United Student Aid Funds, Inc. v. Espinosa

(Slip Opinion) OCTOBER TERM, 2009 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 08–1134. Argued December 1, 2009—Decided March 23, 2010
A plan proposed under Bankruptcy Code (Code) Chapter 13 becomes
effective upon confirmation, see 11 U. S. C. §§1324, 1325, and will re
sult in a discharge of the debts listed in the plan if the debtor com
pletes the payments the plan requires, see §1328(a). A debtor may
obtain a discharge of government-sponsored student loan debts only
if failure to discharge that debt would impose an “undue hardship” on
the debtor and his dependents. §§523(a)(8); 1328. Bankruptcy courts
must make this undue hardship determination in an adversary pro
ceeding, see Fed. Rule Bkrtcy. Proc. 7001(6), which the party seeking
the determination must initiate by serving a summons and complaint
on his adversary, see Rules 7003, 7004, 7008. Respondent Espinosa’s
plan proposed repaying the principal on his student loan debt and
discharging the interest once the principal was repaid, but he did not
initiate the required adversary proceeding. The student loan credi
tor, petitioner United, received notice of the plan from the Bank
ruptcy Court and did not object to the plan or to Espinosa’s failure to
initiate the required proceeding. The Bankruptcy Court confirmed
the plan without holding such a proceeding or making a finding of
undue hardship. Once Espinosa paid his student loan principal, the
court discharged the interest. A few years later, the Department of
Education sought to collect that interest. In response, Espinosa
asked the court to enforce the confirmation order by directing the
Department and United to cease any collection efforts. United op
posed the motion and filed a cross-motion under Federal Rule of Civil
Procedure 60(b)(4), seeking to set aside as void the confirmation or
der because the plan provision authorizing discharge of Espinosa’s
student loan interest was inconsistent with the Code and the Bank
ruptcy Rules, and because United’s due process rights were violated
2 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Syllabus
when Espinosa failed to serve it with the required summons and
complaint. Rejecting those arguments, the Bankruptcy Court
granted Espinosa’s motion in relevant part and denied the cross
motion. The District Court reversed, holding that United was denied
due process when the confirmation order was issued without the re
quired service. The Ninth Circuit ultimately reversed. It concluded
that by confirming Espinosa’s plan without first finding undue hard
ship in an adversary proceeding, the Bankruptcy Court at most
committed a legal error that United might have successfully ap
pealed, but that such error was no basis for setting aside the order as
void under Rule 60(b)(4). It also held that Espinosa’s failure to serve
United was not a basis upon which to declare the judgment void be
cause United received actual notice of the plan and failed to object.
Held:
1. The Bankruptcy Court’s confirmation order is not void under
Rule 60(b)(4). Pp. 6–14.
(a) That order was a final judgment from which United did not
appeal. Such finality ordinarily would “stan[d] in the way of chal
lenging [the order’s] enforceability,” Travelers Indemnity Co. v. Bai
ley, 557 U. S. ___, ___. However, Rule 60(b)(4) allows a party to seek
relief from a final judgment that “is void,” but only in the rare in
stance where a judgment is premised either on a certain type of ju
risdictional error or on a violation of due process that deprives a
party of notice or the opportunity to be heard. United’s alleged error
falls in neither category. Conceding that the Bankruptcy Court had
jurisdiction to enter the confirmation order, United contends that the
judgment is void because United did not receive adequate notice of
Espinosa’s proposed discharge. Espinosa’s failure to serve the sum
mons and complaint as required by the Bankruptcy Rules deprived
United of a right granted by a procedural rule. United could have
timely objected to this deprivation and appealed from an adverse rul
ing on its objection. But this deprivation did not amount to a viola
tion of due process, which requires notice “reasonably calculated, un
der all the circumstances, to apprise interested parties of the
pendency of the action and afford them an opportunity to present
their objections,” Mullane v. Central Hanover Bank & Trust Co., 339
U. S. 306, 314. Here, United’s actual notice of the filing and contents
of Espinosa’s plan more than satisfied its due process rights. Thus,
Espinosa’s failure to make the required service does not entitle
United to relief under Rule 60(b)(4). Pp. 7–10.
(b) Contrary to United’s claim, the confirmation order is not void
because the Bankruptcy Court lacked statutory authority to confirm
Espinosa’s plan absent an undue hardship finding under §523(a)(8).
Such failure is not on par with the jurisdictional and notice failings
Cite as: 559 U. S. ____ (2010) 3
Syllabus
that define void judgments qualifying for Rule 60(b)(4) relief. Section
523(a)(8) does not limit a bankruptcy court’s jurisdiction over student
loan debts or impose requirements that, if violated, would result in a
denial of due process. Instead, it requires a court to make a certain
findings before confirming a student loan debt’s discharge. ‘That this
requirement is “ ‘self-executing,’ ” Tennessee Student Assistance Cor
poration v. Hood, 541 U. S. 440, 450, means only that the bankruptcy
court must make an undue hardship finding even if the creditor does
not request one; it does not mean that a bankruptcy court’s failure to
make the finding renders its subsequent confirmation order void for
Rule 60(b)(4) purposes. Although the Bankruptcy Court’s failure to
find undue hardship was a legal error, the confirmation order is en
forceable and binding on United because it had actual notice of the
error and failed to object or timely appeal. Pp. 10–14.
