BROWN v. EDUCATION CREDIT MANAGEMENT CORPORATION

Filing 14

ORDER ON PLAINTIFF'S APPEAL FROM A DECISION OF THE BANKRUPTCY COURT - re 1 Bankruptcy Appeal. The bankruptcy court's final judgment is Affirmed. By JUDGE NANCY TORRESEN. (mnw)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
KATHLEEN L. BROWN,
Plaintiff,
v.
EDUCATION CREDIT
MANAGEMENT CORP.,
Defendant.

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) Docket No. 2:17-cv-84-NT
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ORDER ON PLAINTIFF’S APPEAL FROM A DECISION OF THE
BANKRUPTCY COURT
Appellant Kathleen Brown challenges the bankruptcy court’s final judgment
that her student loans, held by Appellee Education Credit Management Corporation
(“ECMC”), are non-dischargeable. For the following reasons, I AFFIRM the
bankruptcy court’s determination.
FACTUAL BACKGROUND
While Brown disputes some of the bankruptcy court’s factual findings, the
following factual background is not contested. Brown incurred the debt held by ECMC
to pay for her law school education. Brown enrolled at the California Western School
of Law in January 2001 at the age of 44. She received her Juris Doctor in May 2005.
Upon graduation, Brown took a series of accounting jobs to support herself. In 2008,
she passed the California bar exam. Once she became a member of the California Bar,
Brown took a pro bono position at an elder law non-profit to gain legal experience. In
May 2009, approximately six months later, Brown decided to leave this position. She

thought that the organization liked her, but it would never hire her. Brown sought
paid legal work in California, including applying to openings for contract attorneys.
She received a “number” of interviews, but reported that potential employers told her
that she was too old to hire.
Also in or around May 2009, Brown gave her daughter a one-half acre lot that
she owned in Camden, Maine. Brown’s daughter built a house on the lot, and the total
value of the improved property was assessed at $226,000.
In August 2009, Brown was hit by an SUV while crossing the street. She
sustained multiple injuries, including a broken ankle.
In May 2010, Brown returned to Maine and was sworn in to the Maine Bar.
She had at least one job interview. In June 2010, Brown rented an office space in
Kennebunk, Maine for $200 a month and opened a solo law practice. She retained
one client, who paid Brown $500 to compose a martial dissolution letter. With no
additional clients, Brown closed her law office in July 2011. Since that time, Brown
has not sought legal work. She took a part-time position at the non-profit Catholic
Charities for $10 an hour.
In 2011, Brown enrolled in nursing school, inspired by the success of her stepbrother. Brown testified she did not know how physically demanding nursing would
be. Chronic pain, which Brown had experienced since the 2009 accident, and a
separate neck injury of unknown origin, hampered Brown’s progress in nursing
school. She graduated the nursing program in 2013, but then an illness confined

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Brown to her bed for the next several months. During that time, she continued to
work at Catholic Charities for approximately 15 hours a week.
In November 2014, Brown took and passed the nursing licensing exam. She
began working as a nurse at Durgin Pines in Kittery, Maine the following month. Her
wage was $26 per hour, and she worked for 25-30 hours a week. Brown left Durgin
Pines and took a position at a nursing staffing agency that placed her at nursing
homes. Brown found that while this new position had a worse compensation package,
it provided her with more support and afforded her greater control over which days
and the number of days a week she worked. Brown typically worked two to three days
a week, depending on whether she felt able to do more. Brown testified that she
looked for less physically demanding nursing jobs, but that she is unqualified for
them due to her lack of experience in an acute care hospital setting.
Brown continues to experience severe pain in her neck, right hip, and right
ankle. Brown has never applied for Social Security Disability Insurance (“SSDI”),
and she does not have a prescription for pain medication.
The bankruptcy court determined that Brown’s gross income in 2015 was
$32,530.50 and that this amount barely covered her most basic living expenses.
Brown also has deferred necessary and significant medical, dental, home, and car
expenses. At the time of the trial, Brown projected that her 2016 income would be
lower. She also expressed a plan to start drawing from her social security benefits in
2017 at the age of 62 and to cut back the hours she works.

