Re: Speaking of student loans

1

I need to read more about this, so don't have much to say at the moment, but I'll start by saying that the first word that springs to my mind is a word I love: laches.

(No, not latkes, those are nice too, but: laches.)


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 7:39 AM
horizontal rule
2

Leches?


Posted by: heebie-geebie | Link to this comment | 12- 1-09 7:40 AM
horizontal rule
3

The only precedent should be the finality of judgments. Nothing about the law has changed. This is basically a default judgment, isnt it?


Posted by: Will | Link to this comment | 12- 1-09 7:40 AM
horizontal rule
4

1:

The Laches Society can be quite intimidating.


Posted by: Will | Link to this comment | 12- 1-09 7:41 AM
horizontal rule
5

You can carry-on no more than 3 ounces of latkes and you have to put them in a 1/2 gallon freezer bag. You can check you latkes, but apparently the guy handling your bags is so underpaid that he may need to eat them to live.


Posted by: Moby Hick | Link to this comment | 12- 1-09 7:41 AM
horizontal rule
6

Leeches?


Posted by: heebie-geebie | Link to this comment | 12- 1-09 7:42 AM
horizontal rule
7

You rang?

I haven't read the case, this is totally off the cuff, and when I read the case later I'll come back and explain why what I say in this comment is wrong.

But offhand, I'm with the student loan company (given that the state of the law is that student loans generally can't be discharged in bankruptcy, which is a bad state of the law. I'm not talking about what's a good outcome here, just taking the non-dischargeability of student loans as a premise).

What it sounds like, from the summary in the post, happened, is that the student loan company didn't participate, but that in its absence the court did something it doesn't have the power to do at all -- not like a court convicting you on a speeding ticket because you weren't there to argue the facts, but more like the court convicting you on a ticket for wearing polka-dots in public, because you weren't there to point out that a cop isn't allowed to give you a ticket for wearing polka-dots in public because there's no law against it. The court is responsible for not taking actions that it doesn't have the legal power to take, even if the party injured by those actions doesn't show up to object.

(Now, this is all highly fact specific -- it's generally going to be very very procedurally difficult to challenge anything a court did if you were on notice that it was going to happen and you didn't participate. But if you have some permissible way to complain about it after the fact, and the court really did do something that it did not have the legal power to do, I don't think your initial default should settle it.)


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:42 AM
horizontal rule
8

7: Oh, that clarifies a lot for me about why this was even able to travel as far up as it did.


Posted by: heebie-geebie | Link to this comment | 12- 1-09 7:47 AM
horizontal rule
9

3: Of course, this is going to come down to bankruptcy law, and while I do a little bankruptcy work, I don't really know much, and I'm not really comfortable enough to say a lot off the cuff. But it's not exactly going to be a default judgment, right?


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:48 AM
horizontal rule
10

Now, this is all highly fact specific

Just from the facts gleaned from the NPR story, they sound bad for the loan company: e.g. they didn't dispute things until years after the final judgment, the amount in question wasn't necessarily large enough to require an adversial hearing, etc.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 7:48 AM
horizontal rule
11

ObPedantry: Apropos has an s on the end of it.


Posted by: apostropher | Link to this comment | 12- 1-09 7:51 AM
horizontal rule
12

To clarify on 7 and 10 a bit, student loans (or in this case only the interest payments from one) can be discharged under bankruptcy if undue hardship is shown. But, to show undue hardship there generally has to be an adversial hearing, where the lender can dispute the claim of undue hardship.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 7:51 AM
horizontal rule
13

10: But there's got to be some way to look at the facts that makes it hard, because it got up to the Supreme Court. If I were going to make up facts in favor of the student loan company, I'd guess that they got served with papers (I totally do not have a handle on the applicable procedure here) from the debtor asking for relief, a partial discharge of student loan debt, that they knew was absolutely unavailable under the-- like getting served with a complaint seeking a million dollars in damages from some guy on the subway for looking at him funny. The right thing to do is to show up and dispute it anyway, but for a big company with thousands and thousands of loans out to people in bankruptcy, it's sloppy but understandable that they looked at the papers, and ignored it because they didn't believe there was any risk that a court would grant the relief.


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:56 AM
horizontal rule
14

I dropped the word 'circumstances' in that last.

12: Just guessing, but I wouldn't be surprised if the issue was that whatever got served on the loan company didn't allege 'undue hardship' at all, which is why they felt comfortable ignoring it. If the court actually made a finding of 'undue hardship' in the face of the loan company's default, then I can't see how the loan company has a leg to stand on.

But I really should read about the case before opining at such great length.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:00 AM
horizontal rule
15

13, 14: Agreed. The whole time I was listening to the story I kept wondering where the "hard" part of the case was.

But I really should read about the case before opining at such great length.

But where's the fun in that?


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 8:09 AM
horizontal rule
16

What kind of lawyer are you, LB???!? You dont need to read the opinion to comment on it!

Also, remember how swiftly and harshly the right wing of the Supreme Court comes down on people who have failed to follow the procedural steps:

Criminals, sex harassments suits, Gender pay suits, ect: Miss a deadline or fail to follow some horrifically detailed procedure, like you should know what the men are paid the moment you get your first substandard female paycheck or your lawsuit is time-barred.


Posted by: Will | Link to this comment | 12- 1-09 8:10 AM
horizontal rule
17

16.2 and .3 also sprang to mind when I was listening to the story.


Posted by: heebie-geebie | Link to this comment | 12- 1-09 8:14 AM
horizontal rule
18

Here's Scotusblog on it. Looks like the loan company did everything it was supposed to do in the bankruptcy court -- it filed a proof of claim in the bankruptcy as it was supposed to -- and the bankruptcy court screwed up by confirming the debtor's plan reducing his student loan debt even in the absence of an adversary proceeding. The only thing the loan company did wrong was not appeal promptly (I'm actually not sure what you do when a bankruptcy court does something crazy confirming a plan. Appeal somehow, but I'm not sure how.) They didn't default at the bankruptcy court level: if they defaulted, it was on their appeal rights.

I'd have to read the briefs to have a real sense of who should win this, but it's not really a case about student loans or bankruptcy, it's about procedural default.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:14 AM
horizontal rule
19

Oh, the loan company is going to get the votes of Roberts, Thomas, Alito, and Scalia.

What percentage of time do they vote against the rich or the powerful?


Posted by: Will | Link to this comment | 12- 1-09 8:16 AM
horizontal rule
20

Well, I'm sure Nina Totenberg can't be faulted for reporting this story badly, because I love it so much when she reads court transcripts of the various Justices.


Posted by: heebie-geebie | Link to this comment | 12- 1-09 8:17 AM
horizontal rule
21

Is anyone here more of a bankruptcy lawyer than I am? Is a confirmation order appealable? I'd guess it is, but I don't know.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:17 AM
horizontal rule
22

And here's the 9th Circuit opinion, finding for the debtor. I was wrong in 18: the loan company got notice of the confirmed plan and an opportunity to reopen it by objecting to it within 30 days. At that point, I'm with Kozinsky (who wrote the 9th Circuit opinion); I don't see an argument for forgiving the loan company's default.

But I wouldn't be surprised if the SC does.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:24 AM
horizontal rule
23

21: My memory is that it almost certainly is, but I'd need to look that up to be sure.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 8:26 AM
horizontal rule
24

On the basis of my vast experience, I'm going to say that you can appeal a confirmation order if you are a mage of level 10 or higher and throw 2d10 of at least 12.


Posted by: Moby Hick | Link to this comment | 12- 1-09 8:28 AM
horizontal rule
25

Here's a link to all the briefs.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 8:29 AM
horizontal rule
26

I haven't read the lower court opinions, or the briefs, either, but I'll add .02: finality is a very big deal in bankruptcy. If the plan turns out to be crap -- say you underestimated certain classes of claims -- the rule is 'no backsies.'

