Court Opinion

ID: 854866
Source: CourtListenerOpinion
Date Created: 2013-03-12 14:01:39.0854+00
Date Added: 2024-06-11T15:34:53.440445
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                              Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                        File Name: 13a0063p.06

                 UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT
                                     _________________

                                               X
                                                -
 In re: THOMAS J. ALFES,
                                                -
                                Debtor.
 _____________________________________          -
                                                -
                                                    No. 11-2159
 THOMAS J. ALFES,
                                                ,
                                                 >
                                                -
                              Appellant,

                                                -
                                                -
         v.
                                                -
                                                -
                                                -
 EDUCATIONAL CREDIT MANAGEMENT

                                   Appellee. -
 CORPORATION,
                                               N
                 Appeal from the United States District Court
                for the Eastern District of Michigan at Detroit.
           No. 2:10-cv-14610—Marianne O. Battani, District Judge.
                                       Argued: July 20, 2012
                             Decided and Filed: March 12, 2013
        Before: BOGGS and WHITE, Circuit Judges; BLACK, District Judge.*

                                       _________________

                                             COUNSEL
ARGUED: Larry J. Saylor, MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.,
Detroit, Michigan, for Appellant. Adam C. Trampe, EDUCATIONAL CREDIT
MANAGEMENT CORPORATION, Oakdale, Minnesota, for Appellee. ON BRIEFS:
Larry J. Saylor, MILLER, CANFIELD, PADDOCK AND STONE, P.L.C., Detroit,
Michigan, Michael D. Lieberman, LIEBERMAN, GIES & COHEN, PLLC, Farmington
Hills, Michigan, for Appellant. Adam C. Trampe, A.L. Brown, EDUCATIONAL
CREDIT MANAGEMENT CORPORATION, Oakdale, Minnesota, for Appellee.

         *
           The Honorable Timothy S. Black, United States District Judge for the Southern District of Ohio,
sitting by designation.

                                                    1
No. 11-2159            Alfes v. ECMC                                                                Page 2

                                         _________________

                                               OPINION
                                         _________________

         HELENE N. WHITE, Circuit Judge. Thomas J. Alfes appeals the district-court
judgment affirming the bankruptcy court’s order granting summary judgment in favor
of Educational Credit Management Corporation (ECMC). We AFFIRM.

                                                     I.

         Between 1982 and 1997, Alfes took out student loans funded in whole or in part
by the Federal Family Education Loan Program (FFELP). Alfes consolidated his
student-loan debt and, on the final consolidation, SunTrust Bank (SunTrust) was the
lender and obligee on the consolidated note (Note) and the Pennsylvania Higher
Education Assistance Agency (PHEAA) was the guarantor. Alfes filed a petition for
relief under Chapter 7 of the Bankruptcy Code in May 2005, and the bankruptcy court
entered a general discharge of Alfes’s debts on September 30, 2005.

         Subsequently, Alfes initiated an adversary proceeding seeking a declaration that
the debt under the Note had been discharged, naming both SunTrust and PHEAA as
defendants.      Alfes’s complaint alleged that because the student loans had been
consolidated, the Note no longer constituted an “educational loan” under 11 U.S.C.
§ 523(a)(8)(A) and therefore had been discharged with his ordinary debt.1

         Both SunTrust and PHEAA failed to timely answer or otherwise respond to
Alfes’s complaint. SunTrust assigned its interest under the Note to PHEAA on October
28, 2005. The bankruptcy court entered a default judgment against SunTrust on
November 18, 2005, ordering “the relief sought in [Alfes’s] complaint that [SunTrust’s]
claim against [Alfes] is dischargeable.”

