RICHARD E. FEHLING, Bankruptcy Judge.
Plaintiff/Debtor, Erik Von Kiel, formerly known as Dennis Fluck, ("Debtor"), is a doctor who owed, as of February 29, 2012, $200,239.42 in Health Education Assistance Loans ("HEAL loans"). See Declaration of Barry M. Blum ("Blum Declaration"), p. 6, ¶ 32 (attached to Defendants' Motion for Summary Judgment as Exhibit 1).
Defendants, United States Department of Health & Human Services ("HHS") and
For the reasons that follow, I find that no genuine issue of material fact exists and Defendants are entitled to summary judgment as a matter of law on Counts 1-6 of the Complaint. I therefore grant Defendants' Motion for Summary Judgment on these Counts and deny Debtor's Cross-Motion for Summary Judgment. This Memorandum Opinion constitutes my findings of fact and conclusions of law.
Debtor filed his 15-count Complaint against Defendants and the Honorable Petrese Tucker, United States District Court Judge for the Eastern District of Pennsylvania, United States Attorney David Zane Memerager, Assistant United States Attorney Virginia Powell, United States Trustee Roberta A. DeAngelis and Assistant United States Trustee Dave Adams on February 17, 2011.
On March 24, 2011, Defendants filed a Motion To Dismiss and/or Strike Complaint ("Motion To Dismiss"). Both parties filed briefs and I heard argument on the Motion To Dismiss on May 12, 2011. After which I entered a bench Order that granted the Motion To Dismiss in part, denied it in part and took under advisement and directed the parties to brief the res judicata and collateral estoppel arguments raised by Defendants.
My May 12, 2011 Bench Order was later memorialized in two written Orders. My May 13, 2011 written Order directed the parties to brief the res judicata and collateral estoppel arguments and granted in part and denied in part Defendants' Motion To Dismiss.
Specifically, my May 18 Order dismissed Judge Tucker as a defendant in this proceeding because Debtor consented to her dismissal during the May 12, 2011 argument. In footnote 3, I explained that Counts 11 and 12 were the only counts of the Complaint that pertained to Judge Tucker and I dismissed Counts 11 and 12.
My May 18 Order also dismissed United States Attorney David Zane Memerager, Assistant United States Attorney Virginia Powell, United States Trustee Roberta A. DeAngelis, and Assistant United States Trustee Dave Adams as defendants in this proceeding because they were entitled to absolute immunity from this suit and because they had no duty to report or investigate the claims that Debtor argued
The parties then briefed the res judicata and collateral estoppel issues, and on October 7, 2011, I entered an Order granting Defendants' Motion To Dismiss as to Counts 1, 2, 3, 4 and 6 of the Complaint. After my October 7 Order, only Count 5, which requests a determination that the HEAL loans are dischargeable in this bankruptcy case, remained pending.
On October 21, 2011, Debtor filed a Motion To Reconsider my October 7, 2011 Order ("Motion To Reconsider"), as well as a Request for Extension of Time To Complete his Motion To Reconsider. Meanwhile, Defendants filed their Answer to Count 5 of the Complaint on October 28, 2011. On November 3, 2011, Debtor filed another Motion To Reconsider my October 7, 2011 Order. For some reason, on November 18, 2011, Debtor, without explanation and without seeking leave of court, filed an Amended Complaint which purported to reinstate Counts 1, 2, 3, 4 and 6 of the Complaint. On November 21, 2011, I dismissed the Amended Complaint, finding that Debtor violated Fed.R.Civ.P. 15(a)(1)
Meanwhile, on January 20, 2012, Defendants filed a Renewed Motion To Dismiss Count 5 of Complaint. On February 13, 2012, I held a hearing on Debtor's Motion To Reconsider and I heard argument on Defendants' Renewed Motion To Dismiss Count 5. On February 13, 2012, I entered an Order granting Debtors' Motion To Reconsider and vacating my October 7, 2011 Order dismissing Counts 1-4 and Count 6 of the Complaint. My February 13 Order also denied Defendants' Renewed Motion To Dismiss Count 5, and directed Defendants to file, by March 10, 2012, a Motion for Summary Judgment on Counts 1-6 of the Complaint or an Answer to Counts 1-6 of the Complaint. I also directed Defendants to limit any summary judgment motion to three issues, namely: (1) Whether Debtor's HEAL loans were discharged in a prior bankruptcy; (2) whether In re Dabrowski, 257 B.R. 394 (Bankr.S.D.N.Y. 2001) has precedential value in the Third Circuit; and (3) the effect of my January 5, 2012 Memorandum and Order denying Debtor a discharge
Debtor is a medical doctor who financed his education with the use of Health Education Assistance ("HEAL") loans insured by the federal government under the Public Health Service Act, 42 U.S.C. § 292f-p. Debtor's HEAL loans came due on the first day of the tenth month after Debtor ceased being a full-time student. The HEAL loans financed by First Eastern Bank and First American Bank, N.A. were subsequently purchased, and were held, by the Student Loan Marketing Association ("Sallie Mae"). Defendants refer to these loans as "Claim I." The remaining HEAL loans were held by the Pennsylvania Higher Education Assistance Agency ("PHEAA"). Defendants refer to these loans as "Claim II." See Blum Declaration, pp. 1-2, ¶ 4.
