                                                             FILED
                                                             MAY 31 2019

                                                         SUSAN M. SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
                                                            OF THE NINTH CIRCUIT
                           ORDERED PUBLISHED

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                       BAP No.   SC-18-1234-FBKu

CARLOS CARRION, JR.,                         Bk. No.   11-10508-MM7

                 Debtor.                     Adv. Pro. 17-90089-MM

U.S. DEPARTMENT OF EDUCATION,

                 Appellant,

v.                                           OPINION

CARLOS CARRION, JR.,

                 Appellee.

               Submitted without argument on May 23, 2019

                             Filed – May 31, 2019

              Appeal from the United States Bankruptcy Court
                  for the Southern District of California

         Honorable Margaret M. Mann, Bankruptcy Judge, Presiding



Appearances:     Adam L. Braverman, Robert S. Brewer, Jr., and Glen F.
                 Dorgan on the brief for appellant U.S. Department of
                    Education; Jake A. Walton on the brief for appellee Carlos
                    Carrion, Jr.



Before: FARIS, BRAND, and KURTZ, Bankruptcy Judges.

FARIS, Bankruptcy Judge:

                                 INTRODUCTION

      Chapter 71 debtor Carlos Carrion, Jr. wanted to eliminate his

obligation to repay an educational loan. He did not contend that the loan

was dischargeable under § 523(a)(8). Instead, he argued that the loan was

unenforceable against him, contending that he was a victim of fraud and

identity theft and did not authorize the loan. The bankruptcy court rejected

these contentions, and Mr. Carrion did not appeal. But the court also held

that Mr. Carrion is liable for only one-half of the educational loan, based on

California Family Code (“CFC”) section 916 and a marital settlement

agreement (“MSA”) with his ex-wife. The educational loan creditor, U.S.

Department of Education (the “Department”), appeals this aspect of the

bankruptcy court’s decision. It argues that the bankruptcy court misapplied

CFC section 916 and that the entire debt should be nondischargeable as to

Mr. Carrion.

      We agree with the Department. Accordingly, we REVERSE and

REMAND.

      1
      Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532.

                                           2
                           FACTUAL BACKGROUND2

A.    The educational loan

      Mr. Carrion was married to Laura Barajas. In 2010, Mr. Carrion’s and

Ms. Barajas’ son Mikel intended to enroll at Biola University. To fund his

education, Mr. Carrion and Ms. Barajas considered various financing

options.

      In August 2010, the Department received an application for a Federal

Direct PLUS Loan purportedly on behalf of Mr. Carrion and containing

Mr. Carrion’s typed, electronic signature. The application also served as a

promissory note. The Department processed the loan and disbursed

$21,894 to Biola University to cover Mikel’s tuition costs.

      Mr. Carrion and Ms. Barajas separated in February 2011. Ms. Barajas

filed a petition for dissolution of marriage in June 2011.

B.    The joint chapter 7 bankruptcy

      Also in June 2011, Mr. Carrion and Ms. Barajas filed a joint chapter 7

bankruptcy petition. They scheduled the $21,894 educational loan debt

owed to the Department and indicated that the debt belonged to

Mr. Carrion by designating it with an “H” (for “husband”). Both

Mr. Carrion and Ms. Barajas electronically signed the petition and


      2
        We borrow from the bankruptcy court’s findings of fact (none of which was
challenged on appeal) and conclusions of law. We also exercise our discretion to review
the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re
AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).

                                            3
schedules under penalty of perjury.

      The bankruptcy court granted Mr. Carrion and Ms. Barajas their

discharges in September 2011.

C.    The marital settlement agreement

      In 2013, Mr. Carrion and Ms. Barajas finalized their divorce and

executed the MSA. The MSA listed their liabilities in Exhibit D to the

agreement and provided that “[t]he parties’ obligations have been divided

equally between the parties pursuant to their agreement.” It further stated

that “[w]ith the exception of the parties’ son’s student loan, each party shall

assume the debt incurred in his or her name after the date of separation as

their sole and separate property.” They initialed Exhibit D, which

confirmed that they would each be liable for “1/2” of the “Student Loan

(Son).”