2. The Ninth Circuit erred in holding that bankruptcy courts must
confirm a plan proposing the discharge of a student loan debt without
an undue hardship determination in an adversary proceeding unless
the creditor timely raises a specific objection. A Chapter 13 plan pro
posing such a discharge without the required determination violates
§§1328(a)(2) and 523(a)(8). Failure to comply with this self-executing
requirement should prevent confirmation even if the creditor fails to
object, or to appear in the proceeding at all, since a bankruptcy court
may confirm only a plan that, inter alia, complies with the “applica
ble provisions” of the Code. §1325(a). Neither the Code nor the Rules
prevent parties from stipulating to the underlying facts of undue
hardship or prevent the creditor from waiving service of a summons
and complaint. Pp. 14–16.
3. Expanding the availability of Rule 60(b)(4) relief is not an ap
propriate prophylaxis for discouraging unscrupulous debtors from fil
ing Chapter 13 plans proposing to dispense with the undue hardship
requirement in hopes that the bankruptcy court will overlook the
proposal and the creditor will not object. Such bad-faith efforts
should be deterred by the specter of penalties that “[d]ebtors and
their attorneys face . . . under various provisions for engaging in im
proper conduct in bankruptcy proceedings,” Taylor v. Freeland &
Kronz, 503 U. S. 638, 644. And Congress may enact additional provi
sions to address any difficulties should existing sanctions prove in
adequate. Pp. 16–17.
553 F. 3d 1193, affirmed.
THOMAS, J., delivered the opinion for a unanimous Court.
Cite as: 559 U. S. ____ (2010) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 08–1134
_________________
UNITED STUDENT AID FUNDS, INC., PETITIONER v.
FRANCISCO J. ESPINOSA
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[March 23, 2010]
JUSTICE THOMAS delivered the opinion of the Court.
Under Chapter 13 of the Bankruptcy Code (Code), a
debtor may obtain a discharge of certain government­
sponsored student loan debts only if failure to discharge
that debt would impose an “undue hardship” on the debtor
and his dependents. 11 U. S. C. §§523(a)(8), 1328. The
Federal Rules of Bankruptcy Procedure require bank­
ruptcy courts to make this undue hardship determination
in an adversary proceeding, see Rule 7001(6), which the
party seeking the determination must initiate by serving a
summons and complaint on his adversary, see Rules 7003,
7004, 7008. The debtor in this case filed a plan with the
Bankruptcy Court that proposed to discharge a portion of
his student loan debt, but he failed to initiate the adver­
sary proceeding as required for such discharge. The credi­
tor received notice of, but did not object to, the plan, and
failed to file an appeal after the Bankruptcy Court subse­
quently confirmed the plan. Years later, the creditor filed
a motion under Federal Rule of Civil Procedure 60(b)(4)
asking the Bankruptcy Court to rule that its order con­
firming the plan was void because the order was issued in
2 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
violation of the Code and Rules. We granted certiorari to
resolve a disagreement among the Courts of Appeals as to
whether an order that confirms the discharge of a student
loan debt in the absence of an undue hardship finding or
an adversary proceeding, or both, is a void judgment for
Rule 60(b)(4) purposes.
I
Between 1988 and 1989, respondent Francisco Espinosa
obtained four federally guaranteed student loans for a
total principal amount of $13,250. In 1992, Espinosa filed
a bankruptcy petition under Chapter 13. That Chapter
permits individual debtors to develop a plan to repay all or
a portion of their debts over a period of time specified in
the plan. See Nobelman v. American Savings Bank, 508
U. S. 324, 327 (1993); see also §§301(a), 1321; Fed. Rule
Bkrtcy. Proc. 3015(b). A proposed bankruptcy plan be­
comes effective upon confirmation, see §§1324, 1325, and
will result in a discharge of the debts listed in the plan if
the debtor completes the payments the plan requires, see
§1328(a).
Espinosa’s plan listed his student loan debt as his only
specific indebtedness. App. 15–18. The plan proposed to
repay only the principal on that debt, stating that the
remainder—the accrued interest—would be discharged
once Espinosa repaid the principal. Id., at 26.
As the Federal Rules of Bankruptcy Procedure require,
the clerk of the Bankruptcy Court mailed notice and a
copy of Espinosa’s plan to petitioner United Student Aid
Funds, Inc. (United), the creditor to whom Espinosa owed
the student loan debt.1 Id., at 34; see Rules 2002(b), (g)(2),
3015(d). In boldface type immediately below the caption,
——————
1 United
is a guaranty agency that administers the collection of feder­
ally guaranteed student loans in accordance with regulations promul­
gated by the United States Department of Education. See, e.g., 34 CFR
§682.200 et seq. (2009).
