ECMC v. Alexandra Acosta-Conniff

Filing

Opinion issued by court as to Appellant Alexandra Elizabeth Acosta-Conniff. Decision: Vacated and Remanded. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

Case: 16-12884

Date Filed: 04/19/2017

Page: 1 of 9

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-12884
________________________
D.C. Docket Nos. 2:15-cv-00220-WKW; 2:12-bkc-31448-WRS
In Re: ALEXANDRA ELIZABETH ACOSTA-CONNIFF,
Debtor.
_______________________________________
ECMC,
a.k.a. Educational Credit Management Corporation,
Plaintiff - Appellee,
versus
ALEXANDRA ELIZABETH ACOSTA-CONNIFF,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(April 19, 2017)

Case: 16-12884

Date Filed: 04/19/2017

Page: 2 of 9

Before ROSENBAUM and JULIE CARNES, Circuit Judges, and
SCHLESINGER, * District Judge.
PER CURIAM:
Appellant Alexandra Elizabeth Acosta Conniff (“Conniff”) recently emerged
from Chapter 7 bankruptcy and was granted a discharge on her outstanding debts.
Because the Bankruptcy Code does not, as a general matter, permit student loans to
be discharged via bankruptcy, see 11 U.S.C. § 523(a)(8), Conniff’s student debt
totaling $112,000 was excluded from this discharge. There is, however, a narrow
exception to this exclusion for a debtor who can show that repayment of her
student debt would cause “undue hardship.” Id.
Conniff argued that she would suffer undue hardship if required to repay the
balance of her student debt. Following briefing and a trial, the bankruptcy court
concluded that Conniff met her burden of demonstrating undue hardship, and it
granted her a complete discharge of her student debt. Conniff’s student-loan
creditor, Educational Credit Management Corp. (”ECMC”), appealed this decision
to the district court, which concluded that Conniff had failed to show undue

*

The Honorable Harvey E. Schlesinger, United States District Judge for the Middle District of
Florida, sitting by designation.

2

Case: 16-12884

Date Filed: 04/19/2017

Page: 3 of 9

hardship and accordingly reversed the bankruptcy court’s order finding the student
debt was dischargeable. Conniff appeals the district court’s reversal.
After careful consideration of the record before us, and with the benefit of
oral argument, we VACATE the district court’s judgment and REMAND for
further consideration consistent with this opinion.
STANDARD OF REVIEW
This Court reviews a district court’s legal conclusions de novo. See In re
Fin. Federated Title & Trust, Inc., 309 F.3d 1325, 1328–29 (11th Cir. 2002) (citing
Capital Factors, Inc. v. Empire for Him, Inc. (In re Empire for Him, Inc.), 1 F.3d
1156, 1159 (11th Cir. 1993)). Whether a district court has applied the correct
standard of review to a bankruptcy court’s decision is a legal question that this
Court also reviews de novo. See, e.g., Rush v. JLJ Inc. (In re JLJ Inc.), 988 F.2d
1112, 1116–17 (11th Cir. 1993).
DISCUSSION
An individual debtor like Conniff may not discharge her student loans
through bankruptcy unless she can show that repayment would cause her “undue
hardship.” 11 U.S.C. § 523(a)(8). The term “undue hardship” is not defined in the
Bankruptcy Code. To guide courts’ analysis, this circuit has adopted the test set
out in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir.
3

Case: 16-12884

Date Filed: 04/19/2017

Page: 4 of 9

1987) (the “Brunner test”). See Helman Ins. Corp. v. Cox (In re Cox), 338 F.3d
1238, 1241–42 (11th Cir. 2003). Under the Brunner test, a debtor is entitled to
discharge of her student debts if she proves all of the following:
(1)

That the debtor cannot maintain, based on current income and
living 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.

Brunner, 831 F.2d at 396.
This three-prong test looks at three different time periods. The first prong
focuses on the present ability of the debtor to repay the debt. The second prong
looks to the future to determine the unlikelihood that the debtor could become able
to repay the loan. The third prong looks to the debtor’s past conduct to determine
whether her actions in the past have manifested a good faith effort to repay that
which she owes. The debtor bears the burden of proving each prong of the
Brunner test by a preponderance of the evidence. Educ. Credit Mgmt. Corp. v.
Mosley (In re Mosley), 494 F.3d 1320, 1324 (11th Cir. 2007).

4

Case: 16-12884

Date Filed: 04/19/2017

Page: 5 of 9

Following a trial, the bankruptcy court concluded that Conniff met her
burden under all three prongs of the Brunner test and thus was entitled to
discharge. The legal standard applicable to the second prong, which looks to the
likelihood that the debtor will continue to be unable to repay the loans, is whether
“there is a ‘certainty of hopelessness’ that the debtor will be able to repay the loans
within the repayment period.” Mosley, 494 F.3d 1320. Addressing this second
prong, the district court disagreed with the bankruptcy court’s conclusion that
Conniff had met her burden under this prong of the Brunner test, and it reversed on
that basis. Because Conniff had to prove all three prongs of the test, the district
court indicated that Conniff’s failure to meet her burden on the second prong
meant that it was unnecessary for the court to decide whether she had met the first
or third prong.
Conniff argues on appeal that instead of reviewing the bankruptcy court’s
ruling under a clearly erroneous standard, the district court actually applied a de
novo standard, substituting its own judgment of the facts for the bankruptcy
court’s. On appeal from a bankruptcy-court order, a district court reviews findings
of fact for clear error and conclusions of law de novo. See In re Fin. Federated
Title & Trust, Inc., 309 F.3d 1325, 1328–29 (11th Cir. 2002). Because application
of the Brunner test involves mixed questions of fact and law, In re Mosley, 494

