Evan Crocker v. Navient Solutions, L.L.C.
Citation941 F.3d 206
Date Filed2019-10-21
Docket18-20254
Cited28 times
StatusPublished
Full Opinion (html_with_citations)
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 21, 2019
No. 18-20254
Lyle W. Cayce
Clerk
In re: Evan Brian Crocker, also known as Haas Legal, P.L.L.C.
Debtor
EVAN BRIAN CROCKER, on behalf of themselves and all those similarly
situated, also known as Haas Legal, P.L.L.C, formerly known as Evan Brian
Haas: MICHAEL SHAHBAZI, on behalf of themselves and all those similarly
situated, formerly known as Montana Shahbazi; WENDY L. LANDES, on
behalf of themselves and all those similarly situated; RAEGENA SEITZ-
MOULDS, on behalf of themselves and all those similarly situated,
Appellees
v.
NAVIENT SOLUTIONS, L.L.C.; NAVIENT CREDIT FINANCE
CORPORATION,
Appellants
Appeal from the United States District Court
for the Southern District of Texas
Before STEWART, SOUTHWICK and ENGELHARDT, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
An individual in Texas and another in Virginia separately obtained loans
from the same lender to pay education expenses. Both later filed for
bankruptcy in their respective states. In time, orders of discharge were
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entered. One of the discharged debtors then filed suit against the lender in the
same Bankruptcy Court of the Southern District of Texas that had ordered the
discharge of his debts. Later, the Virginia debtor joined the Texas suit. The
suit seeks to certify a nationwide class of those who claim their education-loan
debts were validly discharged but from whom this lender continues to demand
payment. A declaratory judgment, injunction, and damages are sought.
The lender filed a motion for summary judgment, arguing bankruptcy
courts cannot enforce the injunctions arising from discharge orders entered by
courts in other judicial districts, and these private-education-loan debts are
statutorily excepted from discharge. The bankruptcy court held the opposite
as to both, then certified the two holdings for interlocutory appeal.
We conclude that a bankruptcy court does not have authority to enforce
the discharge injunctions entered in other districts. On the other hand, we
agree with the bankruptcy court that the particular education loans involved
here are not statutorily excepted from discharge. The cause is REMANDED.
FACTUAL AND PROCEDURAL HISTORY
In 2009, Evan Crocker 1 obtained a $15,000 loan to fund his bar
examination preparation. The lender was a subsidiary of SLM Corporation,
d/b/a Sallie Mae, which is a for-profit, public corporation whose loans are not
part of any governmental loan program. The loan documents informed Crocker
that his repayment obligation âmay not be dischargeable in bankruptcy.â
Crockerâs loan was transferred to SLM Education Credit Finance Corporation,
which subsequently became Navient Credit Finance Corporation. In the
complaint, Navient Solutions is said to be the entity pursuing collection. We
will not differentiate among Navient entities in our discussion.
1 Evan Brian Haas changed his name to Evan Brian Crocker in 2017. We use his
current name throughout this opinion.
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In 2015, Crocker filed for voluntary Chapter 7 bankruptcy in the United
States Bankruptcy Court for the Southern District of Texas. He scheduled his
bar-study loan claim as an âEducational . . . Private loanâ and did not dispute
the debt. In February 2016, the court granted him a discharge under 11 U.S.C.
§ 727, informed him that â[m]ost debts are covered by the discharge, but not
all,â and closed his case.
Michael Shahbazi has a similar story. In 2002, Shahbazi obtained an
$11,658.99 loan from Sallie Mae for tuition and expenses while he attended a
technical school. He was given notice that his loan was âan education loan that
must be repaid.â Exactly how Navient obtained its interest is unclear to us,
but it is servicing this loan.
In 2011, Shahbazi filed for voluntary Chapter 7 bankruptcy in the
United States Bankruptcy Court for the Eastern District of Virginia. He
scheduled his Sallie Mae loan as a âStudent Loanâ and did not dispute the debt.
In December 2011, the court granted him a discharge and closed his
bankruptcy proceeding. This discharge order specifically listed âDebts for most
student loansâ as not being discharged.
It is alleged that after both discharges, Navient had both of these
plaintiffs contacted frequently by telephone and email to demand repayment.
In August 2016, Crocker filed an adversary proceeding against Navient in the
Bankruptcy Court for the Southern District of Texas, the same court that had
granted him a discharge. He sought (1) a declaratory judgment that his private
education debt had been discharged; (2) entry of judgment holding Navient in
contempt for violating the injunction arising from his discharge; and (3) a
temporary injunction. The court entered an agreed preliminary injunction on
August 18, 2016, barring Navient from pursuing collection until further order.
Crocker, with Shahbazi as an additional plaintiff, filed an amended
complaint, seeking to certify a nationwide class of those who (1) obtained
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prepetition private education loans from Navient or related companies to cover
expenses at an institution not accredited under Title IV; (2) later filed for
bankruptcy and were issued discharge orders; (3) have never reaffirmed their
prepetition private education loan debt; and (4) are being induced to pay their
allegedly discharged private education loans. Damages were now also sought.
Navient moved for summary judgment on these claims, arguing that a
bankruptcy court has no jurisdiction to interpret and enforce discharge orders
entered by courts in other judicial districts and that the plaintiffsâ education
loans were nondischargeable. The bankruptcy court denied the motion in
March 2018. 2 It rejected that the general rule giving an issuing court sole
authority to enforce its own injunctions applied to the automatic injunction
created by statute when a bankruptcy court grants a discharge under 11 U.S.C.
§ 727. The court also determined that the kind of loans for educational purposes relevant here, which the parties refer to as âprivate loans,â were not within the ambit of the Bankruptcy Codeâs bar on the discharge of some student loans. See11 U.S.C. § 523
(a)(8).
In the same order, the bankruptcy court first authorized an interlocutory
appeal, then certified the order for direct appeal to this court, eschewing the
usual initial appellate review by a district court. A bankruptcy court may
certify a ruling for direct review by a circuit court of appeals when, among other
reasons, it âinvolves a question of law as to which there is no controlling
decisionâ by that circuit court or the Supreme Court, or because an appeal at
that stage in the proceedings âmay materially advance the progress of the
case.â 28 U.S.C. § 158(d)(2)(A)(i), (iii). If a bankruptcy court so certifies, the
2 Wendy L. Landes and Raegena Seitz-Moulds were included without objection as
additional putative class members in a Third Amended Complaint, filed after Navientâs
motion for summary judgment but before the bankruptcy court ruled. No party argues that
the issues before us are altered by their joinder. Accordingly, we do not separately discuss
the facts of the bankruptcies of the two last-added parties.
