Opinion
6:22-bk-264-TPG
09-01-2022
In re Christine Lynne Quattry-Peacock, Debtor.
ORDER DENYING DEBTOR'S MOTION AND AMENDED MOTION SEEKING RECONSIDERATION OF THE ORDER OVERRULING OBJECTION TO EDUCATIONAL CREDIT MANAGEMENT CORPORATION'S CLAIM
TIFFANY P. GEYER, UNITED STATES BANKRUPTCY JUDGE.
This case came on for hearing on July 14, 2022, at 2:00 p.m. upon the motion (Doc. No. 96) (the "Motion") and amended motion (Doc. No. 107) (the "Amended Motion") filed by the pro se Debtor, Christine Lynne Quattry-Peacock, on June 29, 2022, and July 11, 2022, respectively, asking the Court to reconsider its order (the "Order") (Doc. No. 92) overruling the Debtor's objection to the federal student loan claim filed by Educational Credit Management Corporation ("ECMC"). Upon consideration of the Motion and Amended Motion, the arguments of the Debtor and of counsel at the hearing, the law, taking judicial notice of the record in this case and the Debtor's previous bankruptcy cases, and being otherwise fully advised in the premises, the Court denies the Motion and Amended Motion. The Debtor has not supplied this Court with any basis to reconsider the Order.
A court may take judicial notice of its own records. ITT Rayonier Inc. v. United States, 651 F.2d 343, 345 n.2 (5th Cir. Unit B July 20, 1981). The decisions of the United States Court of Appeals for the Fifth Circuit issued on or before September 30, 1981, are binding precedent in the Eleventh Circuit. Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981).
I. SUMMARY OF THE DEBTOR'S BANKRUPTCY CASES, CLAIMS FILED BY ECMC, AND THE DEBTOR'S OBJECTIONS TO ECMC'S CLAIMS
The Debtor has filed three Chapter 13 bankruptcy cases: Case No. 6:15-bk-8657-KSJ (the "2015 Case"); Case No. 6:19-bk-7422-LVV (the "2019 Case"), and the instant Chapter 13 case (the "2022 Case") (Doc. No. 1). In each case, ECMC filed a claim associated with the Debtor's federal student loans. In the 2015 Case, it was Claim No. 7, in the 2019 Case, it was Claim No. 3, and in the 2022 Case, it is Claim No. 1.1. The proofs of claim in each of the three cases are nearly identical; the only differences are in the total amounts claimed, which differences are due to accumulation of interest and collection costs. Attached to the claims are identical spreadsheets of the loan history and details, except that the original guarantor in the 2015 Case and 2019 Case was listed as the Florida Department of Education, and the original guarantor specified in the spreadsheet for the 2022 Case is the Florida Office of Student Financial Assistance. (Case No. 6:15-bk-8657-KSJ, Claim 7-1 at 5; Case No. 6:19-bk-7422-LVV, Claim 3-1 at 5; Case No. 6:22-bk-264-TPG, Claim 1-1 at 5.) In compliance with Fed. R. Bankr P. 3001(c)(2)(A), ECMC included an itemized statement of account with each claim supplying the amounts of the current unpaid principal, interest, and collection costs, and indicating promissory notes were available upon request.
In the 2015 case, the amount claimed was $55,364.08. (Case No. 6:15-bk-8657-KSJ, Claim 7-1 at 2.) In the 2019 Case, the amount claimed was $60,138.69. (Case No. 6:19-bk-7422-LVV, Claim 3-1 at 2.) In the 2022 Case, ECMC now claims $60,651.56. (Claim 1-1 at 2.)
In her 2015 Case and her 2022 Case, the Debtor filed objections to ECMC's claim.(Case No. 6:15-bk-8657-KSJ, Doc. No. 44; Case No. 6:22-bk-00264-TPG, Doc. Nos. 44, 49.) Construing the Debtor's objections and other papers filed in opposition to ECMC's claim in the 2015 Case and the 2022 Case as a whole, she has argued that ECMC's claim is an excessive demand, her loans were "charged off," one of her student loan checks was stolen and cashed when a stop payment should have been issued, she was prejudiced because a loan was not provided for her final semester, she needs information regarding reimbursements due to a semester she withdrew as a result of hospitalization, that she should not have been subject to collection practices before graduation, ECMC did not attach promissory notes to its proofs of claim and the documentation ECMC did supply was insufficient pursuant to Fed.R.Bankr.P. 3001. She also argued that repayment was an undue hardship, ECMC employed harassing collection procedures, the loan balance was incorrect, and that erroneous late fees may be included in the claim. Finally, she argues this Court should simply apply the Brunner test to relieve her of her student loan debt.
The Debtor's 2019 Case lasted less than two months and was dismissed before the Debtor filed any objection to ECMC's claim.
