, 505 F.3d at 1048.
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In this case Plaintiff is seeking a discharge by
declaration. 	While it is true that the Plan did not contain any
undue hardship language or specifically state that the student
loan would be discharged, Plaintiff is seeking to use the
language in the Plan regarding failure to file a proof of claim
the same way. 	The Court finds that Plaintiff has failed to state
a cause of action and the adversary proceeding should be
dismissed. 	See also Gallick v. United States Dept. of Education
(In re Gallick), 292 B.R. 830, 831 (Bankr. W.D. Pa. 1993)(“[T]he
failure to file [a proof of claim] does not affect the
dischargeability of the debt. 	Rather, the failure to file a
proof of claim means only that the creditor may not share in the
distribution of assets from the estate.”); In re Amos, 283 B.R.
864, 867 (Bankr. W.D. Ky. 2002)(Student loan creditor entitled to
collect student loan debt because it was not discharged by
chapter 13 discharge even though creditor never filed proof of
claim.); In re Loving, 269 B.R. 655, 662 (Bankr. S.D. Ind. 2001)
(“Neither the bankruptcy rules nor the proof of claim bar date
prevents a creditor holding a nondischargeable debt who has not
filed a proof of claim from collecting outside of bankruptcy.”)
(Citations omitted.)
CONCLUSION
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Because Plaintiff never filed an action to determine the
dischargeability of his student loan debt it is not discharged.
An Order dismissing this adversary proceeding will enter.
Honorable James S. Starzynski
United States Bankruptcy Judge
date entered on docket: 	January 18, 2008
copies to:
Louis Puccini, Jr
Puccini & Meagle, P.A.
PO Box 30707
Albuquerque, NM 87190-0707
Shay E Meagle
PO Box 30707
Albuquerque, NM 87190-0707
Kevin D Hammar
1212 Pennsylvania St NE
Albuquerque, NM 87110-7410
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
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