4
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circuit court of appeals then exercises its discretion. § 158(d)(2)(A). A motions
panel of this court granted the unopposed motion to authorize the appeal.
DISCUSSION
We review âgrants and denials of summary judgment de novo. Summary
judgment is appropriate when âthere is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.ââ Lyda
Swinterton Builders, Inc. v. Okla. Sur. Co., 903 F.3d 435, 444 (5th Cir. 2018)
(quoting FED. R. CIV. P. 56). Federal Rule of Civil Procedure 56 is incorporated
into the Federal Rules of Bankruptcy Procedure. FED. R. BANKR. P. 7056.
Navient has two principal contentions on appeal. The first is that the
bankruptcy court either has no jurisdiction to enforce the statutory injunctions
arising from a bankruptcy discharge that another bankruptcy court ordered,
or at least for prudential reasons may not do so. Second, Navient contends
that the plaintiffsâ education loans are within the category of loans that under
the Bankruptcy Code are nondischargeable.
There are no meaningful factual issues presented to us. Instead, we have
legal issues of statutory interpretation. We now turn to those.
I. Authority to enforce a Section 524 discharge order entered by a bankruptcy
court in another judicial district
In broad brush, these proceedings concern two closed Chapter 7
bankruptcies in which generic discharges, i.e., discharges not specifying the
discharged debts, were issued at completion. A discharge âoperates as an
injunctionâ against an extensive list of actions that a creditor might take to
collect on the discharged debt. 11 U.S.C. § 524(a)(2), (3). The discharge is a
âsubstantive right,â and that right is âoften enforced by a motion for contempt,
but [it is] also enforceable through a declaratory judgment action.â Natâl
Gypsum Co. v. NGC Settlement Tr. & Asbestos Claims Mgmt. Corp. (In re Natâl
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Gypsum Co.), 118 F.3d 1056, 1063 (5th Cir. 1997) (citations omitted). The
declaratory judgment was sought in National Gypsum by the opening of an
adversary proceeding in the bankruptcy court that had granted the debtorâs
discharge. Id. at 1060. Indeed, Federal Rule of Bankruptcy Procedure 7001(6)
states that an adversary proceeding is, among other things, âa proceeding to
determine the dischargeability of a debt.â
Thus, an available procedure under National Gypsum is a declaratory
judgment action. A violation of the declaratory judgment will lead to its own
remedies such as âdamages or an injunction.â United Teacher Assocs. Ins. Co.
v. Union Labor Life Ins. Co., 414 F.3d 558, 570(5th Cir. 2005); see also28 U.S.C. § 2202
. The issue for us is identifying the proper court or courts in
which such an action can be brought. May a bankruptcy court other than the
one that granted the discharge enforce the injunction?
The closest this circuit has come to answering the question is to hold, in
the class action context, that a bankruptcy judge in the Southern District of
Texas may exercise âjurisdiction over claims that arise in other cases
administered by other judgesâ in the same judicial district. Wilborn v. Wells
Fargo Bank, N.A. (In re Wilborn), 609 F.3d 748, 753 (5th Cir. 2010). The
Wilborn court only briefly discussed the issue of enforcing an injunction arising
from the discharge order of a different bankruptcy court in the same district.
In the present proceedings, the bankruptcy courtâs understanding of its
authority extended well beyond its home district. The question of a bankruptcy
judgeâs injunctive reach within its own district has not been answered.
The two plaintiff-debtors received general discharges in bankruptcy.
Central to the dispute is that Congress has excepted from discharge, among
other categories of debt, certain types of student-loan debt. 11 U.S.C. §
523(a)(8). We will deal with the issue of dischargeability in the second part of
our opinion and will wait to quote the relevant statute until then.
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We have already summarized that the bankruptcy court at this stage
answered only two questions. The first answer we review is the âyesâ the court
gave to the question of whether a bankruptcy court in a judicial district other
than the one in which the discharge was entered has authority to interpret the
discharge and enforce the injunction. The court rejected Navientâs argument
that the general rule should apply that the court issuing an injunction is the
only one that can enforce it through contempt proceedings. The bankruptcy
court first held that general rule was inapplicable because no discretion or
individual judgment is exercised in creating the injunction. 3 The form order
used for the discharges for the initial two plaintiffs here does not even mention
an injunction. The injunction instead arises from this statutory command: âA
discharge in a case under this title . . . operates as an injunction against the
commencement or continuation of an action.â § 524(a). Because there is âno
subjective thought process that requires deference nor is there any risk of
misinterpretation of a particular judgeâs reasoning,â the bankruptcy court
concluded that the general limitation on enforcement of injunctions only by the
issuing court was inapplicable. The court did not cite any case authority to
support its analysis. The basic point was that the bankruptcy statutes
themselves make clear that no purpose is served by requiring a return to the
issuing court to interpret a discharge injunction.
Navient, of course, disagrees that discharge injunctions should be
treated differently than others. A principal authority it cites is one of this
courtâs precedents dealing with non-bankruptcy injunctions. There, Chief
Judge Charles Clark explained in the context of a claim of securities fraud that
3 There is at least one aspect of the bankruptcy discharge that requires individual
judicial consideration. The applicable education loans are not discharged âunless excepting
such debt from discharge under this paragraph would impose an undue hardship on the
debtor and the debtorâs dependents.â § 523(a)(8). Different bankruptcy judges can look at
the same facts and reach contrary decisions.
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â[e]nforcement of an injunction through a contempt proceeding must occur in
the issuing jurisdiction because contempt is an affront to the court issuing the
order.â Waffenschmidt v. MacKay, 763 F.2d 711, 716(5th Cir. 1985). A bankruptcy court does continue to have jurisdiction to enforce its orders, and that jurisdiction remains even after the bankruptcy case is closed. See, e.g., Galaz v. Katona,841 F.3d 316, 322
(5th Cir. 2016). The issue for us arises
because Galaz and other Fifth Circuit precedents do not hold that authority is
exclusive in the original court. Navient also argues that regardless of
jurisdiction, there are prudential reasons supporting its argument.
Navientâs appellate brief recounts the background for an injunction that
arises from a discharge, drawing from a scholarly article. Charles Jordan
Tabb, The Historical Evolution of the Bankruptcy Discharge, 65 AM. BANKR. L.
