In re James BUCCHINO

• Decision Date: 29 September 2010
• Docket Number: Bankruptcy No. 7-10-11493 JR.,Adversary No. 10-1042 J.
• Citation: 439 B.R. 761
• Parties: In re James BUCCHINO and Nicole Bucchino, Debtors. James Bucchino and Nicole Bucchino, Plaintiffs, v. Wells Fargo Bank, N.A., Defendant.
• Court: U.S. Bankruptcy Court — District of New Mexico

439 B.R. 761

In re James BUCCHINO and Nicole Bucchino, Debtors.James Bucchino and Nicole Bucchino, Plaintiffs,

v.Wells Fargo Bank, N.A., Defendant.

Bankruptcy No. 7-10-11493 JR.

Adversary No. 10-1042 J.

United States Bankruptcy Court,D. New Mexico.

Sept. 29, 2010.

COPYRIGHT MATERIAL OMITTED.

Michael K. Daniels, Albuquerque, NM, for Debtors and Plaintiffs.

James Rasmussen, Albuquerque, NM, for Defendant.

MEMORANDUM OPINION

ROBERT H. JACOBVITZ, Bankruptcy Judge.

THIS MATTER is before the Court on cross motions for summary judgment. ¹ At issue is whether Defendant's action in placing an “administrative pledge” on the Plaintiffs' bank account(s) after receiving notice of Plaintiffs' bankruptcy case constituted a willful violation of the automatic stay within the meaning of 11 U.S.C. § 362(a)(3) and (k)(1). ² This is not the first time the Bankruptcy Court for the District of New Mexico has been asked to examine the policy of Wells Fargo Bank, N.A. (“Wells Fargo”) under which it places an administrative pledge on a debtor's bank account upon learning that a debtor has filed for bankruptcy, even when Wells Fargo is not a creditor of the debtor and has, therefore, not received notice of the bankruptcy as part of the bankruptcy case. ³ Plaintiffs ask the Court to grant summary judgment on the issue of whether Wells Fargo's actions constituted a willful violation of the automatic stay and then schedule an evidentiary hearing to determine damages. Wells Fargo asserts that Plaintiffs lack standing to pursue their complaint, and that its actions comply with the requirements of the Bankruptcy Code and do not constitute a willful violation of the automatic stay.

After consideration of the undisputed facts in light of the applicable statute and relevant case law, the Court finds that the Plaintiffs do not have standing to assert a claim for willful violation of the automatic stay. Further, even if the Plaintiffs' exemption rights were sufficient to confer standing, the facts of this case do not support a finding that Wells Fargo's actions are sanctionable. The Court will, therefore, grant summary judgment in favor of Wells Fargo.

SUMMARY JUDGMENT STANDARDS

It is appropriate for the Court to grant summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c), made applicable to adversary proceedings by Fed.R.Bankr.P. 7056. In considering a motion for summary judgment, the Court must “ ‘examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment.’ ”

Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10th Cir.1995) (quoting Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990)). Cross motions for summary judgment raise an inference that summary judgment may be appropriate. Crossingham Trust v. Baines, (In re Baines), 337 B.R. 392, 396 (Bankr.D.N.M.2006). Nevertheless, before a Court may grant summary judgment, the Court must satisfy itself that the requesting party has independently satisfied the requirements of Rule 56(c), Fed.R.Civ.P. Harris v. Beneficial Oklahoma, Inc., (In re Harris), 209 B.R. 990, 998 (10th Cir. BAP 1997) (citations omitted). See also Renfro v. City of Emporia, 948 F.2d 1529, 1534 (10th Cir.1991) (stating that a cross motion for summary judgment does not relieve the court of its obligation to determine if a genuine issue of material fact exists).

FACTS NOT IN GENUINE DISPUTE

There is no genuine dispute regarding the following facts:

1. Plaintiffs filed a voluntary petition under Chapter 7 of the Bankruptcy Code on March 26, 2010 (the “Petition Date”). See Complaint for Violation of Stay and Damages (“Complaint”), ¶ 5; Answer, ¶ 1.

2. On the Petition Date, Plaintiffs had three bank accounts at Wells Fargo Bank including one checking account and two savings accounts. ⁴ See Complaint, ¶ 6; Answer, ¶ 2. See also Bankruptcy Case No. 7-10-11493 JR, Amended Schedule B and C (Docket No. 9).

3. On March 26, 2010, Plaintiffs filed their Schedules. See Bankruptcy Case No. 7-10-11493 JR Docket No. 1. In the Schedules the Plaintiffs listed two bank accounts: 1) a checking account at Bank of America overdrawn in the amount of $1.00; and 2) a checking account at Wells Fargo with a balance of $100.00. Id. at Schedule B.

4. On March 26, 2010, Plaintiffs claimed an exemption in the amount of $100.00 in one bank account at Wells Fargo. Id. at Schedule C.

5. On March 30, 2010, Wells Fargo received electronic notification of the filing of the Plaintiffs' Chapter 7 case. See Plaintiff's Motion for Summary Judgment, Exhibit A, Letter dated March 30, 2010 from Luana Tafoya, Operation Manager at Wells Fargo to Michael Daniels (“Daniels Letter”); Affidavit of Luana Tafoya in Support of Defendant's Motion for Summary Judgment and Response to Plaintiffs' Motion for Summary Judgment (“Tafoya Affidavit”), ¶ 2 and Exhibit B thereto.