The Johns-Manville bankruptcy, and then follow-on litigation is a great illustration of this.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 8:33 AM
horizontal rule
27

Oh and I left out of my summary the fact that he i pay back portions of the loan. It's just that the judge dropped some of the interest charges.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 8:33 AM
horizontal rule
28

I looked on the ScotusBlog earlier, but they hadn't posted yet.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 8:38 AM
horizontal rule
29

Further, the appeals court ruled in favor of the defendant borrower. I wonder who decide to grant cert.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 8:39 AM
horizontal rule
30

To lay out the issues as I now understand them from the 9th Circuit opinion:

If the bankruptcy court did something that was absolutely outside of its jurisdiction (like my 'convicted you of wearing polka-dots in public' example) then its action is void, and can be challenged forever regardless of the parties' default, under 60(b)(3).

On the other hand, if what the bankruptcy court did was allowable in the absence of objection from the loan company, the fact that the loan company defaulted on its right to object controls, and the loan company loses.

Kozinsky holds that despite the statute requiring a finding of undue hardship before a student loan can be discharged, a bankruptcy court can discharge a student loan without such a finding where the loan company has notice and doesn't object. This seems to me like pulling a fast one (judicial activism, if you will). I like the policy outcome, but it's not what the statute says; if I were on the Supreme Court I would overrule the 9th Circuit on this point. While saying rude things about the statute in dicta, but the statute's the statute.

The hard question, though, and one where I really don't know what I think the right answer is, is what the difference is between a judgment that's just wrong, and one that's void. I'm comfortable saying that what the bankruptcy court did was wrong (not the bankruptcy judge's fault, they seem to have been following the 9th Circuit. But the 9th Circuit is wrong.) Were they wrong in a manner that rendered the judgment actually void, so it can be attacked forever regardless of default? There's got to be law on this point, but I don't know it; my gut is no, it's not void, but the rest of my gut says it's going to be enough of a judgment call that the SC can do what it likes. Which my cynicism says (like Will's) will be cater to the loan company.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:41 AM
horizontal rule
31

I just used a long drawn-out analogy about speeding in class today! We learned all about the difference between de facto and de jure policies.

I actually use traffic analogies a lot. The downside of this is that several students seem to have taken away the lesson that traffic and language are deeply intertwined. Oh, well.


Posted by: Cecily | Link to this comment | 12- 1-09 8:42 AM
horizontal rule
32

That's Federal Rule of Civil Procedure 60(b).


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:42 AM
horizontal rule
33

The Johns-Manville bankruptcy

I read this as "The John de Mandeville bankruptcy".


Posted by: | Link to this comment | 12- 1-09 8:46 AM
horizontal rule
34

33 was me.


Posted by: Tom Scudder | Link to this comment | 12- 1-09 8:46 AM
horizontal rule
35

11 cont'd: etymologically, it should be "apropos of" not "apropos to" (that would be "to the purpose to"), but that may be a battle that's already been lost in English.


Posted by: Sifu Tweety | Link to this comment | 12- 1-09 8:55 AM
horizontal rule
36

Entirely apropos.


Posted by: apostropher | Link to this comment | 12- 1-09 8:58 AM
horizontal rule
37

I'm a grammaverick.


Posted by: heebie-geebie | Link to this comment | 12- 1-09 9:03 AM
horizontal rule
38

'Void' is, and ought to be, a pretty big deal. If you start using it for cases where the findings were made explicit, or in writing, or stuff like that, you'll get a lot of Rule 60(b)(4) motions.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 9:05 AM
horizontal rule
39

Were they wrong in a manner that rendered the judgment actually void, so it can be attacked forever regardless of default?

Aaaaaaaccckkkkk! All I know is that this particular sentence triggered those three cells in my brain that are aware that there is a distinction between a voidable judgment and a judgment that is void ab inition. Then the other 97,000 brain cells that are aware that I have no idea what that distinction is went into shut down mode.


Posted by: Di Kotimy | Link to this comment | 12- 1-09 9:06 AM
horizontal rule
40

-n


Posted by: Di Kotimy | Link to this comment | 12- 1-09 9:06 AM
horizontal rule
41

36: My BF gave me a similar T-shirt.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 9:07 AM
horizontal rule
42

I've got a simile t-shirt.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 9:08 AM
horizontal rule
43

a friend wears this T-shirt and also carries a card to give to people.


Posted by: k-sky | Link to this comment | 12- 1-09 9:12 AM
horizontal rule
44

39: if you only have 97,003 cells in your brain you have much more significant problems than the distinction between voidable judgments and judgments void ab inhibition. Such as "how am I, an ant, using a computer?"


Posted by: Sifu Tweety | Link to this comment | 12- 1-09 9:13 AM
horizontal rule
45

as long as no one gets fussy about the shift key, it isn't hard.


Posted by: archy | Link to this comment | 12- 1-09 9:15 AM
horizontal rule
46

The shirt in 36 implicitly suggests that sentences should not end in prepositions, thus marking the wearer as an annoying prescriptivist pedant who doesn't understand the English language.


Posted by: essear | Link to this comment | 12- 1-09 9:16 AM
horizontal rule
47

OK, I've read the cert petition, and I'm going to go with the lender on this. The issue is whether you can kill a student debt just by scheduling it in a certain way, or whether you have to commence an adversary proceeding -- which brings in all sorts of due process. A bunch of circuits have said the latter, which is in the rules. And implied in a previous SC decision.

It seemed from the cert petition that the bankruptcy court admitted, on a limited remand, that its failure to except the student loan from discharge was a typo. Now I'm going to see what Kozinski did with that. (I'm still mad at him over Shanghai Power . . .)


Posted by: CharleyCarp | Link to this comment | 12- 1-09 9:17 AM
horizontal rule
48

44: Di has clusters of ganglia throughout her body that do computing in parallel and offer more redundancy than our primitive "brains".


Posted by: essear | Link to this comment | 12- 1-09 9:18 AM
horizontal rule
49

||

What are the odds this involves some devious/nefarious shit?


http://www.guardian.co.uk/politics/2009/dec/01/mystery-tony-blair-finances

>


Posted by: nattarGcM ttaM | Link to this comment | 12- 1-09 9:20 AM
horizontal rule
50

The issue is whether you can kill a student debt just by scheduling it in a certain way, or whether you have to commence an adversary proceeding -- which brings in all sorts of due process.

I'm with you this far -- what the bankruptcy court did (and the 9th Circuit said was okay) was wrong. But there's still the default to get past; unless the bankruptcy court's order was actually void, there's no way to get to it under 60(b)(4). And I don't know the law on that distinction.


Posted by: LizardBreath | Link to this comment | 12- 1-09 9:22 AM
horizontal rule
51

49: One.


Posted by: LizardBreath | Link to this comment | 12- 1-09 9:28 AM
horizontal rule
52

Sooner he gets jailed the better ...


Posted by: nattarGcM ttaM | Link to this comment | 12- 1-09 9:35 AM
horizontal rule
53

44: Oh, I have lots more cells. The rest of them, however, are blissfully ignorant of the void/voidable issue.


Posted by: Di Kotimy | Link to this comment | 12- 1-09 9:37 AM
horizontal rule
54

52: You know, I found Blair's cheerleading for the Iraq War inexplicable enough that I'd almost be pleased to find out he'd been straightforwardly bribed.


Posted by: LizardBreath | Link to this comment | 12- 1-09 9:45 AM
horizontal rule
55

re: 54

I suspect he was probably a true believer on Iraq, but there are other decisions where I wouldn't be at all surprised.

And that's not how it works these days, I don't think. Instead, you play nice and act like a good little boy in office; serving the right interests; knowing that the rewards will come. Nothing as vulgar as explicit quid pro quo, but just as venal and nasty nonetheless.


Posted by: nattarGcM ttaM | Link to this comment | 12- 1-09 9:51 AM
horizontal rule
56

I love the Nina Totenberg who explains complicated legal cases and reads court transcripts. Periodically, though, this other Nina appears, who is a smug, self-satisfied washington insider. She drives me nuts.


Posted by: rob helpy-chalk | Link to this comment | 12- 1-09 10:01 AM
horizontal rule
57

Haven't finished reading the briefs yet, but I'm with LB in 30. And I'll take it a step farther and argue that the loan company SHOULD win as a policy matter, given the dischargeability standards that exist. That rule means that lenders can process bankruptcy petitions using (cheap) people who just have to know enough to fill out some simple forms and to kick it to the (expensive) lawyers if and only if the lender receives a summons and complaint in an adversary proceeding. That saves a whole lot of expensive time reviewing documents to make sure a debtor isn't trying to slide something by, and it puts the burden of flagging the issue on the debtor (who has one bankruptcy case) rather than the lender (which may have hundreds or thousands).


