Gaines v. Citibank et al

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

/S/ RUSS KENDIG

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
IN RE: ) CHAPTER 7
)
KRISTA LYNETTE GAINES, CASE NO. 10-60875
Debtor . ADV. NO. 10-6043
KRISTA LYNETTE GAINES, ) JUDGE RUSS KENDIG
)
Plaintiff, )
Vv.
) MEMORANDUM OF OPINION
UNIVERSITY OF AKRON, et al., ) (NOT INTENDED FOR
) PUBLICATION)
Defendants. )
)

On September 20, 2011, the plaintiff filed a motion for summary judgment.
Defendant, University of Akron, filed a response to plaintiffs motion for summary judgment
on October 3, 2011. The motion is now before the court.

The court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334 and the
general order of reference entered in this district on July 16, 1984. Venue in this district and
division is proper pursuant to 28 U.S.C. § 1409. This is a core proceeding under 28 U.S.C.

§ 157(b)(2)).

This opinion is not intended for publication or citation. The availability of this
opinion, in electronic or printed form, is not the result of a direct submission by the court.

FACTS

Debtor-plaintiff (“plaintiff”) filed a chapter 7 petition on March 10, 2010 and
received a general discharge on July 7, 2010. On May 7, 2010, the plaintiff filed the above-

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captioned adversary proceeding seeking to have student loan debt determined to be
dischargeable under 11 U.S.C. § 523(a)(8). Plaintiff's complaint alleges that payment of the
student loans would cause an undue hardship for her due to her disabilities of bipolar

disorder, personality disorder, and peripheral neuropathy.

The plaintiff moved for summary judgment on September 20, 2011 asserting that
there is no genuine dispute of material fact and that she is entitled to judgment as a matter
of law. Specifically, the plaintiff asserts that she has met the three-prong test applicable to
proceedings under § 523(a)(8) to determine that payment of the student loans would cause
an undue hardship on her. With respect to the first prong, the plaintiff asserts that since her
monthly income is just $883.00 and since her expenses exceed her income, then she has
proven that she cannot maintain a minimal standard of living if forced to repay the student
loans. The plaintiff asserts that she has met the second prong since her medical and mental
conditions render her unable to maintain gainful employment and since these conditions are
long term and not likely to change. Finally, the plaintiff asserts that she made good faith
efforts to repay the loans in satisfaction of the third prong by acknowledgment of the loans

through requests for deferments of the loans.

The defendant’s response to the motion for summary judgment, filed October 3,
2011, argues that the plaintiff is not entitled to summary judgment. The defendant does not
address the first and second prongs, but asserts that the plaintiff fails to meet the third prong
of the undue hardship test for purposes of 11 U.S.C. § 523(a)(8). Specifically, the defendant
asserts that the plaintiff made only one payment toward the student loans, incurred the
student loans after becoming disabled and while seeking to be adjudicated as disabled, and
filed for bankruptcy relief primarily to discharge her student loan debt.

LAW

A, Summary Judgment Standard

Federal Rule of Civil Procedure 56(a), applicable to this proceeding by way of
Federal Rule of Bankruptcy Procedure 7056, provides that “[t]he 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.” Summary
judgment is not appropriate if a material dispute of the facts arises such that a “reasonable
jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986).

The movant bears the initial burden to prove that there is no genuine issue of fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The non-moving party then bears the
burden to assert facts that, if proven, would form a basis for granting or denying relief
under the governing law. Anderson, 477 U.S. at 248.

B. Brunner Test

The Sixth Circuit adopted the Brunner test to determine if payment of a student
loan would cause undue hardship upon a debtor for purposes of 11 U.S.C. § 523(a)(8).

' The defendant’s response is contradictory on this fact, indicating both that “only one
voluntary payment was made” and that the plaintiff “only made minimum payments

totaling $40.00.”

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Oyler v. Educ. Credit Mgmt. Corp., 397 F.3d 382, 385 (6th Cir. 2005) (following Brunner
v. New York State Higher Educ. Serv. Corp., 831 F.2d 395 (2d Cir. 1987)). The Brunner
test requires a three-prong analysis: “(1) that the debtor cannot maintain, based on current
income and expenses, a ‘minimal’ standard of living for herself and her dependents if
forced to repay the loans; (2) that additional circumstances exist indicating that this state
of affairs is likely to persist for a significant portion of the repayment period of the
student loans; and (3) that the debtor has made good faith efforts to repay the loans.” Id.
at 385 (quoting Brunner, 831 F.2d at 396). The debtor bears the burden to prove each
prong of the Brunner test by a preponderance of the evidence. Oyler, 397 F.3d at 385.