J. 325 (1991). We look at parts of the background in order to understand how
a bankruptcy discharge was enforced before a statute was enacted that
imposed an injunction. Importantly, we also consider whether another part of
the same statutory enactment arguably created a right of enforcement of the
injunction by âforeignâ courts. If so, then its repeal in 1978 has some meaning.
There was no statutory injunction arising from a discharge until 1970.
Id. at 326 n.3. A House Report on 1970 bankruptcy legislation explained
problems with prior law, including the harassment of debtors:
The present discharge provisions of the Bankruptcy Act authorize
the bankruptcy court to determine the right to a discharge, but do
not give the bankruptcy court express jurisdiction to determine the
effect of the discharge. . . . Under present practice, if a bankrupt is
sued in State court on a discharged debt, the State court may
determine whether the debt in question was or was not discharged.
In other words, the jurisdiction over the granting and the enforcing
of a discharge is divided, with the result that debtors are
frequently harassed and coerced by creditors into paying debts
that may have been discharged.
H.R. REP. NO. 91-1502, at 3 (1970).
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The 1970 legislation was adopted and provided for an injunction:
f. An order of discharge shallâ
(1) declare that any judgment theretofore or thereafter obtained in
any other court is null and void . . . ; and
(2) enjoin all creditors whose debts are discharged from thereafter
instituting or continuing any action or employing any process to
collect such debts as personal liabilities of the bankrupt.
Act of Oct. 29, 1970, Pub. L. No. 91-467, § 3,84 Stat. 990
, 991 (amending Section 14 of the 1898 Bankruptcy Code, codified as11 U.S.C. § 32
(f)).
The statutory detailing of the injunction that results from a discharge
has been revised, but the meaning for our purposes is the same: the discharge
âoperates as an injunction against the commencement or continuation of an
actionâ to collect a relevant debt. 11 U.S.C. § 524(a)(2).
Nothing in the statute creating an injunction explains whether this form
of injunction could be enforced only by the bankruptcy court in the issuing
district. Another 1970 provision, though, which appeared immediately after
the injunction section, did specifically refer to enforcement in other courts. It
allowed the order of discharge to be registered in another district and to be
âenforced in like mannerâ in the new district as in the issuing district:
g. An order of discharge which has become final may be registered
in any other district by filing therein a certified copy of such order
and when so registered shall have the same effect as an order of
the bankruptcy court of the district where registered and may be
enforced in like manner.
§ 3, 84 Stat. 990, 991 (codified as11 U.S.C. § 32
(g)). 4 Bankruptcy Rule 404(g)
used almost this exact language. 11 U.S.C. app. at 283 (Supp. III 1974).
4An explanation for what those promoting the 1970 legislation were at least trying to
do was given by the National Conference of Referees in Bankruptcy:
When a bankrupt has moved out of the district where he obtained his
discharge in bankruptcy and is sued by a creditor on a discharged debt in the
state to which he moved, the bankrupt should be able to enforce the discharge
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The 1970 subsection on registration was repealed with adoption of the
Bankruptcy Code of 1978. 11 U.S.C. Tbl. I (showing that former Section 32(g)
was repealed). Further, the Bankruptcy Rule that implemented Section 32(g)
was revised after the 1978 Code was adopted by deleting âmay be enforced in
like manner.â FED. R. BANKR. P. 4004(f). Enacted revisions in the wording of
statutes are part of âstatutory history,â not âthe sort of unenacted legislative
history that often is neither truly legislative (having failed to survive
bicameralism and presentment) nor truly historical (consisting of advocacy
aimed at winning in future litigation what couldnât be won in past statutes).â
BNSF Ry. Co. v. Loos, 139 S. Ct. 893, 906 (2019) (Gorsuch, J., dissenting).
When Congress makes a significant change in language when it amends an
existing statute, it âpresumptively connotes a change in meaning.â ANTONIN
SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL
TEXTS 256 (2012). Congressâs decision to eliminate language that seemed to
allow enforcement of the discharge injunction in a new district 5 gives weight
to the argument that after the 1978 Bankruptcy Code was adopted,
enforcement in âlike mannerâ in a different district was prohibited.
We now turn to the law that exists today. Registering a judgment in a
new court is not a creature primarily of bankruptcy law. Some quite learned
professors described the adoption of a general statutory provision for
registration in 1948, after an earlier Civil Rules version was rejected as
and its injunctive provisions through the district court where he is currently
residing. Section 14g [11 U.S.C. section 32(g)] is meant to permit the bankrupt
access to his local United States court by registering therein a certified copy of
the order granting the discharge.
H.R. REP. NO. 91-1502, at 11.
5 Learned commentators concluded that Section 32(g) authorized enforcement of a
discharge injunction in a new district. One wrote that with âthe 1970 Amendments to the
1898 Act, Congress developed the portable and registerable discharge injunction.â Robert P.
Wasson, Jr., Remedying Violations of the Discharge Injunction Under Bankruptcy Code
524âŠ, 20 BANKR. DEV. J. 77, 88 (2003).
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arguably being beyond the rulemaking power of the Supreme Court. 11
CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & MARK KAY KANE, FEDERAL
PRACTICE AND PROCEDURE § 2787 (2012). The current statute states:
A judgment in an action for the recovery of money or
property entered in any court of appeals, district court, bankruptcy
court, or in the Court of International Trade may be registered by
filing a certified copy of the judgment in any other district or, with
respect to the Court of International Trade, in any judicial district,
when the judgment has become final by appeal or expiration of the
time for appeal or when ordered by the court that entered the
judgment for good cause shown. Such a judgment entered in favor
of the United States may be so registered any time after judgment
is entered. A judgment so registered shall have the same effect as
a judgment of the district court of the district where registered and
may be enforced in like manner.
28 U.S.C. § 1963. Bankruptcy courts were added to the statute in 1996. Federal Courts Improvement Act of 1996,Pub. L. No. 104-317, § 203
,110 Stat. 3847
, 3849.
Section 1963 permits the clearing of jurisdictional hurdles when the
prior judgment was entered in a suit in which federal question was the basis
for jurisdiction. The hurdle arises because âan action solely to enforce the
judgment would lack that federal question jurisdiction and therefore could not
be maintained in federal courtâ absent some other jurisdictional basis. JAMES
WILLIAM MOORE, ET AL., MOOREâS FEDERAL PRACTICE ¶ 130.33 (explaining that
âa suit on a judgment does not involve a federal question, however important
federal questions may have been to the resolution of the original controversy,â
and citing Stiller v. Hardman, 324 F.2d 626, 628 (2d Cir. 1963)). 6
6 An earlier version of MOOREâS has, since the adoption of Bankruptcy Rule 404(g) and
then continuing with current Rule 4004(f), been cited by the Federal Rules Advisory
Committee to explain each Rule. See Rule 404(g), Adv. Comm. Notes (1976); Rule 4004(f),
Adv. Comm. Notes (1983), both citing JAMES WILLIAM MOORE ET AL., MOOREâS FEDERAL
PRACTICE ¶ 1.04[2] (2d ed. 1967). We could not locate any archival record of the 1967 treatise
section, but some if not all of that section was quoted in a district court opinion. See Dichter
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The 1970 Bankruptcy Code amendment to permit registration was
labeled âan adaptation of 28 U.S.C. section 1963,â as it clearly was. H.R. REP.
