498 B.R. 98
Bankr. S.D. Miss.2013Background
- Debtors filed Chapter 13 petition on Sept 22, 2011; Feild loan plaintiff HFS sought collection.
- Feild loan status misidentified as medical; Feild loan treated as unsecured by plan.
- HFS filed post-petition County Court suit against Whitney, implicated by automatic stay.
- Debtors failed to timely respond to HFS’s summary judgment motion; scheduling orders extended deadlines.
- HFS sought dismissal of adversary and sanctions; court granted partial summary judgment for Debtors on counterclaim.
- Court held Espinosa governs dischargeability of student loans; due-process notice lacking; no discharge via plan; counterclaim dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HFS is entitled to summary judgment on the automatic stay claim | HFS argues stay violation occurred post-petition | Debtors contend no willful violation and notice defects | Summary judgment granted for HFS on stay claim not willful |
| Whether Rule 9011 sanctions are warranted | HFS seeks sanctions for improper filings | Debtors argue noncompliance with separate sanctions motion rule | Sanctions denied; Rule 9011 not properly invoked |
| Whether discharge of Whitney’s student loan(s) occurs via confirmation order or hardship process | HFS argues plan discharges not enforceable against it; Espinosa controls | Debtors rely on plan language; Espinosa requires due process | Discharge not granted via plan; Espinosa-based due process not met; no discharge by plan |
| Whether the Counterclaim should be granted or dismissed | HFS seeks sanctions and fees; argues fraud upon Court | Debtors deny fraud; request for dismissal denied | Sua sponte summary judgment in Debtors’ favor; Counterclaim dismissed |
Key Cases Cited
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (U.S. 2010) (dischargeability under 11 U.S.C. § 523(a)(8) requires undue hardship with due process)
- Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir. 2008) (willful stay violations require knowledge of the stay)
- NL Indus., Inc. v. GHR Energy Corp., 940 F.2d 957 (5th Cir. 1991) (summary judgment standard and Celotex framework authority)
- The Cadle Co. v. Pratt, 524 F.3d 580 (5th Cir. 2008) (Rule 56 summary judgment; evidentiary burden on movant and nonmovant)
- In re Franklin, 448 B.R. 744 (Bankr. M.D. La. 2011) (dischargeability and plan treatment considerations)
- Leatherman v. Tarrant Cnty. Narcotics Intell. & Coordination Unit, 28 F.3d 1388 (5th Cir. 1994) (tool for evaluating summary judgment standard application)