Cite as: 559 U. S. ____ (2010) 3
Opinion of the Court
the plan stated: “WARNING IF YOU ARE A CREDITOR
YOUR RIGHTS MAY BE IMPAIRED BY THIS PLAN.”
Id., at 23. The plan also noted the deadlines for filing a
proof of claim or an objection to the plan. Id., at 26–27.
United received this notice and, in response, filed a
proof of claim for $17,832.15, an amount representing both
the principal and the accrued interest on Espinosa’s stu­
dent loans. Id., at 35. United did not object to the plan’s
proposed discharge of Espinosa’s student loan interest
without a determination of undue hardship, nor did it
object to Espinosa’s failure to initiate an adversary pro­
ceeding to determine the dischargeability of that debt.
In May 1993, the Bankruptcy Court confirmed
Espinosa’s plan without holding an adversary proceeding
or making a finding of undue hardship. One month later,
the Chapter 13 trustee mailed United a form notice stat­
ing that “[t]he amount of the claim filed differs from the
amount listed for payment in the plan” and that “[y]our
claim will be paid as listed in the plan.” Id., at 44. The
form also apprised United that if United “wishe[d] to
dispute the above stated treatment of the claim,” it had
the “responsibility” to notify the trustee within 30 days.
Ibid. United did not respond to that notice.
In May 1997, Espinosa completed the payments on his
student loan principal, as required by the plan. Shortly
thereafter, the Bankruptcy Court discharged Espinosa’s
student loan interest.2
In 2000, the United States Department of Education
commenced efforts to collect the unpaid interest on Espi­
nosa’s student loans.3 In response, Espinosa filed a mo­
——————
2 The discharge order contained an apparent clerical error that the
courts below considered and addressed in adjudicating these proceed­
ings. See n. 4, infra.
3 After Espinosa completed payments under the plan, United as­
signed Espinosa’s loans to the Department under a reinsurance agree­
ment. After these proceedings began, United requested and received a
4 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
tion in 2003 asking the Bankruptcy Court to enforce its
1997 discharge order by directing the Department and
United to cease all efforts to collect the unpaid interest on
his student loan debt.
United opposed that motion and filed a cross-motion
under Federal Rule of Civil Procedure 60(b)(4) seeking to
set aside as void the Bankruptcy Court’s 1993 order con­
firming Espinosa’s plan. United made two arguments in
support of its motion. First, United claimed that the
provision of Espinosa’s plan authorizing the discharge of
his student loan interest was inconsistent with the Code,
which requires a court to find undue hardship before
discharging a student loan debt, §§523(a)(8), 1328(a), and
with the Bankruptcy Rules, which require the court to
make the undue hardship finding in an adversary proceed­
ing, see Rule 7001(6). Second, United argued that its due
process rights had been violated because Espinosa failed
to serve it with the summons and complaint the Bank­
ruptcy Rules require as a prerequisite to an adversarial
proceeding. See Rules 7003, 7004, 7008.
The Bankruptcy Court rejected both arguments, granted
Espinosa’s motion in relevant part, denied United’s cross­
motion, and ordered all claimants to cease and desist their
collection efforts. United sought review in the District
Court, which reversed. That court held that United was
denied due process because the confirmation order was
issued without service of the summons and complaint the
Bankruptcy Rules require.
Espinosa appealed to the Court of Appeals for the Ninth
Circuit, which issued an initial per curiam opinion re­
manding the case to the Bankruptcy Court to consider
correcting an apparent clerical error in its discharge or­
der.4 530 F. 3d 895, 899 (2008). The Bankruptcy Court
——————
recall of the loans from the Department. App. to Pet. for Cert. 63.
4 The one-page discharge order contained a paragraph that purported
Cite as: 559 U. S. ____ (2010) 5
Opinion of the Court
corrected the error, after which the Court of Appeals
resubmitted the case and reversed the judgment of the
District Court. The Court of Appeals concluded that by
confirming Espinosa’s plan without first finding undue
hardship in an adversary proceeding, the Bankruptcy
Court at most committed a legal error that United might
have successfully appealed, but that any such legal error
was not a basis for setting aside the confirmation order as
void under Rule 60(b). 553 F. 3d 1193, 1198–1202 (2008).5
In addition, the Court of Appeals held that although
Espinosa’s failure to serve United with a summons and
complaint before seeking a discharge of his student loan
debt violated the Bankruptcy Rules, this defect in service
was not a basis upon which to declare the judgment void
because United received actual notice of Espinosa’s plan
——————
to exclude “ ‘any debt . . . for a student loan’ ” from the discharge. 530
F. 3d 895, 896 (CA9 2008). That provision appeared irreconcilable with
the confirmation order, which contemplated the discharge of the inter­
est on Espinosa’s student loan debt. Suggesting that the Bankruptcy
Court may have automatically generated the discharge order without
tailoring it to the terms of the confirmation order, the Court of Appeals
remanded the case to the Bankruptcy Court to consider amending the
discharge order to conform to the confirmation order. Id., at 899; see
Fed. Rule Civ. Proc. 60(a) (authorizing a court to “correct a clerical
mistake or a mistake arising from oversight or omission”). On remand,
the Bankruptcy Court found that the text of its discharge order except­
ing Espinosa’s student loan debt from discharge “was inserted because
of a clerical mistake” and struck that language from the order. App. 48.