NO. 91-1502, at 11. One significant difference, though, is that Section 1963 is
limited to judgments that order the recovery of property or money, which
orders discharging debts would not be. As importantly, Section 1963 âdoes not
permit enforcement elsewhere of a decree for injunctive relief.â 11 WRIGHT,
MILLER, & KANE, FEDERAL PRACTICE § 2787.
In conclusion, the 1970 registration statute was by far the most direct
support for allowing one bankruptcy court to enforce anotherâs discharge
injunction. That statute, though, is no more, which supports that Congress
abolished such enforcement. Current Bankruptcy Rule 4004(f) guides
registration but does not authorize âlike mannerâ enforcement as did its
predecessor. The foregoing convinces us that registration does not alter the
usual procedures for enforcing an injunction.
We return, then, to the bankruptcy courtâs first basis for its ruling, which
relied on, of all things, logic alone to support that because a discharge
injunction needs no discretionary interpretation, there should not be any
obligation to return to the issuing court for its enforcement. With respect for
so venerable a basis for argument, i.e., straightforward logical reasoning, we
conclude more is needed here to overcome the contrary authority.
v. Disco Corp., 606 F. Supp. 721, 725 (S.D. Ohio 1984). The following excerpt likely is at least
some of the reason for the reference to MOOREâS in the Advisory Committee Notes:
It may be suggested that by authorizing the judgment-creditor to
enforce his judgment through registration in other districts, as an alternative
to an action on the judgment, substantive rights are conferred upon him, venue
requirements are altered, and the jurisdiction of the district court is enlarged.
But in purpose and effect the registration of judgments in other districts is only
a more convenient and effective method of enforcing them according to their
original terms.
Id. (quoting MOOREâS FEDERAL PRACTICE ¶ 1.04[2] at 223 (1967)).
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The bankruptcy court gave as a second basis for its decision, not
completely distinguishable from its first, that when enforcing a discharge, a
court is simply enforcing a statute. Holding a creditor in contempt âgoes to the
very core of the bankruptcy process itself.â The court relied on a scholarly
opinion by Bankruptcy Judge Isgur analyzing the fundamentals in Cano v.
GMAC Mortg. Corp. (In re Cano), 410 B.R. 506(Bankr. S.D. Tex. 2009). The bankruptcy court here also cited both28 U.S.C. § 157
, which sets out many of the procedures for bankruptcy courts and the authority of the district courts over them, and28 U.S.C. § 1334
, which grants to district courts âoriginal and
exclusive jurisdiction of all cases underâ the Bankruptcy Code, with some
exceptions.
We need not analyze today the complexities of Section 157 addressed by
Cano, including the differences among cases and proceedings âarising under
title 11 or arising in or related to a case under title 11.ââ § 157(a) (emphasis
added). We limit our analysis because our question is limited: may a different
bankruptcy court than the one that issued the discharge that caused the
injunction to arise, enforce that injunction regardless of whether the
impediment is jurisdiction, venue, prudential considerations, or something
else? The Cano court identified but did not resolve that issue: â[r]equiring
Plaintiffs to seek civil contempt damages from their âhome courtâ may be the
more appropriate remedy and the only remedy authorized.â Cano, 410 B.R. at
543. The Cano opinion did not need to resolve the issue before us.
We next examine precedents concerning contempt authority. âCivil
contempt is the normal sanction for violations of the discharge injunction.â
RICHARD LEVIN & HENRY J. SOMMER, COLLIER ON BANKRUPTCY ¶ 524.02(c)
(2018). We have used absolute language, though not in a bankruptcy context,
that â[i]t is elementary that the court against which a contempt is committed
has exclusive jurisdiction to punish for such contempt.â United States v.
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Barnett, 330 F.2d 369, 385(5th Cir. 1963) (citing In re Debs,158 U.S. 564
, 594â
95 (1895)).
Other circuits have insisted on a return to the bankruptcy court whose
discharge order created the injunction. The Eleventh Circuit has held that
only the bankruptcy court issuing the discharge has jurisdiction to enforce the
injunction through contempt. Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958,
961(11th Cir. 2012). 7 The Seventh Circuit has said the âresponsibility for enforcing the discharge order [is] in the court that issued it.â Cox v. Zale Delaware, Inc.,239 F.3d 910
, 916â17 (7th Cir. 2001) (citing FED. R. BANKR. P. 9020). The cited Bankruptcy Rule 9020 simply says Rule 9014 on âContested Mattersâ is what âgoverns a motion for an order of contempt.â The Ninth Circuit has held that both Section 524 and the Bankruptcy Rules require a contempt action in the bankruptcy court that issued the discharge order. See Barrientos v. Wells Fargo Bank, N.A.,633 F.3d 1186, 1189
(9th Cir. 2011).
The Second Circuit has limited enforcement of discharge injunctions
through contempt proceedings to the originating court: âthe bankruptcy court
retains a unique expertise in interpreting its own injunctions and determining
when they have been violated.â Anderson v. Credit One Bank, N.A., (In re
Anderson), 884 F.3d 382, 390â91 (2d Cir. 2018). Without labeling the reason
as one of jurisdiction, the court explained:
The power to enforce an injunction is complementary to the
duty to obey the injunction, which the Supreme Court has
described as a duty borne out of ârespect for judicial process.â GTE
Sylvania, Inc. v. Consumers Union of U.S., Inc., 445 U.S. 375, 387,
100 S.Ct. 1194,63 L.Ed.2d 467
(1980) (internal quotation marks
omitted). That same respect for judicial process requires us to hold
7 Without intimating that it has derivative precedential effect in this circuit, we note
as a matter of collegial respect that the opinion is from the circuit with which we until 1981
were joined, and authoring Judge Tjoflatâs notable judicial service began on the Fifth Circuit.
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that the bankruptcy court alone has the power to enforce the
discharge injunction in Section 524.
Id. at 391.
