Rule 60(b)(4)'s Applicability

1) Rule 60(b)(4) allows a party to seek relief from a final judgment that "is void," only where a judgment is premised either on a certain type of jurisdictional error or on a violation of due process that deprives party of notice and an opportunity to be heard. The Respondent's failure to serve summons and complaint deprived the Petitioner, United Student Aid, of a right granted by a procedural rule, but that deprivation did not amount to a violation of due process.


The Bankruptcy Court's lack of statutory authority to confirm Espinosa's Plan absent undue hardship did not void the plan

2) The Court held that just because the Bankruptcy Court lacked statutory authority to confirm Espinosa's plan absent an undue hardship finding under section 523(a)(8) did not make the confirmation order void. "Such failure is not on par with the jurisdictional and notice failings that define void judgments qualifying for Rule 60 (b)(4) relief." "The bankruptcy court must make an undue hardship finding even if the creditor does not request one and it does not mean that a bankruptcy court's failure to make the finding renders the subsequent confirmation order void for Rule 60 (b)(4) purposes. "


An adversary proceeding should be filed to determine if an undue hardship exists

3) The Court also held that the 9th Circuit erred in holding that bankruptcy courts must confirm a plan proposing the discharge of student loan debt without an undue hardship determination in an adversary proceeding unless the creditor timely raises a specific objection. "A Chapter 13 plan proposing such a discharge without the required determination violates sections 1328 (a)(2) and 523(a)(8).


The Supreme Court discourages unscrupulous use by debtors

Last - The court noted that "expanding the availability of Rule 60(b)(4) relief is not an appropriate prophylaxis for discouraging unscrupulous debtors from filing Ch. 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."