         1
             The Bankruptcy Code, 11 U.S.C. § 523(a)(8)(A)(i), states, “[a] discharge under section 727 . . .
of this title does not discharge an individual debtor from any debt . . . unless excepting such debt from
discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents,
for . . . an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit,
or made under any program funded in whole or in part by a governmental unit or nonprofit institution.”
No. 11-2159        Alfes v. ECMC                                                  Page 3

        In the interim, ECMC filed a motion to substitute for PHEAA and answered
Alfes’s complaint on October 26, 2005. ECMC’s motion for substitution stated that
PHEAA had transferred the Note to ECMC and that ECMC was therefore the real party
in interest. ECMC’s answer stated that “[Alfes] is indebted to ECMC for educational
loans made to [Alfes] by ECMC’s predecessor in interest, various banks and
governmental guarantors.” However, PHEAA’s transfer to ECMC did not actually occur
until weeks later on December 2, 2005, a fact the parties did not learn until December
7, 2005.

        In the interim, on December 5, the bankruptcy court denied ECMC’s motion to
substitute for lack of standing. PHEAA immediately filed an answer to Alfes’s
complaint to avoid an entry of default, but the bankruptcy court clerk had entered a
default against PHEAA the same day.

        On December 8, ECMC filed a second motion to substitute and PHEAA filed a
motion to set aside the entry of default. The bankruptcy court entered a default judgment
against PHEAA on December 9, 2005, and closed the bankruptcy case on January 4,
2006.

        On January 23, 2006, the bankruptcy court reopened the adversary proceeding
and granted PHEAA’s motion to set aside the default judgment. The court entered a
stipulated order substituting ECMC for PHEAA on February 17, 2006. On ECMC and
Alfes’s cross-motions on the issue whether consolidation loans are “educational loans”
under 11 U.S.C. § 523(a)(8), the bankruptcy court denied Alfes’s motion for summary
judgment and granted ECMC’s motion to dismiss on April 17, 2006, concluding that a
holder of consolidated student loans is an educational lender for the purposes of
11 U.S.C. § 523(a)(8)(A) and that the consolidated loan was therefore nondischargeable
absent a showing of undue hardship. Alfes did not appeal that decision.

        ECMC transferred the Note back to SunTrust, which, through its servicer
American Education Services (AES), resumed collection on the Note. Alfes refused to
pay, asserting that the debt had been discharged by the default judgment against
SunTrust.
No. 11-2159        Alfes v. ECMC                                                   Page 4

       On December 18, 2008, Alfes filed a motion to reopen the adversary proceeding,
arguing that AES was bound by the default judgment against SunTrust and was therefore
enjoined from collecting on the Note. Alfes sought entry of a new order prohibiting
SunTrust, or any future successor in interest, from collecting on the Note, sanctions for
AES/SunTrust’s “knowing and intentional violation” of the November 18, 2005,
discharge order, and attorney’s fees.

       SunTrust transferred the Note back to ECMC for the purpose of defending
against Alfes’s claims, and PHEAA, ECMC, and SunTrust filed a joint response to
Alfes’s motion to reopen on January 20, 2009, arguing, inter alia, that student-loan
guarantors have claims that are “separate and distinct” from those received by
assignment from student-loan lenders. Therefore, they argued, the default judgment
against SunTrust as lender did not bind PHEAA and ECMC in their capacity as
guarantors.

       On October 15, 2009, the bankruptcy court granted Alfes’s motion to reopen the
adversary proceeding and set a hearing date on the issue of damages. No hearing was
held, however, because the parties informed the court that they were in settlement
negotiations.

       In or around May of 2010, the parties entered into a confidential settlement
agreement under which Alfes agreed to limit his claim against SunTrust to costs and
attorney’s fees and, in exchange, ECMC agreed that any further claims regarding Alfes’s
remaining obligation under the Note, “regardless of the theory of liability and regardless
of whether such claim arises under the promissory notes, guaranty, or otherwise, shall
be brought on or before May 17, 2010.”