The 2015 Case was ultimately dismissed because the Debtor failed to make timely plan payments. (Case No. 6:15-bk-8657-KSJ, Doc. No. 166.) No ruling issued on the Debtor's objection to ECMC's claim in the 2015 Case before the case was dismissed.
Under the Brunner test, a debtor must establish the following to show undue hardship that will permit discharge of her student debt obligations under 11 U.S.C. § 523(a)(8): "'(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.'" In re Cox, 338 F.3d 1238, 1241 (11th Cir. 2003) (quoting Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987)). The Debtor does not offer any analysis of how she meets these elements. Doc. No. 96. In addition, "the Bankruptcy Rules require a party seeking to determine the dischargeability of a student loan debt to commence an adversary proceeding by serving a summons and complaint on affected creditors." United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 268-69, 130 S.Ct. 1367, 1376 (2010). The Debtor has not filed an adversary proceeding regarding ECMC's claim.
See Case No. 6:15-bk-8657-KSJ, Doc. No. at 44 at 2-7; Case No. 6:22-bk-264-TPG, Doc. No. 49 at 2; Doc. No. 96 at 2-3; Doc. No. 107 at 2-4.
In the 2022 Case, ECMC filed a response (the "Response") (Doc. No. 73) supplying the Debtor and the Court with the promissory notes relating to its claim (Doc. No. 73, Composite Ex. 2) and documents evidencing how it acquired the claim (Doc. No. 73 at 8 - 20), as the Debtor had requested. ECMC also made arguments as to why its claim should be allowed over the Debtor's objection. ECMC served the Response upon the Debtor via U.S. mail at her physical mailing address on record with the Court, and upon her via electronic mail at "legal@digital-studios.biz" (Doc. No. 73 at 6) which was apparently not the electronic mail address the Debtor desired but was one she used for receipt of pleadings in this case in the past. Following a review of the Debtor's objections and ECMC's Response, on June 22, 2022, the Court held a hearing and subsequently entered the Order overruling the Debtor's objection to ECMC's claim (Doc. No. 92) because the Debtor failed to make a good argument why ECMC's claim should not be allowed and failed to supply any documents with her objections that would tend to show ECMC is not entitled to its claim in the amount filed. Accordingly, the prima facie validity of the claim's authenticity and amount was not rebutted, and the Court entered the Order overruling the Debtor's objection. (Doc. No. 92.) This Order is the subject of the Debtor's Motion (Doc. No. 96) and Amended Motion (Doc. No. 107) seeking reconsideration here.
Under 11 U.S.C. § 502(a), "a proof of claim is deemed allowed until an interested party objects." In re Davis, No. 6:20-BK-06209-LVV, 2021 WL 4237546, at *3 (Bankr. M.D. Fla. Sept. 15, 2021). "A proof of claim executed and filed in accordance with [the Federal Rules of Bankruptcy Procedure] shall constitute prima facie evidence of the validity and amount of the claim." Fed.R.Bankr.P. 3001(f). A party objecting to the claim bears the burden of proof to rebut its prima facie validity. In re Thornburg, 596 B.R. 766, 769 (Bankr. M.D. Fla. 2018). "The objecting party must refute the legal sufficiency and make a good argument why the claim should not be allowed as filed." In re Davis, No. 6:20-BK-06209-LVV, 2021 WL 4237546, at *3. To refute the legal sufficiency and make a good argument, "evidence at least equal in force to that offered by the proof of claim and which would refute at least one of the allegations essential to the claim's legal sufficiency" must be produced. In re Thornburg, 596 B.R. at 770. Here, the Court overruled the Debtor's objection because she failed to supply sufficient argument, documents or other relevant information that refuted any aspect of ECMC's claim.
II. SUMMARY OF THE DEBTOR'S REQUEST FOR RECONSIDERATION OF ORDER OVERRULING HER OBJECTION TO ECMC'S CLAIM
The Debtor has advanced a long list of reasons why this Court should reconsider its order overruling her objection to ECMC's claim. She argues that: (1) the Court did not conduct an evidentiary hearing; (2) she had difficulty hearing the arguments of ECMC's counsel who appeared at the hearing remotely; (2) ECMC did not serve its response to her at the email address she designated so she lacked notice; (3) ECMC's claim is an excessive demand; (4) the student loan officer misled her about when payments on her student loans would be due; (5) collection practices were wrongfully employed while she was still enrolled as a full-time student; (6) one of her student loan checks was stolen and she should not have to pay it back; (7) the claim contains erroneous default fees; (8) she was wrongfully denied a loan for her final semester of school; (9) she was given an incorrect loan repayment date; (10) in six months she will apply for an administrative discharge of her student loans - the Total Permanent Disability ("TPD") discharge- through a program offered by the U.S. Department of Education, or, alternatively, (11) this Court should simply discharge ECMC's claim by applying the Brunner test. (Doc. No. 96.) She also argues that she did not receive credit for payments she made and that ECMC failed to note its claim was acquired from Educaid. (Doc. No. 107.)
