OPINION & ORDER
KARL S. FORESTER, Senior District Judge.
This matter is before the Court on appeal from the June 3, 2010 Order of the United States Bankruptcy Court for the Eastern District of Kentucky granting judgment in favor of the Defendant-Appellee, Educational Credit Management Corporation ("Defendant"). Rather than pursue her appeal before the Bankruptcy Appellate Panel of the Sixth Circuit Court of Appeals, Plaintiff-Appellant Pamela Ileen Matthews ("Plaintiff") elected to have her appeal heard before this Court.
I. RELEVANT FACTS AND PROCEDURAL HISTORY
On March 29, 2009 (the "Petition Date"), Plaintiff filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Kentucky, Lexington Division. The case was subsequently converted from a Chapter 11 case to a Chapter 7 case on June 1, 2009. On July 17, 2009, Plaintiff initiated an adversary proceeding against Sallie Mae, Inc. ("Sallie Mae") seeking to discharge certain student loan obligations. [BR# 1].
On May 27, 2010, the matter was tried in front of the Bankruptcy Court. On June 3, 2010, the Bankruptcy Court entered an Order entering judgment in favor of Defendant. [BR# 92]. In its Order (the "Judgment"), the Court found that Plaintiff failed to meet the first two prongs of the test set forth in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir.1987), as adopted in the Sixth Circuit by Tirch v. Pennsylvania Higher Education Assistance Agency, 409 F.3d 677, 682 (6th Cir. 2005) and Oyler v. Educational Credit Management Corp., 397 F.3d 382 (6th Cir. 2005).
On June 10, 2010, Plaintiff filed a Notice of Appeal with the Bankruptcy Court. [BR# 94; DE #1]. In her Notice of Appeal, Plaintiff specifies that she is appealing "from the judgment, order, or decree of the bankruptcy judge (judgment denying Plaintiff undue hardship discharge of student loan indebtedness pursuant to 523(8)(a) of the United States Bankruptcy Code entered in this adversary proceeding on the third (3rd) day of June, 2010 [sic]." Plaintiff attached the Judgment to her Notice of Appeal. Plaintiff's Notice does not refer to any of the Bankruptcy Court's prior orders on Plaintiff's various motions challenging Defendant's standing. However, on June 24, 2010, as required by Federal Rule of Bankruptcy Procedure 8006, Plaintiff filed a Statement of Issues on Appeal with the Bankruptcy Court identifying the issues to be presented on appeal. [BR# 99]. In her Statement of Issues on Appeal, Plaintiff identifies issues related to her previous challenges to Defendant's standing.
Defendant previously argued that because Plaintiff's Notice of Appeal designates only the Judgment as the order or judgment being contested on appeal, and that Plaintiff further specifies that she is only challenging the Judgment as it relates to the denial of Plaintiff's undue hardship discharge, this Court has no jurisdiction to review Plaintiff's claims regarding Defendant's standing and the validity of Defendant's interest in Plaintiff's student loans. The Court rejected Defendant's argument and found that Plaintiff's designation of the Bankruptcy Court's final judgment in her Notice of Appeal sufficiently preserved for review all of the Bankruptcy Court's prior non-final rulings and orders, including those on Plaintiff's previous challenges to Defendant's standing. [DE # 21].
In the interest of fairness, the Court provided Defendant with additional time to file a brief addressing the merits of Plaintiff's arguments regarding standing and also gave Plaintiff time to respond to Defendant's supplemental brief. Both parties have now filed the additional briefs authorized by the Court. Accordingly, this matter is now ripe for review.
II. REQUEST FOR ORAL ARGUMENT
In Plaintiff's appellate brief, she requests oral argument on this matter, stating that the Court would be aided in undertaking oral arguments in this case "[g]iven the numerous statutory and technical provisions referenced throughout [her] brief concerning Title 34 of the Code of Federal Regulations." However, based on a review of these provisions and the record in this case, the Court finds that the facts and legal arguments are adequately presented in the briefs and the record and the decisional process would not be significantly aided by oral argument and, therefore, oral argument is not necessary. See Fed.R.Bankr.Pro. 8012. The Court will consider the merits of Plaintiff's appeal based on the briefs and the record.
