Haney v. Educational Credit Management Corp.
Filing
26
MEMORANDUM OPINION & ORDER: Court AFFIRMS the Bankruptcy Court's denial of Haney's motion to reconsider & her motion for leave to amend her complaint. Court lacks jurisdiction over Haney's appeal from the Bankruptcy Court's dismi ssal of her claims & therefore DISMISSES that part of her appeal. The Clerk shall STRIKE this case from the Court's active docket. This is a FINAL & APPEALABLE Order & there is no just cause for delay. Signed by Judge Amul R. Thapar on 8/27/2012. (RKT)cc: COR,Bankruptcy Court Modified text on 8/27/2012 (RKT).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
PIKEVILLE
)
)
)
Appellant,
Civil No. 12-08-ART
)
)
v.
)
MEMORANDUM OPINION
)
EDUCATIONAL CREDIT
& ORDER
)
MANAGEMENT CORPORATION,
)
)
Appellee.
)
*** *** *** ***
THERESA HANEY,
“Ignoring deadlines is the surest way to lose a case.”
United States v. Golden
Elevator, Inc., 27 F.3d 301, 302 (7th Cir. 1994). And parties like appellant Theresa Haney
“who decide that they will play by rules of their own invention will find that the game cannot
be won.” Nw. Nat’l Ins. Co. v. Baltes, 15 F.3d 660, 663 (7th Cir. 1994). Haney appeals the
Bankruptcy Court’s dismissal of her claims and subsequent denial of her motions to
reconsider and to amend her complaint. But the Bankruptcy Court properly denied these
latter two motions as untimely. And because her motion to reconsider was untimely, her
appeal from the order dismissing her claims is also untimely, thus eliminating the Court’s
jurisdiction over that appeal. The Court therefore affirms the Bankruptcy Court’s denial of
her motions to reconsider and to amend her complaint. In addition, Haney’s appeal on the
merits of her claims must be dismissed for lack of jurisdiction.
BACKGROUND
In September 1997, Theresa Haney voluntarily filed for bankruptcy in the United
States Bankruptcy Court for the Eastern District of Kentucky. In re Haney, No. 97-70937TNW (Bankr. E.D. Ky. Sept. 8, 1997), R. 1. She sought a Chapter 13 bankruptcy, which
enables individuals with a stable income to develop a plan to repay some or all of their debts.
See 1 William L. Norton Jr., Bankruptcy Law & Practice § 3:16 (3d ed. 2012). She listed the
Kentucky Higher Education Assistance Authority as a creditor with an unsecured claim
against her, and indeed, as her only creditor. Haney v. Educational Credit Mgmt. Corp. (In
re Haney), No. 11-07024-TNW (Bankr. E.D. Ky. Nov. 30, 2011), R. 15 at 1 [hereinafter
Adversary Proceeding]. Haney immediately proposed a plan for repaying her debts. Id.
This proposed plan would allow her to pay unsecured creditors “to the greatest extent
possible” over a period of sixty months. Id. at 1–2. With no objections to this proposal, the
Bankruptcy Court confirmed the plan on December 19, 1997. Id. at 2.
Shortly afterward, the Kentucky Higher Education Assistance Authority assigned
Haney’s student-loan debt to the Educational Credit Management Corporation. Id. Seeking
payment for the debt, Educational Credit quickly filed a proof of claim for $24,870.81 in
Haney’s bankruptcy case. Id. Haney did not object to this proof of claim, which the
Bankruptcy Court allowed. Id. Educational Credit managed to collect nearly $12,000 before
the sixty-month repayment period under Haney’s bankruptcy plan ended. Id. With the
plan’s repayment period over, the Bankruptcy Court entered a standard order discharging “all
debts provided for by the plan” except any debt “for a student loan . . . as specified in 11
U.S.C. § 523(a)(8).” Id. With nothing left to do, the Bankruptcy Court closed Haney’s case.
Id.
Seven years passed before Educational Credit resumed collecting the balance of
Haney’s student-loan debt. Id. Educational Credit began garnishing Haney’s wages on July
2
29, 2011, prompting Haney to take swift action. Id. Within one week, Haney moved to reopen her bankruptcy case so she could file an adversary proceeding against Educational
Credit. Id. Haney believed that the 2003 discharge order had eliminated her student-loan
debt and that Educational Credit’s collection efforts violated that order. Id. The Bankruptcy
Court granted Haney’s motion to re-open her case. Id.
