Walls v. Wells Fargo Bank, NA
| Citation | 255 BR 38 |
| Decision Date | 16 October 2000 |
| Docket Number | No. Civ. S-99-1860 FCD/DAD.,Civ. S-99-1860 FCD/DAD. |
| Parties | Donna M. WALLS, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant. |
| Court | U.S. District Court — Eastern District of California |
William S. Weisberg, Craig S. Miller, Weisberg & Miller, Sacramento, CA, Ronald S. Goldser, Zimmerman Reed P.L.L.P., Minneapolis, MN, Carleton B. Crutchfield, Mitsch & Crutchfield, St. Paul, Minnesota, for plaintiff.
Thomas O. Jacob, Office of General Counsel, Wells Fargo Bank, National Association, San Francisco, CA, Mark D. Lonergan, Rhonda L. Nelson, Severson & Werson, A Professional Corporation, San Francisco, CA, for defendant.
This matter is before the court on (1) defendant Wells Fargo Bank's motion to dismiss eight of the ten causes of action alleged in plaintiff's complaint for failure to state a claim, and (2) plaintiff Donna M. Wall's motion to refer the core bankruptcy issues contained in complaint to the United States Bankruptcy Court for the Eastern District of California and to stay the remaining issues in this court pending a decision by the bankruptcy court on the referred claims.
On September 24, 1997, plaintiff Donna Walls filed a voluntary bankruptcy petition under Chapter 7 of Title 11 of the United States Code. In her petition, plaintiff listed a pre-petition obligation of $118,000 ("the debt") to defendant Wells Fargo Bank. Plaintiff's bankruptcy was discharged on January 2, 1998 and closed on January 26, 1998.
Plaintiff contends that defendant unlawfully attempted to collect the debt after she filed her Chapter 7 petition in violation of the automatic stay, 11 U.S.C. § 362, and after the debt had been discharged, in violation of the reaffirmation provisions and discharge injunction, 11 U.S.C. § 524(c), (a)(2). Plaintiff alleges that pursuant to defendant's unlawful collection efforts, she paid over $5,500 to defendant after she filed her bankruptcy petition and after her debt had been discharged.
Plaintiff's complaint consists of ten counts:
Count 1: wilful violation of the reaffirmation provisions
of 11 U.S.C. § 524(c)
Count 2: wilful violation of the automatic stay, 11
U.S.C. § 362
Count 3: wilful violation of the discharge injunction
11 U.S.C. § 524(a)(2)
Count 4: contempt of court based upon defendant's
alleged violation of 11 U.S.C. §§ 362 and
524(a)(2)
Count 5: violation of RICO, 18 U.S.C. § 1962(c)
Count 6: violation of the Fair Debt Collection Practices
Act ("FDCPA"), 15 U.S.C. § 1692f
Count 7: declaratory relief
Count 8: injunctive relief
Count 9: accounting
Count 10: attorney's fees pursuant to 11 U.S.C
§§ 105, 362(h), 15 U.S.C. § 1692k, and 18
U.S.C.1964(c)
Plaintiff brings this putative class action on behalf of herself and others similarly situated.
Defendant moves to dismiss the first and third causes of action on the ground that there is no private right of action under section 524,1 the fifth cause of action on the ground that plaintiff failed to plead an "enterprise" as required to state a claim under RICO, the sixth cause of action on the ground that the FDCPA does not apply to creditors collecting their own debts, the fifth and sixth causes of action on the ground that to the extent they are premised on violations of sections 362 and 524, the exclusive remedies are found in the Bankruptcy Code, and the seventh through tenth causes of action on the ground that they are preempted by the Bankruptcy Code to the extent they are based on violations of the same. Plaintiff moves to refer all core bankruptcy issues to the bankruptcy court and to stay the proceedings in this court, including defendant's motion to dismiss, pending resolution of the referred claims.
