In re: William David Goldstein and Molly K. Goldstein, CC-14-1346-TaDPa

Background

Debtors William and Molly Goldstein entered a HAMP trial period plan (TPP) with Wells Fargo in 2009, made the required trial payments, but never received a permanent modification or a written denial.
The Goldsteins filed chapter 7 in August 2010 and received discharges; their case was closed as a no-asset case. In October 2012 they sued Wells Fargo and Bank of America in state court asserting claims (fraud in inducement, promissory estoppel, breach of contract, punitive damages) based on the TPP (the “TPP Claims”).
Defendants demurred in state court arguing the TPP Claims were prepetition assets not owned by the debtors and thus plaintiffs lacked standing. The state court continued the matter to allow the Goldsteins to reopen their bankruptcy.
The Goldsteins reopened the case, scheduled the TPP Claims on amended Schedule B (with a disclaimer asserting they thought the claims were postpetition), and a chapter 7 trustee was appointed.
The trustee negotiated a settlement with Wells Fargo for $60,000, conditioned on a bankruptcy court finding that the TPP Claims were estate property; the trustee moved to approve the compromise under Rule 9019 (alternatively to sell under § 363).
The bankruptcy court held the TPP Claims accrued prepetition and therefore were estate property; the Goldsteins appealed. The BAP affirmed.

Issues

Issue	Goldstein's Argument	Wells Fargo / Trustee's Argument	Held
Did the TPP-based causes of action accrue prepetition (i.e., are they property of the estate)?	Claims did not accrue until postpetition when debtor learned of a written denial and when postpetition case law (Wigod/West/Corvello) recognized TPP-based claims.	Claims accrued prepetition because the last element (bank’s failure to act after full performance) occurred prepetition and accrued even if legal developments later clarified viability.	Accrued prepetition; TPP Claims are property of the estate.
Does the absence of a fully signed TPP or lack of published precedent prepetition prevent accrual/ownership by the estate?	No enforceable agreement existed prepetition without bank’s signed TPP and precedent; thus claim arose later.	Judicial interpretations did not create new rights; they merely applied existing state law to HAMP-related facts; absence of controlling prepetition precedent does not prevent accrual.	Lack of signed TPP or contrary/non-binding precedent does not convert claims into postpetition property.
Is discovery/tolling relevant to accrual for estate-ownership purposes?	Discovery rule or delayed knowledge delays accrual until debtors actually learned postpetition.	Discovery principles affect statute of limitations but not accrual/ownership; a claim accrues when suit could be maintained.	Discovery/tolling does not postpone accrual for estate-ownership when the claim could have been brought prepetition.
Do subsequent favorable judicial decisions revive or create prepetition rights that change ownership?	Postpetition decisions created the cause of action, so claims are postpetition.	Later decisions only interpreted preexisting state law and HAMP guidance; they did not create new rights.	Subsequent decisions did not create new rights; they merely clarified application and cannot convert prepetition-accrued claims into postpetition ones.

Key Cases Cited

Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705 (9th Cir.) (legal causes of action are included within § 541 property of the estate)
Cusano v. Klein, 264 F.3d 936 (9th Cir.) (accrual for bankruptcy ownership looks to state law; distinguish accrual from discovery/tolling)
Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir.) (HAMP/TTP interpretation under state law and Treasury directives)
Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.) (TPP can be enforceable and give rise to contract and tort claims)
West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780 (Cal. Ct. App.) (interpreting HAMP/TPP obligations under California law)