Although certain amici press the point, United has not challenged
the substance of the Bankruptcy Court’s amendment to the order or
asked us to consider whether such amendment was proper under Rule
60(a). See Brief for Petitioner 42; Reply Brief for Petitioner 20. Thus,
we express no view on those issues. See Kamen v. Kemper Financial
Services, Inc., 500 U. S. 90, 97, n. 4 (1991) (noting that “we do not
ordinarily address issues raised only by amici”).
5 In so doing, the Court of Appeals disagreed with two other Courts of
Appeals. See In re Mersmann, 505 F. 3d 1033, 1047–1049 (CA10 2007)
(en banc); Whelton v. Educational Credit Management Corp., 432 F. 3d
150, 154 (CA2 2005).
6 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
and failed to object. See id., at 1202–1205.6
We granted certiorari. 557 U. S. ___ (2009).
II
A discharge under Chapter 13 “is broader than the
discharge received in any other chapter.” 8 Collier on
Bankruptcy ¶1328.01, p. 1328–5 (rev. 15th ed. 2008).
Chapter 13 nevertheless restricts or prohibits entirely the
discharge of certain types of debts. As relevant here,
§1328(a) provides that when a debtor has completed the
repayments required by a confirmed plan, a bankruptcy
court “shall grant the debtor a discharge of all debts pro­
vided for by the plan or disallowed under section 502 of
this title, except,” inter alia, “any debt . . . of the kind
specified in [§523(a)(8)].” §1328(a)(2). Section 523(a)(8),
in turn, specifies certain student loan debts “unless ex­
cepting such debt from discharge . . . would impose an
undue hardship on the debtor and the debtor’s depend­
ents.”7 As noted, the Bankruptcy Rules require a party
——————
6 Three Courts of Appeals have reached the opposite conclusion on
similar facts. See In re Ruehle, 412 F. 3d 679, 682–684 (CA6 2005);
In re Hanson, 397 F. 3d 482, 486 (CA7 2005); In re Banks, 299 F. 3d
296, 302–303 (CA4 2002).
7 Section 523 provides:
“(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b)
of this title does not discharge an individual debtor from any debt—
. . . . .
“(8) unless excepting such debt from discharge under this paragraph
would impose an undue hardship on the debtor and the debtor’s de­
pendents, for—
“(A)(i) an educational benefit overpayment or loan made, insured, or
guaranteed by a governmental unit, or made under any program
funded in whole or in part by a governmental unit or nonprofit institu­
tion; or
“(ii) an obligation to repay funds received as an educational benefit,
scholarship, or stipend; or
“(B) any other educational loan that is a qualified education loan, as
defined in section 221(d)(1) of the Internal Revenue Code of 1986,
Cite as: 559 U. S. ____ (2010) 7
Opinion of the Court
seeking to determine the dischargeability of a student loan
debt to commence an adversary proceeding by serving a
summons and complaint on affected creditors. See supra,
at 4. We must decide whether the Bankruptcy Court’s
order confirming Espinosa’s plan is “void” under Federal
Rule Civil Procedure 60(b)(4) because the Bankruptcy
Court confirmed the plan without complying with these
requirements.8
A
The Bankruptcy Court’s order confirming Espinosa’s
proposed plan was a final judgment, see In re Optical
Technologies, Inc., 425 F. 3d 1294, 1300 (CA11 2005), from
which United did not appeal. Ordinarily, “the finality of
[a] Bankruptcy Court’s orders following the conclusion of
direct review” would “stan[d] in the way of challenging
[their] enforceability.” Travelers Indemnity Co. v. Bailey,
557 U. S. ___, ___ (2009) (slip op., at 1–2). Rule 60(b),
however, provides an “exception to finality,” Gonzalez v.
Crosby, 545 U. S. 524, 529 (2005), that “allows a party to
seek relief from a final judgment, and request reopening of
his case, under a limited set of circumstances,” id., at 528.
Specifically, Rule 60(b)(4)—the provision under which
United brought this motion—authorizes the court to re­
lieve a party from a final judgment if “the judgment is
void.” 9
——————
incurred by a debtor who is an individual.”
8 Because United brought this action on a motion for relief from judg­
ment under Rule 60(b)(4), our holding is confined to that provision. We
express no view on the terms upon which other provisions of the Bank­
ruptcy Rules may entitle a debtor or creditor to postjudgment relief.
