Cano v. GMAC Mortgage Corp. (In Re Cano)Cano v. GMAC Mortgage Corp. (In Re Cano)
MEMORANDUM OPINION
Background
Plaintiffs are current and former chapter 13 debtors who executed mortgage 1 contracts with GMAC. Plaintiffs allege that GMAC improperly charged and collected fees and costs during their pending chapter 13 plans and failed to disclose the activities to the bankruptcy court. Plaintiffs also allege that GMAC attempted to collect some non-disclosed, accumulated fees and costs after Plaintiffs received their chapter 13 discharges. Plaintiffs seek relief from GMAC’s alleged conduct under a host of theories.
The Court dismisses the majority of Plaintiffs’ claims. Most claims are based on Bankruptcy Code provisions that define the contents and mechanics of a chapter 13 plan but do not grant debtors substantive rights. Nothing within those provisions allows the Court to create private causes of action out of provisions that define contents and mechanics. The Court cannot graft into the Code rights and remedies that Congress chose not to create.
However, the Court also has the duty and authority to enforce court orders and substantive rights provided by the Code. Accordingly, the Court declines to dismiss Plaintiffs’ claims for violation of court orders confirming Plaintiffs’ chapter 13 plans, and violation of Federal Rule of Bankruptcy Procedure 2016. 2
1. Summary of Allegations
Plaintiffs are former chapter 13 debtors who have mortgage contracts with GMAC Mortgage Corporation, L.L.C. Plaintiffs allege that they diligently completed their chapter 13 plans and received a discharge. Plaintiffs’ plans provided for the cure of all arrears on their home mortgages. Accordingly, when Plaintiffs completed their final plan payment, they should have faced a “new opportunity in life with a clear field for future effort,” unfettered by arrearages on their home mortgages.
Local Loan Co. v. Hunt,
Despite Plaintiffs’ completion of their chapter 13 plans, Plaintiffs allege that they entered their first day of post-discharge life in default. Essentially, Plaintiffs allege that GMAC managed their mortgage accounts in a manner that violated Plaintiffs’ chapter 13 plans and deprived them of the fresh start purpose of chapter 13. Plaintiffs allege that GMAC allocated chapter 13 plan payments among arrear-ages, pre-petition debts, and current principal and interest in contravention of Plaintiffs’ plans. Plaintiffs also allege that defendant GMAC charged or accumulated fees and costs that were not authorized by the mortgage contracts or the orders confirming their chapter 13 plans. Plaintiffs allege that GMAC did not disclose to the Court the fees and costs during their chapter 13 bankruptcy cases. Plaintiffs allege
2. Specific Allegations
The Canos filed a chapter 13 bankruptcy petition in August of 2002. The Bankruptcy Court issued an order confirming the Canos’ chapter 13 plan on February 20, 2003. The plan and a subsequent modification to the plan provided for current monthly principal and interest payments, pre and post-petition arrearages, escrow shortages, and legal costs incurred by GMAC.
As of June, 2005, the Canos allege that they were current on all mortgage obligations, including property taxes. Nevertheless, the Canos allege that GMAC attempted to collect unauthorized fees and expenses in a manner that violated various provisions of the Bankruptcy Code, Bankruptcy Rules, and the court orders confirming their plan. In July, 2005, GMAC filed an amended proof of claim seeking an amount that exceeded the Canos’ original principal balance and that allegedly contained unsupported and unauthorized amounts. During 2006 through 2008, the Canos allege that GMAC sent them statements showing “past due” or “unpaid” amounts that were unsupported and unauthorized.
On January 11, 2008, the trustee for the Canos’ bankruptcy case filed a motion for an order declaring the Canos’ mortgage current. The motion stated that the debt- or had completed all plan payments and all amounts claimed in GMAC’s proofs of claim were paid. GMAC did not object to the motion. On February 4, 2008, the Bankruptcy Court issued an order finding that the Canos had paid all amounts claimed in GMAC’s proofs of claim and that the Canos were current on their mortgage obligations. The order also required the Canos to resume making monthly payments directly to GMAC.
On February 21, 2008, the trustee filed a report and notice of bar date that showed all the plan payments made to GMAC and required GMAC to file a supplemental proof of claim to recover any additional amounts authorized by their mortgage contract. The report stated that any claim not filed within 60 days would be barred. The report also stated that GMAC must provide the trustee, the debtor, and debt- or’s counsel with written notice of any changes in the debtor’s monthly payment obligations. GMAC did not file a supplemental claim or object to the notice.
The Bankruptcy Court granted the Ca-nos a chapter 13 discharge on February 26, 2008. Despite the discharge, the court order finding the Canos current, and the trustee’s final report, GMAC allegedly continued to attempt to collect amounts allegedly incurred during the Canos’ bankruptcy case. On March 18, 2008, GMAC allegedly sent the Canos a statement demanding payment for “unpaid amounts,” “late charge,” and “other,” totaling $5,936.71. A similar statement was allegedly sent on April 3, 2008, alleging that $5,932.44 was due. On May 6, 2008, GMAC allegedly sent a notice of intent to accelerate and foreclose if $5,193.57 was not paid within 30 days.
On May 19, 2008, the Canos filed this adversary proceeding on behalf of a nationwide class. Plaintiffs seek to represent a class consisting of:
All residential mortgage customers of GMAC in the United States who filed a chapter 13 bankruptcy proceeding prior to October 16, 2005 and received a Chapter 13 discharge but to whom GMAC nonetheless represented that their mortgage was in arrears or that they owed any interest, fees, charges, or expenses not specifically approved by an order of a United States Bankruptcy Court.
Plaintiffs request relief based on alleged violations of: Plaintiffs’ chapter 13 plans, court orders confirming Plaintiffs’ plans, Federal Rule of Bankruptcy Procedure 2016(a), and §§ 362(a)(1), (3), (4), (5), and (6), 524, 1322(a)(1), 1322(b)(5), 1326(c), 1327, and 1328 of the Bankruptcy Code. Plaintiffs also assert claims for breach of contract, contempt, and abuse of process, and seek declaratory and injunctive relief. Plaintiffs seek relief pursuant to the Court’s § 105 power. Plaintiffs seek actual and punitive damages, legal costs, and sanctions.
3. Pending Motions
Early in this adversary proceeding, GMAC filed a motion to dismiss and a motion to withdraw the reference. On November 10, 2008, the Court held a hearing on the motion to withdraw the reference and the motion to dismiss.
A. Report and Recommendation
On April 2, 2009, the Court issued its Report and Recommendation recommending that the District Court not withdraw the reference to this Court. GMAC argued that withdrawal was mandatory because resolution of Plaintiffs’ complaint would require this Court to interpret federal statutes that affect interstate commerce. GMAC also contended that there was cause for permissive withdrawal because resolution of the adversary by the District Court would lead to greater efficiencies.
The Court’s Report and Recommendation found that this adversary proceeding was a core proceeding arising from Bankruptcy Code provisions and principles. Resolving the adversary will require close scrutiny of the Bankruptcy Code, not non-title 11 statutes. Bankruptcy courts are designed and are best suited for resolving core bankruptcy issues.
The Court’s Report and Recommendation is pending in the District Court.
