In re Aleckna

Student debt and sour grapes are the topics of this Third Circuit opinion. When Aleckna filed for Chapter 13 bankruptcy, she had completed her coursework but still owed California Coast University (“CCU”) tuition. The filing of her bankruptcy petition, however, imposed an “automatic stay” of all collection actions against her, and therefore enjoined CCU from trying to recover that debt during the proceedings. While her case was pending, Aleckna asked CCU to send her a copy of her transcript. CCU responded but would only provide her with an incomplete one that did not include a graduation date, explaining that a “financial hold” had been placed on her account. Aleckna filed a counterclaim against CCU in the Bankruptcy Court, arguing that it violated the automatic stay by refusing to give her a complete certified transcript. The Bankruptcy Court found in Aleckna’s favor, concluding that she was entitled to receive her full transcript, as well as damages and attorneys’ fees because the University’s violation was “willful”. CCU appealed to the District Court, arguing that its violation could not have been “willful” under the Third Circuit’s decision in In re University Medical Center. The District Court affirmed, and CCU again appealed. The Third Circuit also affirmed. First, the Court held that despite the amendment to § 362 of the Bankruptcy Code, which governs alleged violations of an automatic stay, University Medical remains good law. The Court then found that CCU failed to show that the law regarding the transcript issue was sufficiently unsettled within the meaning of University Medical. Therefore, the violation of the stay was willful.

ALECKNA