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 11:26 AM
horizontal rule
58

That rule means that lenders can process bankruptcy petitions using (cheap) people who just have to know enough to fill out some simple forms and to kick it to the (expensive) lawyers if and only if the lender receives a summons and complaint in an adversary proceeding. That saves a whole lot of expensive time reviewing documents to make sure a debtor isn't trying to slide something by, and it puts the burden of flagging the issue on the debtor (who has one bankruptcy case) rather than the lender (which may have hundreds or thousands).

This: I was thinking this but couldn't quite figure out how to put it. Kozinski was all snotty about how the loan company had notice that the bankruptcy court had partially discharged the guy's loans, but giving a corporation 'notice' of something in the form of a document that would normally be processed by someone whose job it isn't to react appropriately, when the corporation has a right to expect a different kind of document that will go to the right person, isn't really 'notice'.

Some ways being a huge, well-funded corporation is an advantage dealing with stuff, but not always.


Posted by: LizardBreath | Link to this comment | 12- 1-09 11:33 AM
horizontal rule
59

Yea, let's protect the large corporations who have notice but dont react properly because they shouldnt be expect to react well.

But, those darn individuals had better cross every t and dot every i or their case gets thrown out, regardless of the merits.

Remember people: procedure is much more important than substance.*

*Unless a big corporation or a police officer is involved.


Posted by: Will | Link to this comment | 12- 1-09 11:37 AM
horizontal rule
60

But there's still the default to get past; unless the bankruptcy court's order was actually void, there's no way to get to it under 60(b)(4). And I don't know the law on that distinction.

I think the lender's argument is that there's no default because it's effectively not a party to the bankruptcy case and has no duty to do anything to protect itself. The process it's entitled to before its rights can be affected is an adversary proceeding, and that didn't happen, so it's basically in the position of having had a judgment entered against it in a case in which it wasn't a party.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 11:38 AM
horizontal rule
61

Some ways being a huge, well-funded corporation is an advantage dealing with stuff, but not always.

If a corporation makes it impossible for human beings to communicate with it, I guess there are negative consequences once in a blue moon. Interesting.


Posted by: Cryptic ned | Link to this comment | 12- 1-09 11:41 AM
horizontal rule
62

And yes to 58 on Kozinski. People really ought to practice law for a while before being appointed to the bench.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 11:42 AM
horizontal rule
63

60: Well, it's in the bankruptcy, because it put in a proof of claim. And as a creditor, it got a copy of the confirmation order with instructions for how to object to it, and it didn't object. There's a real default there; wrongdoing by the court as well, but a real default by the loan company. The notice issue you pointed out is a real one (real, at least, for an explanation of what happened on the lender's end), but if all the documents provided to the lender had been read with understanding and responded to appropriately, this wouldn't have happened.


Posted by: LizardBreath | Link to this comment | 12- 1-09 11:44 AM
horizontal rule
64

63.last: "Responded to appropriately" is the whole issue. The lender's argument is that it wasn't required to do anything. Something I read indicated that a proof of claim is optional for nondischargeable debt, but I'm not sure where that leads.

59: But the debtor completely screwed up the required procedure and didn't even bring the relevant issue before the court. Do you really want to require lenders to backstop debtors' lawyers who don't know what they're doing?

61: So the legal system should impose random negative consequences on corporations to penalize them for poor customer service? Seems a rather convoluted approach, but whatever.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 11:55 AM
horizontal rule
65

What's the policy justification behind the non-dischargability of student loans? Is it that the (young) people taking student loans tend to have such poor credit history that rates would be unacceptably high if lenders weren't largely protected from default risk?


Posted by: salacious | Link to this comment | 12- 1-09 12:01 PM
horizontal rule
66

64: But it was a participating creditor, that had filed a proof of claim, and then consented (by not objecting when given the opportunity) to the confirmation order. Even though the court was wrong in issuing the confirmation order without an adversary proceeding, I don't think that relieves the lender of its obligation as a creditor to object to a confirmation order that it doesn't consent to. (This is all if we put the notice issue to one side.)


Posted by: LizardBreath | Link to this comment | 12- 1-09 12:03 PM
horizontal rule
67

65: Something like that.


Posted by: LizardBreath | Link to this comment | 12- 1-09 12:03 PM
horizontal rule
68

I don't think that relieves the lender of its obligation as a creditor to object to a confirmation order that it doesn't consent to

That's what the Supreme Court is going to decide, isn't it? I've pretty well talked myself into the opposite conclusion, but either way it's an interesting case (as bankruptcy cases often are).


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 12:05 PM
horizontal rule
69

67: Isn't it new? I truly have no idea what I am talking about, but I thought that students loans only became non-dischargable after the recent bankruptcy reform bill.


Posted by: oudemia | Link to this comment | 12- 1-09 12:06 PM
horizontal rule
70

67: Does anyone know if that's a decent justification, empirically speaking? Cause if it is, any fucking with the rule is just going to show up in higher student loan interest rates. Presumably that's not a good thing...


Posted by: salacious | Link to this comment | 12- 1-09 12:07 PM
horizontal rule
71

68: Well, right -- the question comes back to whether the bad confirmation order was void or just wrong.


Posted by: LizardBreath | Link to this comment | 12- 1-09 12:07 PM
horizontal rule
72

65: At the time the bankruptcy laws were changed to make student loan debt essentially non-dischargeable, the primary justification was to prevent students from taking really expensive degrees, then immediately declaring bankruptcy after graduation, thus stiffing the lender while starting up a lucrative career as a lawyer/doctor/etc.

There was no evidence that this actually occurred with any frequency. In fact there was evidence that it didn't. But lenders have better lobbyists than poor students.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 12:10 PM
horizontal rule
73

69: The law changed in 1998.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 12:12 PM
horizontal rule
74

But lenders have better lobbyists than poor students.

The students spent too much time/money on the Toledo Windowbox.


Posted by: Moby Hick | Link to this comment | 12- 1-09 12:15 PM
horizontal rule
75

Some student loans have been non-dischargeable since 1978.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 12:19 PM
horizontal rule
76

The lender had 'notice' but not the kind of notice that law requires it to have been given. A requirement that exists for substantial reasons, and a kind of notice that is universally recognized in the law to be materially different from other kinds of notice. I don't find this troublesome, from a voidness perspective.

Like starting the clock for removal from proper service, not just getting a fax of the complain from some vendor.

The cert petition claims that this isn't a one-off screw up of a lawyer who didn't know how to do it, but a systematic way debtors are trying to undermine lenders.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 12:25 PM
horizontal rule
77

The one that I don't get is the situation where people are disabled. If you are so disabled that you will never ever be able to engage in any productive activity, then you can get them discharged. I think that that applies only to people in a vegetative state.

People who are on SSI are still responsible for their government loans. Now, I don't think that those people should get out of them entirely, but I do think that there ought to be a stay on the accrual of interest as long as they're disabled.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 12:26 PM
horizontal rule
78

73/75: Aha, see -- I knew I didn't know what I was talking about!


Posted by: oudemia | Link to this comment | 12- 1-09 12:27 PM
horizontal rule
79

And I really don't know what's wrong with all you people who'd rather talk about movies than civil procedure.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 12:40 PM
horizontal rule
80

79: We could talk about movies that feature lawyers, courtrooms, etc.

Which reminds me, UT's law library has a "Law and Popular Culture" collection that includes several hundred movies and tons of fiction related, albeit often very tenuously, to the law. So you can check out "Clueless" because in it the dad is a lawyer. And of course they have all the Grisham, but also plenty of better stuff too. Great timewaster. My favorite was the complete set of Eyebeam books, most of which were set when Eyebeam was in law school and then just starting out in a firm.

To bring things full circle, Jay Westbrook, who does empirical research on bankruptcy, often in collaboration with Elizabeth Warren, has a big Sam Hurt drawing on his door, from back when Hurt was a law student.


Posted by: M/tch M/lls | Link to this comment | 12- 1-09 12:49 PM
horizontal rule
81

40: P=NP?