III. ISSUE ON APPEAL
As noted above, although Plaintiff has generally argued that Defendant does not
Finally, in her reply brief to Defendant's supplemental response brief, Plaintiff first clarifies that "[t]he singular issue before the court for consideration is [Plaintiff's] contention that [Defendant] were [sic] improperly permitted to intervene as a party in interest in [Plaintiff's] adversary proceeding seeking discharge of certain student loan obligations pursuant to § 523(8)(a) of the United States Bankruptcy Code." [DE# 23, p. 5]. Throughout Plaintiff's lengthy briefs, this is the only particular finding by the Bankruptcy Court that Plaintiff deems is erroneous. Accordingly, this Court will construe her appeal to be from the Bankruptcy Court's Order granting Defendant's motion to intervene. [BR# 28]. The Court's conclusion is further supported by Plaintiff's identification of the standard of review in her reply to Defendant's supplemental response brief as being the standard of review of orders on motions to intervene. Thus, this Order is the decision reviewed by this Court on appeal. To the extent that Plaintiff wishes to appeal any other decisions by the Bankruptcy Court, the Court finds that she failed to adequately present these issues to the Court in a manner that would enable the Court to engage in a meaningful review on appeal.
While it is unquestionably improper for an appellant to wait until filing a reply brief to identify the lower court's decision being appealed, in this case, the Court notes that Defendant's supplemental response brief also states that the issue on appeal is whether the Bankruptcy Court erred in permitting Defendant to intervene as a matter of right. Thus, in these circumstances, Plaintiff's untimely disclosure of perhaps the most important issue to her appeal—the actual decision by the Bankruptcy Court being appealed—while inappropriate, has not unduly prejudiced Defendant's ability to respond to Plaintiff's arguments presented on appeal regarding whether Defendant should have been permitted to intervene as a matter of right.
IV. STANDARD OF REVIEW
This appeal arises from a final order of the United States Bankruptcy Court for
Generally, legal conclusions of the Bankruptcy Court are reviewed by this Court de novo while the Bankruptcy Court's findings of fact are reviewed for clear error. In re Baker & Getty Financial Serv., Inc., 106 F.3d 1255, 1259 (6th Cir.1997). With respect to the Bankruptcy Court's findings of fact, due regard must be given to the opportunity of the Bankruptcy Court to judge the credibility of witnesses. Fed. R. Bankr.P. 8013. A finding of fact will be deemed clearly erroneous when the reviewing court, based on the record as a whole, is left with a "firm and definite conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (citation omitted). Any mixed questions of law and fact must be broken down "into its constituent parts" and the appellate court must "apply the appropriate standard of review for each part." In re Batie, 995 F.2d 85, 88 (6th Cir.1993).
In this case, the Bankruptcy Court ruled on Defendant's motion for intervention of right pursuant to Fed. R. Bankr.Pro. 7024 and Fed. R. Civ. Pro. 24(a). A party seeking intervention of right under Rule 24(a)(2) must demonstrate four elements: "1) timeliness of the application to intervene; 2) the applicant's substantial legal interest in the case; 3) impairment of the applicant's ability to protect that interest in the absence of intervention; and 4) inadequate representation of that interest by parties already before the court." Jordan v. Michigan Conference of Teamsters Welfare Fund, 207 F.3d 854, 862 (6th Cir.2000). According to Plaintiff, the "narrow issue" before this Court is the second element, "the sufficiency of the legal interest retained by [Defendant] in [Plaintiff's] student loan indebtedness." [DE #23, p. 9]. The standard of review for this element is de novo. Stupak-Thrall v. Glickman, 226 F.3d 467, 471 (6th Cir.2000) ("We review a district court's decision regarding timeliness (the first element) for abuse of discretion; the remaining three elements are reviewed de novo."). Rule 24 is construed broadly in favor of the proposed intervenor. Purnell v. Akron, 925 F.2d 941, 950 (6th Cir.1991).
