In re Singleton
| Decision Date | 13 November 2001 |
| Docket Number | Bankruptcy No. 95-11298. Adversary No. 00-1026. |
| Citation | 269 BR 270 |
| Parties | In re Cathy A. SINGLETON, Debtor. Cathy A. Singleton, Plaintiff, v. Wells Fargo Bank, N.A., Defendant. |
| Court | U.S. Bankruptcy Court — District of Rhode Island |
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Christopher Lefebvre, Pawtucket, RI, for Plaintiff.
Edward Bertozzi, Patricia A. Sullivan, Edwards & Angell, Providence, RI, for Defendant.
DECISION AND ORDER
Before the Court is the Motion of the Defendant, Wells Fargo Bank, N.A. ("the Bank"), to Dismiss this Adversary Proceeding. The Bank moves for dismissal of Counts I and III, which allege violations of the discharge injunction, 11 U.S.C. § 524, on the ground that no private right of action exists for such conduct, and that Count II alleging a § 362 violation is defective in that the Plaintiff fails to plead the prima facie elements of a stay violation. The parties also disagree as to the appropriate choice of law, given the geographical history of this case.
Upon consideration, and for the reasons discussed below, I rule as follows: (1) Count I is dismissed, but for reasons other than those argued by the Bank; (2) the Defendant's Motion to Dismiss Count II is GRANTED, with leave to amend; (3) the Motion to Dismiss Count III is DENIED; (4) Defendant's alternative Motion to Stay the proceeding is DENIED;(5) a ruling on class certification is deferred until discovery is complete.
In May 1995, Cathy A. Singleton filed a voluntary petition under Chapter 7 of the Bankruptcy Code, and listed Wells Fargo Bank, N.A. as a VISA credit card creditor. Shortly thereafter, at the Bank's request, Singleton signed a "Reaffirmation Agreement" but the agreement was never executed or filed by Wells Fargo, as required. See Vazquez v. Sears Roebuck & Co. (In re Vazquez), 221 B.R. 222, 227 (Bankr.N.D.Ill.1998)(alleged reaffirmation agreement neither filed nor approved by the court is void and unenforceable.) In September 1995, Singleton received a Chapter 7 discharge, and thereafter she made post-discharge payments totaling $797.
In September 1999, in the United States District Court for the Northern District of California, Singleton filed a Class Action Complaint for injunctive, declaratory and other equitable relief, and for monetary damages. In response, the Bank filed a motion to transfer the action to this Court on the ground that Singleton is a resident of Pawtucket, Rhode Island, and that her bankruptcy case was administered in the Rhode Island Bankruptcy Court. 28 U.S.C. § 1404(a). Chief District Judge Marilyn Hall Patel transferred the Adversary Proceeding to Rhode Island, and the District Court for the District of Rhode Island referred the matter to this Court. The Bank filed the instant motion to dismiss the complaint and to strike the class certification allegations, or in the alternative to stay the proceeding. Docket # 23.
The Motion to Dismiss is brought pursuant to Fed.R.Civ.P. 12, which is made applicable in bankruptcy adversary proceedings by Fed. R. Bankr.P. 7012. In ruling on such motions, the Court will "accept well-pleaded facts as true and draw all reasonable inferences from those facts in favor of the plaintiff." Figueroa v. Rivera, 147 F.3d 77, 80 (1st Cir.1998), and for the Defendant to prevail, it must appear "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
While "federal law is presumed to be uniform," the application of that generality still leaves room for argument. E.E.O.C. v. Northwest Airlines, Inc., 188 F.3d 695, 700 (6th Cir.1999). For example, the Plaintiff contends that when a case concerning a federal question (28 U.S.C. § 1331) is transferred from a foreign circuit, the law of the circuit to which the case is transferred governs. Id. () (citations omitted). The Defendant, however, argues that "this case is governed by the law in California, where Singleton chose to bring this action," and bases its argument on two Supreme Court cases: (1) Eckstein v. Balcor Film Investors, 8 F.3d 1121 (7th Cir. 1993), cert. denied, 510 U.S. 1073, 114 S.Ct. 883, 127 L.Ed.2d 78 (1994); and (2) Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). Wells Fargo 5/14/2001 Brief, at 6. Eckstein acknowledges that "a transferee court normally should use its own best judgment about the meaning of a federal law when evaluating a federal claim, but the Securities Exchange Act instructs us to act differently," Eckstein at 1126, and the Court in Van Dusen said:
"This Court has often formulated the Erie doctrine by stating that it establishes `the principle of uniformity within a state,\' and declaring that federal courts in diversity of citizenship cases are to apply the laws `of the states in which they sit.\' A superficial reading of these formulations might suggest that a transferee federal court should apply the law of the State in which it sits rather than the law of the transferor State."