       On May17, 2010, ECMC filed a complaint seeking a declaratory judgment that
the debt was nondischargeable by virtue of the April 17, 2006, judgment in its favor,
thereby initiating a second adversary proceeding. On May 18, ECMC filed an amended
complaint, which, while largely identical to the May17 complaint, further clarified
No. 11-2159           Alfes v. ECMC                                                             Page 5

PHEAA/ECMC’s rights as guarantor under the Note.2 Alfes moved to dismiss the
amended complaint, arguing that it added a new claim and should have been barred by
the settlement agreement’s May17, 2010, deadline. The bankruptcy court denied Alfes’s
motion, holding that the amended complaint related back because it did not assert “any
substantively different claim” and did not result in unfair surprise to Alfes. The
bankruptcy court’s order denying Alfes’s motion to dismiss the amended complaint
ordered the parties to file cross-motions for summary judgment.

         In August 2010, the parties filed cross-motions for summary judgment, Alfes
arguing that the default judgment against SunTrust should bar, as res judicata, ECMC’s
nondischargeability claim, and ECMC arguing that the later dismissal order in its favor
should bar Alfes’s claim and that the default judgment against SunTrust could not bind
PHEAA/ECMC in their capacity as guarantors. The bankruptcy court granted ECMC’s
motion, holding that its April 17, 2006 order granting PHEAA/ECMC’s motion to
dismiss for failure to state a claim had preclusive effect because that order was a final
decision on the merits, the current action was between the same parties, and the issue
before it, i.e., whether Alfes’s debt to ECMC was dischargeable, had been litigated.
Further, the bankruptcy court held that the earlier default judgment against SunTrust did
not bar ECMC’s claim because SunTrust was not a party in the second adversary
proceeding. The court did not address ECMC’s argument that it had “separate and
distinct” rights as guarantor.

         On appeal, the district court affirmed the bankruptcy court’s denial of Alfes’s
motion to dismiss ECMC’s May 18 amended complaint and affirmed that the April 17,
2006 final judgment in favor of ECMC was an absolute bar to Alfes’s claims in the
second adversary proceeding. Regarding the amended complaint, the district court
observed that because the Federal Rules of Civil Procedure apply in bankruptcy

         2
           The original (May 17) complaint alleged that PHEAA, as ECMC’s predecessor in interest, had
purchased the Note from SunTrust in October of 2005. The amended (May 18) complaint revised this
allegation to say that PHEAA had purchased the Note from SunTrust under the guaranty agreement. The
amended complaint added the allegation that the November 18, 2005, default judgment against SunTrust
should not control, as SunTrust never held any guarantor interest in the Note, and that SunTrust did not
hold any interest in the Note at the time of the default judgment.
No. 11-2159        Alfes v. ECMC                                                   Page 6

adversary proceedings, a party may amend its pleading once as a matter of course and
the amendment will relate back to the date of the original complaint provided the claim
arises out of the same “conduct, transaction, or occurrence.” The district court
concluded that ECMC properly availed itself of this rule and noted that Alfes knew the
bases of ECMC’s claims and was not prejudiced by the amendment. On the application
of res judicata, the district court held that although the November 18, 2005 default
judgment was binding with respect to SunTrust, the bankruptcy court later set aside the
default judgment against PHEAA, and that ECMC, after its substitution, successfully
litigated on the merits. Additionally, the district court noted that Alfes did not appeal
the bankruptcy court’s judgment in favor of ECMC, and that “the time for Alfes[] to
challenge that final order has long since passed.”

       Alfes timely appealed.

                                           II.

       When reviewing appeals originating in bankruptcy courts, “we directly review
the bankruptcy court’s decision rather than the district court’s review of the bankruptcy
decision. See In re M.J. Waterman & Assocs., Inc., 227 F.3d 604, 607 (6th Cir. 2000).
We review the bankruptcy court’s factual findings for clear error and its conclusions of
law de novo. Id. In the present case, the facts are not disputed, and this appeal presents
pure questions of law that we review de novo. Further, “[b]ecause this court’s de novo
review involves only application of legal propositions to the undisputed facts in the
record, we may affirm on any grounds supported by the record even if different from the
reasons of the district court.” Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters,
Inc., 280 F.3d 619, 629 (6th Cir. 2002). The bankruptcy court’s application of res
judicata is a question of law we review de novo. See Bates v. Twp. of Van Buren,
459 F.3d 731, 734 (6th Cir. 2006).