5

Case: 16-12884

Date Filed: 04/19/2017

Page: 6 of 9

F.3d at 1324, it is important that a reviewing court identify the standard of review
it is applying in considering the various factual findings and legal conclusions
reached by the bankruptcy court.
A bankruptcy court’s findings as to each of the three prongs of the Brunner
test are factual findings that should be reviewed by the district court for clear error;
not under a de novo standard of review. Cf. In re Mosley, 494 F.3d at 1326–27
(indicating that the evidence at trial supported the bankruptcy court’s finding that
the debtor would be highly unlikely to become able to repay his student loans and
that he had made good faith efforts to obtain work to enable him to repay those
loans). By contrast, a bankruptcy court’s interpretation of any legal question
pertinent to its fact finding, including whether or not a debtor is entitled to
discharge based on its findings as to the three Brunner prongs, is a legal conclusion
subject to de novo review. See Hedlund v. Educ. Res. Inst. Inc., 718 F.3d 848, 849,
854 n. 10 (9th Cir. 2013) (“In a § 523(a)(8) proceeding, the bankruptcy court’s
good faith finding” under the third prong of the Brunner test “should be reviewed
for clear error,” but “we review the application of Brunner de novo, i.e., whether
the bankruptcy court properly applied the three-prong test” in deciding whether a
debtor is entitled to discharge based on the Brunner findings).

6

Case: 16-12884

Date Filed: 04/19/2017

Page: 7 of 9

The district court did not, however, indicate whether it was applying a clear
error or a de novo standard of review when it considered the bankruptcy court’s
finding as to the second prong of the Brunner test, which is the only prong the
district court examined. From our review of the district court order, we cannot
confidently conclude that the court was applying a clear error standard.
Given this uncertainty, we remand the case to the district court with
instructions to apply clear-error review to the bankruptcy court’s factual findings
as to each prong of the Brunner test and de novo review to any of the bankruptcy
court’s legal conclusions. If the district court concludes that it lacks sufficient
factual findings to review the bankruptcy court’s decision as to any of the three
prongs,1 the district court may remand the matter to the bankruptcy court for
further factual findings as it deems necessary.

1

Expressing its uncertainty whether the bankruptcy court’s conclusion constituted an effort “to
provide an equitable escape from a perceived ‘life sentence’ of debt,” the district court indicated
the need for more detailed factual findings by the bankruptcy court as to the reasonableness and
necessity of Conniff’s expenses and the extent to which she could reduce those expenses. The
court further indicated that the bankruptcy court had not spelled out its thinking as to why it had
chosen $915 as the benchmark for Conniff’s monthly repayment obligations, nor made factual
findings regarding her eligibility for a repayment plan that would substantially reduce her
monthly payments. Finally, as to Conniff’s failure to take advantage of a loan forgiveness
program that would have wiped out $17,500 of her debt for every five years she taught special
education in a rural district, the district court found the record lacking in explaining why Conniff
was unsuccessful in participating in this program and what steps she could have taken to achieve
a different result.

7

Case: 16-12884

Date Filed: 04/19/2017

Page: 8 of 9

Finally, in expressing its disagreement with the bankruptcy court’s decision,
the district court offers several grounds in support of its reasoning. One of those
grounds, however, merits mention. Specifically, in reaching its conclusion that
Conniff had not proven the second prong, the district court opined that Conniff has
only herself to blame for incurring student debt in the pursuit of multiple degrees
that she should have known would not lead to an increase in income sufficient to
cover the debt:
Although she is not satisfied with the pay the advanced
degrees ultimately have yielded, Conniff chose to earn
four degrees, funded primarily by student loans, in her
preferred career path of education with a general
understanding of the benefits she would obtain from the
degrees versus the costs. She admits specifically that she
decided to obtain another student loan to earn her
pinnacle Ph.D in special education and agreed to repay it,
knowing how the cost of the Ph.D compared with the
increase in pay it would provide. (Doc. #2-11, at 31.)
Conniff finds herself in circumstances largely of her own
informed decision-making, which although not
dispositive, is a consideration. See In Re Brightful, 267
F.3d at 328.
From this, the district court concluded, among other things, that “[a]lthough
Conniff admittedly finds herself in undesirable financial difficulties, she ultimately
must bear the consequences of her decision to obtain loans in order to pursue her
multiple educational goals.”

8

Case: 16-12884

Date Filed: 04/19/2017

Page: 9 of 9

As noted, the second prong is a forward-looking test that focuses on whether
a debtor has shown her inability to repay the loan during a significant portion of
the repayment period. It does not look backward to assess blame for the student
debtor’s financial circumstances. Thus, even if the court concludes that a debtor
has acted recklessly or foolishly in accumulating her student debt, that does not
play into an analysis under the second prong. Nor should it be considered on
remand in analysis of that prong.2
CONCLUSION
The district court’s decision reversing the bankruptcy court’s discharge order
is VACATED and the matter is REMANDED to the district court for further
review consistent with this opinion.

2

We neither foreclose nor endorse a possible argument that the third prong, which looks to a
debtor’s good faith, might be implicated in an extreme case by a debtor who unnecessarily and
unreasonably amasses substantial additional debt at a time when she is obligated to pay a student
loan, and who then argues that, because she now has so many other bills to pay, she should
receive an undue hardship exemption as to her student debt. We merely note that our holding
regarding the need to look only to the debtor’s future ability to pay applies solely to the second
prong.

9