9 Subject to certain exceptions, Bankruptcy Rule 9024 makes Rule
60(b) applicable to Chapter 13 proceedings. One such exception pro­
vides that “a complaint to revoke an order confirming a plan may be
filed only within the time allowed by” 11 U. S. C. §1330. Fed.
Rule Bkrtcy. Proc. 9024. Section 1330(a) imposes a 180-day time limit
for a party to seek revocation of a confirmation order “procured by
8 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
A void judgment is a legal nullity. See Black’s Law
Dictionary 1822 (3d ed. 1933); see also id., at 1709 (9th ed.
2009). Although the term “void” describes a result, rather
than the conditions that render a judgment unenforceable,
it suffices to say that a void judgment is one so affected by
a fundamental infirmity that the infirmity may be raised
even after the judgment becomes final. See Restatement
(Second) of Judgments 22 (1980); see generally id., §12.
The list of such infirmities is exceedingly short; otherwise,
Rule 60(b)(4)’s exception to finality would swallow the
rule.
“A judgment is not void,” for example, “simply because it
is or may have been erroneous.” Hoult v. Hoult, 57 F. 3d
1, 6 (CA1 1995); 12 J. Moore et al., Moore’s Federal Prac­
tice §60.44[1][a], pp. 60–150 to 60–151 (3d ed. 2007) (here­
inafter Moore’s). Similarly, a motion under Rule 60(b)(4)
is not a substitute for a timely appeal. Kocher v. Dow
Chemical Co., 132 F. 3d 1225, 1229 (CA8 1997); see
Moore’s §60.44[1][a], at 60–150. Instead, Rule 60(b)(4)
applies only in the rare instance where a judgment is
premised either on a certain type of jurisdictional error or
on a violation of due process that deprives a party of notice
or the opportunity to be heard. See United States v. Boch
Oldsmobile, Inc., 909 F. 2d 657, 661 (CA1 1990); Moore’s
——————
fraud.” Courts of Appeals disagree as to whether a Rule 60(b)(4)
motion should be treated as a “complaint to revoke” a plan subject to
§1330’s time limit and substantive limitation to motions based on
fraud. Compare Whelton, 432 F. 3d, at 156, n. 2, with In re Fesq, 153
F. 3d 113, 119, and n. 8 (CA3 1998). We need not settle that question,
however, because the parties did not raise it in the courts below. And
even under a theory that would treat United’s Rule 60(b)(4) motion as a
“complaint to revoke” the plan, United’s failure to file its motion within
§1330(a)’s 180-day deadline and its failure to seek relief on the basis of
fraud did not deprive those courts—and does not deprive us—of author­
ity to consider the motion on the merits because those limitations are
not jurisdictional. See Arbaugh v. Y & H Corp., 546 U. S. 500, 515–516
(2006); Reed Elsevier, Inc. v. Muchnick, ante, at 12–13.
Cite as: 559 U. S. ____ (2010) 9
Opinion of the Court
§60.44[1][a]; 11 C. Wright, A. Miller, & M. Kane, Federal
Practice & Procedure §2862, p. 331 (2d ed. 1995 and Supp.
2009); cf. Chicot County Drainage Dist. v. Baxter State
Bank, 308 U. S. 371, 376 (1940); Stoll v. Gottlieb, 305 U. S.
165, 171–172 (1938). The error United alleges falls in
neither category.
1
Federal courts considering Rule 60(b)(4) motions that
assert a judgment is void because of a jurisdictional defect
generally have reserved relief only for the exceptional case
in which the court that rendered judgment lacked even an
“arguable basis” for jurisdiction. Nemaizer v. Baker, 793
F. 2d 58, 65 (CA2 1986); see, e.g., Boch Oldsmobile, supra,at 661–662 (“[T]otal want of jurisdiction must be distin­
guished from an error in the exercise of jurisdiction, and
. . . only rare instances of a clear usurpation of power will
render a judgment void” (brackets and internal quotation
marks omitted)).
This case presents no occasion to engage in such an
“arguable basis” inquiry or to define the precise circum­
stances in which a jurisdictional error will render a judg­
ment void because United does not argue that the Bank­
ruptcy Court’s error was jurisdictional. Reply Brief for
Petitioner 5, 11. Such an argument would fail in any
event. First, §523(a)(8)’s statutory requirement that a
bankruptcy court find undue hardship before discharging
a student loan debt is a precondition to obtaining a dis­
charge order, not a limitation on the bankruptcy court’s
jurisdiction. See, e.g., Arbaugh v. Y & H Corp., 546 U. S.
500, 515–516 (2006). Second, the requirement that a
bankruptcy court make this finding in an adversary pro­
ceeding derives from the Bankruptcy Rules, see Rule Proc.
7001(6), which are “procedural rules adopted by the Court
for the orderly transaction of its business” that are “not
jurisdictional.” Kontrick v. Ryan, 540 U. S. 443, 454
10 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
(2004) (internal quotation marks omitted).