Haney subsequently filed a two-count complaint against Educational Credit. Compl.,
Adversary Proceeding, R. 1. She sought (1) a determination that her student-loan debt had
been discharged because Educational Credit had appeared in the bankruptcy proceeding but
failed to object to the discharge order, and (2) attorney’s fees and sanctions for Educational
Credit’s violation. Id. ¶¶ 14–20. Educational Credit moved to dismiss her complaint for
failure to state a claim for relief, arguing that the student-loan debt was not discharged.
Adversary Proceeding, R. 5.
In Haney’s response, she alleged for the first time that the language of the discharge
order did, in fact, eliminate her debt to Educational Credit under the pre-1998 version of 11
U.S.C. § 523(a)(8). See Adversary Proceeding, R. 15 at 3. Beginning in 1991, § 523(a)(8)
allowed for the discharge of education loans that had been in repayment for at least seven
years. See 3 William L. Norton, Jr. Bankruptcy Law & Practice § 57:52 (3d ed. 2012). But
Congress repealed that provision in October 1998, making student loans non-dischargeable
unless the Bankruptcy Court finds that the debt would create an “undue hardship.” Id.
Haney argued that her discharge order’s “generic language” meant to refer to the pre-1998
version of the statute, thus discharging her student-loan debt because it had been in
repayment for more than seven years. See Adversary Proceeding, R. 15 at 3. According to
Haney, this discharge of her student-loan debt was binding on the Bankruptcy Court. See
3
Adversary Proceeding, R. 15 at 3.
The Bankruptcy Court, though, did not feel shackled by Haney’s interpretation of the
discharge order. On November 30, 2011, the Bankruptcy Court granted the motion to
dismiss. Adversary Proceeding, R. 16; Adversary Proceeding, R. 15 at 6. The Bankruptcy
Court rejected Haney’s new argument, holding that there were no factual allegations in the
complaint to support such an argument and that, in any event, her argument was meritless.
Adversary Proceeding, R. 15 at 4.
Haney moved for reconsideration on December 20, 2011. Adversary Proceeding,
R. 17. In the same ink that she asked for reconsideration, Haney also moved to amend her
complaint by adding allegations supporting her argument that her student-loan debt was
discharged under the pre-1998 version of 11 U.S.C. § 523(a)(8).
Id. ¶ 11–22.
The
Bankruptcy Court denied her motion to reconsider as untimely and denied leave to amend
her complaint. Adversary Proceeding, R. 19.
Haney then filed a notice of appeal on January 16, 2012. Adversary Proceeding,
R. 20. She claims the Bankruptcy Court erred when it (1) denied her motion to reconsider as
untimely, (2) denied her motion to amend after dismissal, and (3) granted Educational
Credit’s motion to dismiss. Haney v. Educ.l Credit Mgmt. Corp., No. 7:12-08-ART (E.D.
Ky. Apr. 12, 2012), R. 18.
DISCUSSION
I.
Appeal from Denial of Haney’s Motion to Reconsider
The Bankruptcy Court correctly denied Haney’s motion to reconsider as untimely.
The Federal Rules of Bankruptcy Procedure “govern procedure in cases under title 11 of the
United States Code.” Fed. R. Bankr. P. 1001. Although the Federal Rules of Bankruptcy
4
Procedure do not contemplate a motion to reconsider, courts treat such motions as motions as
motions to alter or amend judgment under Rule 9023. See, e.g., Markowitz v. Campbell (In
re Markowitz), 190 F.3d 455, 460 (6th Cir. 1999). Rule 9023 fully incorporates its civil
counterpart, Federal Rule of Civil Procedure 59, with one difference:
Except as provided in this rule and Rule 3008, [Federal Rule of
Civil Procedure 59] applies in cases under the Code. A motion
for new trial or to alter or amend a judgment shall be filed, and a
court may on its own order a new trial, no later than 14 days
after entry of judgment.
The difference is this: while Federal Rule of Civil Procedure 59 permits the court to order a
new trial and allows parties to move to alter or amend a judgment within twenty-eight days
of a judgment, Federal Rule of Bankruptcy Procedure 9023 allows only fourteen days to do
so. See, e.g. Khan v. Regions Bank & Wilmington Trust Co. (In re Khan), Adversary No. 113186, at *1 (Bankr. E.D. Tenn. Dec. 13, 2011); In re Ellipso, Inc., No. 09-00148, 2011 WL
1100294, at *1 (Bankr. D.D.C. Mar. 23, 2011); In re Gress, 435 B.R. 520, 522 (Bankr. S.D.
Ohio 2010).
Here, the Bankruptcy Court denied Haney’s motion to reconsider as untimely because
she filed it more than fourteen days after the order dismissing her claims. That decision was
correct.
The Bankruptcy Court dismissed Haney’s claims on November 30, 2011.