Posted by: Doug | Link to this comment | 12- 1-09 1:00 PM
horizontal rule
82

Unemployment computer system still having problems, state says

They'd hire someone to fix it, but that would mean taking someone off the unemployment roll and they couldn't track that.


Posted by: Moby Hick | Link to this comment | 12- 1-09 1:12 PM
horizontal rule
83

OK, if we've exhausted bankruptcy court procedure, how about insurance company reserves?


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 1:42 PM
horizontal rule
84

This has been eye opening.

If the only way a debtor can discharge a student loan is if it is an undue hardship, and for that to be found a lender must have its say in court, why would any lender ever show in court? Why wouldn't they all do what this lender seems to have done? That way the undue-hardship discharges just vanish.

Why yes, I am confused.


Posted by: md 20/400 | Link to this comment | 12- 1-09 2:02 PM
horizontal rule
85

Why yes, I am confused.

The argument isn't that the lender doesn't have to show up under any circumstances, it's that it doesn't have to show up unless the debtor has invoked the proper procedure to make it show up by filing an adversary proceeding and serving the lender with a summons and complaint. The debtor didn't do that here, but did get a plan approved that purported to discharge the student loan. That shouldn't have happened. Debtor's counsel, the bankruptcy court, and (I think) the trustee all had to screw up for it to happen, and screw up they did. But that was years ago, and the question now is whether the lender can point out the screwup years after the fact or whether it's bound by the plan the bankruptcy court approved.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 2:11 PM
horizontal rule
86

This is really a side comment, but the references to debtor's counsel make me laugh a bit: debtor's counsel would probably wind up costing $5000 or something in order to make all this happen properly. It's not surprising if it didn't happen properly.

(/end pointless remark)


Posted by: parsimon | Link to this comment | 12- 1-09 2:20 PM
horizontal rule
87

Yeah, it's much more the court's fault than it is the debtor's, probably.


Posted by: LizardBreath | Link to this comment | 12- 1-09 2:21 PM
horizontal rule
88

Ah, OK. The lenders do have to show up when the correct procedure is followed. I'm with Will on this, I think. I guess the result will be that the debtor has to do everything right and the lender gets a do-over because it's hard out there for a corp.


Posted by: md 20/400 | Link to this comment | 12- 1-09 2:22 PM
horizontal rule
89

88: I don't think that you're quite getting what 'correct procedure' means here. 'Correct procedure' means that the debtor needed to file an adversary proceeding -- pretty much, a lawsuit -- inside the bankruptcy. But the debtor didn't, just asked the court nicely for the relief he wanted. And the court gave it to him, without all that irritating evidence and hearing both sides. This wasn't a nitpicky point of procedure, this was something where the lender was supposed to get a trial before the bankruptcy judge wrote down the debt.

I'm not sure how this case should come out, but it's not like the lender's getting a do-over because the papers were in the wrong font - the bankruptcy court did something really strange.


Posted by: LizardBreath | Link to this comment | 12- 1-09 2:31 PM
horizontal rule
90

87 -- Not if the debtor was intentionally trying to get the discharge without filing an adversary.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 2:34 PM
horizontal rule
91

Reading/skimming the briefs, I suspect that this is one of those cases where one won't need to read any farther in the S.Ct.'s opinion than "Certiorari to the United States Court of Appeals for the Ninth Circuit" to know the outcome.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 2:39 PM
horizontal rule
92

90: Yeah, I've been thinking of the guy as a hapless pro-se, but if he was represented it could perfectly well have been deliberate.


Posted by: LizardBreath | Link to this comment | 12- 1-09 2:42 PM
horizontal rule
93

I'm not sure how this case should come out, but it's not like the lender's getting a do-over because the papers were in the wrong font - the bankruptcy court did something really strange.

Thank you, it is becoming clearer. So the bankruptcy filing is not itself sufficient. The debtor needs to get an adversarial hearing on this particular debt because it cannot be discharged without such a hearing. The court reduced the debt anyway (!) and the lender says it didn't get due process. (Then it gets tangled up in whether the lender filed an appeal in time, etc.)

I guess I should read the links.


Posted by: md 20/400 | Link to this comment | 12- 1-09 2:43 PM
horizontal rule
94

The Scotusblog link isn't great -- I came out of that confused about the facts. The 9th Circuit opinion is better -- I disagree with how it came out, but after it I understood what was going on.


Posted by: LizardBreath | Link to this comment | 12- 1-09 2:48 PM
horizontal rule
95

Not to take anything away from all of this insightful legal analysis, but the issue that caught my attention was the school that procured the loan in the first place.

It is absolutely unconscionable to me the way that a lot of these fly-by-night technical schools and for-profit/online colleges operate. They spam high school students with misleading letters that imply that they've gotten "scholarships," they tell them they already have an "admissions appointment" set up, and then when the student comes in they get their SSN and make a killing off of convincing them to fill out a FAFSA and take out loans to start a training course even when there is no chance they will succeed.

They get adults too, especially for bogus and/or uncertified jobs like "medical billing and coding assistant" or "ultrasound technician." People go $10-25,000 into debt for courses that result in a meaningless proprietary credential that no employer trusts or cares about.

This article spotlights a related problem, in which a school didn't tell its students that it had lost its accreditation. There's an element of buyer beware here, but it's also just infuriating to me that the state attorney general and other consumer protection agencies seem to do nothing even in response to specific complaints.

/venting


Posted by: Witt | Link to this comment | 12- 1-09 3:09 PM
horizontal rule
96

I thought that you got out of paying your loans if your school was defunct.


Posted by: Bostoniangirl | Link to this comment | 12- 1-09 3:30 PM
horizontal rule
97

96: No, it's if your roommate dies halfway through your last semester. Totally happened to a friend of mine's girlfriend.


Posted by: Bave Dee | Link to this comment | 12- 1-09 3:34 PM
horizontal rule
98

LB, I'm too swamped to comment on the case, but you should probably read Eric Brunstad's amicus brief before commenting further.

In very broad terms, the general rule is that finality of judgment trumps even gross legal error or jurisdictional error, so long as there is notice+an opportunity to object consistent w/minimum constitutional due process. Here, there was unquestionably notice+opportunity to object, and payments were made to the lender under the Ch 13 plan. Really, the only serious reason to back the loan company is a belief that a student loan company is entitled to greater sympathy than an ordinary litigant. There's a little support in the BK code for that proposition, which makes this a Sct-worthy case, but not much.


Posted by: robert halford | Link to this comment | 12- 1-09 4:00 PM
horizontal rule
99

unquestionably notice+opportunity to object

I wouldn't say 'unquestionably', given the discussion above. But I'll take a look at the Brunstad brief.


Posted by: LizardBreath | Link to this comment | 12- 1-09 4:06 PM
horizontal rule
100

The lender got a copy of the plan when it still had time to object, appeared in the proceeding as a creditor, and was paid under the plan. BK judgments really need to be final in such circumstances, b/c they are proceedings that operate to finally discharge debt as against the world.


Posted by: robert halford | Link to this comment | 12- 1-09 4:11 PM
horizontal rule
101

The lender got a copy of the plan when it still had time to object, appeared in the proceeding as a creditor, and was paid under the plan. BK judgments really need to be final in such circumstances, b/c they are proceedings that operate to finally discharge debt as against the world.


Posted by: robert halford | Link to this comment | 12- 1-09 4:12 PM
horizontal rule
102
Posted by: | Link to this comment | 12- 1-09 4:12 PM
horizontal rule
103
Posted by: | Link to this comment | 12- 1-09 4:13 PM
horizontal rule
104
Posted by: | Link to this comment | 12- 1-09 4:24 PM
horizontal rule
105

98: The Brunstad brief seems pretty useless -- it doesn't even address the fact that there was a real problem with the court's confirmation of the plan. I can see arguing that it's got to be final even if it's wrong, but Brunstad didn't admit that anything wrong happened.

On the finality issue -- looking through the parties' briefs, the Second Circuit disagrees with you that finality is necessary under these circumstances. Whelton v. Educational Credit Mgmt. Corp., 432 F.3d 150, 154 (2d Cir. 2005) ("A discharge obtained in this manner, i.e., 'without filing an adversary proceeding to establish undue hardship,' is plainly 'contrary to the express language of the Bankruptcy Code and Rules.' Thus, it is properly treated as 'void.' ") I don't have a firm enough grasp of the relevant law to be sure how the 60(b)(4) issue should come out, but I'm pretty sure it's not an easy call.