2
Although United concedes that the Bankruptcy Court
had jurisdiction to enter the order confirming Espinosa’s
plan, United contends that the court’s judgment is void
under Rule 60(b)(4) because United did not receive ade­
quate notice of Espinosa’s proposed discharge of his stu­
dent loan interest. Specifically, United argues that the
Bankruptcy Court violated United’s due process rights by
confirming Espinosa’s plan despite Espinosa’s failure to
serve the summons and complaint the Bankruptcy Rules
require for the commencement of an adversary proceeding.
We disagree.
Espinosa’s failure to serve United with a summons
and complaint deprived United of a right granted by a
procedural rule. See Fed. Rule Bkrtcy. Proc. 7004(b)(3).
United could have timely objected to this deprivation and
appealed from an adverse ruling on its objection. But this
deprivation did not amount to a violation of United’s
constitutional right to due process. Due process requires
notice “reasonably calculated, under all the circumstances,
to apprise interested parties of the pendency of the action
and afford them an opportunity to present their objec­
tions.” Mullane v. Central Hanover Bank & Trust Co., 339
U. S. 306, 314 (1950); see also Jones v. Flowers, 547 U. S.
220, 225 (2006) (“[D]ue process does not require actual
notice . . .”). Here, United received actual notice of the
filing and contents of Espinosa’s plan. This more than
satisfied United’s due process rights. Accordingly, on
these facts, Espinosa’s failure to serve a summons and
complaint does not entitle United to relief under Rule
60(b)(4).
B
Unable to demonstrate a jurisdictional error or a due
Cite as: 559 U. S. ____ (2010) 11
Opinion of the Court
process violation, United and the Government, as amicus,
urge us to expand the universe of judgment defects that
support Rule 60(b)(4) relief. Specifically, they contend
that the Bankruptcy Court’s confirmation order is void
because the court lacked statutory authority to confirm
Espinosa’s plan absent a finding of undue hardship. In
support of this contention, they cite the text of §523(a)(8),
which provides that student loan debts guaranteed by
governmental units are not dischargeable “unless” a court
finds undue hardship. 11 U. S. C. §523(a)(8) (emphasis
added). They argue that this language imposes a “ ‘self­
executing’ limitation on the effect of a discharge order”
that renders the order legally unenforceable, and thus
void, if it is not satisfied. Brief for Petitioner 23–24; Brief
for United States as Amicus Curiae 18 (quoting Tennessee
Student Assistance Corporation v. Hood, 541 U. S. 440,
450 (2004)). In addition, United cites §1325(a)(1), which
instructs bankruptcy courts to confirm only those plans
that comply with “the . . . applicable provisions” of the
Code. Reading these provisions in tandem, United argues
that an order confirming a plan that purports to discharge
a student loan debt without an undue hardship finding is
“doubly beyond the court’s authority and therefore void.”
Brief for Petitioner 13.
We are not persuaded that a failure to find undue hard­
ship in accordance with §523(a)(8) is on par with the
jurisdictional and notice failings that define void judg­
ments that qualify for relief under Rule 60(b)(4). As
noted, §523(a)(8) does not limit the bankruptcy court’s
jurisdiction over student loan debts.10 Supra, at 9–10; see
——————
10 Sections 1328(a) and 523(a)(8) provide that student loan debt is
dischargeable in a Chapter 13 proceeding if a court makes a finding of
undue hardship. In contrast, other provisions in Chapter 13 provide
that certain other debts are not dischargeable under any circumstances.
See, e.g., §§523(a)(1)(B), (C) (specified tax debts); §523(a)(5) (domestic
support obligations); §523(a)(9) (debts “caused by” the debtor’s unlawful
12 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
Hood, 541 U. S., at 447 (noting that “[b]ankruptcy courts
have exclusive jurisdiction over a debtor’s property”). Nor
does the provision impose requirements that, if violated,
would result in a denial of due process. Instead, §523(a)(8)
requires a court to make a certain finding before confirm­
ing the discharge of a student loan debt. It is true, as we
explained in Hood, that this requirement is “ ‘self­
executing.’ ” Id., at 450.11 But that means only that the
——————
operation of a vehicle while intoxicated). We express no view on the
conditions under which an order confirming the discharge of one of
these types of debt could be set aside as void.
11 The Government suggests that §523(a)(8)’s “self-executing” nature
derives in part from the text of §523(a), which states that “[a] discharge
under section 727 . . . or 1328(b) of this title does not discharge an
individual debtor from any debt,” including the student loan debts
specified in paragraph (8) (emphasis added); see Brief for United States
as Amicus Curiae 18; see also Reply Brief for Petitioner 1–2. That is
not what we concluded in Hood and, in this case, would be irrelevant in
any event.