                          A. ECMC’s Claims as Guarantor

       Alfes argues that because his debt under the Note was discharged by the default
judgment against SunTrust, res judicata barred ECMC as the assignee of SunTrust’s
No. 11-2159        Alfes v. ECMC                                                 Page 7

interest from relitigating the issue of dischargeability, and the bankruptcy court thus
erred in denying his motion for summary judgment. This argument misses the mark.

       ECMC concedes that whatever interest it acquired from SunTrust through
Suntrust’s assignment in the capacity of lender is limited by the 2005 default judgment
against SunTrust. Instead, ECMC argues that it retains a valid interest under the Note
in its capacity as guarantor, which it acquired by assignment from PHEAA and upon
substitution in the first adversary proceeding. The guaranty interest under the Note is
“separate and distinct” from the interest held by SunTrust as lender. Thus, the primary
question on appeal concerns the scope of PHEAA/ECMC’s remaining interest in its
“separate and distinct” capacity as guarantor, and whether the default judgment against
SunTrust discharged that interest so as to extinguish ECMC’s rights acquired by
assignment from PHEAA.

               1. Guarantor rights in bankruptcy proceedings

       Alfes argues that under the laws of guaranty, the principal relationship under a
note is that between the borrower and lender, and any guaranty rights are established in
a separate contractual relationship between the lender and the guarantor. Therefore,
Alfes claims, PHEAA/ECMC, in its capacity as third-party guarantor, has no interest
under the Note between Alfes and SunTrust, i.e., PHEAA did not have, and could not
assign to ECMC, the right to defend the Note. Rather, Alfes contends, ECMC may only
assert claims for reimbursement, restitution, and subrogation, which do not arise under
the Note.

       Alfes’s argument fails to recognize the independent rights a guarantor may assert
under bankruptcy law. It is well-settled that when a debtor successfully obtains a
discharge through bankruptcy, the guarantor holds a “claim against the debtor, and as
such, [is considered] a creditor” for the purposes of bankruptcy proceedings. United
States v. Erkard, 200 B.R. 152, 154 (N.D. Ohio 1996). See also In re H & S Transp.
Co., 939 F.2d 355, 359 (6th Cir. 1991) (holding that the “guarantor of debtor’s loan is
a ‘creditor’ by virtue of his right to reimbursement from debtor.”); 5-547 Collier on
Bankruptcy ¶ 547.03 (“The guarantor holds a contingent claim against the debtor that
No. 11-2159         Alfes v. ECMC                                                     Page 8

becomes fixed when the guarantor pays the creditor whose claim was guaranteed or
insured.”). The bankruptcy court’s initial discharge of Alfes’s debt stated that creditors
are not prohibited from collecting on nondischargeable debt, which includes “[d]ebts for
most student loans.” Because a guarantor is a “creditor” for the purpose of bankruptcy
actions, guarantors of debt held by lenders also have a right to collect on and defend the
nondischargeability of a note in bankruptcy proceedings.

        Erkard is particularly instructive. There, the debtor-defendant’s educational
loans were purchased by a private lender. After the debtor received a general discharge
order, the lender filed a claim with the guarantor, the U.S. Department of Health and
Human Services, which paid the outstanding debt in return for assignment of the note.
The debtor initiated an adversary proceeding against the lender seeking a discharge of
the educational loans. The lender failed to answer, and the bankruptcy court entered a
default judgment and ordered the loan discharged. The United States was never added
as a party.

