Menu    6 ABR 94

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

In re: Case No. J98-00659-DMD

JACQUELINE FOWLER,

                              Debtor.
Bancap No. 98-1046
JACQUELINE FOWLER,
                              Plaintiff,

          v.

STATE OF ALASKA, COMMISSION ON POSTSECONDARY EDUCATION, and USA FUNDS,
                              Defendants.

Adversary No. J98-00659-001-DMD
Chapter 7

ORDER GRANTING MOTION TO DISMISS

(State of Alaska, Commission on Postsecondary Education)

A telephonic hearing on the State of Alaska, Commission on Postsecondary Education's ("ACPE") motion to dismiss was held before the undersigned on December 11, 1998. Robert Spitzfaden appeared on behalf of the plaintiff, Teresa Williams appeared for ACPE, and Michael Lindeman appeared for USA Funds. Having reviewed the pleadings on file in this proceeding and considered the arguments of counsel,

IT IS ORDERED that ACPE's motion to dismiss is granted. ACPE will be dismissed from this proceeding, without prejudice.

A judgment will be entered consistent with this order.

Discussion

In this adversary proceeding, the debtor seeks a determination that her outstanding student loan obligations to ACPE and USA Funds are discharged pursuant to 11 U.S.C. § 523(a)(8). ACPE filed a limited answer to the adversary complaint and moved to dismiss on the grounds that the Eleventh Amendment bars suit against it in federal court without its consent. 6 ABR 95   TOP   In her opposition to dismissal, the plaintiff argues that ACPE has consented to suit by virtue of AS 09.50.250, that she should be given leave to amend to name state officials in place of ACPE, under the doctrine of Ex Parte Young, (1) and that ACPE is not an entity of the state entitled to assert sovereign immunity.

The plaintiff's reliance on AS 09.50.250 is misplaced. A state's waiver of Eleventh Amendment immunity is found "only where stated by the most express language or by such overwhelming implication from the text as [ will ] leave no room for any other reasonable construction." (2) A state's Eleventh Amendment immunity is not waived by its consent to be sued in its own courts. (3) To constitute an effective waiver of Eleventh Amendment immunity, a state statute must clearly specify the intent of the state to be sued in federal court. (4)

Here, the plaintiff contends the state consented to suit in federal court by virtue of an amendment to AS 09.50.250 which occurred in 1992. Prior to the amendment, the first sentence of AS 09.50.250 provided, "A person or corporation having a contract, quasi-contract, or tort claim against the state may bring an action against the state in the superior court." This sentence was amended in 1992 to delete the language "in the superior court." The act making this amendment was entitled "Civil Procedure -- District Court Jurisdiction -- Actionable Claims," and the preamble to the act specified that it related "to the jurisdiction of the district court and to the district court's ability to hear actions as small claims." (5) The amendment broadened the state's consent to be sued in its own state courts, expanding jurisdiction to both the superior and district courts. It was not an express waiver, as asserted by the plaintiff, of the state's immunity from suit in federal court.

The most recent amendment to AS 09.50.250 supports this interpretation. In 1997, the first sentence of this statute was amended to specify, "A person or corporation having 6 ABR 96   TOP   a contract, quasi-contract, or tort claim against the state may bring an action against the state in a state court that has jurisdiction over the claim." (6) The reference to "a state court that has jurisdiction over the claim" was inserted as a "corrective amendment" to clarify that the state courts would have jurisdiction over certain types of claims against the state. (7) Finally, the Alaska Statutes have a provision which deals specifically with the state's waiver of sovereign immunity from suit in federal courts. AS 44.23.020(c) provides:

(c) Before January 1, 1999, the attorney general may, in a case that involves the state's title to submerged lands, or in any case in which the state seeks to allocate fault to the federal government or a federal employee under AS 09.17.080, waive the state's immunity from suit in federal court provided under the Eleventh Amendment to the Constitution of the United States. The expiration on January 1, 1999, of the attorney general's authority to waive the state's Eleventh Amendment immunity does not affect existing waivers in ongoing cases.

The state clearly has not consented to being sued in federal courts by virtue of AS 09.50.250. In prior bankruptcy proceedings, both this court and the United States District Court for the District of Alaska have found that ACPE and the Alaska Student Loan Corporation are agencies of the state which can assert sovereign immunity under the Eleventh Amendment of the United States Constitution. (8) Accordingly, notwithstanding the provisions of 11 U.S.C. § 106(a), ACPE cannot be sued in this court unless it so consents. (9)

