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In the Matter of v. Sallie Mae

July 25, 2011

IN THE MATTER OF
VATHSALA SRINIVASAN, DEBTOR. VATHSALA SRINIVASAN, PLAINTIFF,
v.
SALLIE MAE, INC, DEFENDANT.



The opinion of the court was delivered by: Pisano, District Judge.

NOT FOR PUBLICATION

OPINION

Adver. Proc. No. 10-1545 (RTL)

This matter comes before the Court by way of an appeal by pro se appellant Vathsala Srinivasan ("Appellant" or "Debtor") from the following three orders of the bankruptcy court: (1) an order denying motion for sanctions under Bankruptcy Rule 9011 against Educational Credit Management Corporation ("ECMC") entered on August 3, 2010; (2) an order denying entry of judgment by default and closing the adversary proceeding dated September 7, 2010; and (3) and order denying appellant's motion for an order amending the September 7th order and to make additional findings of fact under Rule 7052 dated October 4, 2010. ECMC has filed a motion to dismiss the appeal as to the August 3rd order. For the reasons below, ECMC's motion is denied, and the orders of the bankruptcy court are affirmed.

I. Background

A. The Bankruptcy Proceedings

Appellant filed a voluntary Chapter 7 bankruptcy petition on January 30, 2010. On May 10, 2010, the bankruptcy court entered an order discharging Debtor and on May 17, 2010 the bankruptcy case was closed. In the course of the bankruptcy proceeding, on April 22, 2010, Appellant filed an adversary complaint, naming Sallie Mae, Inc. ("Sallie Mae") as defendant, seeking a determination that her consolidated student loan debt was dischargeable under 11 U.S.C. §523(a)(8). Sallie Mae did not file an answer to the complaint; rather, ECMC, believing that it was the proper party in interest with respect to Appellant's student loan debt, timely filed an answer to the complaint and moved for an order substituting ECMC for the named defendant Sallie Mae. Appellant objected to ECMC's motion to intervene and cross-moved for sanctions against ECMC's counsel, alleging that ECMC's motion was without basis. Appellant also moved for entry of default and default judgment against Sallie Mae.

In addressing the motions, the bankruptcy court examined the evidence before it and concluded that there were a number of entities that, at one time or another, held Appellant's student loan. While it was unclear from the evidence produced who the holder of the debt was at that time, none of the evidence showed that either Sallie Mae or ECMC ever held the loan. Finding that ECMC could not produce evidence of a chain of title showing it was the holder of Debtor's student loan, the bankruptcy court denied the motion for substitution and entered a default against Sallie Mae. See Docket Entry Nos. 35, (order denying motion to substitute) 36 (order denying motion for sanctions), and 38 (transcript of decision) in Adversary Proc. No. 10-1545.*fn1 However, the bankruptcy court would not enter judgment by default against Sallie Mae, finding as follows:

[T]he Debtor does not owe a debt to Sallie Mae, Inc. and did not owe a debt to Sallie Mae, Inc. on the date she filed bankruptcy. Sallie Mae, Inc. has merely been the servicer of her consolidated loan. Since there is no debt due from the Plaintiff/Debtor to the Defendant, Sallie Mae, Inc., no purpose would be served in declaring the debt dischargeable.

Docket Entry No. 54 (Opinion) at 6-7.

On September 7, 2010, the court entered an order denying Appellant's request for judgment by default and closed the adversary proceeding. Docket Entry No. 53. Appellant then filed a motion under Bankruptcy Rule 7052 asking the bankruptcy court to amend its September 7th order and to make additional findings relating to the discharge of her student loan debt. The Court denied Appellant's motion by order entered October 5, 2010. Appellant filed her Notice of Appeal on October 15, 2010.

II. Analysis A. Motion to Dismiss

ECMC moves to dismiss the appeal of the bankruptcy court's August 3, 2010 order denying Appellant's motion for sanctions as untimely. ECMC argues that Appellant had 14 days from entry of that order -- until August 17, 2010 -- to file her notice of appeal but failed to do so and, thus, her appeal is untimely. The Court disagrees.

Appeals from the bankruptcy court to the District Court are governed by 28 U.S.C. § 158. Pursuant to § 158(a), the District Court has mandatory jurisdiction over "final judgments, orders, and decrees of the bankruptcy court" and discretionary jurisdiction over "other interlocutory orders and decrees." 28 U.S.C. § 158(a)(1) and (3). In order for a district court to acquire jurisdiction over a bankruptcy order, a party must file a notice of appeal in the bankruptcy court within fourteen days of the entry of a final order. Fed. R. Bankr. P. 8002(a); In re Caterbone, 640 F.3d 108, 112 (3d Cir. 2011). Traditionally, an order is considered final and appealable only if it "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, ...


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