D.    Mr. Carrion’s claim of identity theft

      The educational loan became due in January 2016, when the

deferment period ended. The Department sent Mr. Carrion a billing

statement indicating a $32,124.42 balance. Mr. Carrion denied that he owed

the debt and filed a police report, claiming that he was a victim of identity

theft and fraud. He also filled out an affidavit stating that Ms. Barajas

perpetrated the fraud and submitted the loan application without his

knowledge. The loan servicer rejected his claim of identity theft.




                                       4
E.    The adversary proceeding

      Mr. Carrion initiated an adversary proceeding against the

Department, seeking a determination that the debt was void because the

promissory note was executed as a result of identity theft and that the

educational loan debt was discharged. He stated that he “had no

knowledge of the Debt” and that Ms. Barajas “misappropriated Plaintiff’s

identity in order to execute the Note without Plaintiff’s knowledge or

consent” and “concealed the existence of the Debt from Plaintiff.”

      The Department asserted that the educational loan debt was

nondischargeable under § 523(a)(8) absent a showing of undue hardship.

F.    Trial and decision

      The bankruptcy court held a trial on Mr. Carrion’s complaint.3 At the

conclusion of trial, the bankruptcy court ordered additional briefing on the

issue of the application of the California Family Code, apparently

concerning the effect of the MSA on Mr. Carrion’s liability for the

educational loan debt.

      The Department contended that CFC section 916(a)(1) provides that a

person is personally liable for debt that he incurred before or during



      3
        Neither party ordered a copy of the trial transcript. We may presume that
nothing in the transcript would help the parties’ respective positions. See Gionis v.
Wayne (In re Gionis), 170 B.R. 675, 680-81 (9th Cir. BAP 1994) (“We are entitled to
presume that [an appellant who does not provide a transcript] does not think the trial
transcript helpful in that regard.”).

                                           5
marriage, regardless whether the debt was assigned to the person’s spouse

under the MSA. It acknowledged that subsection (a)(3) holds the nondebtor

spouse personally liable for the debt if it was assigned for payment by the

nondebtor spouse in the division of property. It argued that the MSA

“allocated to Plaintiff one-half of the obligation to repay the student loan at

issue in this case. Accordingly, should this Court reject Plaintiff’s identity

theft claims, Plaintiff will remain personally liable to the Department for

the full amount of the student loan pursuant to [CFC] Section 916(a)(1).”

      Mr. Carrion maintained that he did not owe any of the educational

loan debt. He denied that the student loan referred to in the MSA was the

Federal Direct PLUS Loan at issue.

      The bankruptcy court found Mr. Carrion’s identity theft claim

unpersuasive, particularly given his statements in his 2011 bankruptcy

schedules that he was liable for the loan and the 2013 MSA, which allocated

the liability for the debt equally between himself and Ms. Barajas. It ruled

that, even if the educational loan was obtained without his consent, he

ratified the loan.

      The bankruptcy court held that the Department had met its burden of

proving that the educational loan debt was excepted from discharge under

§ 523(a)(8). Of relevance to this appeal, the court held that, even though Mr.

Carrion ratified the loan and is liable for it, “the allocation of liability in the

MSA is nevertheless binding upon the Department, meaning that Barajas


                                         6
and Carrion are each liable for one/half of the loan.” The court concluded,

“One half of the unpaid loan balance of $36,071.91, or $18,035.96, is non-

dischargeable as to Carrion.”

      The Department timely appealed.

                                JURISDICTION

      The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334

and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUE

      Whether the bankruptcy court erred in holding that Mr. Carrion

owed only half of the student loan debt.

                          STANDARD OF REVIEW

      We review the bankruptcy court’s conclusions of law de novo. See

Litton Loan Servicing v. Garvida (In re Garvida), 347 B.R. 697, 703 (9th Cir.

BAP 2006). “De novo review requires that we consider a matter anew, as if

no decision had been made previously.” Francis v. Wallace (In re Francis),

505 B.R. 914, 917 (9th Cir. BAP 2014) (citations omitted).

                                 DISCUSSION

A.    The bankruptcy court erred in holding that Mr. Carrion was liable
      for only half of the educational loan debt.