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PROCEDURAL HISTORY
Brown filed for Chapter 7 bankruptcy in February 2015. The bankruptcy court
held an evidentiary hearing on September 23, 2016. Brown proceeded pro se and was
the sole witness. On February 24, 2017, the bankruptcy court issued its final
determination that Brown failed to establish sufficient evidence of hardship to justify
discharge of her student loans. In making this determination, the court declined to
credit some of Brown’s testimony on the basis that it was contradictory or improbable.
Brown timely appealed that determination and opted to file her appeal with the
District of Maine.
LEGAL STANDARD
When a district court reviews a bankruptcy court’s final judgment on appeal,
the district court may affirm, modify, reverse, or remand the judgment. Crawford v.
Riley (In re Wolverine, Proctor & Schwartz, LLC), 436 B.R. 253, 260 (D. Mass. 2010).
Questions of law are reviewed de novo, while the underlying factual findings must
stand unless they are deemed clearly erroneous. Bronsdon v. Educ. Credit Mgmt.
Corp. (In re Bronsdon), 435 B.R. 791, 796 (2010). In reviewing an appeal, courts
should give “due regard . . . to the opportunity of the bankruptcy court to judge the
credibility of the witnesses.” Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir. 1997).
DISCUSSION
The question on appeal is whether Brown failed to satisfy her evidentiary
burden to show repayment of her student loan would pose an undue hardship.

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I.

Dischargeability of Student Loans
Under the Bankruptcy Code, student loans are not subject to the general rule

of dischargeability, but rather a student loan may be discharged only where the
debtor can show that payment of the debt “would impose an undue hardship on the
debtor.” 11 U.S.C. § 523(a)(8). Courts employ a burden-shifting analysis for the undue
hardship inquiry. First, the creditor bears the burden of showing that the debt is the
type excepted from discharge under § 523(a)(8). Educ. Credit Mgmt. Corp. v. Savage
(In re Savage), 311 B.R. 835, 837 (B.A.P. 1st Cir. 2004). Here, the parties agree that
Brown’s student loans are regulated by § 523(a)(8). The burden therefore shifts to the
debtor to show that not discharging this debt would cause the debtor and her
dependents “undue hardship.” Id.
Most courts in the First Circuit analyze the existence of an undue hardship
under the totality of the circumstances test.1 A debtor must:
prove by a preponderance of evidence that (1) his past, present, and
reasonably reliable future financial resources; (2) his and his
dependents’ reasonably necessary living expenses; and (3) other
relevant facts or circumstances unique to the case, prevent him from
paying the student loans in question while still maintaining a minimal
standard of living, even when aided by a discharge of other prepetition
debts.
In re Bronsdon, 435 B.R. at 798. “Whether the failure to discharge a student loan will
cause undue hardship to the debtor and the dependents of the debtor under

In the prior proceeding, ECMC requested that the court apply a different undue hardship test,
set out in Brunner and employed in nine other circuits. See Brunner v. N.Y. State Higher Educ. Servs.
Corp., 831 F.2d 395 (2d Cir. 1987). On appeal, however, the parties do not challenge the application of
the totality of the circumstances test.
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§ 523(a)(8), rests on both the economic ability to repay and the existence of any
disqualifying action(s).” Id. at 800.
In this case, the bankruptcy court concluded that Brown did not meet her
evidentiary burden of showing that her future financial circumstances would prevent
her from repaying her loans and maintaining a minimum standard of living. In
particular, the court found:
her testimony was less credible with respect to her reasonably reliable
future income. While the Plaintiff’s age and physical limitations
certainly pose challenges, her often conflicting testimony regarding her
employment history suggests that the Plaintiff’s most significant
obstacle to gainful employment is not her age, gender, or physical
limitations but, rather, her unrealistic expectations that reasonable
employment must be flexible, comfortable, enjoyable and lucrative.
Bankr. Ct. Op. 8 (ECF No. 1-4). The court further noted that Brown:
appears to have the skills and licensing necessary to obtain employment
in two well-paying professions. If her inability to find reliable
employment is premised upon a medical ailment, rampant age or gender
discrimination, or a lack of qualifications, then the ECMC loans should
be discharged. If, however, the Plaintiff’s current employment situation
is more indicative of an unwillingness to work regularly, a lack of effort
in finding steady employment or a far too limited job search, then a
hardship discharge is not appropriate. Regardless, the Plaintiff bears
the burden of establishing by a preponderance of the evidence that her
reasonably reliable future income justifies a hardship discharge and she
has not met that burden.
Bankr. Ct. Op. 10. The bankruptcy court concluded that Brown’s student loan debt
could not be discharged.
II.