Adversary Proceeding, R. 16. Haney moved for reconsideration on December 20, 2011—
more than fourteen days after the order of dismissal. Id., R. 17. Her motion was therefore
untimely.
Haney disputes the premise that she only had fourteen days to move for
reconsideration. Appellant’s Br., Haney, No. 7:12-08-ART, R. 20 at 2. Instead, she claims
that the twenty-eight-day deadline of Federal Rule of Civil Procedure 59 applies, making her
5
motion to reconsider timely. Id. She reasons that Rule 9023 “does not appear to limit the 28
day” deadline of civil counterpart “except for a court’s sua sponte decision to order a new
trial.” Id., R. 20 at 2–3.
Haney’s argument is frivolous.
The text of Rule 9023 is clear.
Rule 9023
incorporates Federal Rule of Civil Procedure 59 “[e]xcept as provided” otherwise. And Rule
9023 does provide otherwise, stating that a motion to alter or amend “shall be filed . . . no
later than 14 days after entry of judgment.” Haney’s reasoning makes sense only if the Court
rewrites Rule 9023 as follows:
A motion for new trial or to alter or amend a judgment shall be
filed, and [A] court may on its own order a new trial[] no later
than 14 days after entry of judgment.
She cites no case law in favor of this reading, and the Court could not find any. In the end,
the Bankruptcy Court’s denial of Haney’s motion to reconsider was correct.
II.
Appeal from Denial of Leave to Amend Haney’s Complaint
The Bankruptcy Court did not abuse its discretion in denying Haney’s motion to
amend her complaint. Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002) (reviewing
denial of a Rule 15 motion to amend for abuse of discretion); In re Isaacman, 26 F.3d 629,
631 (6th Cir. 1994) (“On appeal to [the Sixth Circuit], we consider the judgment of the
bankruptcy court directly, using the same standards of review as the district court.”); see also
Matter of Southmark Corp., 88 F.3d 311, 314–15 (5th Cir. 1996) (reviewing whether the
bankruptcy court abused its discretion in denying leave to amend). Federal Rule of Civil
Procedure 15 governs amendments to pleadings in adversary proceedings. Fed. R. Bankr. P.
7015. That rule entitles a party to “amend its pleading once as a matter of course” before
being served with a responsive pleading and instructs courts to “freely give leave [to amend]
6
when justice so requires” in all other cases. Fed. R. Civ. P. 15(a)(2).
When, as here, a plaintiff moves to amend after her claims are dismissed, “that is a
different story.” Leisure Caviar, LLC v. U.S. Fish & Wildlife Serv., 616 F.3d 612, 616 (6th
Cir. 2010); see also Vielma v. Eurek Co., 218 F.3d 458, 468 (5th Cir. 2000) (holding that a
trial court’s discretion to allow amendments “narrows considerably after entry of judgment”).
“Instead of meeting only the modest requirements of Rule 15,” Haney must “meet the
requirements for reopening a case established by Rules 59 or 60.” Leisure Caviar, LLC, 616
F.3d at 616. As a result, “a court acts within its discretion” in denying a post-dismissal
amendment based on “undue delay,” including “delay resulting from a failure to incorporate
previously available” information. Id.
Haney has not “provide[d] a compelling explanation” for amending her complaint
post-dismissal. Id. at 617. She wanted to add an allegation that her student loans were
statutorily discharged by the pre-1998 version of 11 U.S.C. § 523(a)(8) because they were
more than seven years old. Adversary Proceeding, R. 17 ¶ 11. Haney’s current counsel, Mr.
Hansen, was also her counsel of record during her bankruptcy proceeding, but he had to
withdraw before the discharge order was filed because he was elected as the Commonwealth
Attorney of Kentucky in 2000. See In re Haney, No. 97-70937-TNW, R. 24; Appellant’s
Br., Haney, No. 7:12-08-ART, R. 20 at 4 Consequently, Mr. Hansen concludes, he was
unable to include this allegation in Haney’s original complaint because he “had to file her
adversary proceeding without [certain] information readily available, such as the language of
the discharge order.” Appellant’s Br., Haney, No. 7:12-08-ART, R. 20 at 4–5.
At the time of the original complaint, however, both Mr. Hansen and Haney knew
how long her student-loan debt had been in repayment. Id. at 7. Further, Haney’s 2003
7
discharge order was easily accessible from the Clerk of the Bankruptcy Court before her
claims were dismissed. See In re Haney, No. 97-70937-TNW (Bankr. E.D. Ky. Jan. 27,
2003), R. 28. And Mr. Hansen has never explained why Haney was unable to obtain the
2003 discharge order in the four months between her motion to reopen her bankruptcy case
and her motion to reconsider. See Leisure Caviar, LLC, 616 F.3d at 616 (holding that when
considering a post-dismissal motion to amend, a court “ought to pay particular attention to
‘the movant’s explanation for failing to seek leave to amend prior to the entry of judgment’”
(quoting Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir. 2002))).