Posted by: LizardBreath | Link to this comment | 12- 1-09 4:28 PM
horizontal rule
106

105 seconded.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 4:47 PM
horizontal rule
107

To expand a little bit, 100/101 and the Brunstad brief both ignore the fact that student loan debts are not subject to the Bankruptcy Code's normal processes for addressing debts, so pointing to general bankruptcy policy considerations kind of begs the question.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 4:58 PM
horizontal rule
108

Yeah. The unpleasant thing about this case is that there's a statute saying that a student loan company gets more sympathy than an ordinary litigant. I'm not sure that the statute mandates enough extra sympathy that the loan company wins this one, but enough for it to be close.

And it's a sucky statute, but judges aren't allowed to thwart sucky statutes unless they're unconstitutional.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:01 PM
horizontal rule
109

In between reminiscing about poems from my youth, and waiting for a phone call, I took a look at the bankruptcy court's opinion in Espinosa. The judge explicitly says that she doesn't approve of what the debtor is doing, but is bound by 9th Circuit precedent. She also thinks the lender slept on its rights.

The SC took this to resolve the circuit split, and it isn't going to do so in the 9th's favor. Want a finding of undue hardship? Commence an adversary.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 5:04 PM
horizontal rule
110

Also worth noting that bankruptcy itself is a bit on the sucky side for perfectly innocent creditors, consisting, as it does, of a set of convoluted procedures for distributing any remaining assets of the debtor to nearby lawyers and accountants rather than creditors. Necessary and appropriate sometimes, particularly for individuals, but not necessarily a major step on the road to Universal Pony justice-wise.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 5:06 PM
horizontal rule
111

She also thinks the lender slept on its rights.

This, certainly. I can see a fair argument that it didn't genuinely have notice in time to object. But eleven years?


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:06 PM
horizontal rule
112

A friend of mine found out that her pay as an adjunct will be docked about a thousand bucks this month because they recalculated and realized they were paying her for two more credits than she was teaching. This seems criminal to me, but what do I know? She's looking now to see if the contract specified how many credits she was being paid for.


Posted by: A White Bear | Link to this comment | 12- 1-09 5:07 PM
horizontal rule
113

Wait a minute there: every time a dollar goes to a lawyer instead of a credit card company, an angel gets its wings.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 5:07 PM
horizontal rule
114

113: Depends which lawyer....

108: Student loans really are a bit different because the underwriting is backward: you qualify by NOT being able to pay. That doesn't continue forever, and I don't disagree that the current setup is too harsh, but treating student loans just like any other debt doesn't necessarily make sense either.

My preferred solution would be to forget the whole bankruptcy thing, get private lenders out of the picture completely, and set repayment at a maximum of x% of income for y years, collected via the income tax system. And a pony.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 5:13 PM
horizontal rule
115

I really don't have time for this, but the point of the Brunstad brief (that 'pretty useless' is pretty exceptionally arrogant, especially given your own admitted lack of knowledge in the area) is that it was fairly reasonable -- in fact, it happens all the time -- that parties in BK Chapter 13 proceedings don't object to plans where they might legally be entitled to, for good reasons, including benefits under the plan. Nonetheless, BK discharges need to be, and generally are, final, despite discharging otherwise nondischargeable debt or otherwise being procedurally objectionable. And, finality is a key virtue in BK regardless of errors in the process. The point of a discharge in BK, after all, is to leave you free and clear against the world by virtue of a reasonable court order.

Here, there is no dispute -- and I mean no dispute, the lender does not contest this -- that the constitutionally minimum notice provisions were met. The only issue is whether the procedural defect in the BK case allows the lender to reopen the issue years after the final judgment.

In almost any other context, this would be an extremely easy case. The BK code does contain language about "nondischargeable" debt that may make it harder than the average case -- that is, the lender has an argument that the debt simply can't be discharged at all. But when you think about it, all that's really happened is a procedurally and substantively erroneous determination of what constitutes dischargeable debt, no different than a thousand other legal determinations courts make every day. There's really nothing different about a procedurally or substantively incorrect determination of nondischargeability vs any other legally incorrect determination made in a final judgment. You are right about what the 2nd Circuit said, and this isn't a frivolous case. But it is a pretty tortued reading of both the BK code, ordinary BK practice, and the general legal interest in final judgments


Posted by: robert halford | Link to this comment | 12- 1-09 5:13 PM
horizontal rule
116

But this isn't almost any other context, and the non-dischargeability provisions can reasonably be read to say that a creditor that holds a non-dischargeable debt isn't subject to ordinary BK practice or to the BK policy considerations underlying the finality of discharge orders.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 5:19 PM
horizontal rule
117

My preferred solution would be to forget the whole bankruptcy thing, get private lenders out of the picture completely, and set repayment at a maximum of x% of income for y years, collected via the income tax system.
This is more or less how our student loan system works. It's 10% of income over some (fairly low, but not trivial) threshold until the principal is repaid. As of a few years ago there is no interest. It's very far from perfect, but it's not cartoonishly bad.


Posted by: wispa | Link to this comment | 12- 1-09 5:20 PM
horizontal rule
118

"Pretty useless" to persuade me of anything, because it doesn't address the problems with confirming the plan. I could be convinced by a brief that discussed situations where similarly improperly confirmed plans were nonetheless treated as final -- it's perfectly possible that that's the right way to go. But a brief that doesn't examine the right way to deal with a wrongly confirmed plan doesn't get me past the issue that I'm interested in.

I'm sure it's an excellent brief, and I didn't mean to impugn its quality as legal writing. It just doesn't help me figure out this case at all.

There's really nothing different about a procedurally or substantively incorrect determination of nondischargeability vs any other legally incorrect determination made in a final judgment.

The thing is, 60(b)(4) exists. Some legally incorrect determinations are not just wrong, they're void. At which point the question is whether this is one of them.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:20 PM
horizontal rule
119

RH, if the lender had defaulted in an adversary, I'd agree with you completely. If, instead of granting a partial discharge of a student loan, the plan had included a provision for substantial punitive damages for the debtor from some named creditors, and it slipped through, your argument would still apply.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 5:21 PM
horizontal rule
120

I wrote 112 before seeing the additional comments. But there's really no reason why you need to construe the student-lender protective provision of the Code as trumping the finality-protective provisions. It's a pure question of how best to interpret the statute, so reading it in accordance with general BK principles (and precedent) makes sense. No need for the more-in-sorrow handwringing here.

In the real world, all this would do is force student loan lenders to become more actively involved in Ch 13 proceedings. Oh noes.

I agree with Carp about how the case will come out, though. Count on the current SCOTUS -- and especially its purportedly liberal members -- to come out on the side of a truly evil business here.


Posted by: robert halford | Link to this comment | 12- 1-09 5:22 PM
horizontal rule
121

so reading it in accordance with general BK principles (and precedent) makes sense

Again, this begs the question. It's at least equally sensible to read it in accordance with Congress' repeatedly stated intent NOT to treat student loans in accordance with general BK principles.

In the real world, all this would do is force student loan lenders to become more actively involved in Ch 13 proceedings. Oh noes.

As the petitioner's briefs point out, it's a pointless waste of lenders' money and the courts' time to require creditors whose loans can't legally be discharged to show up and file objections every time a debtor submits a sloppy plan.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 5:27 PM
horizontal rule
122

118 -- see Stoll v. Gottlieb, in which a plainly nondischargeable debt was nonetheless discharged by a final order, or Travelers Indemnity, where the BK court's order, which had no valid jurisdictional basis, was upheld as a final judgment, or Chicot County, where a plainly unconstitutional overreach by the BK court was upheld as a final binding judgment once entered. All are discussed in the Brunstead brief.

119 -- difference between in rem and in personam. Finality here is over the res, the discharged estate, so the punitive damages analogy doesn't apply.


Posted by: robert halforf | Link to this comment | 12- 1-09 5:35 PM
horizontal rule
123

121 -- Congress didn't have any stated intent w/r/t the finality issue, nor is there any evidence (that I know of)that the section was intended to trump the finality provisions of the Code. Sure, student loans work differently in BK than dischargeable debt, but Congress didn't clearly amend the final judgment rule, so it makes sense to look at how the Code works as a whole and has been interpreted as a whole.