Finally, the plaintiff contends she should be permitted leave to amend this complaint to name various state officials in place of ACPE, under the doctrine of Ex Parte Young. (10) This doctrine does not permit a party to circumvent the very real limitations imposed by the Eleventh Amendment simply by replacing the state as a defendant with its officials, 6 ABR 97   TOP   however. A state official may be sued in federal court, notwithstanding the Eleventh Amendment's grant of sovereign immunity, in certain situations where "prospective relief is sought against individual state officers in a federal forum based on a federal right." (11) Not all suits of this type fall within the doctrine. (12) It has been "tailored to conform as precisely as possible to those specific situations in which it is necessary to permit the federal courts to vindicate federal rights." (13) The state official being sued "must be cloaked with a duty to enforce the laws of the state and must threaten or be about to commence civil or criminal proceedings to enforce an unconstitutional act." (14) " [ A ] generalized duty to enforce state law or general supervisory power over the persons responsible for enforcing the challenged provision will not subject an official to suit." (15)

In the bankruptcy context, " [ p ] ersons aggrieved by a state's continuing violation of [ the bankruptcy code ] may obtain injunctive relief under Ex Parte Young in order to remedy a state officer's ongoing violation of Federal law." (16) While the bankruptcy court could issue an injunction prohibiting state officials from continuing collection efforts in violation of a bankruptcy discharge, it cannot render a dischargeability determination against the state or its officials absent their consent to be sued in the federal forum. (17)

It would serve no purpose to permit the plaintiff to amend her adversary complaint, because she cannot satisfy the Ex Parte Young criteria. The plaintiff has not alleged ongoing or imminent collection actions by the state, or any other action which would constitute  6 ABR 98    TOP   a violation of the Bankruptcy Code. Even if state officials were named in place of ACPE, the relief requested by plaintiff would remain, essentially, a determination under § 523(a)(8) of the dischargeability of a state funded student loan. Since state courts already have concurrent jurisdiction to determine the dischargeability of student loans, (18) this is not the type of federal right which must be preserved for federal adjudication. The plaintiff cannot successfully invoke this court's jurisdiction simply by replacing ACPE with certain state officials.

For the foregoing reasons, ACPE's motion to dismiss will be granted. The plaintiff can seek a determination of the dischargeability of her student loan obligation to ACPE in state court.

    DATED: January 12, 1999.

            BY THE COURT
            DONALD MacDONALD IV
            United States Bankruptcy Judge

1. 6 ABR 95   TOP   209 U.S. 123 (1908).

2. 2 6 ABR 95   TOP   Port Authority Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 305 (1990), citing Atascadero State Hospital v. Scanlon, 473 U.S. 234, 239-40 (1985).

3. 6 ABR 95   TOP   Feeney, 495 U.S. at 306.

4. 6 ABR 95   TOP   Id.

5. 6 ABR 95   TOP   Ch. 119, § 1, SLA 1992; 1992 Alaska Laws Ch. 119 (S.B. 101)(West 1999).

6. 6 ABR 96   TOP   AS 09.50.250 (West 1999) [ emphasis added ] .

7. 6 ABR 96   TOP   Ch. 32, § 9, SLA 1997; 1997 Alaska Laws Ch. 32, § 9 (H.B. 115)(West 1999).

8. 6 ABR 96   TOP   Nutter v. Alaska Commission on Post-Secondary Education (In re Nutter), 5 A.B.R. 398 (D. Alaska 1998); Moritz v. Alaska Student Loan Corp. (In re Moritz), Adv. No. A97-00970-001-DMD (Bancap No. 97-3301), at Docket Entry No. 14, entered July 22, 1998.

9. 6 ABR 96   TOP   See Elias v. United States (In re Elias), 218 B.R. 80 (B.A.P. 9th Cir. 1998).

10. 6 ABR 96   TOP   209 U.S. 123 (1908).

11. 6 ABR 97   TOP   Idaho v. Coeur d'Alene Tribe, 521 U.S. 261, 117 S.Ct. 2028, 2038 (1997).

12. 6 ABR 97   TOP   Id., 117 S.Ct. at 2034 (To interpret the doctrine in this fashion "would be to adhere to an empty formalism" which would undermine the limitations on federal jurisdiction imposed by the Eleventh Amendment.).

13. 6 ABR 97   TOP   Id., 117 S.Ct. at 2038.

14. 6 ABR 97   TOP   Snoeck v. Brussa, 153 F.3d 984, 987 (9th Cir. 1998).

15. 6 ABR 97   TOP   Id. at 986, citing Los Angeles County Bar Ass'n v. Eu, 979 F.2d 697, 704 (9th Cir. 1992).

16. 6 ABR 97   TOP   Franchise Tax Board v. Lapin (In re Lapin), 226 B.R. 637, 646 (B.A.P. 9th Cir. 1998), citing Schmitt v. Missouri Western State College (In re Schmitt) , 220 B.R. 68, 72 (Bankr. W.D. Mo. 1998).

17. 6 ABR 97   TOP   Id. at 10; see also Mitchell v. Calif. Franchise Tax Board (In re Mitchell), 222 B.R. 877, 886 (B.A.P. 9th Cir. 1998) (absent consent of state, bankruptcy court lacked subject matter jurisdiction to make dischargeability determination).

18. 6 ABR 98   TOP   28 U.S.C. § 1334(b); Lapin, 226 B.R. at 646-47.