Findings of Fact
Brown’s appeal primarily challenges the bankruptcy court’s factual findings on

her job search efforts, decision to end her volunteer legal job, experiences with age
discrimination, decision to start nursing school, and preference to work two days a
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week. Brown argues that on these various points that the record was sufficiently
developed and consistent. In the following section, I review these findings for clear
error.
A.

Failure to Build the Record on Job Search Efforts

To begin, the bankruptcy court found that the record lacked sufficient evidence
of Brown’s efforts to find gainful employment and also contained opposing evidence
of Brown’s unwillingness to work longer hours in more lucrative positions. Bank Ct.
Op. 10. First, with regard to Brown’s job search efforts, the court found that Brown
relied on generalized comments about networking, making it “simply impossible to
determine, based on the limited evidence presented by the Plaintiff, how many
applications she submitted, the type of openings to which she applied, or the length
of time she actively engaged in the job search.” Bankr. Ct. Op. 9.
Brown argues that the record shows that she made hundreds of contacts with
employers and that she demonstrated a willingness to relocate and seek employment
in alternate fields. Appellant’s Br. 10 (ECF No. 9). Brown refers to testimony in which
she said that she spent two years in California “pounding the pavement” in search of
legal employment and was “constantly” applying for contract work. Hearing Tr. Sept.
23, 2017 at 59:3-4; 63:1-3 (ECF No. 12-1).2 Brown testified that this included:
going on interviews, putting ads on Craigslist, answering ads, calling
people, networking. I didn’t do an outstanding job networking but I did
do some networking. I went to meet and greets. I was a member of the

I refer throughout to the complete transcript, as filed by ECMC. Brown filed an incomplete
and nonsequential version of the transcript that followed different pagination. (ECF No. 9-4.) When
needed, I have substituted citations to the complete transcript where Brown cited to her version of the
transcript.
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San Diego County Bar. And they had mixers so I went there. I was
consistently told I, you know, I was too old.
Hearing Tr. 59:4-9. She interviewed for positions, but was not hired. Hearing Tr. 63:711. Brown also testified that she explored private practice by networking with a
woman who had started her own successful practice, although she concluded that she
could not manage the effort that seemed to require. Hearing Tr. 63:12-64:5. Finally,
Brown testified that she received California unemployment compensation, which
required her to show that she was searching for work. Hearing Tr. 61:11-16. Brown
suggests that the bankruptcy court could have inferred some of the specifics that it
found not to be in evidence from her testimony about receiving unemployment
benefits. See Appellant’s Br. 8-9.3
Under the clearly erroneous standard of review, it is not a proper role of the
court to impose alternative factual inferences from a limited record. Brown’s
argument does not show clear error in the bankruptcy court’s factual finding that the
record does not reflect “how many applications she submitted, the type of openings to
which she applied, or the length of time she actively engaged in the job search.” See
Bankr. Ct. Op. 9.
Brown’s final argument regarding her job search efforts is that they were
comparable to those of the debtor in Bronsdon. Appellant’s Br. 10 (citing Educ. Credit

