Winter Leadership Conference | December 5-7 | Rancho Palos Verdes , CA Register Today View Schedule

Evan Crocker, et al v. Navient Solutions, L.L.C., (In re Crocker)

Fifth Circuit bars nationwide class actions to enforce the discharge injunction. However, the appeals court ruled that private student loans are dischargeable.

- Rochelle Quick Take

View Rochelle Summary
Case Type:
Consumer
Case Status:
Reversed and Remanded
Citation:
18-20254 (5th Circuit, Oct 22,2019) Published
Tag(s):
Ruling:
In a perplexing ruling regarding a court's ability to enforce the discharge injunction, the Fifth Circuit ruled that only a court in the district that issued the discharge could enforce the discharge injunction. This ruling is the result of a comparison of Fed. R. Bankr. P. 4004(f) to prior Bankruptcy Rule 404(g). This analysis highlights the limits of historical analysis, especially in light of the stated legislative purpose of consumer bankruptcy and the universality of the discharge injunction. The student loans in question, however, were dischargeable.
Procedural context:
The bankruptcy court for the Southern District of Texas denied a lender's summary judgment motion, asking the court to rule that private student loan debts are excepted to discharge under 11 U.S.C. § 727 and that the bankruptcy court could not enforce the discharge injunction entered by a bankruptcy court in another judicial district. The bankruptcy court certified the two holdings for interlocutory appeal.
Facts:
Two separate debtors, one in Virginia and one in Texas, obtained loans from the same lender, a subsidiary of Sallie Mae, to pay education expenses. Both later filed for bankruptcy in their respective states, and obtained discharges. 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. The Virginia debtor then joined the Texas lawsuit. The Texas 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. 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.
Judge(s):
STEWART, SOUTHWICK and ENGELHARDT

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

2999 in the system

2904 Summarized

1 Being Processed