
| Making a Mountain Out of a Molehill |
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The federal government and 33 states rarely agree on an issue, and when they do it is even rarer that the Supreme Court rules against them. Rarer still is for a Supreme Court verdict to be a unanimous affirmance of the decision below. But perhaps it took Supreme Court intervention to stop government from making a mountain out of a molehill in United Student Aid Funds v. Espinosa, and similar cases. The opinion by Justice Clarence Thomas won support from every other member of the High Court. He held in favor a student seeking a discharge in Bankruptcy Court from his student loan obligations. The United States government and 33 States urged the Court to overturn the discharge of the student loan’s debt, on the theory that the student had not proven sufficient hardship to be relieved of the obligation. Francisco Espinosa owed an unpaid principal of $13,250, based on attending school over 20 years ago. Several years later, he filed for bankruptcy and proposed a payment plan. With the blessing of the Bankruptcy Court, Espinosa agreed to pay off the entire principal on the student loan, but obtained a waiver for accruing interest. Espinosa complied fully with the Court order, and paid off the entire principal within a few years. But, alas, in 2000 the U.S. Department of Education began seeking to collect on the discharged unpaid interest, and Espinosa filed a motion in 2003 to obtain an order from the Bankruptcy Court telling the United States and the student loan company to back off. The Bankruptcy Court agreed with Espinosa, and ordered an end to collection efforts against him. But government did not take “no” for an answer. It appealed to the District Court, which reversed the order and held in favor of government, allowing it to restart collection efforts. Several more years of litigation ensued, the Ninth Circuit ruled for the student, and finally the case came to its merciful end with the pen of Justice Thomas. In Charles Dickens’ Bleak House, attorneys over-litigated until the legal fees ate up the value of the estate about which they were arguing. “The one great principle of the English law is to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings,” Dickens wrote in that classic. Perhaps a million dollars were spent by the United States government and others in this dispute about the interest on a mere $13,250 student loan that had already been paid in compliance with a court order. |