Opinion
Case Number: 07-01398.
January 30, 2008
MOVANT/APPLICANT/PARTIES:
OUTCOME:
_____ Granted _____ Denied _____ Approved _____ Sustained
_____ Denied _____ Denied without prejudice _____ Withdrawn in open court _____ Overruled
_____ OSC enforced/released
_____ Continued
to: _________________________ For: ______________________________
_____ Formal order/stipulation to be submitted
by: ______________ Date due: ___________________
_____ Findings and conclusions dictated at close of hearing incorporated by reference
_____ Taken under advisement: Brief(s) due ____________________ From ____________________ Response(s) due ________________ From
_____ Fees allowed in the amount of:
$____________________ Expenses of: $____________________
_____ No appearance/response
by: __________________________________________________
_____ DECISION SET OUT MORE FULLY BY COURT AS FOLLOWS:
Hearing held. The motion is hereby denied. While there are no genuine issues of material fact, the defendant, not the plaintiff, is entitled to judgment as a matter.
The plaintiff does not dispute that the defendant is entitled to post-petition interest on its pre-petition student loan. See Bruning v. U.S., 376 U.S. 358 (1964); In re Cousins, 209 F.3d 28, 40-42 (1st Cir. 2000). Rather, plaintiff contends that defendant's claim for post-petition interest was discharged when she, pursuant to her plan, paid in full the amount of the defendant's proof of claim, which made no reference to such interest. Plaintiff thus contends that the defendant is in contempt of the discharge order in attempting now to collect that interest. Plaintiff relies on In re Burrell, 346 B.R. 561 (1st Cir. BAP 2006), a decision grounded in the panel's preference for the finality of plan confirmation orders in bankruptcy, however much at variance with Code requirements the plan may be. See Burrell, 346 B.R. at 570. In Burrell, the plan explicitly treated a secured claim as unsecured and paid in full the amount of the creditor's proof of claim (which made no reference to post-petition interest). There, as here, the debtor contended that the creditor's post-petition interest claim and related lien were discharged upon payment in full. The panel agreed.
Here, the similarity with Burrell is the claimant's failure to preserve or reference post-petition interest in the proof of claim. The dissimilarity, which I find dispositive, is that, while Burrell, in the plan, notified the creditor of the modification of its claim from secured to unsecured, the plaintiff here failed anywhere to notify the defendant of the modification of its claim from non-dischargeable to dischargeable. In fact, the plan does not specifically mention the student loan claim and does not purport to extend the scope of the discharge beyond that specified in 11 USC § 523(a)(8). I find discharge by omission, as here, as objectionable as discharge by declaration. See In re Whelton, 432 F.3d 150, 154 (2d Cir. 2005). Therefore, the debt for postpetition interest cannot be deemed discharged.
Nor can it be deemed satisfied or waived. Claims for interest not matured as of the date of the bankruptcy filing must be disallowed. 11 USC § 502(b)(2). A creditor cannot be reasonably be expected to include in a proof of claim any portion of its right to payment that is clearly subject to disallowance as a claim in bankruptcy; therefore, failure to demand postpetition interest cannot be deemed a waiver of that right to payment. And payment in full of the amount of the proof of claim is not a satisfaction of the portion of the debt that could not be included in the proof of claim. Thus, the plaintiff remains liable therefor.
IT IS SO NOTED: