United States Bankruptcy Appellate Panel of the Ninth Circuit
In re: MELISSA HODA KASHIKAR, Debtor.
TURNSTILE CAPITAL MANAGEMENT, LLC, assignee from DB Structured Products, Inc., Appellee. MELISSA HODA KASHIKAR, Appellant, Bk. No. 2:14-bk-23848-ER Adv. No. 2:15-ap-01184-ER
Submitted without oral argument on March 23, 2017
from the United States Bankruptcy Court for the Central
District of California, Honorable Ernest M. Robles,
Bankruptcy Judge, Presiding
Jonathan Hayes on the brief for appellant.
Melissa Hoda Kashikar; Scott S. Weltman on the brief for
appellee Turnstile Capital Management, LLC.
Before: FARIS, LAFFERTY, and KURTZ, Bankruptcy Judges.
523(a)(8) of the Bankruptcy Code provides that several
categories of educational indebtedness are not dischargeable
in bankruptcy unless the debtor proves that paying the debt
would impose undue hardship on the debtor or her dependents.
Chapter 7 debtor Melissa Hoda Kashikar argues that her
educational debt owed to Appellee Turnstile Capital
Management LLC ("Turnstile") is not covered by
§ 523(a)(8). The bankruptcy court declined to consider
her argument concerning one of the categories of debt and
held that her debt was included in the category of an
"educational benefit" under §
523(a)(8)(A)(ii). The court erred on both counts.
Accordingly, we REVERSE IN PART the court's ruling as to
§ 523(A)(8)(A)(ii), VACATE the court's ruling as to
§ 523(a)(8)(A)(i), and REMAND this case to the
Kashikar attended St. Matthew's University School of
Medicine ("SMU") in Grand Cayman, Cayman Islands.
In order to fund her education and pay for the costs of
attending SMU, Ms. Kashikar signed an application and
promissory note with StudentLoan Xpress. Turnstile's
predecessor in interestdirectly disbursed the funds to SMU.
is no dispute that Ms. Kashikar attended classes at SMU for
the purposes of obtaining a degree and learning about
medicine. However, Ms. Kashikar did not complete her
education at SM U.She returned to the United States, but
could not transfer any of her SMU credits.
21, 2014, Ms. Kashikar filed her chapter 7 petition. She
scheduled her student loan on Schedule F in the amount of
$73, 804. She received a standard discharge on or around
November 10, 2014.
April 14, 2015, Ms. Kashikar filed an adversary complaint
seeking a determination that the loan (the balance of which
had grown to $74, 968.74) was discharged under §
523(a)(8). The complaint is very brief. After identifying the
parties and describing the loan, it alleges that:
Since the purpose of the loan(s) in question were not for an,
"eligible education institution" as defined by 26
U.S.C. 221(d)(1) and (2), the subject loan(s) are not,
"qualified education loan(s)" under 11 U.S.C.
523(a)(8)(B), and therefore not subject to the student loan
general exception to discharge found at 11 U.S.C. 523(a)(8).
Accordingly, the loan(s) alleged in Paragraph 4 were
discharged on November 12, 2014, when Plaintiff/debtor
obtained her discharge in the underlying bankruptcy case.
response to this paragraph of the complaint, Turnstile denied
that the loan was discharged.
parties entered into a Pretrial Stipulation for Claims for
Relief ("Pretrial Stipulation"). The parties agreed
that certain facts were admitted and required no proof,
SMU has never been, and is not now, an "eligible
educational institution" as that term is defined under
section 481 of the Higher Education Act of 1965 (20 U.S.C.
1088), and has never been, and is not now, eligible to
participate in a program under title IV of the Higher
parties further stipulated that no issues of fact remained to
be litigated and that:
The following issues of law, and no others, remain to be
Whether or not Plaintiff's student loans were excepted
from discharge under 11 U.S.C. § 523(a)(8)?
Can Plaintiff discharge her Student Loans solely under 11
U.S.C. § 523(a)(8)(B), as plead [sic] in the complaint?
Pretrial Stipulation provided that "this stipulation
shall supersede the pleadings and govern the course of trial
in this adversary proceeding, unless modified to prevent
reviewing the Pretrial Stipulation, the bankruptcy court
determined that there were no disputed facts to be litigated
and directed the parties to submit briefs explaining why each
party was entitled to judgment as a matter of law. The court
noted that it treated the Pretrial Stipulation as a pretrial
order and said that "the Pretrial Stipulation supersedes
the pleadings and governs this action."
22, 2016, Ms. Kashikar filed her motion for judgment as a
matter of law ("Motion"). She contended that her loan
did not fall within §§ 523(a)(8)(A)(i), (A)(ii), or
(B). Regarding subsection (A)(i), she argued that SMU was not
an eligible "governmental unit" as contemplated by
the Bankruptcy Code. Regarding subsection (A)(ii), she said
that the statute covers only "funds received"
directly by the debtor. Because she did not
"actually" or "directly" receive any of
the loan proceeds (which were paid directly to SMU), she
argued that subsection (A)(ii) was not applicable. Regarding
subsection (B), she argued ...