B. Motion to Dismiss
On April 29, 2009, GMAC filed a Motion to Dismiss Plaintiffs’ First Amended Complaint (docket # 42). GMAC generally asserts two bases for dismissal: (1) Plaintiffs’ causes of action fail to state a valid claim; and (2) the Court lacks subject matter jurisdiction.
GMAC’s failure to state a claim argument focuses on GMAC’s mortgage contract rights and § 1322(b)(2) of the Bankruptcy Code. GMAC contends that its mortgage contracts allow GMAC to charge the fees and costs at issue and collect the fees and costs whenever GMAC chooses. GMAC contends that § 1322(b)(2) protects these contract rights in the bankruptcy process.
The Court has considered and rejected similar arguments in great detail in prior opinions.
Rodriguez v. Countrywide Home Loans, Inc. (In re Rodriguez),
The bankruptcy court of the Eastern District of Pennsylvania did disagree with this Court’s holdings.
Padilla v. GMAC Mortgage Corp. (In re Padilla),
Essentially, GMAC reads too much into § 1322(b)(2). Section 1322(b)(2) prevents a chapter 13 plan from modifying a mortgage lender’s contract rights. A chapter 13 debtor may not modify principal or interest payments or discharge fees and expenses allowed by the mortgage contract. But § 1322(b)(2)’s protections do not place mortgage lenders outside the court’s purview.
Section 1322(b)(2) prevents a plan from modifying a mortgage lender’s substantive contract rights, but § 1322(b)(2) does not allow a mortgage lender to ignore the procedural limits imposed by the Bankruptcy Code and Rules that govern how those rights are exercised. A mortgage lender must exercise its contract rights in the manner allowed by the Bankruptcy Code, Bankruptcy Rules, and court orders. Bankruptcy Rule 2016 requires mortgage lenders to disclose any fees and costs the mortgage lender intends to collect from the debtor. Enforcement of Rule 2016 is necessary to enforce the rights and obligations imposed by specific Code provisions. Failure to enforce Bankruptcy Code and Rule requirements would allow mortgage lenders to deny debtors the promised fresh start, despite their diligent compliance with all that the Code and the court asked of them.
GMAC’s jurisdictional argument is largely an attack on a bankruptcy court’s authority to adjudicate a nationwide class action. GMAC alleges that this Court only has subject matter jurisdiction over bankruptcy cases filed in this district and adversary proceedings that relate to a bankruptcy case filed in this district. Accordingly, GMAC contends that this Court, at most, has jurisdiction only over claims filed by putative class members who filed bankruptcy cases in the Southern District of Texas, and lacks jurisdiction over the claims asserted by putative class members who filed bankruptcy cases outside of the Southern District of Texas.
As set forth below, the Court rejects GMAC’s jurisdictional argument. The argument imposes a relational tie between adversary proceedings and individual
For the reasons set forth below, the Court grants in part and denies in part GMAC’s motion to dismiss. The Court grants GMAC’s motion to dismiss Plaintiffs’ claims for violations of §§ 362, 506, 524, 1322(a)(1), 1322(b)(5), 1326(c), 1327, and 1328. The Court denies the balance of GMAC’s motion.
Jurisdiction and Venue
The Court has jurisdiction over this matter under 28 U.S.C. § 1334. Venue is proper in this District pursuant to 28 U.S.C. § 1409. This is a core proceeding under § 157(b)(2).
Analysis
The Court considers GMAC’s failure to state a claim and subject matter jurisdiction arguments separately below.
1. Failure to State a Claim
Under Federal Rule of Civil Procedure 12(b)(6), a court should dismiss a complaint if it fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The issue in a 12(b)(6) motion is whether a plaintiff is entitled to offer evidence to support its claim.
Scheuer v. Rhodes,
The Supreme Court recently clarified a plaintiffs pleading requirements.
Ashcroft v. Iqbal,
- U.S. -,
A. Plaintiffs’ Claims for Violations of Bankruptcy Code Provisions, Bankruptcy Rules, and Court Orders
Plaintiffs allege that GMAC violated the automatic stay, the discharge injunction, a host of chapter 13 Code provisions, Rule 2016, and the orders confirming Plaintiffs’ chapter 13 plans. Plaintiffs also assert claims for breach of contract, contempt, and abuse of process. All theories are based on the same underlying conduct: misallocating plan payments and collecting undisclosed fees and costs.
The Court grants GMAC’s motion to dismiss with respect to the majority of Plaintiffs’ theories. The Court considers Plaintiffs’ theories separately below.
i. The Automatic Stay
Plaintiffs allege that GMAC violated the automatic stay through three separate courses of conduct: charging the disputed fees and costs to Plaintiffs’ accounts, misal-locating payments among principal, arrear-ages, and fees and costs, and sending Plaintiffs default notices while their plans remained pending. The Court has previously considered § 362’s application to improper charges and allocation of mortgage payments.
In re Padilla,
Section 362 of the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay, applicable to all entities. 11 U.S.C. § 362(a). The stay acts as a “self-executing injunction.”
See, e.g., In re San Angelo Pro Hockey Club, Inc.,
The stay, however, does not operate to stay proceedings or claims that arise
post-petition
unless the creditor seeks to enforce such claims against property of the estate. 11 U.S.C. § 362(a); 3 Collier on Bankruptcy, ¶ 362.03(3)(c) (15th ed. rev. 2006) (citing
Bellini Imps. Ltd. v. Mason & Dixon Lines, Inc.,
Once Plaintiffs’ chapter 13 plans were confirmed, GMAC’s mortgage rights no longer arose only from their pre-petition contracts. Their rights arose from the confirmed plan.
Section 1327(a) provides:
The provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.
11 U.S.C. § 1327(a). As described in greater detail later in this Memorandum Opinion, GMAC’s rights to charge and col
A confirmed plan constitutes a new arrangement between the debtor and creditors.
In re Stratford of Tex., Inc.,
Because confirmation of Plaintiffs’ chapter 13 plans converted GMAC’s claims for reimbursable fees and costs into claims arising under a confirmed plan — rather than a claim arising under a pre-petition contract — GMAC did not violate the automatic stay by enforcing the provisions of Plaintiffs’ confirmed plans. Even if GMAC made errors in enforcement of the plans, those errors do not violate § 362(a)(1), (5), or (6) because they were an enforcement of a post-petition plan obligation rather than an enforcement of a pre-petition claim.
A creditor can violate the automatic stay by attempting to collect post-petition debts if the creditor attempts to collect the debt from property of the estate. Section 362(a)(3) precludes “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” 11 U.S.C. § 362(a)(3) (emphasis added). Plaintiffs allege that charging the fees and costs to their accounts, allocating payments made to offset principal and arrear-age obligations, and sending alleged default notices constitute “act(s) to obtain possession” of estate property.
The Court concludes that GMAC’s alleged conduct did not constitute an “act to obtain possession” or seek to acquire “property of the estate,” as those terms are defined by § 362(a)(3). The conduct in question involved two separate acts: an initial deposit within a general account, and a latter allocation from the general account to individual accounts. The first act involved “property of the estate,” the second did not. Only the second act, involving non-estate property, was allegedly wrongful.