If the Debtor submits a TPD application and the application is granted, ECMC's claim would be discharged and forgiven by the U.S. Department of Education. Federal Student Aid, Total and Permanent Disability (TPD) Discharge, https://disabilitydischarge.com (last visited July 18, 2022). In her 2015 Case, the Debtor explored seeking a TPD discharge (6:15-bk-8657, Doc. No. 116) but elected not to not pursue the application (Case No. 6:15-bk-8657-KSJ, Doc. No. 120), however, she certainly remains free to do so at any time.
III. LEGAL STANDARD FOR RECONSIDERATION
The bankruptcy court has power to reconsider the allowance or disallowance of proofs of claim "for cause." In re Cyrus II P'ship, 358 B.R. 311, 316 (Bankr.S.D.Tex. 2007) (citing 11 U.S.C. § 502(j)); Fed. Bankr. R. 3008. "As the Advisory Committee Note to Bankruptcy Rule 3008 evidences, the bankruptcy court's discretion in deciding whether to reconsider a claim is virtually plenary, as the court may decline to reconsider without a hearing or notice to the parties involved. If reconsideration is granted, the court may readjust the claim in any fashion 'according to the equities of the case.'" 358 B.R. at 316 (citing 11 U.S.C. § 502(j)); In re Rayborn, 307 B.R. 710, 720 (Bankr. S.D. Ala. 2002) ("Reconsideration under § 502(j) is a two-step process. A court must first decide whether "cause" for reconsideration has been shown. Then, the Court decides whether the "equities of the case" dictate allowance or disallowance of the claim." (internal citations omitted)).
The party moving for reconsideration bears the burden of proving that reconsideration is appropriate. 307 B.R. at 720. Specifically, the Debtor must show "cause" for reconsideration. If cause is not demonstrated, the request for reconsideration should be denied. "The term 'cause,' as used in this context, is not defined in the Code and courts have taken a variety of approaches when interpreting and applying § 502(j)." In re JARZ Hosp. Grp. of Tampa, Inc., 626 B.R. 637, 639 (Bankr. M.D. Fla. 2021). Here, the Court will follow the majority of courts and apply the standard in Federal Rule of Civil Procedure 60(b). 626 B.R. at 640 ("The majority of courts that have considered application of § 502(j) have taken the position . . . that when claim allowance or disallowance is the subject of a court order, it is appropriate to utilize the standards for review set forth in Rule 60.").
Federal Rule of Bankruptcy Procedure 9024 makes Fed.R.Civ.P. 60 applicable to bankruptcy proceedings.
A court can relieve a party from an order due to "mistake, inadvertence, surprise, or excusable neglect[.]" Fed.R.Civ.P. 60(b)(1). The Debtor does not assert any grounds that would qualify as mistake, inadvertence, surprise, or excusable neglect. However, the Debtor does claim she was "unaware" of the Response filed by ECMC because ECMC copied her on the Response at a different email address than the one she had specified. She also claims to have had difficulty hearing during the court proceeding. Neither argument supplies any basis to set aside the order under Fed.R.Civ.P. 60(b)(1).
First, the Debtor was properly served with the Response via U.S. Mail at her physical address on file with the Court as reflected in the Certificate of Service on the Response.Though the Response was also sent to a different email address than the one the Debtor requested, that does not preclude a finding that the Debtor had notice of the Response. Because the Response was mailed to the Debtor via first class mail at the address she supplied the Court, service was reasonably calculated to apprise the Debtor of the Response and afford her an opportunity to reply; therefore, there is no issue regarding any lack of notice or due process. See In re Hans Dajung Choe, No. 18-69400-PMB, 2019 WL 6999722, at *4 (denying creditor's motion to reconsider order sustaining objection to claim and finding no violation of due process where creditor claimed that it never received objection, but objection was served via first class mail to the correct address).
"At all times during the pendency of the case, a debtor bears the responsibility of maintaining a current mailing address with the Court." In re Cantrell, No. 17-62952-JWC, 2019 WL 2323772, at *3 (Bankr. N.D.Ga. May 29, 2019) (citing Fed.R.Bankr.P. 4002(a)(5)). Under Federal Rule of Bankruptcy Procedure 9006(e), "service of any paper . . . is complete on mailing."