I am touched by your sympathy with the creditors, but all this would require is that a student loan company pay some attention when they receive a Chapter 13 plan, rather than allowing people to think their debts have been fully discharged and then coming after them years later.


Posted by: robert halford | Link to this comment | 12- 1-09 5:43 PM
horizontal rule
124

Stoll v. Gottleib. Walk me through why you think that's controlling? As I read it, it holds that you can't attack a final decision in a bankruptcy court collaterally, in another court without appellate jurisdiction over the bankruptcy court. Which isn't the situation here.

I'll go try and find the other two cases -- I don't have a lot of hope for Travelers Indemnity unless you give me the cite.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:44 PM
horizontal rule
125

I am touched by your sympathy with the creditors,

And is this really necessary? You sound as if you work in this area more than I do, so I'm interested in what you have to say. The accompaniment of the substance of your comments with accusations of being soft on Big Student Loans, OTOH, makes it hard to focus on the substance rather than getting prickly about your tone.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:46 PM
horizontal rule
126

Chicot County. This one (assuming I've found the right case) is about whether a decree proper at the time it was entered remains valid when the statute that gave the court jurisdiction is subsequently found to be unconstitutional, and holds that the decree is not retroactively invalidated such as to be subject to collateral attack. That really doesn't seem to me to be either particularly bankruptcy-specific, or controlling over a situation where the court's order was improper when entered.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:52 PM
horizontal rule
127

I am touched by your sympathy with the creditors, but all this would require is that a student loan company pay some attention when they receive a Chapter 13 plan, rather than allowing people to think their debts have been fully discharged and then coming after them years later.

This sort of thing really isn't helpful. It's not about sympathy for creditors or sympathy for debtors, it's about what holding best reconciles the legal and policy issues presented by the case. I'm persuaded by the argument that it's pointless and wasteful to require student loan services to spend a lot more time reviewing bankruptcy filings to prevent the occasional case in which the debtor's counsel, judge, and trustee are all asleep at the switch and let an non-confirmable plan go through. You're persuaded otherwise. Maybe we could have that argument without the ad hominem stuff?

I'd also submit that the debtor's beef ought to be with the lawyer who sold him a bankruptcy that couldn't legally accomplish what he was trying to accomplish. Lenders aren't the only ones out there preying on the down and out.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 5:55 PM
horizontal rule
128

I really don't have time to go into detail, but the point of Stoll is that a discharge removing non-dischargeable debt is not subject to later reopening. The collateral attack point is a red herring -- the situation before the SCOTUS is a little unusual, in that the debtor sought to have the BK court enforce an injunction, but the discharge of debt was clearly a final, binding, non-appealable, non-reopenable order, so reopening it in this case is really a form of collateral attack; we're no longer in the world of direct review.


Posted by: robert halford | Link to this comment | 12- 1-09 5:57 PM
horizontal rule
129

so reopening it in this case is really a form of collateral attack

This is nuts -- the 60(b)(4) motion is in the same proceeding, in the court. How is that collateral? A collateral attack is in a different proceeding.


Posted by: LizardBreath | Link to this comment | 12- 1-09 5:59 PM
horizontal rule
130

in the court s/b in the same court.


Posted by: LizardBreath | Link to this comment | 12- 1-09 6:00 PM
horizontal rule
131

servicer, that is

124.2: Briefs are all here. The Traveler's case is here.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 6:03 PM
horizontal rule
132

126 -- even a BK final order that was CLEARLY "void" -- because unconstitutional --remains enforcable under the finality provisions of BK law.

NPH, I'm not going after you personally, but this isn't an abstract conversation. Folks are getting screwed right and left in Ch 13, particularly by student loan companies. A final discharge of debt following payment on a plan is really the only protection you've got, and one of the few forms of social insurance we really have. Setting a precedent that makes it easier for creditors who benefit from the ludicrous non-dischargeability provisions of the Code to go after folks even AFTER they've paid the creditor on their plan and think that they're out of debt is both morally wrong and inconsistent with the basic, marginal protection from risk that bankruptcy provides to individuals.


Posted by: robert halford | Link to this comment | 12- 1-09 6:09 PM
horizontal rule
133

The collateral attack rule protects the finality of final judgments after the time for direct review is finished. Here, you have a final judgment after the time for direct review has expired. The fact that the guy went back to the same court looks weird, but really isn't any different than going back to the SDNY to contest a final, nonappealable order made by a SDNY judge.


Posted by: robert halford | Link to this comment | 12- 1-09 6:14 PM
horizontal rule
134

even a BK final order that was CLEARLY "void" -- because unconstitutional --remains enforcable under the finality provisions of BK law.

But it's not the same procedural situation at all. When a statute is found to be unconstitutional, there are obvious problems with going back in time and unwinding every decision made in the past pursuant to that statute. When a particular court has erred, unwinding that error through the procedures set forth in the FRCP is a much narrower problem. As I keep on saying, I don't know how this case should come out. But it comes down to a 60(b)(4) issue: cases talking about general principles of bankruptcy law don't tell me much outside of the 60(b)(4) context.


Posted by: LizardBreath | Link to this comment | 12- 1-09 6:14 PM
horizontal rule
135

The collateral attack rule protects the finality of final judgments after the time for direct review is finished. Here, you have a final judgment after the time for direct review has expired.

This simply denies the existence of 60(b)(4). You can't just ignore it, the rule's there, and you have to argue that this particular judgment is wrong but not void in the context of the rule.


Posted by: LizardBreath | Link to this comment | 12- 1-09 6:16 PM
horizontal rule
136

NPH, I'm not going after you personally, but this isn't an abstract conversation. Folks are getting screwed right and left in Ch 13, particularly by student loan companies. A final discharge of debt following payment on a plan is really the only protection you've got, and one of the few forms of social insurance we really have.

Fair enough, but it seems to me that what's doing the screwing is the non-dischargeability statute, perhaps abetted from time to time by lawyers' taking client's money to file BK case that can only work if the judge screws up. Relying on uncorrectible judicial errors as a form of social insurance doesn't really strike me as tenable.


Posted by: Not Prince Hamlet | Link to this comment | 12- 1-09 6:21 PM
horizontal rule
137

I don't have strong feelings about the public policy of it all -- at least, I have strong feelings that the non-dischargeability of student loan debt is a bad thing, but given that the statute is on the books, I'm not clear on what the best way to handle it is. And it's very clear to me that in the absence of 60(b)(4), the lender would be SOL. But 60(b)(4) is there, and generally serves to allow attack on judgments after the time for direct review is finished -- non-bankruptcy judgments are supposed to be final too. So an argument that doesn't explain why 60(b)(4) specifically doesn't apply here doesn't help me decide what I think the right answer is legally, rather than from a policy perspective.


Posted by: LizardBreath | Link to this comment | 12- 1-09 6:22 PM
horizontal rule
138

I should say that 133 is by analogy -- obvioulsy you're right that FRCP rule 60 creates a different procedural posture, but the finality provisions of the BK code create a situation that is (or should be) analagous to a final judgment subject to collateral attack; otherwise, you lose the benefit of the in rem proceeding.


Posted by: robert halford | Link to this comment | 12- 1-09 6:23 PM
horizontal rule
139

138: Part of the reason I'm pushing back here, is that you keep on talking about the extra level of finality applicable to bankruptcy judgments as opposed to just regular judgments. Just regular judgments are pretty final too, and while I've just skimmed the cases you've pointed to, I don't see them saying "Oh, sure, we'd blithely overturn this judgment if it was just regular, but it's bankruptcy, and you don't mess with bankruptcy."

Literally, I don't know much about this area of law -- I do a little bankruptcy litigation, but more litigation than bankruptcy. Where does this principle of bankruptcy proceedings being more final than regular court proceedings come from?


Posted by: LizardBreath | Link to this comment | 12- 1-09 6:28 PM
horizontal rule
140

Three things -- first, I'm writing too fast while trying to win this lame argument while getting a letter out the door.

