COA on rehearing clarifies where to send payment

The Indiana Court of Appeals Monday rejected arguments that its prior decision regarding a student-loan debt owed to a bankrupt note-holder caused confusion as to who was owed and left the debtor open to the possibility of multiple judgments.

In September, the panel affirmed a trial court judgment against Douglas L. Krasnoff, awarding The Education Resources Institute $13,952.66. Krasnoff argued among other things that because TERI had gone through bankruptcy, it had no standing to pursue its claim against him. TERI Loan Holdings, LLC is TERI’s post-bankruptcy successor in interest.

The COA on rehearing affirmed its earlier opinion and brushed aside Krasnoff’s concern that the ruling meant, “if he pays the judgment amount over to TERI, another entity — TERI Loan Holdings, LLC, the real party in interest here — will also seek to recover from Krasnoff on the very same obligation. What would stop them from doing so?”

“We think his concern is misplaced,”  Judge L. Mark Bailey wrote for the panel in Douglas L. Krasnoff v. The Education Resources Institute, 49A04-1501-CC-3. “There is but one claim underlying the entirety of the litigation: Krasnoff’s liability on the promissory note. Judgment was entered against Krasnoff with respect to his liability on the note in litigation where TERI was ratified as a litigant. As a result, any effort on the part of TERI Loan Holdings to pursue a claim on the note would be subject to dismissal as res judicata — that is, the doctrine of claim preclusion would operate to avoid the multiple inconsistent liability of which Krasnoff now complains.
 

“Krasnoff also contends in a footnote that “[i]t is not clear how or to whom payment could even be made,” Bailey wrote. “The matter is far from vexing. We held in our prior opinion that the Trust ratified the action, and the Trust transferred its interest in the note to TERI Loan Holdings. Krasnoff would therefore make payment to TERI Loan Holdings or to its designee.  This, too, would serve to resolve Krasnoff’s concerns with TERI Loan Holdings seeking a second judgment on the note.”