The loans that were held by Sallie Mae (Claim I) first came due on March 30, 1989, after Debtor completed his internship programs and the nine month forbearance period expired. See Blum Declaration, p. 2, ¶ 5. From May 10, 1989 through January 29, 1998, Debtor made 34 payments on these loans totaling $26,717.03. Debtor made no other payments on the Sallie Mae loans. See Blum Declaration, p. 2, ¶ 6. Sallie Mae declared Debtor in default and filed a complaint against Debtor in 2000 in the Lehigh County Court of Common Pleas, Civil Division, docketed at No. 2000-C-757. On July 14, 2000, the state court entered a judgment in this action against Debtor in the amount of $132,185.27. See Blum Declaration, p. 2, § 7, and Exhibit D (Blum-00054-72) (certified state court docket and pleadings). Sallie Mae then filed an insurance claim against HHS. HHS paid Sallie Mae's claim on November 20, 2000, and Sallie Mae assigned the judgment to HHS. See Blum Declaration, pp. 2-3, ¶¶ 8-9, Exhibit E (Blum-00073-4), Exhibit G.
The loans that were held by PHEAA (Claim II) first became due on May 15, 1989. See Blum Declaration, p. 3, ¶ 14. From May 9, 1989 through April 22, 1998, Debtor made 43 payments on the PHEAA loans totaling $23,027.93. Debtor made no other payments on the PHEAA loans. See Blum Declaration, p. 4, ¶ 15. PHEAA declared Debtor in default and filed a complaint against Debtor in the Lehigh County Court of Common Pleas, Civil Division, docketed at Case No. 1999-N-0761. On August 3, 1999, the state court entered a judgment in this action against Debtor in the amount of $29,008.36 plus interest accruing at 7.375%. See Blum Declaration, p. 4, § 16, and Exhibit L (Blum-00132-40) (certified state court docket and pleadings). PHEAA then filed an insurance claim against HHS. HHS paid PHEAA's claim in the amount of $28,581.00 on September 15, 1999 and PHEAA assigned the judgment to HHS. See Blum Declaration, pp. 4, 5, ¶¶ 17, 18, 23, Exhibit M (Blum-00143), Exhibit N (Blum 00145-46), Exhibit O.
After receiving the assignment of the judgment, HHS repeatedly attempted to collect the debt from Debtor. See Blum Declaration, p. 4, ¶¶ 19-22, Exhibit O. On September 19, 2002, HHS registered the judgment with the United States District Court for the Eastern District of Pennsylvania. See Blum Declaration, p. 4, 5, ¶ 23, Exhibit I (Blum-00088-90).
A motion for summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a).
