Jacks v. Wells Fargo Bank, N.A. (In re Jacks)

Jacks v. Wells Fargo Bank, N.A. (In re Jacks), No. 09-16146 (11th Cir. June 7, 2011)
The Eleventh Circuit affirmed entry of summary judgment in favor of Wells Fargo finding that (1) the mere recordation internally by Wells Fargo of post-petition attorneys fees incurred in filing a proof of claim, without any attempt to collect these fees from the debtors or the estate or to modify the debtors' mortgage, is not an act in violation of the automatic stay; (2) Wells Fargo's failure to disclose and obtain court approval of its post-petition fees does not violate § 506(b) and Rule 2016(a) where Wells Fargo made no attempt to collect the fees or otherwise add them to debtors' mortgage balance; and (3) failure to include proof of claim fees on the proof of claim does not provide a valid basis for objection to a claim under § 502(b). The Court declined to address the debtors' claim for injunctive relief finding that the claims were not ripe for adjudication and subsequently dismissed the claims for lack of jurisdiction.
Procedural context:
Appeal of district court's affirmance of bankruptcy court order granting summary judgment in favor of Wells Fargo on all counts contained in Debtors' adversary complaint.
In November 2004, the Jacks obtained a home mortgage from Washington Mutual Bank. The mortgage was assigned to Wells Fargo in March 2007. The Debtors filed a Chapter 13 petition in the U.S. Bankruptcy Court for the Northern District of Alabama on August 8, 2007. On September 6, 2007, Wells Fargo filed a secured claim in the amount of $162,205.57. Exhibit A to the proof of claim was an "Itemization of Claim and Summary of Supporting Documents." The exhibit listed the Debtors' total debt of $162,205.57. The exhibit contained a statement that fees and costs related to review of the bankruptcy pleadings and filing of a proof of claim will be charged to the lender for post-petition services rendered subsequent to the filing of the bankruptcy matter and that if there were any fees and costs not paid through the bankruptcy, the lender reserved the right to seek future reimbursement of such fees and costs. After filing the proof of claim, Wells Fargo's outside counsel submitted an invoice to Wells Fargo for $310 in fees and expenses associated with preparing and filing the proof of claim in the Debtors' case. On October 17, 2007, the Debtors filed an Amended Chapter 13 Plan which proposed that the Debtors would continue to make their monthly mortgage payments directly to Wells Fargo and disclosed a potential claim against Wells Fargo for violations of the automatic stay, Section 506 and Rule 2016. The Plan was confirmed on December 28, 2007. On July 29, 2008, the Debtors filed a class action adversary proceeding against Wells Fargo. The Debtors claimed, on behalf of themselves and similarly situated mortgagors, that Wells Fargo had violated the Bankruptcy Code and various Bankruptcy Rules by improperly "charg[ing]. assess[ing], impos[ing] and/or collect[ing] impermissible fees" on the plaintiffs' and similarly situated mortgagors' accounts. The Debtors alleged that Wells Fargo had charged or assessed $310 in bankruptcy-related fees to their account without disclosing the fees in the proof of claim or seeking approval of the bankruptcy court. The complaint also alleged that Wells Fargo was attempting or will attempt to collect the fees once the Debtors receive their discharge or the case is dismissed, whichever occurs first. The $310 in fees had been recorded to the Debtors' "Customer Account Activity Statement" on October 25, 2007. The fees were related to the proof of claim filed in the Debtors' bankruptcy case. The Debtors became aware of the proof of claim fees when the Debtors' Customer Account Activity Statement was sent to Ms. Jacks in response to her request for the activity history on her account. The Customer Account Activity Statement was the only document in evidence which listed the $310 fee and both Debtors testified that Wells Fargo had never attempted to collect these fees.

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