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Stephenson v. United States Department of Education/Nelnet

United States District Court, M.D. North Carolina

March 28, 2018

KIMBERLY DAWN STEPHENSON, Appellant,
v.
UNITED STATES DEPARTMENT OF EDUCATION/NELNET, [1] Appellee.

          MEMORANDUM OPINION AND ORDER

          LORETTA C. BIGGS UNITED STATES DISTRICT JUDGE

         Appellant, Kimberly Dawn Stephenson (“Ms. Stephenson” or “Appellant”), proceeding pro se, appeals orders entered by the United States Bankruptcy Court for the Middle District of North Carolina, pursuant to 28 U.S.C. § 158, denying her Motion for Injunction and dismissing her adversary proceeding. (ECF No. 1.) Before this Court, in addition to the appealed orders, are several motions filed by Appellant in this Court, which include the following: (a) Motion for Leave to Proceed In Forma Pauperis, (ECF No. 8); (b) Motion per Rule 24(c), (ECF No. 9); (c) Motion Per 28 U.S.C. § 753(f), (ECF No. 11); (d) Motion to Supplement the Appellate Record, (ECF No. 19); (e) Motion to Pay Filing Fee in Installments, (ECF No. 22); (f) Amended Motion to Make Payments, (ECF No. 23); (g) Request to Close Case, (ECF No. 25); (h) Motion to Strike Request to Close Case, (ECF No. 26); (i) Second Motion to Strike Request to Close Case, (ECF No. 27); and (j) Motion to Strike, (ECF No. 28).

         For the reasons stated below, the orders of the Bankruptcy Court are affirmed. In addition, the following motions are granted: Motion to Strike Request to Close Case, (ECF No. 26); and Motion to Strike, (ECF No. 28). The following motions are considered withdrawn by Appellant: Motion for Leave to Proceed In Forma Pauperis, (ECF No. 8); Motion to Pay Filing Fee in Installments, (ECF No. 22); Amended Motion to Make Payments, (ECF No. 23); and Request to Close Case, (ECF No. 25). The following motions are denied as moot: Motion per Rule 24(c), (ECF No. 9); Motion Per 28 U.S.C. § 753(f), (ECF No. 11); and Second Motion to Strike Request to Close Case, (ECF No. 27). Finally, the Motion to Supplement the Appellate Record, (ECF No. 19), is denied.

         I. BACKGROUND

         On April 29, 2016, Ms. Stephenson filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, and on September 14, 2016, the Bankruptcy Court entered an order granting her a discharge. (ECF No. 5-22 at 2-3.) On June 8, 2016, during the pendency of the bankruptcy proceedings, Ms. Stephenson initiated an adversary proceeding before the Bankruptcy Court to discharge pre-petition student loan debts pursuant to 11 U.S.C § 523(a)(8) on the basis that excepting such debts from bankruptcy would impose undue hardship on her. (ECF No. 4-2.) These pre-petition debts were allegedly held by Appellees, the United States Department of Education (“the Dept. of Ed.”), Educational Credit Management Corporation (“ECMC”), and National University (“National”).[2] (Id.)

         While the adversary proceeding was pending, Ms. Stephenson submitted a “Federal Direct Consolidation Loan Application and Promissory Note (‘Loan Consolidation Application')” to the Dept. of Ed. (ECF No. 5-22 at 3.) This application was approved, and the Dept. of Ed. consolidated Ms. Stephenson's student loan debt, which had been held by the three above lenders, into a single “Consolidation Loan” held by the Dept. of Ed. (Id.) Following the consolidation of Ms. Stephenson's student loans, ECMC was dismissed from the proceeding pursuant to a Consent Order entered by the Bankruptcy Court and signed by Ms. Stephenson and ECMC. (Id. at 4.) The Dept. of Ed. filed a Motion to Dismiss, “arguing that the loan consolidation rendered the discharge of Plaintiff's pre-petition loans and this adversary proceeding moot.” (Id.) Ms. Stephenson then filed a Motion for Injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure requesting that the [Bankruptcy] Court: (1) “require [the Dept. of Ed.] to ‘reverse' the consolidation of Plaintiff's educational loans”; (2) find the loan consolidation unenforceable; and (3) mandate that Defendant remove the consolidation loan from three credit bureaus. (Id. at 10.)