For example, Brown testified that she lost a contract accounting job in June 2008 and left for
Maine in 2010 when she “ran out of money.” Hearing Tr. Sept. 23, 2017 at 60:8-9 (ECF No. 12-1). On
this basis, the bankruptcy court could have inferred that she qualified for unemployment for the entire
99 weeks allowed under the law. Appellant’s Br. 8-9 (ECF No. 9) (citing to a National Bureau of
Economic Research paper not otherwise in the record). In addition, Brown suggests that the court
could have inferred that she made five contacts with employers per week for each of the 99 weeks,
totaling 495 contacts. Appellant’s Br. 9.
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Mgmt. Corp. v. Bronsdon, 421 B.R. 27 (D. Mass. 2009)). In that case, the district court
determined that the bankruptcy court’s findings of fact were not clearly erroneous
because there was “ample evidence” that Bronsdon was “an industrious individual.”
Bronsdon, 421 B.R. at 29, 32. The district court also affirmed that Bronsdon’s future
income was limited to her Social Security payment. Id. at 32. This was because “[t]he
record show[ed] a pattern of gradually decreasing employability followed by a
prolonged unemployment, despite a broad and vigorous job search and increasing
education and work experience.” Id. Bronsdon failed the Massachusetts bar exam
three times by a substantial margin, and so she would never work as an attorney. Id.
at 33. In addition, Bronsdon worked as a legal secretary until she was involuntarily
terminated and then took temporary positions. She “continually” went on interviews,
made phone calls, and spoke with employment agencies. Id. at 30. She also wrote a
novel and applied for a patent. Id.
Even though Bronsdon and Brown are both in their sixties and saddled with
law school debt, their cases are not easy to compare. First, clearly erroneous is a
relatively high standard, and in Bronsdon, the district court affirmed—rather than
reversed—the bankruptcy court’s findings. Second, Bronsdon convinced the court
that she could never find a legal job but that she persevered on alternative paths,
whereas Brown’s job search and decision to stop pursuing her legal career was not
satisfactorily established or explained.
The bankruptcy court also noted that Brown’s decision to quit Durgin Pines
and to work instead for a nursing staffing agency hurt her ability to repay her student

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loans. The judgment continued “it does not help the Plaintiff’s case that she refuses
to work directly for nursing homes or similar facilities, notwithstanding her ability
to qualify for these higher paying jobs, because she finds it more enjoyable to work
for staffing agencies.” Bankr. Ct. Op. 9-10. Underlying this statement were
comparisons that the bankruptcy court made about the number of hours the two
employers asked Brown to work4 and her compensation in either nursing position.5

The bankruptcy court found that Durgin Pines required Brown to work a minimum number of
hours per week, while the staffing agency allowed Brown to “pick and choose” the days that she
worked. Bankr. Ct. Op. 5. Brown argues that while she testified that she worked 25-30 hours a week
at Durgin Pines to complete her orientation training, after her training was complete, she would not
have had set hours or work days. Appellant Br. 18-19. At the same time, however, Brown argues that
she left Durgin Pines “as soon as she had enough experience,” and sought out the support and
flexibility of the staffing agency, where she could work two days a week. See Appellant’s Br. 19.
Because the record does not indicate what Brown’s work requirements would have been at Durgin
Pines had she stayed, there are no grounds to find error in the bankruptcy court’s determination on
this point.
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Similarly, the bankruptcy court found that “[s]ome of the other nurses at the staffing agency
work 40-60 hours per week and the staffing agency continuously requests that their nurses work more
hours.” Bankr. Ct. Op. 5. Brown testified “I’m just not able to do much more than two days a week.
They keep pressuring me to take more hours, but I can’t do it.” Hearing Tr. 42:15-16. Brown argues
now that the pronoun “they” referred to the management of the nursing home where the staffing
agency placed her, and not to the staffing agency itself. Appellant Br. 20 n.22. This clarification is not
supported by the record; at best the subject of the pronoun “they” in her testimony is undefined.
Further, Brown testified that other staffing agency nurses work up to 32 hours and direct employees
of the nursing homes can work at least 40 hours. Hearing Tr. 71:5-14. This indicates that Brown is
working less hours than both categories of employee. The pronoun “they” reasonably could be
interpreted as the staffing agency that employs her asking Brown to work more than two days a week.
The bankruptcy court found that Brown left a $26 per hour job at Durgin Pines to accept a $20
per hour job at the staffing agency with a smaller compensation package and fewer incentives. Bankr.
Ct. Op. 4-5. Brown argues that this hourly wage is incorrect because she earned $28 per hour at the
staffing agency, a $2 increase in her hourly wage. See Hearing Tr. 41:16; see also 119:9-10. Because
the record contains reference to Brown earning $28 per hour at the staffing agency and does not
contain a reference to her earning $20 per hour, I find that the bankruptcy court made an error on this
fact. On the broader conclusion, however, that a nurse like Brown could “do better financially if he or
she were employed directly by a facility such as Durgin Pines,” Brown has not shown error. See Bankr.
Ct. Op. 9. Brown testified that Durgin Pines had the better “compensation package,” including pay
incentives for working a shift over the weekend and stronger employee benefits. Appellant Br. 21 n.23;
see also Hearing Tr. 39:14, 75:25-76:4. Brown also testified that nurses could work more than 40 hours
a week as direct employees of nursing facilities like Durgin Pines and earn overtime. See Hearing Tr.
71:3-14. Accordingly, I do not find clear error on this point.
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Brown argues against this factual finding, stating that her preference for the
“advocacy” she gets at the staffing agency does not reflect a poor work ethic.
Appellant’s Br. 19-20. This is a straw man argument, however, and Brown fails to
show error in the bankruptcy court’s characterization of Brown’s testimony regarding
her preferences and her choice to work for the less time-demanding and less wellcompensated employer. This factual finding was not clearly erroneous.
B.