In Hood, we described as “ ‘self-executing’ ” paragraph (8)’s instruc­
tion that student loan debt not be discharged “unless” an undue hard­
ship determination is made. 541 U. S., at 450. The “does not dis­
charge” language in §523(a), which applies generally to every
enumerated paragraph in that section—and to which we never referred
in Hood—was not relevant to our analysis. That is evident from the
authority we cited to support our description of §523(a)(8)’s condition as
“ ‘self-executing.’ ” E.g., id., at 450 (citing S. Rep. No. 95–989, p. 79
(1978), which states that “[p]aragraph (8) . . . is intended to be self­
executing” insofar as “the lender or institution is not required to file a
complaint to determine the nondischargeability of any student loan”
(emphasis added)).
In any event, the “does not discharge” language in §523(a) is inappli­
cable to this case. Section 523(a) provides that “[a] discharge under
section 727, 1141, 1228(a), 1228(b), or 1328(b) of [the Code] does not
discharge an individual debtor from” the debts described in §523(a)’s
enumerated paragraphs. But Espinosa did not seek a discharge under
“sections 727, 1141, 1228(a), 1228(b), or 1328(b).” He sought a dis­
charge under §1328(a), which provides that, upon completion of a
Chapter 13 plan, a bankruptcy court “shall grant the debtor a discharge
of all debts provided for by the plan . . . , except any debt . . . of the kind
specified in . . . paragraph . . . (5), (8), or (9) of section 523(a).” (Empha­
Cite as: 559 U. S. ____ (2010) 13
Opinion of the Court
bankruptcy court must make an undue hardship finding
even if the creditor does not request one; it does not mean
that a bankruptcy court’s failure to make the finding
renders its subsequent confirmation order void for pur­
poses of Rule 60(b)(4).12
Given the Code’s clear and self-executing requirement
for an undue hardship determination, the Bankruptcy
Court’s failure to find undue hardship before confirming
Espinosa’s plan was a legal error. See Part III, infra. But
the order remains enforceable and binding on United
because United had notice of the error and failed to object
or timely appeal.
United’s response—that it had no obligation to object to
Espinosa’s plan until Espinosa served it with the sum­
mons and complaint the Bankruptcy Rules require, Brief
for Petitioner 33—is unavailing. Rule 60(b)(4) does not
provide a license for litigants to sleep on their rights.
United had actual notice of the filing of Espinosa’s plan,
its contents, and the Bankruptcy Court’s subsequent
confirmation of the plan. In addition, United filed a proof
of claim regarding Espinosa’s student loan debt, thereby
submitting itself to the Bankruptcy Court’s jurisdiction
with respect to that claim. See Langenkamp v. Culp, 498
U. S. 42, 44 (1990) (per curiam). United therefore forfeited
its arguments regarding the validity of service or the
——————
sis added). Section 1328(a) thus incorporates by reference paragraph
(8) of §523(a), including that paragraph’s self-executing requirement for
an undue hardship determination, but does not incorporate the “does
not discharge” text of §523(a) itself.
12 United relies on our decisions in United States ex rel. Wilson v.
Walker, 109 U. S. 258 (1883), and Vallely v. Northern Fire & Marine
Ins. Co., 254 U. S. 348 (1920), to argue otherwise. Those authorities
are not controlling because they predate Rule 60(b)(4)’s enactment and
because we interpreted the statutes at issue in those cases as stripping
courts of jurisdiction—either over the parties, id., at 354–356, or the
res, Wilson, supra, at 265–266—and United concedes that the statutory
limit in this case is not jurisdictional. See supra, at 9.
14 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
adequacy of the Bankruptcy Court’s procedures by failing
to raise a timely objection in that court.
Rule 60(b)(4) strikes a balance between the need for
finality of judgments and the importance of ensuring that
litigants have a full and fair opportunity to litigate a
dispute. Where, as here, a party is notified of a plan’s
contents and fails to object to confirmation of the plan
before the time for appeal expires, that party has been
afforded a full and fair opportunity to litigate, and the
party’s failure to avail itself of that opportunity will not
justify Rule 60(b)(4) relief. We thus agree with the Court
of Appeals that the Bankruptcy Court’s confirmation order
is not void.
III
In issuing its judgment, however, the Court of Appeals
looked beyond the narrow question whether the Bank­
ruptcy Court’s order confirming Espinosa’s plan was void
under Rule 60(b)(4). It canvassed other bankruptcy court
decisions within the Circuit that presented a different
question—whether a bankruptcy court presented with a
debtor’s plan that proposes to discharge a student loan
debt, in the absence of an adversary proceeding to deter­
mine undue hardship, should confirm the plan despite its
failure to comply with the Code and Rules. The Court of
Appeals noted that some Bankruptcy Courts had declined
to confirm such plans “even when the creditor fail[ed] to
object to the plan.” 553 F. 3d, at 1205. The court disap­
proved that practice and overruled those cases, stating
that bankruptcy courts must confirm a plan proposing the
discharge of a student loan debt without a determination
of undue hardship in an adversary proceeding unless the
creditor timely raises a specific objection. Ibid. This, we
think, was a step too far.