A hearing was held on August 4, 2000. At the hearing, the court ordered the parties to submit supplemental briefing on certain issues. The court has reviewed the parties' supplemental briefs and disposes of the matter herein.
This court has "original but not exclusive jurisdiction over all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b). This court, however, may refer to the bankruptcy court any cases arising under that title as well as related proceedings. See 28 U.S.C. § 157(a); E.D. Gen. Ord. No. 182.
A complaint will not be dismissed under Fed.R.Civ.P. 12(b)(6) "unless it appears beyond doubt that plaintiff can prove no set of facts in support of his or her claim that would entitle him or her to relief." Yamaguchi v. Department of the Air Force, 109 F.3d 1475, 1480 (9th Cir.1997) (quoting Lewis v. Telephone Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996)). "All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996).
Plaintiff requests the court refer the following issues to the bankruptcy court:
Defendant does not oppose the referral of matters under Title 11 to the bankruptcy court; rather, defendant contends that referral is premature at this time. Defendant contends that referring the abovementioned issues to the bankruptcy court prior to ruling on defendant's motion to dismiss may violate defendant's Seventh Amendment right to a jury trial. The court agrees.
The Seventh Amendment guarantees defendants the right to have a jury determine issues of fact. As discussed in detail below, plaintiff's equitable and legal claims raise common issues of fact. For example, as plead in the complaint, plaintiff's RICO and FDCPA claims are premised solely upon violations of the Bankruptcy Code. Thus, if the court refers the equitable claims to the bankruptcy court and stays all proceedings on plaintiff's legal claims, the bankruptcy judge will decide the common factual issues first, before they can be submitted to a jury. Under the doctrine of collateral estoppel, these factual determinations could become binding in later proceedings on the legal claims in this court. See Beacon Theatres v. Westover, 359 U.S. 500, 504-11, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959); see also Peterson v. Wells Fargo Bank, N.A., 2000 WL 1225788 *1-4 (E.D.Cal. Aug.17, 2000).
The court also finds that ruling on defendant's motion to dismiss at this time promotes the goal of judicial efficiency. As the court stated in Molloy v. Primus Automotive:
If the bankruptcy court were to decide this issue, the `losing\' party would presumably appeal that decision to this Court. Thus, one way or another, this Court must decide whether § 524 contains an implied right of action. To avoid duplicative litigation in the Bankruptcy Court, this Court\'s determination of this issue will control this litigation.
247 B.R. 804, 815 (C.D.Cal.2000).
Accordingly, this court will exercise its discretion and will not refer the core claims to the bankruptcy court prior to ruling on defendant's motion to dismiss.2
The automatic stay is effective upon the filing of the bankruptcy petition. In re Pettit, 217 F.3d 1072, 1077 (9th Cir. 2000). It is self-executing and enjoins "any act to collect, assess or recover a claim against the debtor that arose before the commencement of the case." Id. (quoting 11 U.S.C. § 362(a)(6)). The automatic stay dissolves on the discharge date. In re Mayton, 208 B.R. 61, 66 (9th Cir. BAP 1997).
A discharge of bankruptcy "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived." 11 U.S.C. § 524(a)(2) (emphasis added).
After filing a Chapter 7 petition, a debtor, such as plaintiff, who has consumer debts secured by property of the estate must file a statement of her intention to retain or surrender the property with the clerk, and, "if applicable," specify that she claims the property as exempt, plans to redeem the property, or intends to reaffirm the debt. See 11 U.S.C. § 521(2)(A). The debtor has forty-five days in which to perform her expressed intention. Id. § 521(2)(B).
Reaffirmation and redemption, however, are not the debtor's only alternatives. In the Ninth Circuit, debtors who are current on their loan payments on secured property may elect to hold on to the collateral securing the loan and continue making payments, without electing whether to redeem the property or reaffirm the debt. See In re Parker, 139 F.3d 668, 673 (9th Cir.), cert. denied, McClellan Fed. Credit Union v. Parker, 525 U.S. 1041, 119 S.Ct....
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