         The Bankruptcy Court held a hearing on December 13, 2016, (see ECF No. 5-22 at 2), and subsequently entered the two orders that are the subject of this appeal. The court denied Ms. Stephenson's Motion for Injunction, (ECF No. 5-17), and granted the Dept. of Ed.'s Motion to Dismiss, (ECF No. 5-21). Ms. Stephenson timely appealed these orders. (ECF No. 1.)

         II. MOTIONS FILED IN DISTRICT COURT

         The Court will begin by addressing the motions filed by Ms. Stephenson in this appeal. The Dept. of Ed. has not filed a response to any of these motions.

         A. Requests to Strike

         Appellant has filed two documents each entitled “Motion to Strike Request to Close Case.”[3] (ECF Nos. 26; 27.) In these filings, Appellant states that she “wishes to strike Docket # 25 Request to Close Case.” (ECF Nos. 26; 27.) In both filings, Appellant also expresses that she “was a bit presumptuous in asking to close this case.” (ECF Nos. 26; 27.) Appellant thus appears to attempt to make clear that she seeks to withdraw the request made in ECF No. 25 to close her case with the practical effect of leaving this appeal intact. The Court will therefore construe these two Motions to Strike Request to Close Case, (ECF Nos. 26; 27), as requests to allow Appellant to withdraw the Request to Close Case, (ECF No. 25). Because she has made duplicative requests for the same relief, the Court will allow the first of these requests to withdraw, (ECF No. 26), and the second request, (ECF No. 27), will be denied as moot. The Request to Close Case, (ECF No. 25), is thus withdrawn.

         Appellant has also filed a Motion to Strike, (ECF No. 28), which similarly appears to request that the Court allow her to withdraw previously filed documents. In this Motion to Strike, Appellant states: “Please strike the application to proceed In Forma Pauperis.” (Id.) Though this motion does not reference the docket number of the application, a review of the court file shows that Appellant is referencing ECF No. 8. Appellant further asserts: “Please strike Motion request for payments per filing fee. Docket number 22 and 23. The filing fee has been paid to the Bankruptcy Court . . . therefore these Motions are moot.” (Id.) Appellant thus appears to request that the Court permit her to “strike” the Motion for Leave to Proceed In Forma Pauperis, (ECF No. 8); the Motion to Pay Filing Fee in Installments, (ECF No. 22); and the Amended Motion to Make Payments, (ECF No. 23). The Court will construe these requests to “strike” as requests to allow Appellant to withdraw these motions, and her requests, (ECF No. 28), will be allowed. The Court will thus consider the following motions withdrawn: Motion for Leave to Proceed In Forma Pauperis, (ECF No. 8); Motion to Pay Filing Fee in Installments, (ECF No. 22); and Amended Motion to Make Payments, (ECF No. 23).

         B. Remaining Motions

         Next, the Court will consider the three remaining, unaddressed motions filed by Appellant in this Court. These motions include the following: (a) Motion per Rule 24(c), (ECF No. 9); (b) Motion Per 28 U.S.C. § 753(f), (ECF No. 11); and (c) Motion to Supplement the Appellate Record, (ECF No. 19).

         1. Motion Per Rule 24(c)

         In her Motion Per Rule 24(c), Appellant states: “A party allowed to proceed on appeal in forma pauperis may request that the appeal be heard on the original record without reproducing any part. I request that this appeal be heard on the original record.”[4] (ECF No. 9.) Appellant appears to bring this motion pursuant to Rule 24(c) of the Federal Rules of Appellate Procedure. See Fed. R. App. P. 24(c) (“A party allowed to proceed on appeal in forma pauperis may request that the appeal be heard on the original record without reproducing any part.”). The Federal Rules of Appellate Procedure, however, do not apply because this case is not presently before a court of appeals. See Fed. R. App. P. 1(a)(1) (“These rules govern procedure in the United States courts of appeals.”). This motion is therefore denied.