The party requesting summary judgment bears the burden of showing that the record contains no genuine issue of material fact and that he is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir.2004). If the moving party meets this burden, the burden then shifts to the party opposing summary judgment to present "specific facts showing that there is a genuine issue [of material fact] for trial," offering concrete evidence supporting each essential element of its claim." Olick v. Kearney (In re Kearney), 466 B.R. 680, 696 (E.D.Pa.2011) quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (emphasis in original). The non-moving party cannot defeat a well supported summary judgment motion by reasserting unsupported factual allegations contained in his pleadings. Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir.1989). The party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, 106 S.Ct. 1348, and he may not rely on "mere allegations, general denials, or ... vague statements...." Trap Rock Indus., Inc. v. Local 825, Int'l Union of Operating Eng'rs, 982 F.2d 884, 890 (3d Cir.1992) (quotation omitted). Rather, he must rebut the motion by designating "specific factual averments through the use of affidavits or other permissible evidentiary material that demonstrate a triable factual dispute." GMAC Inc. v. Coley (In re Coley), 433 B.R. 476, 486 (Bankr.E.D.Pa.2010).
Count 4 of Debtor's Complaint is labeled, "Loan Discharged in Bankruptcy already" and alleges that the HEAL loans were discharged in Debtor's prior chapter 7 bankruptcy case filed in 1991. At the time Debtor filed his prior bankruptcy case in 1991, a HEAL loan was automatically excepted from discharge unless the debtor filed an adversary complaint requesting that the HEAL loan be discharged. A debtor was obliged to establish: (1) The discharge would be granted after the expiration of the five year period
Debtor and his wife, Insa Von Kiel, filed a chapter 7 bankruptcy petition in this court on September 9, 1991. This filing predated my tenure as a bankruptcy judge, and was assigned to my predecessor, the Honorable Thomas M. Twardowski. My review of the docket entries contained in Debtor's 1991 bankruptcy case reveals that Debtor never filed an adversary complaint in that case requesting that
The two state court judgments entered against Debtor by the Lehigh County Court of Common Pleas were based on the HEAL loans owed by Debtor to HHS. In his Counts 1, 2, 3 and 6 of the Complaint, Debtor attempts to challenge the existence of the HEAL loans. To adjudicate these Counts would require that I review and set aside the two state court judgments entered against Debtor. The Rooker-Feldman doctrine, however, prohibits me from exercising jurisdiction over a dispute that challenges the validity of a state court judgment. Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983). See also Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166-70 (3d Cir.2010); Madera v. Ameriquest Mortgage Co. (In re Madera), 586 F.3d 228, 232 (3d Cir.2009) (the Rooker-Feldman doctrine applies even if bankruptcy jurisdiction over a proceeding exists); Randall v. Bank One Nat'l Ass'n (In
In addition, Debtor's Counts 1, 2, 3 and 6 of the Complaint: (1) Seek to litigate claims that could have been raised in the underlying state court actions; and (2) involve the same parties or their privies and the same causes of action that were involved in the underlying state court actions. Final judgments were entered against Debtor by courts of competent jurisdiction in the underlying state court actions. For these reasons, even if I had subject matter jurisdiction over Counts 1, 2, 3 and 6 (which I do not), these Counts are barred under the doctrine of res judicata, also known as claim preclusion. Munoz v. Sovereign Bank, 323 Fed.Appx. 184, 187-88 (3d Cir.2009); Schuldiner v. Kmart Corp., 284 Fed.Appx. 918, 920-21 (3d Cir. 2008); Randall, 358 B.R. at 165-66 (the res judicata doctrine applies to state court default judgments).
An exception to the Rooker-Feldman and other preclusionary doctrines was recognized by the court in In re Dabrowski, 257 B.R. 394 (Bankr.S.D.N.Y.2001). Specifically, the Dabrowski court held that Rooker-Feldman and other preclusionary doctrines do not apply to state court judgments that are void because of a bankruptcy discharge. Debtor argues that the state court judgments entered by the Lehigh County Court of Common Pleas are void because the HEAL loans upon which they were based were discharged in his 1991 bankruptcy case and that the Dabrowski exception applies.
The court in Dabrowski found only that a bankruptcy court was not preempted from hearing a case in which a state court incorrectly determined that a clear bankruptcy discharge did not affect the validity of state court claims or judgments. I previously found and I reiterate, however, that the HEAL loans were not discharged in Debtor's 1991 bankruptcy case. Debtor's underlying premise that the state court judgments are void is therefore erroneous. Debtor's reliance on Dabrowski is misplaced.