Plaintiffs’ payments were “property of the estate” when sent to GMAC. 11 U.S.C. § 1306(a)(2). However, when GMAC received the Plaintiffs’ pay
Thus, GMAC’s only “act” with respect to “property of the estate” was the receipt and initial deposit of the payments. No one contends that GMAC’s receipt and initial deposit of funds paid voluntarily and pursuant to a confirmed plan violated the automatic stay. After depositing the payments to its own account, GMAC may have allocated (even wrongly) portions of the payments to offset reimbursable fees and costs charged. However, the posting of an item from one internal account to another is not an act to obtain possession of estate property. GMAC already had possession when they received the payment. The improper allocation of payments may violate the orders confirming the plans, but it does not violate the automatic stay. 4
Nor would GMAC’s alleged allocation of payments contrary to the plan or sending of default notices constitute a prohibited act to obtain estate property. The mere posting of a charge or sending a default notice, without more, is not “an act to obtain possession.”
Mann v. Chase Manhattan Mortgage Corp.,
The contention that misallocating funds or sending default notices violates § 362(a)(3) misinterprets the scope of “acts” covered by that provision. Section 362(a)(3) is essentially an “anti-grab-law” statute. The intent and purpose of (a)(3) is to prohibit physical taking of property or refusal to turn-over property within a creditor’s physical possession. 3 Collier on Bankruptcy, ¶ 362.03[5] (15th ed. rev. 2006) (noting that § 362(a)(3) “requires that no entity grab non-estate property from the estate”) (emphasis added). GMAC’s alleged misallocation of funds and sending of default notices did not involve grabbing property. Rather, GMAC’s alleged conduct would, at most, constitute a breach of the confirmed plan.
The Supreme Court has held that a mere breach of an obligation, without an accompanying physical taking or possession, does not violate § 362(a)(3). In
Strumpf,
a debtor argued that a bank’s refusal to pay the debtor monies deposited in the debtor’s bank account violated § 362(a)(3).
Citizens Bank of Md. v. Strumpf,
Congress’s decision to use different language to define prohibited “acts” within § 362(a)’s subparts further clarifies (a)(3)’s antigrab nature. Congress prohibited distinct acts within subsections of § 362(a). Subsection (a)(3) prohibits acts with reference to “possession” and “control” (“any act to obtain possession ... or exercise control”). Subsection (a)(6) prohibits an
The Court notes that its conclusion regarding the applicability of the automatic stay varies from the conclusion reached by Judge Bohm in
In
re
Sanchez,
Judge Bohm takes a more holistic approach to the question and concludes that the application of the payments by the lender in Sanchez was a stay violation because it should be considered a single act along with the deposit of the funds. However, this holistic approach fails to account for the purpose of § 362(a)(3). As set forth above, the purpose of § 362(a)(3) is to prevent creditors from involuntarily grabbing estate assets. Applying § 362(a)(3) to a situation where a debtor makes a voluntary payment (although one that is improperly applied) expands the scope of § 362(a)(3) beyond its apparent purpose. The Court respectfully concludes that the holistic approach taken by Judge Bohm converts any contract breach into a stay violation and runs afoul of the Supreme Court’s teachings in Citizens Bank of Maryland v. Strumpf.
The language used by the Supreme Court, in its unanimous opinion, is instructive:
[W]e are unpersuaded by respondent’s additional contentions that the administrative hold violated §§ 362(a)(3) and 362(a)(6). Under these sections, a bankruptcy filing automatically stays “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate,” 11 U.S.C. § 362(a)(3), and “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title,” § 362(a)(6). Respondent’s reliance on these provisions rests on the false premise that petitioner’s administrative hold took something from respondent, or exercised dominion over property that belonged to respondent. That view of things might be arguable if a bank account consisted of money belonging to the depositor and held by the bank. In fact, however, it consists of nothing more or less than a promise to pay, from the bank to the depositor, see Bank of Marin v. England,385 U.S. 99 , 101,87 S.Ct. 274 , 276,17 L.Ed.2d 197 (1966); Keller v. Frederickstown Sav. Institution,193 Md. 292 , 296,66 A.2d 924 , 925 (1949); and petitioner’s temporary refusal to pay was neither a taking of possession of respondent’s property nor an exercising of control over it, but merely a refusal to perform its promise.
Strumpf,
In
Strumpf,
the Supreme Court declined to address the effect of a chapter 13 plan confirmation on the parties’ rights.
Strumpf,
For the reasons set forth above, the Court concludes that Plaintiffs have not
ii. The Discharge Injunction
Sections 524 and 1328 generally provide that the Court must grant a chapter 13 debtor a discharge upon the debt- or’s completion of all plan payments, and the Court’s discharge order operates as an injunction precluding creditors from attempting to collect discharged debts. 11 U.S.C. §§ 524, 1328. However, not all debts are discharged.
Subsections (1)-(4) of § 1328(a) excepts four types of debts from the chapter 13 discharge. 11 U.S.C. § 1328(a)(1)-(4). Subsection (1) excepts any debts “provided for under section 1322(b)(5).” Id. Section 1322(b)(5) provides that the debtor’s chapter 13 plan may provide for the “curing of any default” and “maintenance of payments.” As discussed later in this Memorandum Opinion, the “maintenance of payments” provision of § 1322(b)(5) affords debtors the right to stay current on their mortgage obligations, including the fees and costs at issue. A debtor can only remain current if a mortgage lender seeks recovery of fees and costs it intends to collect when they are incurred. A debtor cannot remain current if a lender seeks to collect fees and costs assessed over a five year plan in a single, aggregate, lump sum demand. Accordingly, the fees and costs at issue are § 1322(b)(5) amounts excepted from discharge by § 1328. 5
Plaintiffs have cited numerous cases holding that mortgage lenders can be liable for violation of the discharge injunction based on attempts to collect arrearages, fees, and costs incurred pre-petition or during the course of the plan after the debtor received a discharge.
See, e.g., Miller v. Countrywide Home Loans (In re Miller),
The Court dismisses Plaintiffs’ claims based on § 524 and § 1328 for failure to state a claim, with respect to putative class members whose petitions were filed before October 17, 2005.
iii. Violation of Chapter 13 Code Provisions
The chapter 13 provisions cited by Plaintiffs largely define the mandatory and permissive contents of a plan rather than afford debtors substantive rights that would give rise to a private cause of action. For example, § 1322(a)(1) provides that the trustee shall have control over the
Sections 1322(b)(2) and (b)(5) define what the debtor may and may not include in a plan. The provisions bind no other party prior to plan confirmation. Rights only arise from the provisions after the court has issued an order confirming a plan that incorporates those rights. Ultimately, the court order gives rise to the rights.
Section 506(b) specifies the extent to which secured creditors are entitled to interest and other reasonable fees and costs. 6 The provisions, independent of a confirmed plan, do not grant debtors substantive rights.