Though the Eleventh Circuit in Alderwoods concluded that the bar to
seeking enforcement in a foreign court was jurisdictional, we pretermit so
foundational a holding. We start with the reality that a violation of the
injunction is an affront to the issuing court. Yes, the injunction arises from
statute and not from judicial discretion. Indeed, as here, the injunction may
not even be mentioned in the courtâs order. Nonetheless, a central
consideration for us is that there is not a sufficiently clear path for deviating
from the usual rule. Instead, what is clear are various obstacles we have
identified to taking that path. We now discuss a final one.
A recent Supreme Court decision placed the civil contempt that results
from violating a bankruptcy discharge injunction under the general principles
for contempt. It richly phrased its analysis: âWhen a statutory term is
âobviously transplanted from another legal source,â it âbrings the old soil with
it.ââ Taggart v. Lorenzen, 139 S. Ct. 1795, 1801(2019) (quoting Hall v. Hall,138 S. Ct. 1118, 1128
(2018)). Rooted in the soil are âthe traditional standards in equity practice for determining when a party may be held in civil contempt for violating an injunction.âId.
We do not see a holding in Taggart that all the rules for civil contempt
were transplanted into bankruptcy, but we do see an imperative that any
deviation from those rules have a substantial justification. Beginning in 1970,
there was a statutory argument from Section 32(g) of the 1898 Bankruptcy
Code that there was no need to return to the original bankruptcy court, but
that argument was repealed in 1978 along with the section. The remainder of
what has been argued to us does not suffice to show that we should allow an
exception from the usual enforcement rules for injunctions. Though Taggart
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did not lock the gate to any deviations from traditional contempt rules in
bankruptcy, very little opportunity to open it was provided.
We adopt the language of the Second Circuit that returning to the
issuing bankruptcy court to enforce an injunction is required at least in order
to uphold ârespect for judicial process.â Anderson, 884 F.3d at 391. The
bankruptcy court erred in holding that it could address contempt for violations
of injunctions arising from discharges by bankruptcy courts in other districts.
Therefore, as to Shahbazi and at least those debtors whose discharges were
entered by courts in other districts, the bankruptcy court in these proceedings
has no authority to enforce the resulting injunction.
Though the bankruptcy court did not reach the issue of certification of a
class, we point out that because of the limitation on enforcement we have just
identified, and indeed because we are aware of no prior certification of a class
that includes debtors whose discharges were entered by bankruptcy courts in
other districts, certifying such a class would be highly dubious. We also leave
for the court on remand the separate issue, if it becomes relevant, of whether
that court has authority to enforce the injunctions arising from discharges
entered by any bankruptcy court in the same judicial district.
II. Dischargeability of private student loans
The bankruptcy court also answered the question of whether the loans
that the plaintiffs received were subject to the statutory prohibition of
discharge of certain education loans. The courtâs answer to that question was
âno.â Though the ruling will impact only the discharges of loans by that court
or perhaps in that judicial district, it remains an answer we must review.
Congress has excepted certain categories of debt from discharge,
including much student-loan debt. All exceptions to discharge are to be
interpreted narrowly in favor of the debtor to preserve the âfresh startâ the
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Bankruptcy Code provides for debtors. Hickman v. Texas (In re Hickman), 260
F.3d 400, 404â05 (5th Cir. 2001). 8 The current articulation of the exception is
that âthe discharge under section 727 [and other sections] does not discharge
an individual debtor from any debt ââ
...
(8) unless excepting such debt from discharge under this
paragraph would impose an undue hardship on the debtor and the
debtorâs dependents, for--
(A)(i) an educational benefit overpayment or loan made,
insured or guaranteed by a governmental unit, or made under
any program funded in whole or in part by a governmental unit
or nonprofit institution; or
(ii) an obligation to repay funds received as an educational
benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education
loan, as defined in section 221(d)(1) of the Internal Revenue
Code of 1986, incurred by a debtor who is an individual.
11 U.S.C. § 523(a). In summary, Subsection (A)(i) applies to loans, etc. in which a governmental unit or a nonprofit institution had a defined role. Subsection (B) requires a journey through multiple statutes to understand its meaning. A partial explanation is that the referenced Internal Revenue Code section defines a âqualified education loanâ as, among other things, âany indebtedness incurred by the taxpayer solely to pay qualified higher education expenses,â along with other conditions.26 U.S.C. § 221
(d). The qualified expenses are âthe cost of attendanceâ at the eligible education institution, reduced by scholarships and other payments.Id.
An eligible institution is defined, with
exceptions, in Internal Revenue Code Section 25A(f)(2), as one âwhich is
8 We quote what might seem to be authority that the opposite presumption applies to
education loans. Though referring to a partyâs argument, the Supreme Court could be seen
as agreeing that Congress made âstudent loan debt presumptively nondischargeable.â Tenn.
Student Assistance Corp. v. Hood, 541 U.S. 440, 450(2004). In context, though, the Court is referring only to education loans from states.Id.
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eligible to participate in a program under Title IVâ of the Higher Education
Act. There is no claim that Subsection (B) applies.
Subsection (A)(ii) is Navientâs target, which deals clearly with
scholarships and stipends. Less clear, but definable, is what else it deals with.
We restate the statutory language: there must be âan obligation to repay funds
received as an educational benefit, scholarship, or stipend.â § 523(a)(8)(A)(ii).
Navient argues this language plainly includes private student loans, and that
Fifth Circuit precedent supports this argument. Navient also contends that
lower court cases that disagree had misapplied canons of statutory
interpretation to reach their conclusions. Finally, Section 523(a)(8)âs
legislative history supports including private student loans.
The plaintiffs, though, argue that Subsection (8)(A)(ii)âs text and the
Bankruptcy Codeâs purpose to give debtors a fresh start require reading the
subsection narrowly. Further, reading the subsection through the canons of
statutory interpretation affirms this narrow reading, as do the draftersâ
language and grammar choices. Finally, the legislative history does not show
Congress intended to exempt private education loans from discharge. 9
The bankruptcy court here determined Subsection (8)(A)(ii) was
unambiguous. The court considered the absence of the word âloanâ and the
inclusion of the concepts of stipends and scholarships to narrow the meaning
of receiving an educational benefit to include only such funding as âtuition
advances by an employer that must be repaid if the employee leaves her
employment within a certain period of time.â The court also focused on the
Congressional use of the word âasâ to precede âeducational benefit.â To the
9 Navient does not argue there is relevance to the fact that both Crocker and Shahbazi
classified the relevant debts as âeducationalâ on Schedule F of their bankruptcy filings.