The state court judgments entered against Debtor are not void and the Rooker-Feldman and res judicata (claim preclusion) doctrines bar my consideration of Counts 1, 2, 3, and 6 of the Complaint and Debtor's attempt to argue that the HEAL loans and the debt he owes to HHS do not exist.
Count 5 of the Complaint seeks a present determination that the HEAL
Section 292f(g), by its very terms, applies only if a discharge is granted — which will not occur in this case because my January 5, 2012 Order denied Debtor a discharge under Section 727(a)(2), (3) and (4).
When a general discharge is denied under Section 727, issues regarding exceptions to discharge of specific debts under Section 523 or 42 U.S.C. § 292f(g) become moot. Perotti v. Perotti (In re Perotti), Adv. No. 1:07-AP-00144, Bankr.No. 1:07-BR-01889MDF, 2008 WL 5158543, at *10 (Bankr.M.D.Pa. Aug. 27, 2008) (finding that "because § 727(a)(8) precludes a discharge in the instant case, a decision on dischargeability would be merely advisory and therefore improper"); Rasmussen v. Unruh (In re Unruh), 278 B.R. 796, 807 (Bankr.D.Minn.2002); Barnett Bank of Pasco County v. Decker (In re Decker), 105 B.R. 79, 82 (Bankr.M.D.Fla.1989) ("The threshold issue is whether the Debtor should be denied a general discharge in bankruptcy as a denial of his discharge will render the dischargeability issues academic and moot."); Chillicothe State Bank v. Carroll (In re Carroll), 70 B.R. 143, 146
"[F]ederal courts may adjudicate only actual, ongoing cases or controversies. It is of no consequence that the controversy was live at earlier stages in this case; it must be live when ... decid[ing] the issues. If a case is indeed moot, the Court must refrain from reaching the merits because any opinion issued would be merely `advisory' and rest on hypothetical underpinnings." Unruh, 278 B.R. at 807 (citation omitted). To rule on the dischargeability of a specific debt after the debtor has been denied a general discharge would therefore constitute an improper advisory opinion. Id.
My decision denying Debtor a discharge under Section 727 renders the dischargeability of specific loans, including the HEAL loans, moot because I have already denied Debtor a discharge of any of his pre-petition debts. To rule on the dischargeability of the HEAL loans under these conditions would constitute an improper advisory opinion. For this reason, no question of material fact exists and Defendants are entitled to judgment as a matter of law on Count 5 of the Complaint.
For all of these reasons, I find that no genuine issues of material fact exist and Defendants are entitled to judgment as a matter of law on Counts 1-6 of the Complaint.
AND NOW, this 19 day of June, 2012, upon my consideration of Defendants' Motion for Summary Judgment and documents filed in support thereof, Debtor's Cross-Motion for Summary Judgment and documents filed in support thereof, and the briefs filed by the parties, and upon the findings of fact and conclusions of law stated in the accompanying Memorandum Opinion,
IT IS HEREBY ORDERED that Defendants' Motion for Summary Judgment is GRANTED and JUDGMENT ON COUNTS 1-6 OF THE COMPLAINT IS ENTERED IN FAVOR OF DEFENDANTS AND AGAINST DEBTOR.
IT IS FURTHER ORDERED that Debtor's Cross-Motion for Summary Judgment is DENIED.
I may not take judicial notice sua sponte of the facts contained in Debtor's prior bankruptcy case that are in dispute, In re Aughenbaugh, 125 F.2d 887 (3d Cir.1942), but I may take judicial notice of adjudicative facts "not subject to reasonable dispute ... as long as it is not unfair to a party to do so and does not undermine the trial court's factfinding authority." Indian Palms, 61 F.3d at 205 (citing Fed.R.Evid. 201(f) advisory committee note (1972 proposed rules)).
In this case, the fact that Debtor never filed an adversary complaint in his 1991 bankruptcy case requesting a determination that the HEAL loans be found dischargeable cannot be subject to reasonable dispute because this fact is evident from a review of the official court docket of Debtor's 1991 bankruptcy case. In addition, it is not unfair to Debtor for me to take judicial notice of this fact and taking judicial notice of this fact does not undermine my factfinding authority. Indian Palms, 61 F.3d at 205.