Pompa v. Wells Fargo Home Mortg., Inc. (In re Pompa), CASE NO: 06-31759

• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas
• Writing for the Court: Marvin Isgur
• Parties: In re: RENATO POMPA; fdba R. P. POOL, et al Debtor(s). RENATO POMPA, et al Plaintiff(s), v. WELLS FARGO HOME MORTGAGE, INC. Defendant(s).
• Docket Number: CASE NO: 06-31759,ADVERSARY NO. 11-3651
• Decision Date: 29 June 2012

IN RE: RENATO POMPA; fdba R. P. POOL, et al Debtor(s).
RENATO POMPA, et al Plaintiff(s),
v.
WELLS FARGO HOME MORTGAGE, INC. Defendant(s).

CASE NO: 06-31759
ADVERSARY NO. 11-3651

UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

SIGNED June 29, 2012

CHAPTER 13
JUDGE ISGUR
MEMORANDUM OPINION

Plaintiffs Renato and Petra Pompa allege that Wells Fargo Mortgage, Inc., their mortgage lender, improperly charged fees during the pendency of the Pompas' chapter 13 plan and improperly applied their plan payments. The Pompas assert that these actions violate various Bankruptcy Code sections, as well as national and local procedural rules. Wells Fargo moves to dismiss on various grounds. The Court grants, in part, and denies, in part, Wells Fargo's motion to dismiss; the Court grants the Pompas leave to amend.

Background

The Pompas are former chapter 13 debtors who completed the requirements of their chapter 13 plan. Wells Fargo held a deed of trust on the Pompas' home. The plan provided for arrears on Wells Fargo's secured claim to be paid and cured through the plan. On May 5, 2011,

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the Court issued an order deeming the Wells Fargo mortgage current, and the Pompas were given a discharge on May 17, 2011. The bankruptcy case was closed on November 22, 2011.

The Pompas now bring suit alleging that Wells Fargo misapplied payments and improperly charged undisclosed fees during the pendency of their chapter 13 plan. The Pompas claim they are entitled to relief under §§ 524, 105, and 506 of the Bankruptcy Code, Fed. R. Bankr. P. 2016, and the local Chapter 13 Trustee Procedures for Administration of Home Mortgage Payments. The Pompas seek actual and statutory damages, as well as legal fees and expenses.

Wells Fargo moves to dismiss the Pompas' claims for lack of subject matter jurisdiction and for failure to state a claim on which relief can be granted.

Wells Fargo contends that the Court lacks subject matter jurisdiction over this suit. Because the Pompas have received their discharge, Wells Fargo argues, the claims are not "related to" a bankruptcy case, as they do not "impact[] . . . the handling and administration of the bankrupt estate." Feld v. Zale Corp. (In re Zale Corp.), 62 F.3d 746, 752 (5th Cir. 1995) (citations omitted).

Wells Fargo moves to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. Wells Fargo argues three grounds for its 12(b)(6) motion. First, Wells Fargo contends that the Code sections and procedural rules cited by the Pompas do not provide a remedy for private parties to sue upon under Cort v. Ash, 422 U.S. 66 (1975) and its progeny.

Second, Wells Fargo argues that even if the Pompas are permitted to sue under the provisions in question, they are not entitled to relief with respect to §§ 524, 506, and Fed. R. Bankr. P. 2016, because Wells Fargo's actions did not violate those provisions. Wells Fargo

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argues that it has not violated the discharge injunction under § 524, because the fees in question were not dischargeable in the first place. Wells Fargo also argues that charging fees without notice and approval by the Court does not violate § 506 and Rule 2016, as these sections do not require notice and approval of fees charged by mortgage lenders. It reasons that requiring notice and approval would modify its contractual rights in violation of 11 U.S.C. § 1332(b)(2).

Finally, Wells Fargo contends that even if notice and approval were required under Rule 2016, it has not yet violated that rule, as the Pompas allege only that Wells Fargo has "charged" the fees in question. Wells Fargo contends that the Pompas must allege receipt of payment and application of the fees against existing funds.