      The sole issue on appeal is the bankruptcy court’s interpretation of

section 916 of the California Family Code. The Department essentially

argues that the bankruptcy court misconstrued section 916 by reading


                                        7
subsection (a)(2) in isolation without reference to subsection (a)(1). We

agree.

      Section 916 provides, in its entirety:

      (a) Notwithstanding any other provision of this chapter, after
      division of community and quasi-community property
      pursuant to Division 7 (commencing with Section 2500):

            (1) The separate property owned by a married person at
            the time of the division and the property received by the
            person in the division is liable for a debt incurred by the
            person before or during marriage and the person is
            personally liable for the debt, whether or not the debt was
            assigned for payment by the person’s spouse in the
            division.

            (2) The separate property owned by a married person at
            the time of the division and the property received by the
            person in the division is not liable for a debt incurred by
            the person’s spouse before or during marriage, and the
            person is not personally liable for the debt, unless the
            debt was assigned for payment by the person in the
            division of the property. Nothing in this paragraph affects
            the liability of property for the satisfaction of a lien on the
            property.

            (3) The separate property owned by a married person at
            the time of the division and the property received by the
            person in the division is liable for a debt incurred by the
            person’s spouse before or during marriage, and the
            person is personally liable for the debt, if the debt was
            assigned for payment by the person in the division of the


                                       8
           property. If a money judgment for the debt is entered
           after the division, the property is not subject to
           enforcement of the judgment and the judgment may not
           be enforced against the married person, unless the person
           is made a party to the judgment for the purpose of this
           paragraph.

     (b) If property of a married person is applied to the satisfaction
     of a money judgment pursuant to subdivision (a) for a debt
     incurred by the person that is assigned for payment by the
     person’s spouse, the person has a right of reimbursement from
     the person’s spouse to the extent of the property applied, with
     interest at the legal rate, and may recover reasonable attorney’s
     fees incurred in enforcing the right of reimbursement.

Cal. Fam. Code § 916.

     In plain english, section 916 means that, if Spouse A and Spouse B

divorce:

     (1) Spouse A remains liable for Spouse A’s own debts, even if an

MSA requires Spouse B to pay some or all of those debts;

     (2) Spouse A is not liable for any of Spouse B’s debts, except for any

of Spouse B’s debts that the MSA requires Spouse A to pay;

     (3) Spouse A is liable for any of Spouse B’s debts that the MSA

requires Spouse A to pay;

     (4) If Spouse A pays any debts that the MSA requires Spouse B to

pay, Spouse B must reimburse Spouse A; and

     (5) Vice versa.


                                      9
       The Department argues on appeal that the bankruptcy court

improperly limited Mr. Carrion’s liability for the educational loan debt by

only applying CFC section 916(a)(2) or (a)(3) and ignoring section

916(a)(1).4 It contends that, under section 916(a), “a debtor spouse remains

personally liable for his or her debts incurred during marriage, regardless

of the terms of any marital settlement agreement[,]” and the bankruptcy

court correctly concluded that Mr. Carrion is the debtor spouse.

Accordingly, Mr. Carrion “remains personally liable for his student loan

with the Department notwithstanding the 50-50 division of his debt in the

parties’ MSA.”

       We agree with the Department. Although we have not found any

case directly on point with regard to student loan debt, the language of the

statute (while hard to read) is not ambiguous. See Robinson v. Shell Oil Co.,

519 U.S. 337, 340 (1997) (The “first step in interpreting a statute is to

determine whether the language at issue has a plain and unambiguous

meaning with regard to the particular dispute in the case.”); Heritage Pac.