There is "a rebuttable presumption that an item properly mailed was received by the addressee." Barnett v. Okeechobee Hosp., 283 F.3d 1232, 1239 (11th Cir. 2002). Establishing the presumption requires the following three facts: "(1) the document was properly addressed; (2) the document was stamped; and (3) the document was mailed." Id. at 1240. The Certificate of Service on the Response provides each of these three facts. (Doc. No. 73 at 6.) Although the Debtor alleges she was unaware of the Response, "[m]ere denial of receipt does not rebut the presumption." In re Hans Dajung Choe, No. 18-69400-PMB, 2019 WL 6999722, at *4 (Bankr. N.D.Ga. Dec. 19, 2019) (citing Barnett v. Okeechobee Hosp., 283 F.3d at 1241).
Second, regarding the Debtor's assertion that she could not hear certain aspects of the proceeding as ECMC's counsel appeared telephonically, the Court's personnel made every effort to accommodate the Debtor during the hearing. The Court increased the volume of the speakers when ECMC's counsel spoke and allowed the Debtor to stand physically closer to the speakers in the courtroom. She was offered a special headset but refused. She heard and responded to the Court during the hearing. Her claim that aspects of the proceeding were hard to hear or "garbled" is not credible. As such, Subsection (b)(1) does not provide a basis to reconsider the Order.
Subsection (b)(2) permits a court to relieve a party from an order due to "newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b) . . . ." Fed.R.Civ.P. 60(b)(2). However, the Debtor fails to present any new evidence that could not have been discovered with reasonable diligence before entry of the Order. To the contrary, many of the arguments the Debtor made in the 2022 Case when objecting to ECMC's claim she also made in the 2015 Case, and now simply repeats those same arguments in seeking reconsideration. The documents she attached to her motions did not refute any element of ECMC's proof of claim and she does not claim to have any newly discovered evidence now. Therefore, Subsection (b)(2) provides no basis for reconsideration.
Subsection (b)(3) permits a court to relieve a party from an order due to fraud, misrepresentation, or misconduct by an opposing party. Fed.R.Civ.P. 60(b)(3). The Debtor presents no evidence of fraud, misrepresentation, or misconduct by ECMC that resulted in the entry of the Order. Although the Debtor, with no substantiation, did argue there was misconduct in the collections process, this is not a basis for reconsidering the Order. Subsection (b)(3) affords the Debtor no relief.
Subsection (b)(4) permits a court to relieve a party from an order if the order is void. Fed.R.Civ.P. 60(b)(4). The Order is not void. Therefore, relief is not available under subsection (b)(4).
Subsection (b)(5) permits a court to relieve a party from an order if the order has been "satisfied, released, or discharged" or is "based on an earlier judgment that has been reversed or vacated" or if "applying it prospectively is no longer equitable . . . ." Fed.R.Civ.P. 60(b)(5). The Order has not been satisfied, released, or discharged. The Debtor makes no compelling argument that applying the Order prospectively is no longer equitable. Indeed, the Order did little more than give ECMC an allowed claim, which she can seek to discharge though the TPD program outside of any bankruptcy case. Thus, subsection (b)(5) provides no basis for relief.
The 2022 Case is being dismissed by the Court in a separate order that prohibits the Debtor from filing any further bankruptcy case for a period of two years.
Finally, subsection (b)(6) allows an order to be set aside for any other reason that justifies relief. Fed.R.Civ.P. 60(b)(6). Extraordinary circumstances are required to relieve a party from an order under subsection (b)(6). Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 393, 113 S.Ct. 1489, 1497 (1993) ("To justify relief under subsection (6), a party must show 'extraordinary circumstances' suggesting that the party is faultless in the delay."). Presumably the Debtor would assert that the requirements of the TPD program provide extraordinary circumstances that would support reconsideration because, under the U.S. Department of Education's rules for TPD discharge of student loans, a doctor must execute a certification that the TPD applicant is "unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment . . . ." Federal Student Aid, Total and Permanent Disability (TPD) Discharge, Frequently Asked Questions About Total and Permanent Disability Discharge, https://disabilitydischarge.com/faqs (last visited July 18, 2022). The Debtor believes that if she applies for a TPD she may be required to take medication which she believes impairs her or otherwise comes with negative side effects. Taking the Debtor at her word, this still does not supply a valid basis for reconsideration of the Order under Section (b)(6).
In sum, the Debtor fails to demonstrate that cause exists under any provisions of Rule 60(b) to support reconsidering the Order. Because the Debtor fails to demonstrate cause for reconsidering the Order, the Court does not determine whether the Claim may be allowed or disallowed according to the equities of the case. 11 U.S.C. § 502(j).
IV. CONCLUSION
The Debtor failed to demonstrate a basis for reconsidering the Order. Accordingly, the Motion (Doc. No. 96) and Amended Motion (Doc. No. 107) are DENIED.
The Clerk is directed to serve a copy of this order on all interested parties.