        The United States brought an action seeking repayment from the debtor. The
debtor defended on the basis that the default judgment entered against the lender had
discharged the debt, precluding the United States from collecting on the note as
guarantor.    The Erkard court observed that upon payment on the guaranty and
assignment of the note, the United States held two parallel claims on the outstanding
debt: “[T]he United States became a creditor . . . based on its status as assignee of the
notes, this being in addition to its preexisting status as a creditor based upon its position
as the guarantor of the same notes.” Erkard, 200 B.R. at 153. The court held that “[a]t
all times relevant to the proceedings in bankruptcy, the United States was the guarantor
of the notes held by [the lender]. As a guarantor, the United States was a holder of a
contingent claim against the debtor and, as such, was a creditor entitled to notice of the
debtor’s bankruptcy petition.” Id. at 154. The court concluded that the United States,
as guarantor of the note, held an independent contingent claim against the debtor
notwithstanding the default judgment entered against the lender. Id.
No. 11-2159         Alfes v. ECMC                                                    Page 9

        In the present case, PHEAA, like the United States in Erkard, was at all times a
guarantor of the Note held by SunTrust. PHEAA was a named party in the original
action, and as guarantor held a contingent claim on Alfes’s debt and a right to defend the
Note. These same rights passed to ECMC by assignment.

        Conversely, the facts of In re Bernal, 207 F.3d 595 (9th Cir. 2000), on which
Alfes relies, are distinguishable. In Bernal, ECMC acquired its rights as guarantor by
assignment after a default judgment had entered against the original guarantor. The
court held that the default judgment against the original guarantor barred ECMC as
assignee because “ECMC was bound by what had gone on before.” Id. at 598.

        In contrast, here ECMC acquired its rights as guarantor by assignment before the
default judgment against PHEAA on December 9, 2005.                 More important, the
bankruptcy court set aside the default judgment against PHEAA and entered a final
judgment on the merits in favor of ECMC, holding the debt nondischargeable.

        Therefore, while the default judgment against SunTrust limits ECMC’s claim as
assignee of the Note, it has no effect on its separate and distinct rights as guarantor. See
In re Garmhausen 262 B.R. 217, 222–23 (Bankr. E.D.N.Y. 2001) (The “mere fact that
[the guarantor] now holds both [a claim by assignment from the lender and a claim
reserved as guarantor] does not transform them into one. . . . [The] guarantor is not
bound by the default judgment entered against [the lender] on the underlying
obligation.”); In re Wedell, 329 B.R. 59, 61 (W.D. Wash. 2005) (“[The guarantor’s
rights] are distinct from those of the [lender] and are not automatically discharged simply
because [the guarantor] also stood in the shoes of the defaulted lender.”)

                2. Res judicata

        The doctrine of res judicata provides that “a final judgment on the merits of an
action precludes the parties or their privies from relitigating issues that were or could
have been raised in a prior action.” Kane v. Magna Mixer Co., 71 F.3d 555, 560
(6th Cir. 1995) (internal quotation marks omitted). Res judicata is based on the
following four elements:
No. 11-2159        Alfes v. ECMC                                                  Page 10

       (1) a final decision on the merits by a court of competent jurisdiction; (2)
       a subsequent action between the same parties or their privies; (3) an issue
       in the subsequent action which was litigated or which should have been
       litigated in the prior action; and (4) an identity of the causes of action.

Id.

       Alfes argues that the bankruptcy court erred in giving preclusive effect to its
April 17, 2006 order holding the debt nondischargeable. Conversely, Alfes argues that
ECMC, as SunTrust’s assignee, must be bound by the November 18, 2005 default
judgment against SunTrust.

       Alfes’s argument fails in the face of PHEAA/ECMC’s separate and distinct rights
as guarantor. In the second adversary proceeding, the bankruptcy court, noting the
contradictory res judicata claims, properly held that the default judgment against
SunTrust did not involve the same parties as the current action. While any claim by
ECMC as SunTrust’s assignee is barred by the default judgment against SunTrust,
ECMC’s claims as guarantor originate from PHEAA, not SunTrust. Therefore, ECMC’s
guaranty claim in the second adversary proceeding was not foreclosed by the default
judgment against SunTrust.

