276 F.3d 502 (9th Cir. 2002), 00-17036, Walls v. Wells Frago Bank

Docket Nº:00-17036
Citation:276 F.3d 502
Case Date:January 08, 2002
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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276 F.3d 502 (9th Cir. 2002)




No. 00-17036

United States Court of Appeals, Ninth Circuit

January 8, 2002

Argued and Submitted December 4, 2001

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[Copyrighted Material Omitted]

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Counsel: Timothy J. Becker (argued) and Carleton B. Crutchfield, Mitsch & Crutchfield, St. Paul, Minnesota, for the plaintiff-appellant.

Jan T. Chilton, Severson & Werson, San Francisco, California, for the defendant-appellee.

Appeal from the United States District Court for the Eastern District of California Frank C. Damrell, Jr., District Judge, Presiding D.C. No. CV-99-01860-FCD

Before: Alex Kozinski, Pamela Ann Rymer, and Barry G. Silverman, Circuit Judges.

Rymer, Circuit Judge

We are asked to imply a private right of action for a debtor discharged from bankruptcy to enforce an alleged violation of 11 U.S.C. §§ 524, which provides that discharge under Title 11 of the Bankruptcy Code operates as an injunction against collecting debt as a personal liability of the debtor.

Donna Marie Walls brought a class action on behalf of Chapter 7 bankruptcy debtors against Wells Fargo Bank for (among other things) violating the discharge injunction by attempting to collect her debt after it had been discharged. The district court concluded that the remedy Congress intended for violations of the discharge injunction is contempt pursuant to 11 U.S.C. §§ 105(a). Walls v. Wells Fargo Bank, N.A., 255 B.R. 38 (E.D. Cal. 2000). Accordingly, it referred Walls's claims for contempt to the bankruptcy court but dismissed her claims for relief under §§ 524. We agree, and hold that a private cause of action is not available under §§ 524, or through §§ 105.

This appeal also raises the issue whether a discharged debtor may pursue a simultaneous claim under the Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. §§ 1692f. We think not, as to do so would circumvent the Bankruptcy Code's remedial scheme. We have jurisdiction pursuant to 28 U.S.C. §§ 1291, and affirm.

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Walls filed a voluntary bankruptcy petition under Chapter 7 of Title 11 of the United States Code on September 24, 1997. She listed a pre-petition obligation of $118,000 owed to Wells Fargo Bank, secured by her house. She continued to make payments, before and after her debt was discharged on January 2, 1998. This enabled Walls to keep the house under a "ride-through" allowed by In re Parker , 139 F.3d 668, 672-73 (9th Cir. 1998), to debtors who are current on their loan payments on secured property and who continue to make payments. Parker permits such debtors to avoid making a statutory election whether to redeem the property or reaffirm the debt pursuant to §§ 524(c). This meant that Wells Fargo retained its lien on the property and could foreclose in the event that Walls did not make payments. Several payments later, Walls in fact stopped paying. Wells Fargo foreclosed on the house in December 1998. Walls then filed this class action in federal district court. No class has yet been certified.

Walls's complaint alleges that Well Fargo did not obtain an agreement reaffirming its debt under §§ 524(c) after she filed for bankruptcy, and that her debts were discharged giving rise to the discharge injunction pursuant to §§ 524(a)(2) and (c). Nevertheless, the bank continued to solicit and collect monthly payments, which she made on October 4, 1997, November 12, 1997, and December 7, 1997 before discharge but after the automatic stay, and on January 19, 1998, February 24, 1998, and May 9, 1998 after discharge. This activity, Walls alleges, was prohibited by §§ 524 and was an unfair and unconscionable means of collecting a debt under the FDCPA, 15 U.S.C. §§ 1692f. Wells Fargo moved to dismiss the claims for willful violation of the discharge injunction and the FDCPA under Rule 12(b)(6) of the Federal Rules of Civil Procedure; Walls moved to refer the core bankruptcy issues to the bankruptcy court. The district court granted Walls's motion by referring her claims for willful violation of the automatic stay, and for contempt on account of the alleged violation of the automatic stay and the discharge injunction, to the bankruptcy court. Neither this referral, nor these claims, are before us on appeal. Otherwise, the court granted Wells Fargo's motion to dismiss.

Walls timely appeals dismissal of her claims based on an implied right of action under §§ 524, and for violation of the FDCPA.1


Although both parties agree that we have jurisdiction and a motions panel of this court ruled that we do pursuant to 28 U.S.C. §§ 1291, we must nonetheless examine the issue sua sponte. In re Hawaii Corp., 796 F.2d 1139, 1141 (9th Cir. 1986). A question arises because two of the claims in Walls's complaint were referred to the bankruptcy court while the remaining claims were dismissed. In these circumstances it could be that the case is not final as to all claims, but we are satisfied that it is for purposes of §§ 1291 because the district court disposed of each of the issues that was before it under its original jurisdiction. Both claims referred to the bankruptcy court allege a violation of the Bankruptcy Code; therefore, both are "core proceedings" under 28 U.S.C. §§ 157 and, as such, may be finally resolved by

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the bankruptcy court. See In re Cinematronics, Inc., 916 F.2d 1444, 1449 (9th Cir. 1990) (bankruptcy court may "enter final judgments in socalled core cases, which are appealable to the district court") (citation omitted). For this reason, the district court's entry of judgment was a final decision as to all claims before it.


Walls argues that §§ 105(a) itself empowers a district court to enforce a violation of §§ 524, and alternatively that Congress created a private cause of action for enforcement of the discharge injunction directly under the terms of§§ 524.


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