         2. Motion Per 28 U.S.C. § 753(f)

         In the Motion Per 28 U.S.C. § 753(f), Appellant states: “Pursuant to 28 U.S.C. § 753(f) I ask for the fees of the transcript from 10/24/2016 and 12/13/2017 are paid.” (ECF No. 11.) Appellant further conveys: “I filed this Motion timely in bankruptcy court prior to the case being transmitted to district court. I am filing with district court because I believe that is proper procedure. If any Motion is considered moot please disregard and strike.” (Id.) 28 U.S.C. § 753(f) provides in part: “Each reporter may charge and collect fees for transcripts requested by the parties.” 28 U.S.C. § 753(f). The Local Bankruptcy Rules indicate that any fees required for the transmission of a bankruptcy proceeding's transcript must be paid in the Bankruptcy Court:

If the record designated by any party includes a transcript of any hearing or trial, or a part thereof, that party shall immediately after filing the designation, deliver to the court reporter and file with the clerk of the Bankruptcy Court a written request for the transcript and make satisfactory arrangements for the payment of its cost.

M.D. N.C. LBR 5011-1(c). Thus, the Bankruptcy Court is the proper forum to consider Appellant's request, and this Court will deny the Motion Per 28 U.S.C. § 753(f), (ECF No. 11).

         3. Motion to Supplement the Appellate Record

         In her Motion to Supplement the Appellate Record, Appellant states: “Appellant respectfully asks this court to grant this Motion allowing appellant to enter EXHIBIT A on the record. Either the appellate court granting the order to supplement the record or remanding back to the Bankruptcy court to add EXHIBIT A to the record.” (ECF No. 19 at 1.) The document that Appellant seeks to introduce on appeal, containing additional e-mails purportedly between her and Mr. Strup, does not appear to have been part of the record in the Bankruptcy Court. (See Id. at 2 (“This email was not available to Ms. Stephenson until she found it a few weeks ago . . . Ms. Stephenson finally found this email approximately a week after she filed this appeal.”).) Federal Rule of Bankruptcy Procedure 8009 sets forth the materials that comprise the record on appeal from a Bankruptcy Court. Fed.R.Bankr.P. 8009. This rule “does not permit items to be added to the record on appeal to the district court if they were not part of the record before the bankruptcy court.” In re Thomas, No. 3:06cv00037, 2008 WL 112042, at *3 (W.D. Va. Jan. 9, 2008) (quoting In re CPDC, Inc., 337 F.3d 436, 443 (5th Cir. 2003)). For this reason, the Motion to Supplement the Appellate Record, (ECF No. 19), is denied.

         III. APPELLANT'S CONTENTIONS ON APPEAL ON THE MERITS

         The Court will now turn to the merits of Ms. Stephenson's appeal. Of the three orders entered by the Bankruptcy Court on December 13, 2016, Appellant challenges two: (1) the order denying her Motion for Injunction; and (2) the order granting the Dept. of Ed.'s Motion to Dismiss. (See ECF No. 15.) This Court affirms these orders of the Bankruptcy Court.

         A. Standard of Review

         A district court hearing an appeal from a bankruptcy court reviews factual findings for clear error and conclusions of law de novo. In re Merry-Go-Round Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2005); Ivey v. First Citizens Bank & Trust Co., 539 B.R. 77, 79 (M.D. N.C. 2015), aff'd sub nom. In re Whitley, 848 F.3d 205 (4th Cir. 2017). Mixed questions of law and fact are also subject to de novo review. In re Litton, 330 F.3d 636, 642 (4th Cir. 2003). A factual finding is “‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. Bessemer City, 470 U.S. 564, 573 (1985) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). Thus, the clear error standard requires a reviewing court to affirm a bankruptcy court's findings of fact so long as such findings are “plausible in light of the record viewed in its entirety, even if the reviewing court might have reached a different conclusion.” Robinson v. ...


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