Second, the point isn't so much that BK judgments are "more" final than other judgments, but that there are particular reasons in the Code and in policy for not treating discharging nondischargeable debt as a sufficient basis for reopening the judgment. That is, the Code provides an additional basis for having discharge mean discharge (low hanging fruit), in addition to general principles of finality.

Third, procedurally, I think you are overestimating the differences between FRCP rule 60 and a collateral attack. FRCP Rule 60 attacks for invalidity are really, really hard You can't challenge a final judgment under FRCP 60 for being invalid just b/c it was wrong, or b/c the Court lacked jurisdiction -- you usually have to show something like there being no opportunity to contest jurisdiction. Similarly, you can collaterally attack a final judgment for lack of jurisdiction, but only in EXTREMELY rare circumstances. That's why the cases showing a strong preference for finality in the BK area in face of a collateral attack are also relevant here. And there's really no reason to create a special BK exception to ordinary practice under FRCP 60. In fact, if anything, for the reasons I've been arguing, the finality of discharges of debt should be treated as something particularly important.

To NPH's argument, the broader concern isn't so much the facts of this case, but that lenders could use the precedent to call into question other final BK rulings in individual cases.


Posted by: robert halford | Link to this comment | 12- 1-09 6:54 PM
horizontal rule
141

And there's really no reason to create a special BK exception to ordinary practice under FRCP 60.

Not arguing that -- indeed, arguing precisely the reverse, that it should apply here just as in any other case. I haven't been through all the briefs; while the lender's brief had some directly on point cases applying FRCP 60 to reopening a bankruptcy where the court had improperly discharged non-dischargable debt, were there any of the amici you know that made FRCP 60 arguments that the rule shouldn't apply in this situation? I've only run into FRCP 60 in practice once, and that was reopening a judgment due to fraud, so I don't have any background on the standard for 'void'.


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:00 PM
horizontal rule
142

The amicus brief from the Council of Chapter 13 Trustees is the one I wanted, that makes the Rule 60 arguments. After reading it, I think I'm still stuck on 'not an easy question'.


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:24 PM
horizontal rule
143

Or, more specifically, not a question that's actually compelled by precedent one way or the other. I guess I'd go Halford's way if I were deciding it (as I intimated way back in 30), but god only knows what the Court will do.


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:25 PM
horizontal rule
144

I'm not a bankruptcy lawyer at all, but this sort of sounds like a situation where what's common ground for bankruptcy specialists is not at all obvious to generalists. And the specialists usually lose those fights in the Supreme Court, with the exception (sometimes) of areas where there are a significant number of Justices who know the specialty well (con law, ad law, civ and crim pro, maybe count antitrust too). I think the tax bar shudders every time the Court takes a tax case, for example.


Posted by: widget | Link to this comment | 12- 1-09 7:28 PM
horizontal rule
145

I think all of the FRCP 60 cases reopening a final discharge of debt order on the basis that the debt was improperly discharged involve the same student loan provision that's at issue before the SCT in the case we're discussing -- although I haven't checked to make sure. And the 2nd Cir opinion agreeing w/the petitioners doesn't discuss the regular Rule 60 standards at all.

In any event, FRCP 60(b)(4) generally sets a much higher bar for "void" than just "the judge got the law grossly wrong and/or exceeded his authority.". Nonetheless, in these student loan cases the courts (outside the 9th Circuit) seem to be applying a more relaxed standard, which makes it easier to reopen these kinds of cases. In other words, orders discharging debt in bankruptcy cases are being given less finality than other kinds of final judgment.


Posted by: robert halford | Link to this comment | 12- 1-09 7:45 PM
horizontal rule
146

In other words, orders discharging debt in bankruptcy cases are being given less finality than other kinds of final judgment.

What's really annoying me about the briefs is that no one's squarely making that argument with caselaw. The Chapter 13 Trustees are at least talking about Rule 60, but they're not setting forth "This is the standard for a 60(b)(4) motion generally, here are cases closely analogous to these facts in a non-bankruptcy context denying Rule 60(b)(4) motions. This motion would have been denied if it weren't in a bankruptcy context."

I don't know the law myself, but either there just isn't a body of caselaw supporting what you said, or the people writing the briefs in support of the debtor left some useful caselaw on the table. (At least the ones I've read. Maybe the argument I want is in one of the other amicus briefs.)


Posted by: LizardBreath | Link to this comment | 12- 1-09 7:51 PM
horizontal rule
147

The argument transcript's up, and it's an interesting read. Counsel for the lender had a bad morning. The colloquy with Justice Kennedy at pages 11-14 in particular is not a good sign for her (he calls the position she's taking "simply astounding").


Posted by: widget | Link to this comment | 12- 1-09 7:53 PM
horizontal rule
148

I suspect that the answer to 146 is that there's not a lot of Supreme Court, as opposed to Circuit Court, law on 60(b)(4). But the 9th Circuit opinion does a good job of setting out the standard, so it is weird that the parties didn't rely on that argument more (generally, I thought the briefing on both sides of this case was pretty lousy for a Supreme Court argument).


Posted by: robert halford | Link to this comment | 12- 1-09 8:01 PM
horizontal rule
149

Looking at the oral argument, it sounds as if the Court's going with the debtor, and going to take a very strong position on what 'void' means.


Posted by: LizardBreath | Link to this comment | 12- 1-09 8:02 PM
horizontal rule
150

Yeah, it does look like the Court is going for the debtor. Maybe I'll have to revise my pessimism.


Posted by: robert halford | Link to this comment | 12- 1-09 8:32 PM
horizontal rule
151

150: Why not just save it for something else? It's like an onion. You'll always need it for something.


Posted by: Moby Hick | Link to this comment | 12- 1-09 8:33 PM
horizontal rule
152

150 -- No, you can keep it. Lender had a rough time, but debtor got it bad too, I think.

Would someone who has read this care to remind me of the basis for Justice Scalia's reputation?

You know, you don't go around revoking final judgments when the statute upon which they were based has been found unconstitutional. I don't have a problem, though, with a court's unwillingness to enforce injunctions based on judgments now understood to be improper. The injunction isn't about the res. It's about the future.


Posted by: CharleyCarp | Link to this comment | 12- 1-09 10:43 PM
horizontal rule
153

152 is just the most recent iteration of what's becoming a pretty common refrain: that Scalia isn't actually all that brilliant. To which I say, where did his reputation as an intellectual giant come from? I don't read Supreme Court opinions -- except for the obvious exceptions like Dred Scott and whatnot -- so I'm asking out of ignorance, I'm afraid. But really, every time I look at something he's written, or hear about a line of questioning during oral arguments, it seems like a toxic marriage of a dim bulb and authoritarian ideology. Did something change for him? Did he become terrified on 9/11 and lose his mind -- this is one of the bog-standard explanations for Cheney's evil, right? Did Scalia have an identifiable moment or moments late in life -- like John Adams -- in which he realized that the country he envisioned will never come to be? Or was he always this way?

I'm willing to do some reading, including SC decisions, if there are examples of the workings of his nimble mind.


Posted by: ari | Link to this comment | 12- 1-09 11:33 PM
horizontal rule
154

I hope Bave is reading this thread, it might help him decide whether he wants to to law school or not.


Posted by: teraz kurwa my | Link to this comment | 12- 1-09 11:38 PM
horizontal rule
155

Scalia's brilliance has mostly been trumpetted by the same Washington hagiographers who called Bush a smart, decisive leader. Getting elected to the Supreme Court is not so much a question of how good a judge you are as it is whether you have the right political opinions and don't piss off the other party too much, isn't it? Considering what Scalia did in Bush v Gore, it's clear why he was elected...

(Also, I suspect you have to be a lot more brilliant to get on the SC than you have to be once you're on it...)


Posted by: Martin Wisse | Link to this comment | 12- 2-09 12:01 AM
horizontal rule
156

Scalia is a clear writer, who writes judicial opinions that almost always have rhetorical punch. In cases where you don't have much familiarity with the issues or the law, his opinions are usually the easiest to read and sometimes the most superficially persuasive. He also is somewhat more consistent and less political in his "philosophy" than Roberts, Alito, or Kennedy, although Thomas is much more philosophical than Scalia.

