United States Bankruptcy Appellate Panel of the Ninth Circuit
In re: CARLOS CARRION, JR., Debtor.
CARLOS CARRION, JR., Appellee. U.S. DEPARTMENT OF EDUCATION, Appellant, Adv. Pro. 17-90089-MM
Submitted without argument on May 23, 2019
from the United States Bankruptcy Court for the Southern
District of California Honorable Margaret M. Mann, Bankruptcy
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.
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.
agree with the Department. Accordingly, we REVERSE and
The educational loan
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.
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.
Carrion and Ms. Barajas separated in February 2011. Ms.
Barajas filed a petition for dissolution of marriage in June
The joint chapter 7 bankruptcy
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
schedules under penalty of perjury. The bankruptcy court
granted Mr. Carrion and Ms. Barajas their discharges in
The marital settlement agreement
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)."
Mr. Carrion's claim of identity theft
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 ...