In this case, Defendant's legal interest in Plaintiff's student loan arises due to its status as assignee of the guarantor of the loan, the Michigan Higher Education Student Loan Authority (MHESLA). Plaintiff does not dispute that MHESLA transferred its rights as guarantor of Plaintiff's student loan to Defendant. [DE # 23, p. 12]. Rather, Plaintiff essentially argues that Defendant's rights as guarantor were cut off by the default judgment entered against Sallie Mae. More specifically, Plaintiff devotes much of her briefs to arguments regarding the identity of the lender of her student loan, the conduct of Sallie Mae in this case and whether Defendant should be bound by the default judgment against Sallie Mae. For example, Plaintiff's arguments include that the guarantor's interest was "permanently cancelled" due to the default judgment obtained against Sallie Mae, that Plaintiff properly served Sallie Mae in the adversary proceeding, that Sallie Mae had been designated as the student loan lender, that Bank of New York is not the lender of Plaintiff's student loan, that Sallie Mae improperly designated Bank of New York as Eligible Lender Trustee and that Plaintiff did not have an obligation to know the existence of or identity of the
In her adversary proceeding against Sallie Mae, Plaintiff sought to discharge her student loan due to undue hardship. Without question, the guarantor of Plaintiff's student loan has a substantial interest in a legal proceeding seeking to discharge that loan. Although Plaintiff remains firm in her position that Sallie Mae was the holder of her loan, even if Plaintiff is correct, a guarantor's interest in a loan is separate and distinct from the lender's interest. For example, in Garmhausen v. Sallie Mae Servicing Corp. (In re Garmhausen), 262 B.R. 217 (Bankr. E.D.N.Y.2001), the New York State Higher Education Corporation ("HESC") sought to intervene in an adversary proceeding filed by a debtor in which he sought to discharge two student loans, including one with Sallie Mae. Id. at 219. Apparently, after the complaint was filed, Sallie Mae sold the loan to HESC. Id. Sallie Mae failed to appear or file an answer in the adversary proceeding. Id. Accordingly, the debtor filed a motion seeking the entry of a default judgment. Id. Shortly thereafter, HESC sought to intervene in the case pursuant to its status as the owner of the note, as well as its status as the guarantor of the loan. Id. The court held that, with respect to HESC's status as owner of the note, it simply stepped into Sallie Mae's shoes with respect to what had occurred in the case prior to HESC's purchase of the note from Sallie Mae. Id. at 222. Accordingly, since Sallie Mae had defaulted, HESC must bear the consequences of that default. Id. However, the court further recognized that HESC held two claims in the litigation, the first arising from its ownership of the claim it purchased from Sallie Mae and the second arising from its status of the guarantor of the loan. Id. The court emphasized that these obligations are distinct and the mere fact that HESC held both of them does not transform them into one. Id. The court explained:
Id. at 222-223. See also Miller v. Pennsylvania Higher Education Assistance Agency (In re Miller), 275 B.R. 271, 273 (Bankr.E.D.Tenn.2002) (guarantor holds a claim with rights separate from its claim as assignee of holder of the loan); United States v. Erkard, 200 B.R. 152, 154 (Bankr. N.D.Ohio 1996) ("As a guarantor, the United States was the holder of a contingent claim against the debtor, and as such, was
Even assuming that Plaintiff is correct that Sallie Mae is the lender and that Sallie Mae was properly served in the adversary proceeding, Defendant's rights as assignee of the guarantor are not affected by what Sallie Mae did or did not do in the adversary proceeding. For these reasons, the default judgment against Sallie Mae does not "cut off" Defendant's rights, as assignee of the guarantor, to enforce its interest in Plaintiff's loan. Rather, as MHESLA's assignee, Defendant "stepped into MHESLA's shoes" as guarantor. MHESLA, as guarantor, had a substantial interest in Plaintiff's adversary proceeding seeking to cancel her student loan. Thus, as MHESLA's assignee, Defendant likewise had a substantial legal interest in Plaintiff's adversary proceeding and the Bankruptcy Court's order granting Defendant's motion to intervene was appropriate.