However, the cited chapter 13 Code provisions are still significant to this dispute. The heart of the complaint is based on alleged violations of court orders confirming Plaintiffs’ chapter 13 plans and Rule 2016. The court orders confirming Plaintiffs’ chapter 13 plans incorporate many of the Code provisions. Though the Code provisions, in the abstract, may not provide a basis for a remedy, the court orders requiring compliance with the Code provisions do. The integrity of the judicial system and the purposes of the Bankruptcy Code cannot be honored if the Court does not enforce court orders and rules that are integral to enforcing compliance with the Code,
iv. Violation of Court Orders and Rule 2016
GMAC’s failure to state a claim argument with respect to Plaintiffs’ claims for violation of court orders and Rule 2016 rests primarily on two bases: (a) § 1322(b)(2) protects a mortgage lender’s right to collect fees and expenses pursuant to their pre-petition mortgage contract; and (b) many of the fees and expenses were not provided for by Plaintiffs’ plans because they arose post-confirmation.
The Court has previously considered GMAC’s arguments in prior opinions dealing with similar issues.
In re Rodriguez,
Two sections of the Bankruptcy Code are at the heart of this dispute — -sections 1322(b)(2) and 1322(b)(5). Sections 1322(b)(2) and (b)(5), together, define how a mortgage lender will be paid in a chapter 13 case.
Section 1322(b)(2), the “anti-modification” provision, provides that a chapter 13 plan may:
modify the rights of holders of secured claims, other than a claim that is secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;
11 U.S.C. § 1322(b)(2). The provision grants mortgage lenders special rights no other creditors share. The provision effectively incorporates a mortgage lender’s pre-petition mortgage contract into the chapter 13 plan by precluding modification of the mortgage lender’s contractual rights.
Id.
at 659-60 (citing
Nobelman v. Am. Sav. Bank,
Most mortgage contracts, including GMAC’s, allow lenders to incur reasonable fees and costs necessary to protect their security interest in a debtor’s home. Many mortgage contracts, including GMAC’s, also contain provisions stating that the lender may charge and collect the incurred fees and costs at any time. Mortgage lenders often, in fact, incur fees and costs in a bankruptcy proceeding. GMAC may have incurred such fees and costs in Plaintiffs’ eases. For the purposes of this motion, the Court assumes that GMAC also waited (at least in some instances) until Plaintiffs’ bankruptcy cases were dismissed or closed before seeking to collect the fees and costs. Pursuant to § 1322(b)(2), GMAC has the right to charge and collect these fees and costs and a chapter 13 plan cannot preclude exercise of this right.
However, Congress balanced mortgage lenders’ protections by granting debtors the right to cure arrearages and remain current on the mortgage debt. Section 1322(b)(5) provides that a plan may:
notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due;
11 U.S.C. § 1322(b)(5). Section 1322(b)(5) provides an explicit exception to § 1322(b)(2)’s prohibition of mortgage modifications. Regardless of the mortgage contract, § 1322(b)(5) allows debtors to cure mortgage arrearages and maintain current payments through a chapter 13 plan. 11 U.S.C. § 1322(b)(5). Essentially, § 1322(b)(5) does not allow modification of
In
In re Mendoza,
the Fifth Circuit clarified the difference between modifying the substantive right to payment of amounts allowed by the contract and the method of collecting those amounts.
Mendoza v. Temple-Inland Mortgage Corp. (In re Mendoza),
The Fifth Circuit noted that “[t]here is a distinction between modifying the rights of a mortgagee where the debt- or proposes to pay his mortgage at an interest rate lower than that provided for in the mortgage, and modifying a plan of reorganization to include postpetition mortgage payments which are in arrears.” Id. Even though the mortgage contracts may have allowed the lender to foreclose or accelerate a loan based on a default, §§ 1322(b)(5) and 1329 of the Bankruptcy Code nevertheless grant debtors the ability to cure that default over time and through a chapter 13 plan. The Fifth Circuit noted that this reading of § 1322(b)(5) and the limitations the reading imposes on § 1322(b)(2) are necessary to conform with the congressional policy behind chapter 13. Id. at 1268-69. The Court noted that a primary purpose of chapter 13 and § 1322(b)(5) is “to provide homeowners with the continuing right to cure defaults and preserve their primary asset.” Id. at 1269.
The
Mendoza
Court also cited with approval the 11th Circuit’s
In re Hoggle
opinion.
Id.
at 1268;
Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle),
The Fifth Circuit’s
Mendoza
opinion teaches that debtor and mortgage lender obligations are not fixed and buried from the Court’s supervision after a chapter 13 plan is confirmed. Section 1322(b)(5) embodies a “continuing right” to maintain a mortgage account.
In re Mendoza,
Section 1322(b)(5)’s “continuing right” to maintain a mortgage account includes the right to cure and maintain payments arising from fees and costs charged to the debtor’s mortgage account post-petition. A debtor can only cure these defaults and keep her mortgage current if a mortgage lender discloses and charges these amounts as they arise. Hiding the charges and waiting until after the debtor has received a discharge before seeking collection of the amounts precludes the debtor from exercising the debt- or’s “continuing right” to cure defaults and remain current. Hiding the charges and
After a plan is confirmed, debtor and creditor rights and responsibilities are defined by the plan and the court order confirming the plan. Pursuant to § 1322(b)(2) and (b)(5), a mortgage lender’s contractual right to collect fees and costs allowed by the contract are incorporated within the chapter 13 plan.
In re Padilla,
The debtor’s obligations ensure payments to the mortgage lender and protection of the lender’s collateral. Accordingly, the debtor must make all payments within the time and in the amount prescribed by the plan. If the debtor misses a payment, the debtor violates the terms of the plan and the lender may seek relief such as dismissal. of the case or termination of the automatic stay. Upon dismissal or termination, the debtor loses the protections of the automatic stay and the lender may foreclose on the home.
The creditor’s obligations ensure that the debtor can cure arrearages and emerge from bankruptcy no longer facing foreclosure because of default. Accordingly, the creditor must allocate payments pursuant to the plan. Improper allocation of payments deprives a debtor of the “continuing right” provided by § 1322(b)(5) to cure arrearages and remain current on mortgage obligations and the promised fresh start. Thus, the mortgage lender must allocate payments amongst principal, interest, and arrearages in the manner prescribed by the plan. If a mortgage lender allocates payments that the plan dedicates to pre-petition arrearages to principal and interest or a post-petition charge, without court approval, the mortgage lender violates the terms of the plan and the lender may be subject to liability for violating the order confirming the plan.
If a debtor completes the arduous three or five-year journey through chapter 13, the Bankruptcy Code grants the debtor a fresh start. Section 1328
Not all debts are discharged by § 1328. Principal, interest, and arrearages provided for by the plan are not discharged. Nor are a mortgage lender’s reimbursable fees and costs incurred (but not collected) discharged. Though the reimbursable fees and costs are provided for by the plan through § 1322(b)(2)’s incorporation of the contractual right to collect the fees and costs, mortgage debts provided for by the plan but not paid by the debtor are not discharged. As discussed § 1328(a)(1) specifically excepts from discharge “debts provided for under section 1322(b)(5).”
The fact that the debts are not discharged does not mean that the debts are not satisfied. When the plan is fully performed according to its terms, the arrearage has been cured and the ongoing mortgage payments have been maintained. Sections 1322(b)(5) and 1322(c), allowing debtors to cure defaults and remain current on their mortgage obligations, and the court order that confirmed the plan and imposed the binding effect of a plan provided by § 1327(a), have the effect of bringing debtors current on their mortgage obligations. Accordingly, post-discharge attempts to collect reimbursable fees and costs incurred but not disclosed while a chapter 13 case remains pending violates the court order confirming the chapter 13 plan. Alternative interpretations of §§ 1322(b)(5), 1322(c) and 1327(a) would eviscerate the underlying fresh start purpose of chapter 13.