Importantly, we do not see on the forms in the record or in the instructions for completing
such forms any guidance on labeling a debt as âeducationalâ or a statement that it should not
be so labeled unless it is nondischargeable under Section 523(a)(8).
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court, that meant that what was received was the educational benefit, akin to
scholarships and stipends, not that what was received could be used to pay for
educational benefits. These private education loans were thus dischargeable.
There are some general interpretive rules to apply. Discharge exceptions
are to be construed ânarrowlyâ and âin favor of the debtorâ in order to further
the Bankruptcy Codeâs purpose of giving debtorâs a âfresh start.â Miller v. J.D.
Abrams Inc. (In re Miller), 156 F.3d 598, 602(5th Cir. 1998). Exceptions to discharge âshould be confined to those plainly expressed.â Kawaauhau v. Geiger,523 U.S. 57, 62
(1998). Regardless, we may not ignore plain textual
language, and as we discuss, Congressional action generally has enlarged the
category of education loans that are not dischargeable.
We start with text and context, then discuss some of the prior statutory
language that the current statute has replaced or supplemented. An initial
read of Subsection (A)(ii) does not suggest that Congress used the phrase
âobligation to repay funds received as an educational benefitâ in order to
include private student loans. The immediately preceding Subsection (A)(i)
exempts âeducational . . . loan[s].â Subsection (B) exempts âeducation loan[s].â
Subsection (A)(ii) makes no reference to loans, its focus seemingly elsewhere.
Navient argues that an âobligation to repay funds receivedâ is expansive
and includes loans, citing to other statutes and federal regulations that use
âobligation to repayâ in reference to loans. The fact that an obligation to repay
is one way to refer to loans is correct, but we are trying to discern the meaning
in the context of a particular enactment. If ââCongress includes particular
language in one section of a statute but omits it in anotherâ â let alone in the
very next provisionâ â courts presume âCongress intended a different
meaning.â Loughrin v. United States, 573 U.S. 351, 358 (2014) (quoting Russello v. United States,464 U.S. 16, 23
(1983)). Congress sandwiched
Subsection (A)(ii), which does not mention loans at least by name, between two
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subsections that explicitly do. That structure is at least a start to saying
educational benefits are not loans.
We now look more closely at Subsection (A)(ii)âs text. The subsection
applies to the âobligation to repayâ funds received as âan educational benefit,â
âscholarship,â or âstipend.â The prefatory language, i.e, that there is âan
obligation to repay,â appears only in this subsection. The phrase is superfluous
when referring to loans, but it is quite relevant to payments with contingent
obligations. Next, a stipend is a âfixed and regular payment, such as a salary.â
AMERICAN HERITAGE COLLEGE DICTIONARY, 1220 (3d ed. 1997). A scholarship
is a âgrant of financial aid to a student.â Id.The key phrase, âeducational benefit,â is the broadest. We consider unnecessary a dictionary definition of âeducational,â but âbenefitâ needs one. Because the term is so broad, the limiting principle of noscitur a sociis potentially should be used â over Navientâs objection, though â to understand the phrase in context. In a recent application, the Supreme Court said there are times we should âlook to noscitur a sociis, the well-worn Latin phrase that tells us that statutory words are often known by the company they keep.â Lagos v. United States,138 S. Ct. 1684
,
1688â89 (2018). The âcommon qualityâ in a list that is the focus of the noscitur
a sociis inquiry âshould be its most general quality â the least common
denominator, so to speak â relevant to the context.â SCALIA & GARNER,
READING LAW, 196.
One general quality in the relevant phrase is that stipends and
scholarships âsignify granting, not borrowing.â McDaniel v. Navient Sols., LLC
(In re McDaniel), 590 B.R. 537, 549 (Bankr. D. Colo. 2018). Those grants may
be conditional, but satisfaction of the conditions leaves them as grants. The
common quality is that scholarships and stipends may not need to be repaid.
Navient argues that noscitur a sociis should not apply because the
statutory list is too brief. The Supreme Court recently used the doctrine in a
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four-item list: âlost income and necessary child care, transportation, and other
expenses.â Lagos, 138 S. Ct. at 1688(quoting 18 U.S.C. § 3663A(b)(4)); but see Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson,559 U.S. 280, 288
(2010) (âA list of three items . . . is too short to be particularly illuminating.â). Lagos used three specific items to give meaning to a catchall.Id.
at 1688â89. Authors Scalia and Garner did use a three-item list to explain proper use of this doctrine. SCALIA & GARNER, READING LAW, at 196â97. The example was a state statute criminalizing the carrying of a firearm in a motor vehicle unless, among other conditions, it was âcontained in a closed and fastened case, gunbox, or securely tied package.âId.
(discussing State v. Taylor,594 N.W. 2d 533
, 535â36 (Minn. Ct. App. 1999)). The Minnesota court held that a purse was not a proper âcaseâ â despite that it was âclosed and fastenedâ â because the commonality of the other two items was that they were containers that kept a firearm from being readily accessible.Id.
The brevity of the list in the text we must review does not compel
ignoring the relevant termâs neighbors.
We offer one definition of âbenefit,â namely, a âpayment made or an
entitlement available in accordance with a wage agreement, an insurance
policy, or a public assistance program.â AMERICAN HERITAGE COLLEGE
DICTIONARY, at 127. Whatever definition is used, we begin our analysis with
a tentative acceptance that the benefit generally does not need to be repaid.
Our analysis continues, though.
Navient claims that a different definition of âbenefitâ is best: âan
advantage or profit gained from something.â OXFORD ENGLISH DICTIONARY (3d
ed. 1997). That definition is limitless, invoking the very reason for the noscitur
a sociis doctrine. Navientâs offering does not capture the essentials of âstipendâ
and âscholarship,â which identify narrow categories of benefits.
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Indeed, we see a lack of common sense in interpreting the list as
containing two specific and quite limited kinds of payments that, among other
things, do not usually require repayment, and a third item preceding the two
that was meant to be a catchall for loans and most everything else financially
benefitting a student. Such an understanding of what Congress did with those
words creates a superfluity of words in the other parts of Section 523(a)(8). If
an âobligation to repay funds including educational benefitsâ includes repaying
private student loans, that requires defining âeducational benefitâ to include
loans, which then means it also covers the public loans that are the focus of
Subsection 523(a)(8)(A)(i). See In re Essangui, 573 B.R. 614, 624(Bankr. D. Md. 2017). Under Navientâs interpretation, government loans covered by Subsection (A)(i) and qualified education loans covered by Subsection (B) would also be covered by Subsection (A)(ii), rendering the other subsections serving little purpose. Courts have a âduty to give effect, if possible, to every clause and word of a statute.â Bennett v. Spear,520 U.S. 154, 173
(1997). Concomitantly, âthe canon against surplusage is strongest when an interpretation would render superfluous another part of the same statutory scheme.â Marx v. Gen. Rev. Corp.,568 U.S. 371, 386
(2013).