       In contrast, the April 17, 2006 dismissal of Alfes’s claim should be given res
judicata effect because that action involved Alfes and ECMC in its capacity as
guarantor. The final decision in ECMC’s favor, as the successor in interest to PHEAA,
resolved all claims in the adversary proceeding and Alfes did not appeal that judgment.
Therefore, the district court properly held that the judgment in ECMC’s favor declaring
the debt nondischargeable had binding res judicata effect with respect to Alfes’s claims
in the second adversary proceeding.

                                           III.

       Alfes challenges the bankruptcy court’s denial of his motion to dismiss ECMC’s
amended complaint. He contends that the district court’s determination that the amended
complaint related back because it did not assert “any substantively different claim” and
did not result in unfair surprise to Alfes is erroneous because the amended complaint
No. 11-2159         Alfes v. ECMC                                                    Page 11

added the factual claim that ECMC paid the guaranty to SunTrust, thus effectively
alleging a new cause of action as guarantor.

        The settlement agreement between Alfes, SunTrust, and ECMC states in relevant
part:

        SunTrust, ECMC, and their agents agree that any claim against Debtor
        in connection with the student loans, regardless of the theory of liability
        and regardless of whether such claim arises under the promissory notes,
        guaranty, or otherwise, shall be brought on or before May 17, 2010. This
        provision shall not be construed to waive or extend any limitation or
        appeal period or any defense related thereto.

        Alfes argues that the contractual May 17, 2010 deadline under the settlement
agreement bars ECMC’s May18 amended complaint and that, because the amended
complaint asserted a new claim under a different theory, the amendment violated the
settlement agreement. ECMC responds that while the settlement agreement limits the
time to bring new claims, it is silent on the timing of amendments and whether the rules
of civil procedure apply to allow relation back. Further, both complaints seek a
declaratory judgment that Alfes’s student loans were not discharged.

        Federal Rule of Civil Procedure 15 applies in bankruptcy adversary proceedings.
See Fed. R. Bankr. P. 7015. A party is allowed to amend its pleading “once as a matter
of course” within twenty-one days after serving it. Fed. R. Civ. P. 15(a)(1). This rule
“gives plaintiffs an absolute right to amend their complaint one time before a responsive
pleading is served.” Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 420 (6th Cir.
2000). Rule 15(c) provides that where the statute of limitations has run, an amended
complaint will relate back to the date of the original pleading when “the amendment
asserts a claim or defense that arose out of the conduct, transaction, or occurrence set
out” in the original pleading. See Fed. R. Civ. P. 15(c)(1)(B).

        The bankruptcy court concluded:

        [The amended complaint] clearly relates back. It does not assert any
        substantively different claim, whether it states the facts more accurately
        is . . . subject to dispute. . . . But most importantly there are no surprises
No. 11-2159        Alfes v. ECMC                                                 Page 12

       in the amended complaint. The debtor has known of the creditor’s
       position on this, I think it’s fair to say for years.

Thus, the relevant questions on appeal are whether the May 18 amended complaint sets
forth a new claim under a different theory and, if so, whether the rules of procedure can
be used to allow relation back of the amended complaint.

                                           A.

       On the first question, the bankruptcy court did not err in determining that the
original and amended complaints asserted the same substantive claims. Close analysis
of the original and amended complaints reveals that the claims asserted were
substantively identical.

       Alfes claims that two amended provisions, ¶¶ 30 and 66, added a previously
unasserted claim that PHEAA held rights as guarantor under the Note. Paragraph 30 of
the original complaint alleges that on October 5, 2005, “PHEAA purchased the Note
from SunTrust,” whereas the amended paragraph states that “PHEAA paid SunTrust as
the guarantee, and SunTrust transferred the Note to PHEAA.”

