Rothermel v. Sallie Mae et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: JESSICA MARY ROTHERMEL,
Debtor
IN RE: JESSICA MARY ROTHERMEL,
Plaintiff
v.
SALLIE MAE, INC., and
ECMC,
Defendants
Chapter 7
Case No. 07-21363
Adversary No. 07-2093
MEMORANDUM OPINION
In this Memorandum Opinion, I will consider the motion for summary judgment
filed by the defendants in this adversary proceeding. Because I find a genuine issue of
material fact whether repayment of Mrs. RothermePs loans will create an undue hardship,
I deny the motion for Summary Judgment.
PROCEDURAL BACKGROUND
Debtor, Jessica Mary Rothermel ("Debtor"), filed her petition to discharge her
student loans from Sallie Mae, Inc. ("Sallie Mae") under Chapter 7 on August 16,2007.
Debtor's complaint claimed a monthly income of $1,293 and monthly expenses of
1,555.05, creating a negative income of $262.05 per month.
On March 14,2008, Education Credit Management Corporation ("ECMC")
moved to join as a party Defendant, which I granted on April 9, 2008. ECMC then filed
the present motion for summary judgment, on April 23,2008, claiming that Debtor could
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not show "undue hardship" under § 523(a)(8) of the Bankruptcy Code because Debtor
has at least $121.50 in disposable income per month after subtracting $1,114.30' in
expenses from an income of $1,23 5.802 per month. Debtor's brief in response then
alleged her expenses exceeded her income by $46.673 after subtracting $1,292.054 in
expenses from a monthly income of $1,245.38.5
DISCUSSION
A motion for summary judgment is governed by Federal Rule of Civil Procedure
("Fed. R. Civ. P.") 56, which is made applicable to this proceeding by Federal Rule of
Bankruptcy Procedure 7056. Summary judgment is appropriate when the moving party
can demonstrate that there is no genuine issue of material fact and that the moving party
is entitled to judgment as a matter of law. Fed R. Civ. P. 56(c). The absence of a genuine
issue of material fact is evident if the record, taken as a whole, could not lead a rational
trier of fact to find for the non-moving party. Matsushita Electrical Industrial Co. v.
Zenith Radio Corp.. 475 U.S. 574, 586 (1986). Thus, even if the non-moving party has
the burden of proof at trial, the party moving for summary judgment has the burden of
showing the absence of a genuine issue of material fact in its summary judgment motion
by showing that the non-moving party cannot establish an essential element of its claim
1 How defendants arrive at this number is unclear.
2 This figure is based on the income statement provided by Debtor through discovery, indicating a biweekly
income of $617,9 by adding net income ($574) plus local tax ($6.92) plus federal withholdings ($35.56).
Additionally, ECMC also suggested Debtor's income is $20,411.00 per year by multiplying gross income
listed in the income statements ($785.05) by fifty two weeks. Defendants also suggested a third possible
monthly income as $1,688.86 based on Schedule I of Debtor's bankruptcy schedules before deductions.
3 This should possibly be $56.67, see note 5.
4 This is a total of all expenses listed in the expense statements dated January 10,2008 except for medical
insurance.
5 It is unclear how Debtor calculates an income of $1,245.38 unless the amount is actually $1235.38 as
explained in note 2, and there is a typographical error.
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or that there is insufficient evidence to do so. Celotex v. Cartrett. 477 U.S. 317, 323-25
(1986).
Here, Debtor's claim that payment of her student debt will impose an undue
hardship under 11 U.S.C. §523(a)(8)(B) obligates Debtor to prove her claim in paragraph
15 of her complaint that she will be unable to establish a "minimal" standard of living if
forced to repay her student loans. Pennsylvania Higher Education Assistance Agency v.
Faish. 72 F.3d 298, 304 (3d Cir. 1995). Debtor is also required to show that this state of
affairs is likely to persist for a significant period of time, and that Debtor has made good
faith efforts to repay the loans. Id.
Although Debtor, the non-moving party, will have the burden of proof at trial,
ECMC is responsible in its summary judgment motion for showing that Debtor cannot
establish an element of its claim. Celotex. 477 U.S. at 323-25.1 find that ECMC has not
met its burden of showing no genuine issue of material fact. ECMC has not successfully
shown Debtor can maintain a minimal standard of living while repaying the loans. Most
significantly, the parties are in apparent disagreement whether Debtor has a negative or
positive income, and ECMC has not shown that its calculations, as opposed to Debtor's
calculations, are correct. Furthermore, I find a genuine issue of material fact exists in
Debtor's expenses because the monthly and yearly columns of Debtor's expense report
are not in sync.6 In fact, the ambiguity in the calculations highlighted above also reveal a
genuine issue of material fact. ECMC has therefore not shown Debtor will be unable to
prove an essential element of its claim. For this reason I will deny Defendant ECMC's
motion for summary judgment in the accompanying Order.
6 For example, monthly and yearly total are both listed as $193.91 for "special needs," and fuel is listed as
$20 monthly and $180 yearly, although 12 times 20 equals 240, not 180.
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