Van Dusen at 637-38, 84 S.Ct. 805 (citations omitted). In my view these cases are narrow exceptions to the general rule, i.e., Eckstein deals with questions regarding statutes of limitations for fraud claims arising under § 10(b) of the Securities Exchange Act of 1934, see Eckstein at 1126, and Van Dusen applies only in diversity jurisdiction cases. See Van Dusen at 637-638, 84 S.Ct. 805.
The instant litigation involves neither securities fraud nor diversity jurisdiction, but is a bankruptcy matter arising through general federal bankruptcy jurisdiction. See Lindsay v. Beneficial Reinsurance Co. (In re Lindsay), 59 F.3d 942, 948 (9th Cir.1995) () Therefore, in deciding whether to apply First Circuit or Ninth Circuit law, I will follow the rule that: "A transferee district court is bound, ultimately, to follow only the law of its own circuit court and the Supreme Court, and that law must be presumed to be as `correct' a statement of federal law as that of the transferor circuit." In re Litigation Involving Alleged Loss of Cargo from Tug Atlantic Seahorse, etc., 772 F.Supp. 707, 711 (D.P.R.1991). Accord, Murphy v. F.D.I.C., 208 F.3d 959, 966 (11th Cir.2000); Campos v. Ticketmaster Corp., 140 F.3d 1166, 1171 n. 4 (8th Cir.1998), cert. denied, 525 U.S. 1102, 119 S.Ct. 865, 142 L.Ed.2d 768 (1999); Temporomandibular Joint (TMJ) Implant Recipients v. E.I. DuPont De Nemours & Co., 97 F.3d 1050, 1055 (8th Cir. 1996); Newton v. Thomason, 22 F.3d 1455, 1460 (9th Cir.1994); Menowitz v. Brown, 991 F.2d 36, 40-41 (2nd Cir.1993); In re Korean Air Lines Disaster of September 1, 1983, 829 F.2d 1171, 1174 (D.C.Cir.1987), aff'd 490 U.S. 122, 109 S.Ct. 1676, 104 L.Ed.2d 113 (1989).
Count I of the Amended Complaint is dismissed insofar as it pertains to 28 U.S.C. § 524(c). To state a claim for which relief can be granted, the complaint at a minimum must allege a right or the existence of a duty that the Court can enforce. See In re McDonald, 265 B.R. 3, 6 (Bankr.D.Mass.2001). Section 524(c) neither confers a right upon the debtor nor imposes a duty upon the creditor; "on the contrary, § 524(c) sets forth nothing more than a list of conditions precedent to the enforcement of a purported reaffirmation agreement the consideration for which is based at least in part on a pre-petition debt." Id. at 6. Therefore, "the only result of non-compliance with the conditions set forth in § 524(c) this Court sees is that the parties are left with an unenforceable reaffirmation agreement." Id. at 6, n. 2. Absent any authority under § 524(c) to impose a duty or enforce a right, Count I of the Amended Complaint fails to state a claim for which relief can be granted.1
A bankruptcy filing operates as a stay of "any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title." 11 U.S.C. § 362(a)(6). This Court has previously held, also in a reaffirmation context, "that mere requests for payment are not barred by § 362(a)(6), absent coercion or harassment by a creditor." In re Jefferson, 144 B.R. 620, 623 (Bankr.D.R.I.1992) (emphasis in original). See, e.g., Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 424 (6th Cir.2000); In re Duke, 79 F.3d 43, 44-45 (7th Cir.1996); Brown v. Pennsylvania State Employees Credit Union, 851 F.2d 81, 86 (3rd Cir. 1988); Morgan Guar. Trust Co. v. American Sav. & Loan Ass'n, 804 F.2d 1487, 1491 (9th Cir.1986), cert denied, 482 U.S. 929, 107 S.Ct. 3214, 96 L.Ed.2d 701 (1987); Bessette v. AVCO Fin. Servs., Inc., 240 B.R. 147, 157-158 (D.R.I.1999), aff'd in part, vacated in part, 230 F.3d 439 (1st Cir.2000); Messier v. Filene's (In re Messier), 144 B.R. 617, 619 (Bankr.D.R.I. 1992). Similarly, to avoid dismissal here, the Plaintiff must allege coercion or harassment by the Defendant during the reaffirmation or debt collection process.
In Count II of her Amended Complaint the Plaintiff alleges that Wells Fargo willfully violated § 362(a) by attempting to collect a pre-petition debt, without filing the reaffirmation agreement with the Bankruptcy Court. As we said in Jefferson in 1992, "there is nothing intrinsically wrong with the initiation by creditors of the reaffirmation process in bankruptcy, provided it is done reasonably and without harassment or coercion." Jefferson at 624. See also In re Jamo, 262 B.R. 159, 164 (1st Cir. BAP 2001). In the absence of a claim of coercion or harassment, the motion to dismiss Count II is GRANTED. If in good faith she is able...
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