Enforcement of the court orders confirming a chapter 13 plan, § 1329(a)’s right to modify a plan, § 1322(b)(5)’s “continuing right,” and the fresh start, all require enforcement of Federal Rule of Bankruptcy Procedure 2016(a).
In re Padilla,
Section 1329(a) provides:
“At any time after confirmation of the plan but before the completion of payments under such plan, the plan may be modified, upon request of the debtor
11 U.S.C. § 1329(a). Section 1322(b)(5) affords debtors a “continuing right” to cure defaults and maintain payments.
Mendoza,
A Bankruptcy Court is responsible for “administer(ing) the estate in an efficient and equitable manner, and protecting) the assets of the estate from depletion.” Black
burn-Bliss Trust v. Hudson Shipbuilders, Inc. (In re Hudson Shipbuilders, Inc.),
The Supreme Court recently reaffirmed that the Court must issue orders that are necessary to assure that the purposes of the Bankruptcy Code are fulfilled.
Marrama v. Citizens Bank of Mass. (In re Marrama),
Marrama upheld a pragmatic remedy fashioned by a bankruptcy judge under section 105(a) to achieve a result that the Code clearly required, despite the apparently inconsistent approach of another Code section that was- unclear or ambiguous. In this case, a similar application of section 105(a) is warranted. Section 1322(b)(2) expressly requires that the mortgagee receive its normal monthly payments. Section 1326(a)(1) states that the debtor “shall” begin making payments not later than 30 days after filing the plan and provides that the court may order “otherwise,” which allows the court to require conduit payments through the trustee. Section 1326(a)(2) states that the trustee “shall” retain payments “proposed by the plan” made by the debtor to the trustee before confirmation. Section 1326(c) states that the trustee “shall” make payments to creditors “under the plan.” The Code prohibits modifying the rights of mortgage lenders and creates a presumption in favor of payments disbursed through the trustee. The courts recognize the many reasons that conduit payment of mortgage installments protects debtors, creditors, and the integrity of the bankruptcy process. The interplay among the provisions that protect mortgage lenders’ rights, those that authorize conduit payments, and those that require the trustee to retain some — but not all— payments by the debtor is unclear. Section 105(a) properly applies to allow the trustee to disburse the one or two monthly mortgage payments that are due postpetition but preconfirmation. The critical aspect of the payments at issue is not whether they are “under the plan” or “adequate protection” payments, but rather that they are simply conduit payments. Given the clear and explicit command of section 1322(b) to preserve the rights of holders of mortgage loans on the debtor’s principal residence, and given the ambiguous interplay of sections 1326(a)(1) and (2), the bankruptcy court’s reasoned decision to allow the trustee to distribute mortgage payments received from the debtor in the short period between filing the petition and confirming the plan as well as after plan confirmation was an appropriate application of section 105(a), consistent with Marrama’s approach.
Perez v. Peake (In re Peake),
The Court can not administer an estate in a just, speedy, inexpensive, efficient, and equitable manner without requiring creditors to file a Rule 2016(a) application for fees and costs that creditors seek to collect post-confirmation. Without Rule 2016(a) applications, the Court cannot ensure compliance with court orders or protect a debtor’s rights under § 1322(b)(5) and the right to a fresh start.
GMAC contends that bankruptcy courts cannot interpret the Bankruptcy Code or rules in a manner that violates its substantive right to charge and collect fees and costs pursuant to its pre-petition mortgage contracts provided by § 1322(b)(2). GMAC argues that requiring mortgage lenders to file a Rule 2016 application to collect fees and costs and otherwise regulating their management of a chapter 13 debtor’s mortgage accounts violates § 1322(b)(2). The Court disagrees.
The Supreme Court’s
Nobelman
decision noted that § 1322(b)(2) did not immunize all mortgage lender rights from the effects of the Bankruptcy Code.
Nobelman,
The general rule taken from § 1322(b)(2)’s plain language and Nobel-man is that a mortgage lender’s economic rights continue unimpaired through a chapter 13 plan. However, § 1322(b)(2) does not immunize a lender’s compliance with other Bankruptcy Code provisions and rules.
Collecting fees and costs without filing a Rule 2016 application or after the completion of a debtor’s plan obligations would violate the order confirming the debtor’s chapter 13 plan. A mortgage lender may not disrupt the payment allocation scheme provided by the plan by diverting amounts dedicated to arrearages or principal and interest without court approval. Until the Court reviews a Rule 2016 application and issues an order modifying the payment allocation scheme provided by a chapter 13 plan, a mortgage lender may not collect fees and costs without violating the order confirming the debtor’s plan.
For nearly a century, the Supreme Court has recognized that individual debtors who successfully emerge from bankruptcy should receive a fresh start.
Williams v. U.S. Fid. & Guar., Co.,
The Bankruptcy Code has seen many amendments over the years, but the fundamental fresh start purpose remains. The Supreme Court “has certainly acknowledged that a central purpose of the Code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy a ‘new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.’ ”
Grogan v. Garner,
Chapter 13 and the fresh start purpose do not allow a lender to place a former debtor in default and foreclose on a debt- or’s home for undisclosed charges that accrued during the course of the bankruptcy case. The Supreme Court, Circuit Courts, and bankruptcy courts in all jurisdictions speak of the fresh start for a reason. Chapter 13 exists for a purpose.
For the reasons set forth above, the Court denies GMAC’s failure to state a claim argument with respect to alleged violations of orders confirming Plaintiffs’ chapter 13 plans and Rule 2106.
v. Breach of Contract, Abuse of Process, and Contempt
Plaintiffs allege that GMAC’s alleged collection of unapproved fees and costs violated the contract formed by their confirmed plans, and constituted abuse of process and contempt. The same allegations give rise to Plaintiffs’ claims for violation of the court orders confirming their chapter 13 plan and Rule 2016. At this stage in the litigation, the Court cannot discern whether Plaintiffs’ contract, abuse of process, and contempt claims may afford Plaintiffs relief that is unavailable under their other claims or are simply duplica-tive. Accordingly, the Court declines to consider whether Plaintiffs can assert these claims based on alleged violations of Plaintiffs’ Chapter 13 plans. The Court will consider these claims, if necessary, at the conclusion of trial.
vi. Remedies
GMAC seeks dismissal of Plaintiffs’ request for declaratory and injunctive relief, and legal costs. It is premature to consider what, if any, remedies are warranted. The Court will consider remedies at the appropriate time.
vii. Sufficiency of the Pleading
GMAC also contends that Plaintiffs have pled insufficient facts to support certain claims. The Court disagrees. Plaintiffs’ First Amended Complaint provides numerous specific allegations with respect to the Canos. Plaintiffs pled specific facts with respect to discrepancies between the
B. Civil Contempt and Section 105
GMAC contends that the Bankruptcy Code does not authorize Plaintiffs to assert a private right of action to redress Plaintiffs’ claims. GMAC contends that the Court cannot read a private right of action into the implicated Bankruptcy Code provisions and Rules in contravention of the statute’s plain reading and Congress’s intent. GMAC contends that Plaintiffs’ remedies are limited to state law breach of contract claims and civil contempt from the individual courts whose orders were allegedly violated. The Court limits its analysis of GMAC’s arguments to the claims that the Court has not dismissed or refrained from considering: claims for violation of court orders confirming plans and Rule 2016.