       Alfes’s claim that ECMC’s original complaint made no mention of PHEAA’s
payment under a guaranty disregards several other provisions in the original complaint
that clearly set forth PHEAA/ECMC’s status as guarantor. Paragraph 2 states that
ECMC “provides specialized guarantor services . . . including the transfer of title to
certain student loan accounts on which the student loan borrower has filed a bankruptcy
petition.” This provision was unaltered in the amended complaint. Similarly, ¶ 18,
which appears as ¶ 19 in the amended complaint but remains otherwise unaltered, states
that “PHEAA was the guarantor, insuring the Note under the FFELP.” Thus, the original
complaint sufficiently asserted PHEAA/ECMC’s status as guarantor under the Note and
provided Alfes with notice of ECMC’s claims in that capacity.

       As guarantor, PHEAA held a contingent claim against Alfes’s debt, which
became vested when PHEAA paid the amount outstanding, in exchange for SunTrust’s
assignment of the Note. Further, under the guaranty agreement with SunTrust, PHEAA
No. 11-2159        Alfes v. ECMC                                                 Page 13

had an obligation as guarantor to pay SunTrust as guarantee the amount due on the Note
in the event of bankruptcy. Thus, in the context of SunTrust and PHEAA’s relationship
under the guaranty agreement, it is inconsequential whether this transfer is described as
a “purchase” or as a “payment as the guaranty.”

       Second, ¶ 66 of the amended complaint states that “Alfes still claims the default
judgment against the lender SunTrust, that never held any guarantor interest in the Note
. . . acted to discharge ECMC’s interest in the student loans.” However, rather than
adding a new theory of the case, this addition merely distinguishes PHEAA/ECMC’s
interest as guarantor from SunTrust’s interest as lender and reinforces ECMC’s
allegation in ¶ 1 of its amended complaint that Alfes’s student loans held by ECMC had
not been discharged by virtue of the bankruptcy court’s April 17, 2006, order.

       We also observe that ECMC asserted its separate and distinct claims as guarantor
as early as January 20, 2009, in response to Alfes’s motion to reopen, several months
before the second adversary proceeding was initiated. ECMC’s response argued that
“[Alfes] ignores that PHEAA’s (and ECMC’s) claims as guarantors are different than
their rights as assignee in their capacity as guarantors.” In addition, ECMC’s initial
answer to Alfes’s complaint in the first adversary proceeding, well before entry of the
default judgment against SunTrust, stated that “[Alfes] is indebted to ECMC for
educational loans made . . . by ECMC’s predecessor in interest, various banks and
governmental guarantors.”

       Thus, the bankruptcy court properly concluded that the original and amended
complaints asserted the same substantive claims; that because Alfes was aware of
ECMC’s claims as guarantor for several years, the amended complaint contained “no
surprises;” and that Alfes was not prejudiced by the amendment.

                                           B.

       The district court also correctly concluded that ECMC could properly avail itself
of Federal Rule of Civil Procedure 15(e) given that the parties’ settlement agreement
states only that a claim must be “brought on or before” the contractual deadline and is
No. 11-2159        Alfes v. ECMC                                                  Page 14

otherwise silent on whether the Federal Rules of Civil Procedure apply to allow relation
back.

        On appeal, Alfes argues that “[w]hile the rules may grant the power to file the
amended complaint, [ECMC] is without the right to file it because that right was waived
by contract.” The limitations period for asserting a claim can be abridged by contract.
See Cange v. Stotler & Co., 826 F.2d 581, 584–85 (7th Cir. 1987) (holding that a
reasonable, contracted-for limitations period that is not contrary to public policy is
generally enforceable). But “[t]he relation back doctrine is based upon the principle that
one who has been given notice of litigation concerning a given transaction or occurrence
has been provided with all the protection that statutes of limitation are designed to
afford.” Bonerb v. Richard J. Caron Found., 159 F.R.D. 16, 19 (W.D.N.Y. 1994)
(citation omitted). Here, Alfes was aware of ECMC’s claims as guarantor at least as
early as January 2009.

        Therefore, the bankruptcy and district courts did not err in holding that the
amended complaint related back, because it did not assert “any substantively different
claim” and did not result in unfair surprise to Alfes.

                                           IV.

        For the foregoing reasons, we agree with the determination of the bankruptcy
court and AFFIRM the judgment of the district court.