IMO there has always been much less there than meets the eye; his opinions often are hard to apply in practice, because close analysis gets sacrificed for rhetorical zingers. And, I think he's wrong and not particularly thoughtful about a lot of important issues. But law students love him.


Posted by: robert halford | Link to this comment | 12- 2-09 12:50 AM
horizontal rule
157

Are there particular opinions that are considered classics? Because I've seen some of Kozinksi's work that demonstrates that, although I absoluately can't stand his style, he at least has a certain (very irritating, in my view) flair.


Posted by: ari | Link to this comment | 12- 2-09 12:58 AM
horizontal rule
158

I'll take your answer off the air, as I have to get some sleep.


Posted by: ari | Link to this comment | 12- 2-09 12:59 AM
horizontal rule
159

The dissents are where Scalia shines. Morrison v. Olson, the (rhetorically) amazing dissent in Planned Parenthood v. Casey, and, for something you might agree with, Maryland v. Craig. For a majority opinion, I dunno, Employment Division v. Smith maybe? (religious freedom).

Also, the article The Rule of Law as a Law of Rules.


Posted by: robert halford | Link to this comment | 12- 2-09 1:27 AM
horizontal rule
160

Also, I guess I agree with 152.3, but it doesn't have much to do with bankruptcy or a discharge of debt.


Posted by: robert halford | Link to this comment | 12- 2-09 1:31 AM
horizontal rule
161

Where does this principle of bankruptcy proceedings being more final than regular court proceedings come from?

One of the policy reasons usually given is that bankruptcy proceedings are different from your classic plaintiff vs. defendent court case in that the goal is a workable agreement/plan hammered out between the debtor and often a large number of creditors of different types, situations, etc. Once that agreement/plan is confirmed, with any existing assets divided among the creditors and future assets spoken for in the form of a schedule of payments to various creditors, allowing one creditor to then go back and seek a better deal doesn't just affect the debtor and that creditor, it affects every party to the agreement and would basically cause the whole agreement to collapse. That would defeat one of the major reasons for having a bankruptcy scheme: to bring order to the default process, allow a relatively quick resolution, and have everyone affected then move on.


Posted by: M/tch M/lls | Link to this comment | 12- 2-09 5:27 AM
horizontal rule
162

Lender had a rough time, but debtor got it bad too, I think

Yes, but on different topics. The lender got hammered on how they could possibly justify calling the order void, rather than just wrong. The debtor got hammered on how they could possibly justify calling the order not-wrong, even in the absence of objection from the lender. Assuming that this is telegraphing the decision (not, of course, safe at all) this looks to me like a two point holding (1) smacking the 9th Circuit down for allowing the bankruptcy court to discharge student loan debt without a finding of undue hardship but (2) finding that the lender was obliged to object to the court's error in a timely fashion rather than attacking it as 'void' years later.


Posted by: LizardBreath | Link to this comment | 12- 2-09 5:41 AM
horizontal rule
163

154: I am reading this thread, and it made me think of this piece of advice, which, honestly, shook me a bit at the time. Nevertheless, I'm signed up for the damn test on Saturday, and if I can speed up just a bit on the logic games while retaining my accuracy I should do alright. (I actually do find this kind of thing (meaning the kind of discussion in this thread) kind of interesting, although I don't know anything about the particular issues here, so I haven't followed too closely.)


Posted by: Bave Dee | Link to this comment | 12- 2-09 6:16 AM
horizontal rule
164

162 -- This lender isn't in the Supreme Court to argue about $3,000. An opinion that smacks down the bankruptcy court hard enough, and says we never want to see this shit again (and if the bankruptcy judge thinks a debtor is doing it on purpose, well sanctions might be appropriate) but come on, you people let this one get away, would probably work for them.

I still think they took the case to resolve the circuit split against the Ninth. And that they will.

As they have time to reflect, the points about the sheer volume of paper are going to resonate with the more practical justices. It's easy to say that the judge should have caught this, but they're buried in paper. It's easy to say that well the lender should have appealed, but we don't want to bury the district courts (or baps) in paper. If there's a lot of this -- and that's what the interest and amici would seem to indicate -- I can see the concern about letting cheaters take advantage of volume swamping the particular facts.

I mean, which is there more of: debtors intentionally cheating on which debts are dischargeable, or lenders attacking the finality of judgments with decade late 60(b)(4) motions?

So, yes: debtor may very well get to keep his 3k. (I wouldn't call this a done deal, though, because all the points RH makes apply just as well the 31st day after confirmation as 10 years later -- and the Court is not going to require lenders to scour plans for intentional wrongdoing on that kind of time frame.)


Posted by: CharleyCarp | Link to this comment | 12- 2-09 6:16 AM
horizontal rule
165

And that's not how it works these days, I don't think. Instead, you play nice and act like a good little boy in office; serving the right interests; knowing that the rewards will come. Nothing as vulgar as explicit quid pro quo, but just as venal and nasty nonetheless.

I like to think that Blair may have brought the nation to a point of no return, as far as small worms turning goes. He seems to have turned an awful lot of them.


Posted by: Charlie | Link to this comment | 12- 2-09 6:42 AM
horizontal rule
166

(I wouldn't call this a done deal, though, because all the points RH makes apply just as well the 31st day after confirmation as 10 years later -- and the Court is not going to require lenders to scour plans for intentional wrongdoing on that kind of time frame.)

They've got a year for 'excusable neglect' under 60(b)(1), or for fraud or misconduct under 60(b)(3), which seems like enough. And the 60(b)(4) argument doesn't work where they didn't get constitutionally sufficient notice -- if they genuinely weren't informed of what happened at all, rather than just, like here, in a manner that would be tough to respond to in a timely fashion, the order would be void and attackable forever.


Posted by: LizardBreath | Link to this comment | 12- 2-09 7:25 AM
horizontal rule
167

An opinion that smacks down the bankruptcy court hard enough, and says we never want to see this shit again (and if the bankruptcy judge thinks a debtor is doing it on purpose, well sanctions might be appropriate) but come on, you people let this one get away, would probably work for them.

And this is true. To the extent that the point of this case was to bring the 9th circuit in line with the other circuits by overruling the 9th circuit holding that student loan debt should be dischargable without a finding of undue hardship where the lender doesn't object, the 9th is wrong on the law (kind, decent, and I agree with them on the policy issue, but just wrong), and there's no chance that the SC is going to see it the debtor's way. The lender is probably going to lose the case, but be happy with the holding.


Posted by: LizardBreath | Link to this comment | 12- 2-09 7:30 AM
horizontal rule
168

163: Yeah, this sort of discussion is fun (I really enjoy the process of going from having no idea what I'm talking about to having strong and not totally uninformed opinions in an hour or two), but it's not the bulk of what you do, lawyering. (And I completely suck: I told you I was going to get in touch with that law prof I knew in high school to ask if you could get some advice, and then got chicken about the weirdness of calling and saying "Hey, I haven't talked to you in twenty years, and we weren't close then, but could you give this friend of mine a half-hour on the phone for law school advice?" I know this is the sort of thing people who network do without thinking about it, but I got cold feet. Maybe I'll get brave in the next couple of weeks sometime.)


Posted by: LizardBreath | Link to this comment | 12- 2-09 7:39 AM
horizontal rule
169

168: Oh, don't worry about it. Things seem to be sorting themselves out, at least as far as near-term next steps. I may lean on you for help a bit later. (I'm quite bad at networking, myself, and was/am partly not at all looking forward to speaking with someone you knew twenty years ago who I didn't know at all.)


Posted by: Bave Dee | Link to this comment | 12- 2-09 8:15 AM
horizontal rule
170

Yeah, but I should have told you I was chickening out rather than just dropping it.


Posted by: LizardBreath | Link to this comment | 12- 2-09 8:19 AM
horizontal rule
171

Probably a dumb and missing-the-point question, but is it ever possible to resolve this kind of "the court made an error" issue by having the court compensate the wronged party, so that, for example, the debtor's bankruptcy isn't disrupted by bringing this back up?


Posted by: Nathan Williams | Link to this comment | 12- 2-09 11:43 AM
horizontal rule
172

The good thing about being a judge is that you're pretty much immune from ever having to compensate anyone for anything.


Posted by: Not Prince Hamlet | Link to this comment | 12- 2-09 11:52 AM
horizontal rule