Inconsistent and Incredible Testimony on Age Discrimination

The bankruptcy court also found that the evidence Brown developed suffered
from self-defeating contradictions. For example, the bankruptcy court found Brown’s
“testimony regarding her employment prospects at [the California elder law] nonprofit” inconsistent.
On the one hand, she testified that she ceased working for the
organization after six months because it became apparent the
organization would never hire her due to her age. In support of this
claim, the Plaintiff testified that the organization hired a younger male
attorney during that same six-month period; clearly implying she was
passed over for the paid position. On the other hand, the Plaintiff
testified that new-hires were expected to work one year without pay
before being hired for paid positions and acknowledged that the coworker hired ahead of her satisfied that requirement.
Bankr. Ct. Op. 2-3.
Brown’s challenge to this factual finding is unavailing. First, she argues that
the non-profit “told” her it would not hire her “because” it had hired a younger
attorney. Appellant’s Br. 11. However, her testimony at the evidentiary hearing was
“it was pretty obvious to me they weren’t going to hire me. They liked me, they gave
me a great reference and everything, but they, they wanted somebody younger. In

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fact, while I was there doing pro bono work, they hired a young guy.” Hearing Tr.
61:4-8. This inexactitude undermines Brown’s argument on behalf of her consistency.
Moreover, Brown’s observation that job seekers worked without pay for a year,
which she offered to explain why the non-profit did not hire her, undermined her
assertion that after six months there she knew the organization would never hire her
because of her age.6 Brown testified to several other reasons that motivated her
departure from the elder law non-profit, including that the commute had become a
financial drain, her car needed repair, and she needed to earn an income. See
Appellant’s Br. 11; Hearing Tr. 62:6-8. Brown therefore fails to show clear error in
the determination that she gave contradictory statements.
In addition, the court found that Brown’s account of widespread, overt age
discrimination “strains credulity” because “[i]t seems improbable that all of these
prospective employers—employers engaged in the practice of law—would be so
universally insensitive to the inherent risk of liability under applicable employment
discrimination laws as to make explicit reference to the Plaintiff’s age as a

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Brown testified that the elder law non-profit:
just wasn’t going to hire me. Not that they didn’t like my work, but they just weren’t
going to do it. So oddly enough, just as an aside, I guess, but this kind of flushes out
why they didn’t hire me out there. It’s not uncommon for people to have to work for a
full year. That seems like the magic year – full year – without pay before they’ll carve
out a position for you. I know somebody who worked for this city attorney’s office in
San Diego. She had to work there a year (indiscernable) create a position. And one of
the attorney’s in that agency where I was doing the volunteer work worked there a
year for free before they hired him. So it’s kind of a quirky thing that they do out there.

Hearing Tr. 61:17-62:5.
Brown also argues that the bankruptcy court incorrectly assumed that the new hire at her
non-profit was the same person as the new-hire who had worked a year without pay, when they were
in fact two different people. Appellant’s Br. 12. This distinction is not material.