As Espinosa concedes, Tr. of Oral Arg. 31, 36, a Chapter
13 plan that proposes to discharge a student loan debt
Cite as: 559 U. S. ____ (2010) 15
Opinion of the Court
without a determination of undue hardship violates
§§1328(a)(2) and 523(a)(8). Failure to comply with this
self-executing requirement should prevent confirmation of
the plan even if the creditor fails to object, or to appear in
the proceeding at all. See Hood, 541 U. S., at 450.13 That
is because §1325(a) instructs a bankruptcy court to con­
firm a plan only if the court finds, inter alia, that the plan
complies with the “applicable provisions” of the Code.
§1325(a) (providing that a bankruptcy court “shall confirm
a plan” if the plan “complies with the provisions of” Chap­
ter 13 and with “other applicable provisions of this title”);
see Johnson v. Home State Bank, 501 U. S. 78, 87 (1991);
see also §105(a) (authorizing bankruptcy courts to issue
“any order, process, or judgment that is necessary or
appropriate to carry out” the Code’s provisions).14 Thus,
contrary to the Court of Appeals’ assertion, the Code
makes plain that bankruptcy courts have the authority—
indeed, the obligation—to direct a debtor to conform his
——————
13 This is essential to preserve the distinction between Congress’
treatment of student loan debts in §523(a)(8) and debts listed elsewhere
in §523. Section 523(a)(8) renders student loan debt presumptively
nondischargeable “unless” a determination of undue hardship is made.
In contrast, the debts listed in §523(c), which include certain debts
obtained by fraud or “willful and malicious injury by the debtor,”
§523(a)(6), are presumptively dischargeable “unless” the creditor
requests a hearing to determine the debt’s dischargeability. The Court
of Appeals’ approach would subject student loan debt to the same rules
as the debts specified in §523(c), notwithstanding the evident differ­
ences in the statutory framework for discharging the two types of debt.
14 In other contexts, we have held that courts have the discretion, but
not the obligation, to raise on their own initiative certain nonjurisdic­
tional barriers to suit. See Day v. McDonough, 547 U. S. 198, 202, 209
(2006) (statute of limitations); Granberry v. Greer, 481 U. S. 129, 134
(1987) (habeas corpus petitioner’s exhaustion of state remedies).
Section 1325(a) does more than codify this principle; it requires bank­
ruptcy courts to address and correct a defect in a debtor’s proposed plan
even if no creditor raises the issue.
16 UNITED STUDENT AID FUNDS, INC. v. ESPINOSA
Opinion of the Court
plan to the requirements of §§1328(a)(2) and 523(a)(8).15
We are mindful that conserving assets is an important
concern in a bankruptcy proceeding. We thus assume
that, in some cases, a debtor and creditor may agree that
payment of a student loan debt will cause the debtor an
undue hardship sufficient to justify discharge. In such a
case, there is no reason that compliance with the undue
hardship requirement should impose significant costs on
the parties or materially delay confirmation of the plan.
Neither the Code nor the Rules prevent the parties from
stipulating to the underlying facts of undue hardship, and
neither prevents the creditor from waiving service of a
summons and complaint. See Fed. Rule Bkrtcy. Proc.
7004; Fed. Rule Civ. Proc. 4(k). But, to comply with
§523(a)(8)’s directive, the bankruptcy court must make an
independent determination of undue hardship before a
plan is confirmed, even if the creditor fails to object or
appear in the adversary proceeding. See supra, at 12.
IV
United argues that our failure to declare the Bank­
ruptcy Court’s order void will encourage unscrupulous
debtors to abuse the Chapter 13 process by filing plans
proposing to dispense with the undue hardship require­
ment in the hopes the bankruptcy court will overlook the
proposal and the creditor will not object. In the event the
objectionable provision is discovered, United claims, the
debtor can withdraw the plan and file another without
penalty.
We acknowledge the potential for bad-faith litigation
tactics. But expanding the availability of relief under Rule
——————
15 Bankruptcy courts appear to be well aware of this statutory obliga­
tion. See, e.g., In re Mammel, 221 B. R. 238, 239 (Bkrtcy. Ct. ND Iowa
1998) (“[W]hether or not an objection is presently lodged in this case,
the Court retains the authority to review this plan and deny confirma­
tion if it fails to comply with the confirmation standards of the Code”).
Cite as: 559 U. S. ____ (2010) 17
Opinion of the Court
60(b)(4) is not an appropriate prophylaxis. As we stated in
Taylor v. Freeland & Kronz, 503 U. S. 638 (1992),
“[d]ebtors and their attorneys face penalties under various
provisions for engaging in improper conduct in bankruptcy
proceedings,” id., at 644; see Fed. Rule Bkrtcy. Proc. 9011.
The specter of such penalties should deter bad-faith at­
tempts to discharge student loan debt without the undue
hardship finding Congress required. And to the extent
existing sanctions prove inadequate to this task, Congress
may enact additional provisions to address the difficulties
United predicts will follow our decision.
* * *
The judgment of the Court of Appeals for the Ninth
Circuit is affirmed.
It is so ordered.