Navient calls this analysis âhyperbolic,â reframing the surplusage as
simply âsome overlapâ between the subsections. Navient, though, fails to
explain how the other subsections serve much purpose if the broad reading of
Subsection (A)(ii) applies. Navient argues that Subsection (A)(ii)âs receipt of
funds requirement leaves Subsection (B) with work to do. For example, a loan
obtained by a grandfather for his grandson to attend a Title IV college would
not be covered by Subsection (A)(ii) because the grandfather did not receive the
benefit, but it was covered by Subsection (B). See Wills v. Sallie Mae Servicing
(In re Wills), No. 08-80404-FJO-07, 2010 WL 1688221, at *7 (S.D. Ind. Apr. 23,
2010). Maybe so, but because every exemption in these provisions is a type of
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fund used by recipients to advance their education, Congress could have just
exempted from discharge any âobligation to repay funds received as an
educational benefitâ and left it at that. The redundancies created by Navientâs
interpretation of Subsection (A)(ii) create more than a modest overlap and can
be avoided by adopting the narrower interpretation of that subsection.
Navient seeks to block any interpretive effort by this court by arguing
that one of our precedents makes the sole issue for us âwhether Plaintiffsâ loans
expressed an educational purpose at the time of application, origination, and
disbursement.â See Murphy v. Penn. Higher Educ. Assistance Agency (In re
Murphy), 282 F.3d 868, 870â72 (5th Cir. 2002). 10 Pretty bold analysis of Murphy, and errant in our view. Murphy applied the 1990 language applicable to loans insured by the federal government.Id. at 870
. The question was whether such a federally-insured loan was âeducationalâ even as to proceeds spent on living expenses.Id. at 870, 873
. The court held that the educational purpose of such a loan was defined by its purpose upon disbursement by the lender and not by the way it was spent by the borrower.Id. at 873
. Murphy
did not analyze our issue, and we must conduct our own evaluation.
An argument by plaintiffs about grammar, to which we give less weight
than the foregoing because it relies on such a minor word-choice, is that when
Congress exempted funds âreceived as an educational benefitâ rather than âfor
an educational benefit,â the natural reading is that it describes what the giver
10 The Murphy court discussed the added difficulties the debtorâs strained reading of
âeducational benefitâ in the 1990 statuteâs reference to federally-insured loans would create
for the second use of the phrase in Section 523(a)(8), which the court twice quoted as
âeducation benefit scholarship or stipend,â i.e, without commas. See Murphy, 282 F.3d at
870, 871. That made the first two words adjectival, not a separate category, and the courtâs analysis focused on whether the two words modified both âscholarshipâ and âstipend.âId.
at 871â72. It appears to us, though, that Congress in 1990 adopted this language: âobligation to repay funds received as an educational benefit, scholarship or stipend.â Crime Control Act of 1990,Pub. L. No. 101-647, § 3621
,104 Stat. 4789
, 4964â65. Regardless, the statute as it
exists today does make âeducational benefitâ a third category in Section 523(a)(8)(A)(ii).
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was giving and not what the receiver could make of the gift. The phrase âas
an educational benefitâ indicates that the funds themselves are the educational
benefit (like tuition payments), whereas the phrase âfor an educational benefitâ
might well encompass funds conveyed for educational purposes, including
private student loans. Essangui, 573 B.R. at 621. At least it can be said the
draftersâ word choice does not support inclusion of private student loans.
We also examine the statutory history for Subsection (a)(8), i.e., the
history of enacted revisions. 11 Since 1970, Congress has expanded the scope of
non-dischargeable student loans. See, e.g., Cazenovia Coll. v. Renshaw (In re
Renshaw), 222 F.3d 82, 86â88 (2d Cir. 2000) (surveying the history of
Subsection (a)(8)). We find that the phrase âeducational benefitâ first appeared
in Subsection (a)(8) in 1990, which excepted from discharge a debt
for an educational benefit overpayment or loan made, insured or
guaranteed by a governmental unit, or made under any program
funded in whole or in part by a governmental unit or nonprofit
institution, or for an obligation to repay funds received as an
educational benefit, scholarship or stipend.
Crime Control Act of 1990, Pub. L. No. 101-647, § 3621,104 Stat. 4789
, 4964- 65 (codified as11 U.S.C. § 523
(a)(8)) (emphasis added).
11 Plaintiffs also urge us to examine legislative history. Various court decisions assert
that in 1990, the nondischargeability of âan obligation to repay funds received as an
educational benefit, scholarship, or stipend,â was added to confirm an Eighth Circuit
interpretation holding that certain conditional payments were loans covered by Section (a)(8).
See, e.g., Essangui, 573 B.R. at 618(citing U.S. Depât of Health & Human Servs. v. Smith,807 F.2d 122
(8th Cir. 1986)). A House Judiciary Committee hearing on the bill revealed that the amendment was drafted by a committee of United States Attorneys. Fed. Debt Collection Procedures: Hearing before the Subcomm. on Econ. & Commercial Law of the Comm. on the Judiciary, H.R., 101st Cong., 2, 3 (1990) (statements by Rep. Brooks and U.S. Attây Bob Wortham). In answers to written questions, the chair of the outside drafting committee wrote that VA benefits were an example of a relevant âeducation benefit.âId.
at 74â75 (answers of
Bob Wortham). We acknowledge this history but do not rely on it. Meaning to a statute
comes from its text, analyzed by employing appropriate tools of statutory interpretation
which we conclude do not include legislative history.
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Before explaining the latest change, made in 2005, we remark on the
near-unanimity of courtsâ understanding of the 1990 change. One court, after
surveying the caselaw, stated that the language we italicized above was
âgenerally interpreted . . . to create a new category of nondischargeable debt
that excluded for-profit loans.â Essangui, 573 B.R. at 619. Navient agrees that was the trend, but it argues that by the amendments to Subsection (a)(8) in 2005 which we discuss next, Congress brought private student loans within the exceptions to discharge. The parties do not agree about the post-2005 caselaw. Navient calculates the majority as holding that any funds received for an educational purpose, including private student loans, were covered by the new language. 12 See, e.g., Brown v. CitiBank, N.A. (In re Brown),539 B.R. 853
, 858â59 (Bankr. S.D. Cal. 2015). The plaintiffs count the cases differently. They both agree that since about 2015, there has been increasing caselaw that holds private student loans are not exempt from discharge. See, e.g., Nypaver v. Nypaver (In re Nypaver),581 B.R. 431
, 435â37 (W.D. Pa. 2018).