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determinative factor in the hiring process.” Bankr. Ct. Op. 9. Brown’s testimony
included a statement, for example, that in California:
[e]verything is “the look” out there. And I didn’t have the look. I mean,
they’re brazen. They’ll tell you that. They were just shameless. “You’re
too old.” And honestly, I said, “why did you”— (indiscernible)—ask “why
did you give me the interview?” They’d be “oh, we just wanted to see
what you look like.” Because if I had the look, I would have gotten the
job.
Hearing Tr. 65:3-9. Brown contends the bankruptcy court’s finding was in error
because age discrimination is prevalent in the legal field. Brown supports this
argument with assertions that (1) an attorney at the elder law non-profit told her
that she had a “non-existent” chance of finding work in the state, (2) the California
state bar did a study of age discrimination, and (3) the New York Times published
article on age discrimination in the legal field. Appellant’s Br. 13-14. These three facts
are not supported by citations to the record, however, and cannot be considered on
review of the bankruptcy court’s factual findings. Moreover, Judge Cary’s finding was
not that age discrimination was implausible, but that Brown’s broad claims of
discrimination did not satisfy her evidentiary burden. Giving “due regard” to Judge
Cary’s judgment of Brown’s credibility, I do not find that this determination was clear
error. See Palmacci, 121 F.3d at 785.
C.

Compound Credibility Issues Undermine Disability Testimony

Brown stated in her testimony, and reiterated in her appellate brief, that she
has chronic pain, which makes her working just two days a week appropriate and
limits her future employment options. Medical expert testimony may not be required
to establish a physical disability. See Ackley v. Sallie Mae Student Loans (In re
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Ackley), 463 B.R. 146, 150 (Bankr. D. Me. 2011) (the court did not require medical
expert testimony to find health conditions would not improve based on viewing and
hearing the debtors describe their ailments). In this case, however, the bankruptcy
court determined that Brown’s “contradictory statements raise credibility issues and,
therefore, some evidence beyond her own anecdotal testimony would have been
helpful in establishing the limiting effect of her numerous medical ailments.” Bankr.
Ct. Op. 10.
In In re Nash, the First Circuit also declined to rely solely on a debtor’s
testimony about her disability. Nash v. Conn. Student Loan Found. (In re Nash), 446
F.3d 188 (1st Cir. 2006). There, the debtor testified that “her chances of ‘stabilizing
continuously’ ” were “not very good,” but the government presented evidence that her
condition could be stabilized with effective treatment, and so the court found her
testimony about her future was “necessarily speculative.” Id. In addition, Nash had
secured temporary SSDI, but, because this disability determination was temporary,
the court found lacking “any reliable evidence of future inability to work”. Id. at 19293.

Here, Brown has not applied for SSDI and does not have pain management

prescriptions. Without evidence to support Brown’s assertion beyond her testimony,
I defer to the bankruptcy court’s credibility determination. See Palmacci, 121 F.3d at
785.
III.

Questions of Law
Finally, Brown argues that the bankruptcy court improperly considered good

faith and morality judgments, contrary to First Circuit precedent that no “textual
foundation” exists for a “good faith requirement” in the context of § 523(a)(8). In re
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Bronsdon, 435 B.R. at 800. In particular, Brown argues that the bankruptcy court
improperly weighed her decision to give away—rather than sell—her half-acre lot in
Camden, Maine and her plan to “take early retirement” and start withdrawing from
Social Security at age 62. Appellant’s Br. 24-27.
Brown’s legal argument is unavailing because the bankruptcy court expressly
did not reach this issue. The bankruptcy court relegated its discussion of the Camden
lot and “early retirement” to a footnote, noting that because Brown otherwise had not
satisfied the inability to repay prong of the Bronsdon test, the court need not decide
whether either of these two incidents constituted a “disqualifying factor” under
§ 528(a)(8). Bankr. Ct. Op. 10 n.6; see also In re Bronsdon, 435 B.R. at 800 (the party
opposing discharge of a student loan could present evidence of “any disqualifying
factor, such as bad faith”). I need not a review a question of law raised but not
answered by the bankruptcy court.
CONCLUSION
For the reasons stated above, the Court AFFIRMS the bankruptcy court’s
final judgment.

SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 12th day of December, 2017.

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