ANALYSIS

Since the defendant’s response does not address the first and second prongs, the
court determines that there is no genuine dispute as to any material facts with respect to
these prongs. Therefore, whether summary judgment is appropriate depends solely on
whether a dispute of fact arises with respect to the third prong of the Brunner test.

The plaintiff asserts that she has met the burden of establishing good faith efforts
to repay the loan in satisfaction of the third prong in one way only. She requested
deferments on the student loans and by doing so, she acknowledged the debt. By her
accounts, these requests for additional time to pay the debt indicate that she acted in good

faith.

The defendant, on the other hand, paints a much different picture of the plaintiffs
actions with respect to the debt. First, the defendant asserts that she made only one
payment of $40.00 on the debt. Second, the defendant alleges that the plaintiff incurred
these student loan obligations after becoming disabled and while in the process of seeking
an adjudication of her disabled status. Specifically, the defendant represents that the
plaintiff became disabled as of June 17, 2005 and that she filed a proceeding to be
adjudicated disabled on November 8, 2006, but did not incur the student loans until June
27, 2008. Third, since more than half of the plaintiff's debt is student loan debt, it
suggests that the plaintiff filed bankruptcy primarily for the purpose of discharging the
student loans. The defendant argues that all of these actions are not consistent with good

faith efforts to repay the student loans.

Summary judgment, as noted above, is not appropriate if a material dispute of
facts arises such that a verdict for the nonmoving party could be rendered. Anderson, 477
U.S. at 248. In the instant matter, the plaintiff presents one set of facts to assert that she
meets the third prong of Brunner. The defendant, however, presents an entirely different
set of facts to assert that the plaintiff fails to meet the third prong of Brunner.

This court finds that the dispute between the scenarios painted by each party is a
genuine dispute of fact. Whether or not the plaintiff meets the Brunner test is a question
of law. Barrett v. Educational Credit Management Corp., 487 F.3d 353, 358 (6th Cir.
2007); In re Cheesman, 25 F.3d 356, 359 (6th Cir. 1994). But each prong of the Brunner
test is comprised of factual determinations that are centered around the plaintiff's actions
or inaction as the case may be. See Traversa v. Educ. Credit Mgmt. Corp., 386 B.R. 386,
389 (D. Conn. 2008) (noting that determinations of undue hardship are “highly fact
sensitive”). The defendant’s version of the facts conflict with the plaintiffs version and,

therefore, a genuine dispute of fact arises.

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The dispute of facts that arises is material because it directly relates to the third
prong of the Brunner test and whether or not the plaintiff is able to satisfy her burden of
proof with respect to it. Since there is no dispute that the plaintiff is able to meet her
burden with respect to the first and second prongs, the third prong is the only hurdle that
the plaintiff must overcome. The facts in dispute affect the outcome of the matter. The
defendant sets forth facts that, if proven, may indicate that the plaintiff did not make good
faith efforts to repay the loan and, therefore, cannot meet her burden of proof with respect
to the third prong of the Brunner test. The defendant’s allegations may be sufficient to
form a basis for denying the relief sought in the plaintiff's complaint. Given that a
dispute arises with respect to material facts surrounding the factual inquiry of the Brunner
test, this court is unable to determine that the plaintiff is entitled to judgment as a matter
of law. Accordingly, summary judgment is not appropriate in this matter.

CONCLUSION

Based on the foregoing, the court denies the plaintiff's motion for summary
judgment. An order will be entered concurrently with this opinion denying the motion for

summary judgment.

Service List:

Wayne W Sarna

Community Legal Aid Services, Inc.
First National Tower, 7th Floor

11 Federal Plaza Central
Youngstown, OH 44503

Jaime-Lyn Poh

Community Legal Aid Services Inc
50 South Main St

Ste 800

Akron, OH 44308

Krista Lynette Gaines
175 Chateau Cir. |
Orrville, OH 44667

Marc A. Melamed

1100 Superior Avenue, 19th Floor
Cleveland, OH 44114

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