In 2005, Congress replaced the entirety of Subsection (a)(8) with a new
subsection with subparts. We italicize the only significant new language:
(8) unless excepting such debt from discharge under this
paragraph would impose an undue hardship on the debtor and the
debtor's dependents, for â
(A)(i) an educational benefit overpayment or loan made,
insured, or guaranteed by a governmental unit, or made under any
12 The only circuit court opinion cited to us on this issue is unpublished. Desormes v.
Infilaw Corp. (In re Desormes), 569 F. Appâx 42(2d Cir. 2014). Thus, no matter what we decide, there will not be a split in precedential circuit authority. The opinion was quite brief, with the only description of the debt being that it came from a âstudent loanâ and âwas excepted from discharge under11 U.S.C. § 523
(a)(8)(A)(ii).âId. at 43
. There was no analysis of how to interpret the three-item statutory list. The debtorâs argument centered on the supposed necessity for âa transfer of funds directly to the debtorâ before a loan would âbe received within the meaning of the statute.âId.
The bankruptcy courtâs opinion indicates the loan was from the school to pay the studentâs tuition. Desormes v. Charlotte School of Law, Inc. (In re Desormes),2012 WL 4106765
at *1 (Bankr. D. Conn. 2012).
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program funded in whole or in part by a governmental unit or
nonprofit institution; or
(ii) an obligation to repay funds received as an educational
benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education
loan, as defined in section 221(d)(1) of the Internal Revenue Code
of 1986, incurred by a debtor who is an individual.
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L.
No. 109-8, Title II, § 220,119 Stat. 23
, 59 (emphasis added) (codified as11 U.S.C. § 523
(a)).
The significant change was to make nondischargeable âany other . . .
qualified educational loan,â which Navient concedes the loans here are not, by
adding Subsection (B). Most importantly for us, Congress barely tweaked the
1990 language of âobligation to repay funds received as an educational benefit,
scholarship or stipendâ â it inserted a comma after âscholarship.â Navient
acknowledges that from 1990 to 2005, the interpretation of stipends,
scholarships, and educational benefits had excluded for-profit loans. We see
what did not happen to this language in 2005 as invoking this principle: âIf a
word or phrase has been . . . given a uniform interpretation by inferior courts...,
a later version of that act perpetuating the wording is presumed to carry
forward that interpretation.â Texas Depât of Hous. & Cmty. Affairs v. Inclusive
Cmtys. Project, Inc., 135 S. Ct. 2507, 2520 (2015) (quoting SCALIA & GARNER,
READING LAW 322). Navient argues that severing Subsection (A)(ii) from (A)(i)
allowed (A)(ii) to cover a broader scope of education financing, including
private education loans. All we see is a change to the structure of the overall
statute but no real change to the language that controls the case before us.
Navientâs assertion that the 2005 amendment made all private student
loans nondischargeable is not only unsupported by the text, it is unsupported
by some of Navientâs authorities. Among them is Corletta v. Tex. Higher Educ.
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Coordinating Bd. (In re Pappas), 517 B.R. 708, 716â17 (Bankr. W.D. Tex. 2014). That case says no more than that Congress amended Subsection (a)(8) in 2005 âto apply to private loans as wellâ without identifying Subsection (a)(8)(A)(ii) as the mechanism for this change.Id. at 717
. What brought a new
category of private loans into the discharge arena was the language of
Subsection (a)(8)(B), the only meaningful 2005 addition.
This court has recently discussed the 2005 change to the statute. See
Thomas v. Depât of Educ. (In re Thomas), 931 F.3d 449(5th Cir. 2019). The case concerned the âundue hardshipâ test that allows the discharge of an education loan.Id.
at 451â55. The loans at issue were from the United States Department of Education.Id. at 450
. That made them nondischargeable
under Subsection 523(a)(8)(A)(i) as being âinsured or guaranteed by a
governmental unit, or made under any program funded in whole or in part by
a governmental unit or nonprofit institution.â
The 2005 revision was âin response to the growing trend of commercial
lending,â and the amendmentâs purpose was to âmake qualified private student
loans harder to discharge, prohibiting discharge in all cases, unless repayment
would create âundue hardshipâ for the debtor.â Id. at 453. That is a description
of the new Subsection (a)(8)(B). The definition of a âqualified education loanâ
is in Section 221(d)(1) of the Internal Revenue Code of 1986, and, as stated
before, Navient accepts that Subsection (a)(8)(B) does not apply here.
In a supplementary letter to this court on Thomas, Navient implicitly
recognized that much of the new opinion was not on point, but it quoted the
courtâs language that âSection 523(a)(8) as it stands today excepts virtually all
student loans from dischargeâ with the caveat about undue hardship. Thomas,
931 F.3d at 453. That statement is a fair summary of the reach of
nondischargeability, but before us is a category of loan that has not (yet) been
reached by Subsection 523(a)(8).
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We find nothing in the 2005 revisions to alter our interpretation that
Subsection 523(a)(8)(A)(ii) applies only to educational payments that are not
initially loans but whose terms will create a reimbursement obligation upon
the failure of conditions of the payments.
In conclusion, the only possibly applicable part of the relevant statute is
Subsection 523(a)(8)(A)(ii). In interpreting that provision, we rely on the
noscitur a sociis doctrine, the need to avoid surplusage, Congressional
ratification in 2005 of prior interpretations, and the command that discharge
exceptions are interpreted narrowly in favor of debtors. We conclude that
âeducation benefitâ is limited to conditional payments with similarities to
scholarships and stipends. The loans at issue here, though obtained in order
to pay expenses of education, do not qualify as âan obligation to repay funds
received as an educational benefit, scholarship, or stipendâ because their
repayment was unconditional. They therefore are dischargeable.
* * *
We REVERSE the bankruptcy courtâs determination that it has
authority to enforce a discharge injunction entered by a different districtâs
bankruptcy court. Any debtors seeking injunctions due to discharges entered
in other districts should have their proceedings dismissed or transferred. We
AFFIRM the determination that loans such as those in issue here are
dischargeable. We REMAND to the bankruptcy court.
28