The Court agrees that this Court does not have the authority to create private rights of action from Bankruptcy Code provisions that Congress did not intend to enforce though private rights of action. The Court agrees that neither §§ 1322(a)(1), 1322(b)(5), 1326(c), 1327, 1328 or Bankruptcy Rule 2016, alone, create a private right of action. However, the Court need not create a private right of action where none exists to grant Plaintiffs the relief they seek. Section 105 of the Bankruptcy Code grants courts broad authority to enter any order or judgment “necessary or appropriate to carry out the provisions” of the Bankruptcy Code. 11 U.S.C. § 105(a). Plaintiffs allege that GMAC has engaged in a nationwide, systematic practice of charging and hiding fees and costs without disclosing them to the bankruptcy court and in contravention of Bankruptcy Code provisions, Bankruptcy Rules, Court orders, and the fresh start purpose of chapter 13. If Plaintiffs prove their allegations, the remedy Plaintiffs seek may be “necessary or appropriate to carry out the provisions” of the Bankruptcy Code.
The evidence may demonstrate, as GMAC suggests, that only contract or civil contempt sanctions are appropriate. The evidence may demonstrate that GMAC did nothing wrong and no judgments should be issued. But the court cannot consider the appropriate remedy for factual allegations not yet proven. Discovery has not concluded. Summary judgment motions have not been filed. At this stage, the Court can only evaluate the parties’ pleadings, without the aid of evidence. The only question the Court now considers is whether the Bankruptcy Code may afford the relief Plaintiffs’ seek. Section 105 may provide the relief Plaintiffs seek for GMAC’s alleged nationwide, systematic violations of Bankruptcy Rules, court orders, and the Bankruptcy Code provisions implicated by the court orders. 9
i. Private Right of Action
GMAC’s private right of action argument is not novel. Other defendants have raised the same argument against complaints for violation of the discharge injunction, a confirmed plan, and an order
The “private right of action” argument is a red herring. In the
Cort v. Ash
line of cases, plaintiffs sought relief from the statute allegedly violated. The plaintiffs asked the court to carve out of the particular statutory provision a remedy that the statute did not provide. For example, in
Cort,
the plaintiffs contended that the defendants violated 18 U.S.C. § 610, a criminal statute that prohibited corporations from making certain contributions to Presidential or Vice Presidential elections.
Cort,
In this adversary proceeding, Plaintiffs do not ask the court to imply a private right of action from the Code provisions allegedly violated. The complaint is, at its heart, a complaint seeking relief under the court’s contempt authority and § 105, not any particular provision of chapter 13. There is a distinct difference between asking the Court to create a private right of action out of a statutory provision based on conduct that allegedly violated that statutory provision, and asking the court to enforce a court order through a statutory provision that expressly authorizes courts to issue any orders or judgments necessary to enforce court orders and Code provisions, based on conduct that violated Code provisions incorporated by a court order.
In
Bessette,
the First Circuit considered a defense identical to GMAC’s.
Bessette,
As this Court has previously recognized, “[s]ection 105(a) empowers the bankruptcy court to exercise its equitable powers — where ‘necessary’ or ‘appropriate’ — to facilitate the implementation of other Bankruptcy Code provisions.” Noonan v. Secretary of Health & Human Servs. (In re Ludlow Hosp. Soc’y, Inc.),124 F.3d 22 , 27 (1st Cir.1997); see also SPM Mfg. Corp. v. Stern (In re SPM Mfg. Corp.),984 F.2d 1305 , 1311 (1st Cir.1993); In re G.S.F. Corp.,938 F.2d 1467 , 1475 (1st Cir.1991). While it is true that the considerable discretion conferred on courts sitting in bankruptcy by § 105 is not unlimited, in that it is not “a roving commission to do equity,” Noonan,124 F.3d at 27 (quoting Chiasson v. J. Louis Matherne & Assocs., 4 F.3d 1329, 1334 (5th Cir.1993)), a courtis well within its authority if it exercises its equitable powers to enforce a specific code provision, see id.; SPM MFG., 984 F.2d at 1311 , such as § 524. Thus, § 105 does not itself create a private right of action, but a court may invoke § 105(a) “if the equitable remedy utilized is demonstrably necessary to preserve a right elsewhere provided in the Code,” Noonan,124 F.3d at 28 , so long as the court acts consistent with the Code and does not alter the Code’s distribution of other substantive rights, see id.; SPM Mfg.,984 F.2d at 1311 ... Against this background it is clear ... that a bankruptcy court is authorized to invoke § 105 to enforce the discharge injunction imposed by § 524 and order damages ... if the merits so require. Consistent with this determination, bankruptcy courts across the country have appropriately used their statutory contempt power to order monetary relief, in the form of actual damages, attorney fees, and punitive damages, when creditors have engaged in conduct that violates § 524. See, e.g., In re Hardy,97 F.3d at 1389-90 ; In re Elias98 B.R. at 337 ; Cherry,247 B.R. at 191 ; In re Arnold,206 B.R. 560 , 568 (Bankr. N.D.Ala.1997); Wiley v. Mason (In re Wiley),224 B.R. 58 , 66 (Bankr.N.D.Ill.1998) (denying motion to dismiss), vacated on other grounds,237 B.R. 677 (Bankr.N.D.Ill.1999) (finding class representative inadequate because she suffered no injury); Matthews,184 B.R. at 599-601 ; In re Bowling,116 B.R. 659 , 664-65 (Bankr.S.D.Ind.1990); cf. In re Rosteck,899 F.2d 694 , 697 (7th Cir.1990) (affirming sanction for violation of § 524 without reference to § 105 contempt powers). Therefore, we hold that § 524 is enforceable through § 105. See Malone,245 B.R. at 395 .
Id. at 445.
As the First Circuit noted, the Court “see[s] no reason to jump into the fray with the complex analysis required by
Cort v. Ash
when a remedy is readily and expressly available through another section of the Bankruptcy Code, namely, § 105(a).”
Id.
at 444. The First Circuit’s
Bessette
holding is consistent with § 105’s plain language and recent Supreme Court and Fifth Circuit precedent discussed later in this Memorandum Opinion.
Marrama,
ii. Section 105 and Inherent Authority
GMAC also contends that § 105 does not authorize the remedies Plaintiffs seek. GMAC contends that a court’s § 105 authority is limited to civil contempt sanctions and civil contempt sanctions cannot be punitive or issued by a court other than the court in which the contemptuous conduct allegedly occurred. GMAC’s argument is based on the assumption that § 105 is but a statutory codification and supplantation of bankruptcy courts’ inherent civil contempt authority. GMAC’s assumption is incorrect. The Court’s prior Memorandum Opinions have explained the distinction between bankruptcy courts’ inherent authority and § 105 authority.
