Educ. Credit Mgmt. Corp. v. Coleman (In re Coleman)

560 F.3d 1000 (9th Cir. 2009)

 

RULE:

Ripeness has two components: constitutional ripeness and prudential ripeness. The constitutional ripeness of a declaratory judgment action depends upon whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The issues presented must be definite and concrete, not hypothetical or abstract. Where a dispute hangs on future contingencies that may or may not occur, it may be too impermissibly speculative to present a justiciable controversy. The constitutional component of ripeness is a jurisdictional prerequisite.

FACTS:

Cathy Coleman filed for bankruptcy under Chapter 13 in 2004, and the bankruptcy court confirmed a five-year repayment plan. Coleman owes over $ 100,000 in student loans to Educational Credit. Since graduating from college, Coleman has been irregularly employed as a substitute teacher and art teacher, and was laid off in March of 2005. Just under a year after the plan was confirmed, Coleman sought a determination that it would constitute an undue hardship under 11 U.S.C. § 523(a)(8) for her to repay her student loans, and that her student loans should therefore not be excepted from discharge. Educational Credit moved to dismiss for lack of subject matter jurisdiction on ripeness grounds. The bankruptcy court denied the motion, In re Coleman, 333 B.R. 841 (Bankr. N.D. Cal. 2005), the district court affirmed the decision of the bankruptcy court, and Coleman appealed. 

ISSUE:

Was the dispute prudentially and constitutionally ripe?

ANSWER:

Yes.

CONCLUSION:

On appeal, the court noted that the dispute was sufficiently specific to be constitutionally ripe. Addressing a matter of first impression, the court also found the dispute to be prudentially ripe. Applying the U.S. Supreme Court's Abbott test, the court held that the issue of student loan dischargeability was ripe prior to the completion of Chapter 13 bankruptcy plan payments. If the debtor were deprived of the chance to raise her undue hardship claim until the end of her five-year repayment period, and if her student loans remained undischarged at that time, she would be deprived of the fundamental benefit of filing for bankruptcy, i.e., gaining a fresh start.

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