6. On the same date, Wells Fargo placed an “administrative pledge” on the following accounts (the “Bank Accounts” or “Accounts”) and noted the accounts on its system as “in bankruptcy status”:

a. Savings Account ending in 1541 reflecting a balance of $10,778.58;

b. Savings Account ending in 1590 reflecting a balance of $654.21; and

c. Checking Account ending in 9170 reflecting a balance of $1,909.58.

See Daniels Letter.

7. Wells Fargo is not a creditor of the Plaintiffs and holds no perfected security interest in the any of the Bank Accounts, nor has Wells Fargo at any material time held any setoff rights with respect to any of the Bank Accounts. See Complaint, ¶ 8; Answer, ¶ 4. Bankruptcy Case No. 7-10-11493 JR-Schedules D-F, Docket No. 1.

8. Wells Fargo transmitted the Daniels Letter by facsimile to Plaintiffs' counsel on March 30, 2010 at approximately 7:00 p.m. notifying Plaintiffs' counsel that it had placed the funds in “bankruptcy status, which means the funds are no longer available to your client(s.).” See Daniels Letter.

9. The Daniels Letter includes the following statement:

Wells Fargo is prepared to immediately follow the trustee's direction regarding the Estate Funds, and you may be able to expedite the trustee's decision. Id.

10. Wells Fargo also attempted to transmit by facsimile a similar letter to Clarke C. Coll, the Chapter 7 Trustee, on the same date. Tafoya Affidavit, ¶ 6 (“Wells Fargo attempted twice unsuccessfully to fax a similar letter to the bankruptcy trustee ...”); Affidavit of Clarke C. Coll (“Coll Affidavit”), ¶ 3 (“I had not received any notice from Wells Fargo Bank of this seizure.”).

11. In the letter from Wells Fargo to the Chapter 7 Trustee, dated March 30, 2010 (“Trustee Letter”), which it unsuccessfully attempted to fax to the Trustee, Wells Fargo states:

The Estate Funds are now in bankruptcy status, which means that the funds are payable only to you or your order.... The Estate funds will remain in bankruptcy status until we receive direction from you regarding their disposition, or June 18, 2010, which is 31 days after the scheduled First Meeting of Creditors. If you wish us to take any other action with the Estate Funds, please complete and sign the enclosed form, and fax it to me ...

Trustee Letter, attached to the Tafoya Affidavit as Exhibit B.

12. On March 31, 2010, counsel for Plaintiffs informed the Chapter 7 Trustee that Wells Fargo had placed an administrative pledge on the Bank Accounts. See Coll Affidavit, ¶ 2; Tafoya Affidavit, ¶ 8.

13. On March 31, 2010, Wells Fargo received instructions from the Chapter 7 Trustee authorizing Wells Fargo to release of the funds in the Bank Accounts to Plaintiffs. Tafoya Affidavit, ¶ 8; Coll Affidavit, with attached copies of e-mail communications between himself, Plaintiffs' counsel, and Wells Fargo.

14. On March 31, 2010, Wells Fargo released the administrative pledge on the three Bank Accounts. Tafoya Affidavit, ¶ 10; Affidavit of Nicole Bucchino, ¶ 7.

15. Plaintiffs filed this Adversary Proceeding on March 31, 2010.

16. On April 12, 2010, after the filing of this adversary proceeding, Plaintiffs amended their Schedule B to list the Bank Accounts, as follows

                +--------------------------------------------+
                ¦Description                      ¦Value     ¦
                +---------------------------------+----------¦
                +---------------------------------+----------¦
                ¦Wells Fargo Bank checking account¦$ 1,909.58¦
                +---------------------------------+----------¦
                ¦Wells Fargo Bank savings account ¦$ 654.21  ¦
                +---------------------------------+----------¦
                ¦Wells Fargo Bank savings account ¦$ 1.00    ¦
                +--------------------------------------------+
                 

                +-----------------------------------------------------------------------------+
                ¦(Mother's inheritance; no beneficial interest) Balance in inheritance       ¦¦
                ¦account is $10,778.58                                                       ¦¦
                +-----------------------------------------------------------------------------+
                 

See Bankruptcy Case No. 7-10-11493 JR-Amended Schedule B (Docket No. 9).

17. On April 12, 2010, Plaintiffs also amended their Schedule C to claim an exemption in “Bank accounts” in the amount of $2,564.79. See Bankruptcy Case No. 7-10-11493 JR-Amended Schedule C (Docket No. 9).

DISCUSSION

Plaintiffs claim that Wells Fargo's administrative freeze of the Bank Accounts violated the automatic stay under 11 U.S.C. § 362(a)(3). ⁵ Wells Fargo asserts that Plaintiffs lack standing to assert their claim and, in any event, no stay violation occurred. The Court will first address Plaintiffs' standing to assert their claim that Wells Fargo violated the automatic stay. Standing is a threshold issue. ⁶

1. Standing

[1] [2] Wells Fargo asserts that Plaintiffs lack standing to pursue their claim for willful...