In re Rodriguez,
Bankruptcy Courts have both inherent contempt authority and equitable authority under § 105. The two are not indistinguishable. The former is inherent to all courts, while the latter is rooted in statute. Bankruptcy courts have inherent civil contempt authority.
In re Yorkshire,
Section 105 of the Bankruptcy Code provides independent statutory contempt and other authority.
Id.
(“Distinct from the court’s inherent powers are statutory contempt powers that § 105(a) grants in the bankruptcy context.”);
In re Rimsat, Ltd.,
Section 105’s plain language grants bankruptcy courts broad remedial authority. Section 105(a) provides:
The Court may issue any order, process, or judgment that is necessary or appropriate to carry out the provision of this title. No provisions of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent abuse of process,
11 U.S.C. § 105(a) (emphasis added).
Section 105(a) provides that the court may issue
any
“judgment” necessary or appropriate to carry out requirements of the Bankruptcy Code. Section 105 does not require a court to use the least restrictive means to carry out the requirements of the Code. Section 105(a) does not say that the Court’s authority is limited to orders or judgments
necessary
to carry out the Code. Rather, Congress explicitly added to the statute deferential, discretionary language with “or appropriate.” Courts must give effect to a statute’s plain language.
U.S. v. Ron Pair Enters., Inc.,
The difference between inherent and § 105 authority are farther evidenced by the wide array of remedies, including damage remedies available in a private cause of action, courts have granted pursuant to § 105.
Placid Ref. Co. v. Terrebonne Fuel & Lube, Inc. (In re Terrebonne Fuel & Lube, Inc.),
iii. Application of § 105 to the Facts Pled
Exercise of the Court’s § 105 power to provide some or all of the remedies Plaintiffs seek would be appropriate if Plaintiffs prove their pled facts. In a recent decision dealing with chapter 13 mortgage payments, the Fifth Circuit advised bankruptcy courts that they may use their § 105 authority to prohibit creditor abuses of the chapter 13 process.
Campbell,
Courts have used § 105 to remedy violations of confirmed plans. A bankruptcy court’s authority under § 105 to enforce its own orders cannot be reasonably questioned.
Am. Airlines Inc. v. Allied Pilots Ass’n,
Bankruptcy Courts may not use § 105 to create new substantive rights or contravene specific Code provisions.
U.S. v. Waindel (In re Waindel),
However, Plaintiffs correctly note that Nobelman did not hold that § 1322(b)(2) immunized all mortgage rights from the effects of the Bankruptcy Code. The automatic stay limits a lender’s ability to exercise contractual foreclosure rights. Nobelman,508 U.S. at 330 ,113 S.Ct. 2106 ,124 L.Ed.2d 228 . Additionally, § 1322(b)(5) authorizes debtors to cure defaults over time through a plan, despite contrary provisions within a lender’s contract. Id. Thus, specific provisions like the automatic stay and § 1322(b)(5) may limit a lender’s ability to exercise their rights. Id. However, those limits “are independent of the debtor’s plan or otherwise outside § 1322(b)(2)’s prohibition.” Id.
Id. at 660. Section 1322(b)(2) prohibits a plan from modifying a mortgage lender’s contract rights. Section 1322(b)(2) does not override every other provision of the Bankruptcy Code.
Bankruptcy Code provisions, Bankruptcy Rules, and Court orders may not be violated without recourse. The Court need not create an implied private right of action to remedy such violations. Congress created a remedy through § 105(a). Precedent leaves no question that this Court may remedy such violations through its inherent contempt authority and statutory authority under § 105.
The use of § 105 to remedy alleged violations of Bankruptcy Code provisions, Rules, and court orders, may be particularly appropriate in the context of a nationwide class action. The alternative to a class action seeking relief based on § 105 would be thousands of individual proceedings filed before dozens of different judges in multiple jurisdictions. The Supreme Court’s Chambers and Marrama opinions stand for the proposition that an underlying purpose of § 105 is to afford bankruptcy courts the authority to avoid protracted and multifaceted litigation when the inevitable result of that litigation can be provided with one stroke pursuant to § 105. In Marrama, the Supreme Court held that a bankruptcy court could use § 105 to
dismiss a case directly without first allowing a debtor to engage in a futile conversion that would ultimately end with the same result.
The Supreme Court’s
Chambers
opinion was also rooted in the principle that courts should use equitable powers to avoid “extensive and needless satellite litigation ...”
Chambers,
The Supreme Court rejected Chambers’ contention, holding that procedural rules do not displace a court’s inherent authority or preclude a court’s exercise of its inherent authority when a procedural rule may also apply.
Id.
at 46,
Though Chambers considered a court’s ability to fashion an equitable remedy under its inherent authority rather than the § 105 authority, the Court finds Chambers equally applicable to § 105. A court’s inherent authority and § 105 are both rooted in equitable concerns. Both exist to accomplish the same purpose: fashioning equitable remedies to curb abuses. Avoiding inefficient and unnecessary litigation is a factor of primary importance in any equitable consideration, whether under inherent authority or § 105.
The Seventh Circuit has applied
Chambers’
logic to the § 105 context and explicitly found that a bankruptcy court could sanction a party under § 105 even though Federal Rule of Bankruptcy Procedure 9011 was also applicable.
In re Rimsat, Ltd.,
Moreover, a sanctioning court is not required to apply available statutes and procedural rules in a piecemeal fashion where only a broader source of authority is adequate to justify all the necessary sanctions. Chambers,501 U.S. at 50-51 ,111 S.Ct. 2123 ,115 L.Ed.2d 27 . The bankruptcy court was justified in resorting to 11 U.S.C. § 105(a) and its inherent powers in order to ensure that all the culpable parties received an appropriate sanction and did not abuse its discretion in declining to sanction Factor under Bankruptcy Rule 9011 or 7026.
Id.
Perhaps each member of the putative class could individually seek sanctions pursuant to Rule 9011 or inherent civil contempt authority from the court in which they filed their bankruptcy petition. But § 105 empowers this court to afford a remedy for the same conduct. Of course, prior to any exercise of such authority, this Court must be satisfied that Plaintiffs have demonstrated that the facts regarding the putative class justify class relief. The existence of subject matter jurisdiction only authorizes this Court to consider class relief; it does not pre-ordain the outcome.
iv. Narrow Interpretations of § 105
The Court notes that other Circuits have held that § 105 may not be used to enforce Code provisions other than the automatic stay.
See Joubert v. ABN AMRO Mortgage Group, Inc. (In re Joubert),
Neither
Walls
nor
Pertuso
are binding on this Court. This Court respectfully disagrees with the
Walls
and
Pertuso
courts and follows, as it must, the holdings of this Circuit’s
Campbell
decision, and the First Circuit’s
Bessette
decision.
Campbell,
Requiring Plaintiffs to seek civil contempt damages from their “home court” may be the more appropriate remedy and the only remedy authorized. However, if Plaintiffs’ allegations are proven, it may also be that mere civil contempt damages issued on a case-by-case basis from each individual “home court” is not sufficient to “carry out the provisions” of the Bankruptcy Code or “enforce or implement court orders or rules, or to prevent an abuse of process.” Section 105 requires the Court to fashion a remedy sufficient to ensure that debtors and creditors comply with the Code and court orders. Limiting parties to an inadequate remedy would contravene § 105’s plain language and congressional intent. Section 105 requires the Court to consider what is “necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105.
