Woodcock v. Chemical Bank

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUN 22 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

In re:

RAYMOND L. WOODCOCK,

Debtor.

RAYMOND L. WOODCOCK,

Plaintiff-Appellant,

v. No. 97-1374

CHEMICAL BANK; COLUMBIA
UNIVERSITY; UNIVERSITY
ACCOUNTING SERVICE,
as servicing agent for Columbia
University, ATTORNEY GENERAL,

Defendants,

and

NYSHESC, as servicing agent
for Chemical Bank,

Defendant-Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 96-K-401)
Submitted on the briefs:

Raymond L. Woodcock, pro se.

Dolores B. Kopel, New York State Higher Education Services Corporation,
NYSHESC, Denver, Colorado, for Defendant-Appellee.

Before PORFILIO , BARRETT , and HENRY , Circuit Judges.

BARRETT , Senior Circuit Judge.

Pursuant to 11 U.S.C. § 523(a)(8)(A), certain educational loans are not

dischargeable in bankruptcy until seven years after the loan has first become due,

“exclusive of any applicable suspension of the repayment period.” See also

Woodcock v. Chemical Bank (In re Woodcock), 45 F.3d 363, 365 (10th Cir.

1995). The issue presented by this appeal *
is whether the creditor’s extension of

the repayment period, at the debtor’s request, based upon the creditor’s mistaken

determination that debtor’s loans had not yet become due and owing, was an

“applicable suspension of the repayment period” excludable when calculating

§ 523(a)(8)(A)’s seven-year nondischargeability period. We conclude that it is.

*
After examining the briefs and appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The
case is therefore ordered submitted without oral argument.

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 Appellant seeks to discharge three student loans that he obtained from

Chemical Bank to finance his pursuit of law and master of business degrees.

Appellee New York State Higher Education Services Corporation (NYSHESC)

guaranteed these loans.

Appellant graduated from law school in 1982 and business school in

January 1983. From 1983 through part of 1990, he enrolled in several colleges

and universities on a part-time basis. During this time, appellant continually

requested, and appellee and the lender granted, his requests for deferment of the

repayment of his loans, based upon his part-time student status. Because he had

not enrolled in a degree program subsequent to his graduation from business

school, however, he was no longer matriculated. Therefore, under the terms of

the promissory notes, his loans became due and owing in October 1983, following

a nine-month grace period. See In re Woodcock, 45 F.3d at 366-67. Based upon

appellant’s requests, therefore, appellee and the lender granted appellant

deferments to which he was not entitled under the terms of the promissory notes.

See id. at 365-67.

Appellant filed for Chapter 7 bankruptcy relief on April 21, 1992, more

than seven years after his loans first became due. This debt, therefore, is

dischargeable unless there was an “applicable suspension of the repayment

period” under § 523(a)(8)(A). The bankruptcy court granted appellee summary

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judgment, determining that the extension of the repayment period, although

mistaken, was nevertheless, an “applicable suspension” tolling the running of

§ 523(a)(8)(A)’s seven-year period of nondischargeability. The district court

affirmed. See Woodcock v. Chemical Bank (In re Woodcock), 212 B.R. 658

(D. Colo. 1997). Appellant appeals.

In reviewing the district court’s decision affirming the bankruptcy court’s

determination, this court will apply the same standards of review employed by the

district court. See Tulsa Energy, Inc. v. KPL Prod. Co. (In re Tulsa Energy, Inc.),

111 F.3d 88, 89 (10th Cir. 1997). We, therefore, review de novo the bankruptcy

court’s decision granting appellee summary judgment. See American Bank &

Trust Co. v. Jardine Ins. Servs. Tex., Inc. (In re Barton Indus., Inc.), 104 F.3d

1241, 1245 (10th Cir. 1997).

Appellant argues that, because he was not entitled to the deferments he

requested and received, they are not “applicable suspension[s]” excludable under

§ 523(a)(8)(A). We disagree. The plain language of the statute is not as narrow

as appellant asserts. See Huber v. Marine Midland Bank, N.A. (In re Huber),

169 B.R. 82, 83-84, 86-87 (Bankr. W.D.N.Y. 1994). See generally Flynn v.

New Hampshire Higher Educ. Assistance Found. (In re Flynn), 190 B.R. 139, 142

(Bankr. D.N.H. 1995) (rejecting argument that § 523(a)(8)(A)’s reference to

“applicable suspension” incorporates provisions of regulations and statutes

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governing guaranteed student loans). Interpreting § 523(a)(8)(A) broadly,

see Virginia v. Gibson (In re Gibson), 184 B.R. 716, 718 (E.D.Va. 1995) (citing

cases), aff’d, 86 F.3d 1150 (4th Cir. 1996) (Table), the plain meaning of the

phrase “suspension of the repayment period” refers to an extension of the term

of the loan by granting a period of time during which the debtor is not obligated

to make payments. See In re Huber, 169 B.R. at 84; see also Shryock v. Pittsburg

State Univ. (In re Shryock), 102 B.R. 217, 219 (Bankr. D. Kan. 1989) (broadly

interpreting the term “suspension,” under prior version of § 523(a)(8)(A) that

provided five-year period of nondischargeability, as including “any time the

original repayment period is set aside either by cessation of payments or

modification of payments”).

Section 523(a)(8)(A)’s legislative history supports this interpretation.

See In re Huber, 169 B.R. at 84. In drafting this statute, Congress sought to

insure that a debtor not be able to manipulate deferments in order to defeat the

period of nondischargeability. See Williams v. United States Dep’t of Educ.

(In re Williams), 195 B.R. 644, 647 (Bankr. N.D. Tex. 1996). Congress did not

intend to allow student loans to be discharged in bankruptcy without some effort

on the debtor’s part to repay those loans. See id. at 646-47; see also Law v. The

Educational Resources Inst., Inc. (In re Law), 159 B.R. 287, 291 (Bankr. D.S.D.

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1993) (noting strong policy against permitting debtors to escape repayment of

student loans underlies § 523(a)(8)(A)).

The only cases in which courts have found that a cessation of
payments was not an “applicable suspension” are cases involving
unilateral action by the lender. The rationale behind this exception is
that the borrower should not be penalized for the lender’s extension
of the payment period, when the borrower did not request such an
extension.

In re Gibson, 184 B.R. at 719 (citing cases, which have been omitted here). There

is no question in this case, however, that the extension of the repayment period

was the result of appellant’s requests. See In re Huber, 169 B.R. at 86-87 and 87

n. 11 (discussing importance of fact that debtor requested deferment to which he

was not entitled). Further, appellant has not shown that appellee, in granting the

requested extensions, acted in bad faith. See id. at 87.

Therefore, the period of time during which appellee and the lender granted

appellant’s requests for deferment, based upon his status as a part-time student,

is an “applicable suspension of the repayment period” excludable under

§ 523(a)(8)(A), even though appellant was not entitled to such a deferment

pursuant to the terms of the promissory notes. See In re Huber, 169 B.R. at 83,

86-87. In light of this, the student loans at issue had not first become due more

than seven years prior to appellant’s filing for bankruptcy relief. These debts,

accordingly, are not dischargeable under § 523(a)(8)(A).

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 Appellant’s remaining procedural arguments lack merit. We, therefore,

AFFIRM the judgment of the United States District Court for the District

of Colorado. We DENY appellant’s requests for an award of attorney fees

and costs, and for reimbursement of his filing fees.

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