Dominguez et al v. GC Services, Inc. et al

1Fed.R.Civ.P. 12(b) is incorporated by Fed.R.Bankr.P.
7012(b).
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
BERNIE G. DOMINGUEZ
LILA DOMINGUEZ,
Debtors. 	No. 13-97-17464 SA
BERNIE G. DOMINGUEZ, et al.,
Plaintiffs,
v. 	Adv. No. 05-1198 S
PIONEER CREDIT RECOVERY, INC., et al.,
Defendants.
MEMORANDUM OPINION ON MOTIONS TO DISMISS AND
ORDER DISMISSING ADVERSARY PROCEEDING
This matter is before the Court on two motions to dismiss
filed by Pioneer Credit Recovery, Inc. (doc 20) and Educational
Credit Management Corporation (doc 28). 	Counsel are listed
below. 	This is a core proceeding. 	28 U.S.C. § 157(b)(2)(I).
On a motion to dismiss pursuant to Rule 12(b)(6) 1, a court
must accept as true all of the well-pleaded facts and consider
those facts in a light most favorable to the plaintiff. 	Sutton
v. Utah State School for the Deaf and Blind, 173 F.3d 1226, 1236
(10 th Cir. 1999). 	On such a motion, the issue is not whether the
plaintiff will ultimately prevail, but rather whether the
plaintiff is entitled to offer evidence to support the claim.
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). 	A complaint should
not be dismissed under Rule 12(b)(6) unless it appears beyond
doubt that the plaintiff can prove no set of facts which would
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entitle him or her to relief. 	Id. (quoting Conley v. Gibson, 355
U.S. 41, 45-46 (1957)). 	This is so even if the Court and the
parties are aware of facts, outside the pleadings, that make it
seem unlikely that plaintiffs will prevail. 	“Nevertheless,
conclusory allegations without supporting factual averments are
insufficient to state a claim on which relief can be based.”
Hall v. Bellmon, 935 F.2d 1106, 1110 (10 th Cir. 1991).
In considering the legal sufficiency of plaintiff’s claim,
the court can only consider the facts alleged and any document
attached as an exhibit to the complaint or incorporated in it by
reference. 	See Fed.R.Civ.P. 10(c). 	However, if a plaintiff does
not incorporate by reference or attach a document to the
complaint, but the document is referred to in the complaint and
is central to plaintiff’s claim, a defendant may submit an
authentic copy to the court to consider on a motion to dismiss.
GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381,
1384 (10 th Cir. 1997). 	Therefore, the Court has considered the
documents attached to the Motions to Dismiss without converting
this Motion to one for summary judgment.
FACTS
1. 	On or about February 26, 1986, Plaintiffs guaranteed a
student loan for their daughter (“Loan 1").
2. 	On or about October 23, 1987, Plaintiffs guaranteed another
student loan for their daughter (“Loan 2").
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2The Court’s database shows that the case number was 7-94-
12972, but the difference is not relevant.
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3. 	On December 21, 1987, Plaintiffs filed a chapter 7
bankruptcy case, 7-87-02576, and received a discharge on
April 21, 1992.
4. 	On November 9, 1994, Plaintiffs filed another chapter 7
bankruptcy case, 7-95-12972 (sic) 2 and received a discharge
on May 23, 1996.
5. 	On December 24, 1997, Plaintiffs filed a chapter 13
bankruptcy case, 13-97-17464 and received a discharge on
July 16, 2003.
6. 	The student loan agencies received dividends of about
$6,800.11 in the chapter 13 case.
7. 	The record does not indicate when either Loan 1 or Loan 2
first became due. 	For the purposes of this motion, the
Court will give Plaintiffs the benefit of the doubt and
assume that the loans became immediately due upon signing.
CONCLUSIONS OF LAW
Dischargeability of student loans is governed by 11 U.S.C. §
523(a)(8). 	In 1987 that statute provided that student loans were
not dischargeable “unless-(A) such loan first became due before
five years (exclusive of any applicable suspension of the
repayment period) before the date of the filing of the petition.”
See, e.g., Lohman v. Connecticut Student Loan Foundation (In re
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3In Plaintiffs’ reply brief they state that they may have
been mistaken about the date of discharge of the 1987 case. 	The
Court’s database confirms that discharge was in fact entered on
April 21, 1992.
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Lohman), 79 B.R. 576, 578 n.2 (Bankr. D. Vt. 1987). 	At the time
of the first bankruptcy, Loan 1 had been due for 22 months and
loan 2 had been due for 2 months. 	Neither was discharged in the
first bankruptcy.
If a student loan debtor files a bankruptcy, the repayment
period is suspended for the duration of the case until the debtor
receives a discharge. 	Washington v. Educational Credit Mgt.
Corp. (In re Washington), 318 B.R. 405, 407 (Bankr. W.D. Tenn.
2004); Virginia State Education Assistance Authority v. Gibson
(In re Gibson), 184 B.R. 716, 717 (E.D. Va. 1995), aff’d., 86
F.3d 1150 (4 th Cir. 1996); Saburah v. United States Dept. Of
Education (In re Saburah), 136 B.R. 246, 254 (Bankr. C.D. Cal.
1992). 	Therefore, Loans 1 and 2 were in suspension from December
21, 1987 to April 21, 1992 3 when discharge was entered.
In 1994 when the second bankruptcy was filed, section
523(a)(8) provided that student loans were not dischargeable
unless the loan “first became due more than 7 years (exclusive of
any applicable suspension of the repayment period) before the
date of the filing of the petition.” 	See, e.g., Bachner v.
Illinois Student Assistance Comm. (In re Bachner), 165 B.R. 875,
878 (Bankr. N.D. Ill. 1994). 	Therefore, when the second
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bankruptcy was filed, Loans 1 and 2 had been in repayment for an
additional 31 months (from April 22, 1992 to November 9, 1994).
This means that Loan 1 had been in repayment for a total of 53
months and Loan 2 had been in repayment for a total of 33 months.
Neither were discharged in the second bankruptcy.
Similarly, student loans had to have been in repayment for 7
years when the third bankruptcy was filed. 	Therefore, when the
third bankruptcy was filed, Loans 1 and 2 had been in repayment
for an additional 19 months (from May 24, 1996 to December 24,
1997). 	This means that Loan 1 had been in repayment for a total
of 72 months and Loan 2 had been in repayment for a total of 52
months. 	Neither were discharged in the third bankruptcy.
In summary, the Court can find no set of facts that would
entitle Plaintiffs to relief on this complaint. 	It should be
dismissed.
IT IS ORDERED that this Adversary Proceeding is dismissed.
Honorable James S. Starzynski
United States Bankruptcy Judge
Copies to:
Louis Puccini, Jr
PO Box 30707
Albuquerque, NM 87190-0707
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Manuel Lucero
Assistant US Attorney
PO Box 607
Albuquerque, NM 87103-0607
David E. Stocker
11501 Northlake Drive
Cincinnati, OH 45249
Craig R. Welling
1200 17 th Street, Suite 3000
Denver, CO 80202-5585
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