In the Plaintiffs' Response to the motion to dismiss, the Pompas move for leave to amend their complaint in the following ways:

• to withdraw their FDCPA claim;
• to make a more definite statement of fact if deemed necessary by the court;
• to supplement any insufficient allegations of fact the court identifies;
• to allege that the imposition of fees and charges not disclosed or authorized violated the plan and order confirming the plan and to supplement factual allegations in connection with such if deemed necessary by the court;
• to allege that Wells Fargo is barred by principles of estoppel from collecting fees and charges not disclosed or authorized which exceed the cure amount in its proof of claim and to supplement factual allegations in connection with such if deemed necessary by the court;
• to supplement the factual allegations to support a request for punitive damages based on a pattern of misapplication of payments;
• to include a contempt action under § 105 for violation of § 524.

For the reasons stated herein, the Court holds:

• The Court has subject matter jurisdiction over all the Pompas' claims.

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• The Court has constitutional authority to enter a judgment in this matter.
• A private right of action exists pursuant to § 105 for violations of the Court's orders and the discharge injunction.
• There is no private right of action under § 506, Fed. R. Bankr. P. 2016, and the Chapter 13 Trustee Procedures. The Court therefore dismisses the Pompas' claims for the violation of these provisions.
• Under the facts currently alleged by the Pompas, Wells Fargo has not violated §524, but the Court grants leave to amend to allege facts that could constitute a violations of that provision.

The Pompas' Allegations

The Pompas allege that on August 2, 2011, Wells Fargo sent correspondence to the Pompas informing them that they were delinquent on their mortgage payments. ECF No. 1 at 3. They allege further that Wells Fargo initiated numerous telephone calls asserting delinquency and threatening foreclosure, and that Wells Fargo sent a representative to collect their alleged arrears on December 26, 2011. Id. The Pompas allege that these events occurred because Wells Fargo misapplied payments and improperly charged the Pompas undisclosed fees during the pendency of their chapter 13 plan. Id. at 4.

Jurisdiction

The United States District Court has jurisdiction over these adversary proceedings pursuant to 28 U.S.C. § 1334. Pursuant to 28 U.S.C. § 157, this proceeding is referred to the Bankruptcy Court by General Order 2012-06.

Constitutional Authority

This Court has constitutional authority under Stern v. Marshall, 131 S.Ct. 2594 (2011) to decide this matter. Under Stern, Bankruptcy Courts may not enter final judgments in matters that are within the exclusive jurisdiction of Article III courts. Stern, 131 S.Ct. at 2620. This

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opinion does not involve a final judgment; granting in part and denying in part a motion to dismiss is an interlocutory order. West v. WRH Energy Partners LLC (In re Noram Res., Inc.), 2011 WL 6936361, at *1 (Bankr. S.D. Tex. Dec. 30, 2011).

Analysis

The Court first considers Wells Fargo's 12(b)(1) motion. Second, it considers Wells Fargo's 12(b)(6) motion. Finally, it discusses the Pompas' motion for leave to amend.

I. Rule 12(b)(1) Motion

The burden of proof under a 12(b)(1) motion is on the party asserting jurisdiction. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). When considering a Rule 12(b)(1) motion to dismiss, a court may consider "(1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Den Norke Stats Oljeselskap v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001). The court "must accept all factual allegations in the plaintiff's complaint as true." Id. (citing Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)). The Bankruptcy Court must have bankruptcy-related jurisdiction over each claim independently. WRT Creditors Liquidation Trust v. C.I.B.C. Oppenheimer Corp., 75 F. Supp. 2d 596, 608 (S.D. Tex. 1999).

Wells Fargo contends that the claims in question do not fall within the Court's subject matter jurisdiction, as they do not "impact[] . . . the handling and administration of the bankrupt estate," Feld, 62 F.3d at 752 (citations omitted). Wells Fargo argues that the fees in question are exempted from the estate under 11 U.S.C § 1328(a)(1), and thus there can be no impact upon the estate. Further, the bankruptcy estate terminated upon entry of the discharge order, and so there is no longer an estate to impact.

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Wells Fargo's theory ignores binding Fifth Circuit precedent with respect to post-discharge violations of debtor protections. In Bradley, the Fifth Circuit mandated the bankruptcy court exercise jurisdiction to determine whether a former debtor could assert a claim for a post-discharge violation of the anti-discrimination provisions of § 525 of the Bankruptcy Code. In re Bradley, 989 F.2d 802 (5th Cir. 1993).

Wells Fargo has conflated the Feld rule that provides the standard for the court's "related to" jurisdiction under § 1334 with Bradley's ...