Her failure to
incorporate this previously available information justifies denial of leave to amend. See id.
Indeed, a post-dismissal amendment in this case would have allowed Haney to “use
the [Bankruptcy Court] as a sounding board to discover holes in [her] arguments, then
‘reopen the case by amending [her] complaint to take account of the court’s decision.’” Id.
(quoting James v. Watt, 716 F.2d 71, 78 (1st Cir. 1983) (Breyer, J.)). The Bankruptcy Court
rejected Haney’s contention that her student loans were discharged under the pre-1998
version of 11 U.S.C. § 523(a)(8) because she made this allegation for the first time in her
response to Educational Credit’s motion to dismiss. Adversary Proceeding, R. 15 at 5. Only
after the Bankruptcy Court pointed out this deficiency and rejected Haney’s argument did
Haney try to amend her complaint to fix her errors. Litigation is not, however, a game of
trial-and-error, and the finality of judgments must mean something. See Sault Ste. Marie
Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998) (“A motion under
Rule 59(e) is not an opportunity to re-argue a case. . . . Thus, parties should not use them to
raise arguments which could, and should, have been made before judgment issued.”). The
Court therefore affirms the Bankruptcy Court’s denial of leave to amend.
8
III.
Appeal from Dismissal of Haney’s Claims
Because Haney’s motion to reconsider was untimely, the Court lacks jurisdiction over
her appeal from the dismissal of her claims. A party wishing to appeal a bankruptcy court’s
final decision must file a notice of appeal within fourteen days of the decision. Fed. R.
Bankr. P. 8002(a). If a party files one of the post-decision motions listed in Rule 8002,
though, then the fourteen-day period for filing a notice of appeal is suspended until the
bankruptcy court rules on the motion. Fed. R. Bankr. P. 8002(b). And those post-decision
motions that pause the fourteen-day period include a motion to alter or amend a judgment
under Rule 9023. Fed. R. Bankr. P. 8002(b)(2). To toll the fourteen-day period, though, that
motion to alter or amend must be “timely.” Fed. R. Bankr. P. 8002(b).
Because Haney’s motion to reconsider was untimely, see supra Part I, it did not toll
the fourteen-day period for filing a notice of appeal. See, e.g., Hopson v. Protein Techs.
Intern., 19 F. App’x 336, 337 (6th Cir. 2001) (holding, in the normal civil context, that an
untimely motion to alter or amend under Federal Rule of Civil Procedure 59(e) does not toll
the time to appeal (citing Browder v. Director, Dep’t of Corr. of Ill., 434 U.S. 257, 266
(1978))). Consequently, Haney had fourteen days from November 30, 2011—the date of the
Bankruptcy Court’s order dismissing her claims—to appeal from that decision, giving her
until December 14, 2011. She did not do so. Instead, Haney waited until January 16, 2012,
to file her notice of appeal. Adversary Proceeding, R. 20. Her untimely notice of appeal
therefore deprives the Court of jurisdiction over her appeal from the order dismissing her
claims. In re HMLM II, Inc., 234 B.R. 67, 73 (B.A.P. 6th Cir. 1999) (dismissing an appeal
for lack of jurisdiction because the notice of appeal was not timely filed); In re Linder, 215
B.R. 826, 831–32 (B.A.P. 6th Cir. 1998) (“‘Cases interpreting Rule 8002 hold that the rule
9
shall be strictly construed and that timely filing is a jurisdictional requirement.’” (quoting
Owens v. U.S. Bankruptcy Court (In re Owens), 129 F.3d 1264, 1264 (6th Cir. 1997))).
CONCLUSION
Accordingly, the Court AFFIRMS the Bankruptcy Court’s denial of Haney’s motion
to reconsider and her motion for leave to amend her complaint. See Appellant’s Statement of
Issues, Haney, No. 7:12-08-ART, R. 18 at 1 (Issues 1 and 2 on appeal). The Court lacks
jurisdiction over Haney’s appeal from the Bankruptcy Court’s dismissal of her claims and
therefore DISMISSES that part of her appeal. See id., R. 18 at 1 (Issue 3 on appeal). The
Clerk shall STRIKE this case from the Court’s active docket. This is a FINAL and
APPEALABLE Order, and there is no just cause for delay.
This the 27th day of August, 2012.
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?