Fin. LLC v. Montano (In re Montano), 501 B.R. 96, 106 (9th Cir. BAP 2013)

       4
         The Department appears to misapprehend part of the bankruptcy court’s
ruling. It complains that the bankruptcy court “entered judgment discharging one-half
of the Student Loan, leaving a total of $18,035.96, plus interest, for which Appellee
remains liable.” The bankruptcy court did not discharge any part of the debt under
§ 523(a)(8); to the contrary, it held that the educational loan was covered by that section
and that Mr. Carrion did not demonstrate undue hardship. It held that Mr. Carrion
simply did not owe the other half of the debt and confirmed that “his” half of the debt
was “non-dischargeable as to Carrion.”

                                            10
(same, applying California law). Mr. Carrion remained personally liable for

his own educational loan debt, even though the MSA allocated half of that

debt to Ms. Barajas. See Huskey v. Huskey (In re Huskey), 183 B.R. 218, 221

(Bankr. S.D. Cal. 1995) (“The California Family Code recognizes that

personal liability remains for community obligations assigned to the other

spouse. The remedy is to pay the debt and seek reimbursement from the

spouse assigned the debt.” (citing Cal. Fam. Code §§ 916(a)(1) and (b)).

      The bankruptcy court erred when it decided that subsection (a)(2)

relieved Mr. Carrion of half of the debt. Pursuant to subsection (a)(2),

Ms. Barajas became liable for the half of Mr. Carrion’s educational loan

debt that the MSA assigned to her. See In re Marriage of Braendle, 46 Cal.

App. 4th 1037, 1042 (1996) (“Subdivision (a)(2) makes clear that former

community estate property received by the nondebtor spouse at division is

liable only if the nondebtor spouse is assigned the debt in division.”). But

subsection (a)(1) makes clear that Ms. Barajas’ assumption of half of the

debt did not relieve Mr. Carrion of liability for the entire debt.

      Accordingly, the bankruptcy court erred when it failed to apply

subsection (a)(1) and focused exclusively on subsections (a)(2) and (a)(3).

On remand, the bankruptcy court is directed to enter judgment that

Mr. Carrion is liable for the entire amount of the debt and that the debt is

nondischargeable as to Mr. Carrion.




                                       11
B.    Mr. Carrion’s judicial estoppel argument is meritless.

      Mr. Carrion does not address the Department’s points on appeal. He

only contends that the Department is judicially estopped from arguing that

the MSA is not controlling, because it relied on the MSA in the bankruptcy

court. His position is meritless.

      Judicial estoppel is an equitable doctrine that “precludes a party from

gaining an advantage by taking one position, and then seeking a second

advantage by taking an incompatible position.” Wilcox v. Parker (In re

Parker), 471 B.R. 570, 576 (9th Cir. BAP 2012), aff’d, 533 F. App’x 740 (9th

Cir. 2013) (quoting Whaley v. Belleque, 520 F.3d 997, 1002 (9th Cir. 2008)). We

consider three elements when applying judicial estoppel: “(1) whether a

party’s later position is ‘clearly inconsistent’ with its original position;

(2) whether the party has successfully persuaded the court of the earlier

position, and (3) whether allowing the inconsistent position would allow

the party to ‘derive an unfair advantage or impose an unfair detriment on

the opposing party.’” Id. (quoting United States v. Ibrahim, 522 F.3d 1003,

1009 (9th Cir. 2008)).

      The Department is not raising inconsistent arguments. It argued

before the bankruptcy court that the MSA was proof that Mr. Carrion

ratified the educational loan debt. It also raised the issue of liability for the

debt under CFC section 916(a)(1), claiming that Mr. Carrion was liable for

the entire amount of the debt. It further argued that, even if Mr. Carrion


                                        12
was the victim of identity theft, he was nevertheless liable for half of the

debt pursuant to the MSA under section 916(a)(3) .

      On appeal, the Department does not argue that the MSA is invalid or

must be ignored; it only contends that, even considering the terms of the

MSA, Mr. Carrion is still liable for the entire debt under CFC section

916(a)(1). These positions are not inconsistent, and there is no indication

that the Department is seeking an unfair advantage in this litigation.

                               CONCLUSION

      The bankruptcy court erred in holding that Mr. Carrion was liable for

only half of the educational loan debt. Accordingly, we REVERSE and

REMAND for entry of judgment in accordance with this decision.




                                       13