The sole question at issue here is whether Defendant has a substantial legal interest in this case that gives rise to a right to intervene. Plaintiff admits that Defendant is the assignee of the guarantor of the loan. Accordingly, it has a substantial legal interest in this case. This finding resolves the question of whether the Bankruptcy Court erred in finding that Defendant was entitled to intervene as of right, and, accordingly, resolves Plaintiff's appeal. The remainder of Plaintiff's arguments do not address the question of whether Defendant has a substantial interest in Plaintiff's adversary proceeding based on its status as assignee of the guarantor, but rather address issues related to the identity of the lender, Sallie Mae's conduct and whether Defendant should be bound by the default judgment against Sallie Mae. However, Plaintiff's arguments overlook that Defendant's right in this case does not arise out of a relationship with Sallie Mae, but rather, out of Defendant's status as assignee of the guarantor. Defendant's rights as assignee of the guarantor are alone sufficient to permit it to intervene as a matter of right, regardless of any other rights it may or may not have as lender or of the default judgment against Sallie Mae.
Moreover, Plaintiff has not pointed this Court to any specific rulings or findings by the Bankruptcy Court on any of the other issues she raises in her appellate briefs. Other than the general identification of the Judgment in Plaintiff's Notice of Appeal, the only specific Order by the Bankruptcy Court ever identified by Plaintiff as erroneous is the Order on Defendant's motion to intervene, and Plaintiff did not even identify this Order until her reply to Defendant's supplemental response brief. Plaintiff's apparent appellate strategy has been to simply identify the Judgment in her Notice of Appeal and then re-argue her case anew to this Court, as opposed to pointing this Court to the specific rulings and findings made by the Bankruptcy Court that she contends are erroneous and then arguing why, based on relevant legal standards, these rulings and findings are incorrect. In most instances, Plaintiff fails to bother to cite this Court to evidence in the record supporting the factual conclusions on which her arguments are based. The problem with this strategy is that it burdens this Court with the task of wading through the record and the morass of Plaintiff's arguments to try and figure out whether Plaintiff's arguments are supported by facts in the record and whether, when and how the Bankruptcy Court ruled on Plaintiff's arguments, assuming they were even presented to the Bankruptcy
Regardless, the Court finds that Plaintiff's arguments regarding the identity of the lender, the conduct of Sallie Mae and the default judgment against Sallie Mae, including that the guarantor's interest was "permanently cancelled" due to the default judgment obtained against Sallie Mae, that she properly served Sallie Mae, that Sallie Mae had been designated as the student loan lender, that Bank of New York is not the lender of Plaintiff's student loan, that Sallie Mae improperly designated Bank of New York as Eligible Lender Trustee and that Plaintiff did not have an obligation to know the existence of or identity of the true owners or guarantors of her loan, are irrelevant to whether the Bankruptcy Court erred in granting Defendant's motion to intervene as a matter of right based on Defendant's status as assignee of the guarantor. In addition, Plaintiff has failed to show this Court where the Bankruptcy Court ruled on these arguments and also failed to cite the Court to legal and evidentiary support for these arguments.
Accordingly, having reviewed Plaintiff's appeal de novo, the Court finds that the Bankruptcy Court did not err as a matter of law. Therefore, the Court being otherwise fully and sufficiently advised,
Id. at 758 (quoting Anschutz Land & Livestock Co., Inc. v. Union Pacific Railroad Co., 820 F.2d 338, 344 at n. 5 (10th Cir. 1987)).