Prior to the introduction of evidence at the class certification hearing, the Court cannot tell what remedy, if any, will be necessary or appropriate to ensure that GMAC and similarly situated mortgage lenders do not flout Bankruptcy Code provisions, rules, and rights. The Court only notes that, if Plaintiffs’ allegations are proven, a class action judgment may be the only effective means of ensuring GMAC’s compliance with the Code, Rules, and court orders. The evidence may demonstrate that civil contempt sanctions are all that is necessary to ensure compliance. The evidence may also demonstrate that Plaintiffs’ allegations are unfounded and GMAC scrupulously complied with Bankruptcy Code provisions, Rules, and court orders. The Court would be ignoring the plain congressional intent of § 105 and editing-out words from § 105 if the Court dismissed Plaintiffs’ complaint at this early stage. The Court cannot yet discern what is necessary or appropriate. The story is yet to be told. The Court only notes that Plaintiffs’ allegations are sufficiently egregious, detailed, and “plausible” to afford Plaintiffs their day in court.
v. Disgorgement
The Court has broad authority to order disgorgement of monies obtained in violation of court orders, Code provisions, and Rule 2016.
In re Padilla,
2. Subject Matter Jurisdiction
The party asserting jurisdiction bears the burden of proof.
Ramming v. U.S.,
GMAC makes two jurisdictional arguments. First, GMAC contends that this Court only has jurisdiction over claims that could affect a bankruptcy estate and Plaintiffs’ claims will not affect an estate because they arise from exempt property. Second, GMAC contends that bankruptcy courts lack subject matter jurisdiction over nationwide class action proceedings.
A. Plaintiffs’ Claims Need Not Affect the Canos’ Bankruptcy Estate
GMAC’s first jurisdictional argument assumes that a bankruptcy court’s authority is limited to matters that fit within the Fifth Circuit’s definition of “related to” matters. The Fifth Circuit has defined “related to” matters as those that could conceivably have an effect on a bankruptcy estate.
Wood v. Wood (In re Wood),
Even if GMAC’s “related to” arguments were correct, dismissal would not be proper. The Court’s authority extends beyond “related to” matters.
i. Subject Matter Jurisdiction Under 28 U.S.C. §§ 1334 and 157
The jurisdictional analysis must begin with consideration of whether a district court has jurisdiction over the bankruptcy matter. Section 157(a) allows district courts to refer to the bankruptcy courts bankruptcy matters over which the district court has jurisdiction. 11 U.S.C. § 157(a) (“Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for that district.”). The United States District Court’s General Order of Reference automatically refers these matters to the bankruptcy judges for this district. In re Referrals to Bankr.Judges, General Order 2005-6 (S.D.Tex. March 10, 2005).
Section 1334 provides that district courts have subject matter 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). The three jurisdictional prongs have distinct meanings.
A matter is “related to” a case under title 11 if the adversary proceeding’s outcome may “both (1) alter the rights, obligations, and choices of action of the debtor, and (2) have an effect on the administration of the estate.”
Bass v. Den-
Courts have not precisely defined what matters fall within a court’s “arising under” and “arising in” jurisdiction. However, Courts have made it clear that proceedings involving substantive bankruptcy rights and the integrity of the bankruptcy courts fall within this core jurisdiction.
Generally, a matter arises under title 11 “if it invokes a substantive right provided by title 11.”
Southmark v. Coopers & Lybrand (In re Southmark),
Generally, a matter arises in a case under title 11 if it, “by its nature, could arise only in the context of a bankruptcy case.”
In re Wood,
With respect to bankruptcy cases that remain open, the Fifth Circuit has held that “it is not necessary to distinguish between proceedings ‘arising under’, ‘arising in a case under’, or ‘related to a case under’, title 11.”
In re Wood,
GMAC relies upon
Wood’s
language to contend that this Court lacks subject matter jurisdiction because Plaintiffs’ claims will not affect a bankruptcy estate. With the exception of one named Plaintiff, Plaintiffs have received chapter 13 discharges and no longer have pending bankruptcy cases. Generally, after a bankruptcy case is closed, a bankruptcy
Nevertheless, bankruptcy courts retain significant jurisdiction after a discharge order is issued and a case is closed over matters concerning the interpretation and enforcement of bankruptcy court orders and important substantive rights granted by the Bankruptcy Code. Such matters fall within the Court’s “arising in” and “arising under” jurisdiction. The “arising in” and “arising under” prongs of § 1334 provide independent bases of jurisdiction. The Supreme Court and Fifth Circuit have explained that courts can exercise bankruptcy jurisdiction over matters that “arise in” a bankruptcy case or “arise under” the Bankruptcy Code even when the matters are not “related to” a bankruptcy case.
If
Wood
ever had the meaning attributed by GMAC (and this Court does not believe that it did), such a meaning was effectively overruled this year by the Supreme Court. In
Travelers Indemnity,
the Supreme Court held that, post-discharge, a bankruptcy court has jurisdiction to interpret and enforce its own orders even though the bankruptcy case was closed and the claims would not affect the bankruptcy estate.
Travelers Indem. Co. v. Bailey,
— U.S. —,
The Fifth Circuit has also clarified that after a bankruptcy case is closed, a bankruptcy court nevertheless has subject matter jurisdiction to enforce court orders and to protect important debtor rights created by the Bankruptcy Code pursuant to § 1334’s “arising in” or “arising under” jurisdictional grants.
Ins. Co. of N. Am. v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp. (In re Nat’l Gypsum Co.),
In
Nat’l Gypsum,
defendants raised the same jurisdictional arguments raised by GMAC.
Id.
at 1062. Prior to the debtor’s chapter 11 plan confirmation, defendant insurer had advanced funds on the debt- or’s behalf.
Id.
at 1059. Debtor’s chapter 11 plan provided for the pre-petition advances.
Id.
After the bankruptcy court confirmed the debtor’s plan and the debtor received a discharge, defendant insurer sent a demand letter for the pre-petition advances.
Id.
The debtor filed an adversary proceeding alleging that the defendant’s conduct violated the confirmed plan and the discharge injunction.
Id.
at 1060. The Bankruptcy Court held that it had jurisdiction to consider the debtor’s complaint because it involved the court’s confirmation order.
Id.
Defendant appealed the Court’s finding of subject matter juris
The
Gypsum
Court held that debtor’s allegations that defendant violated the discharge injunction, confirmed plan, and confirmation order fell within the bankruptcy court’s core jurisdiction.
In re Nat’l Gypsum Co.,
The jurisdictional analysis for post-discharge claims must take into account the consequence of a closed estate in order to give meaning to post-discharge rights and enforce court orders. Most post-discharge conduct will not affect an estate because an estate will no longer exist. Nevertheless, the Bankruptcy Code protects debtors from certain post-discharge conduct and courts must be able to enforce their own orders post-discharge to ensure that the rights and obligations provided by the Code are honored.
Bank of La. v. Craig’s Stores of Tex., Inc. (In re Craig’s Stores of Tex., Inc.),
The
Gypsum
Court also cited numerous cases holding that complaints for violations of the discharge injunction, confirmed plan, and confirmation order fell within the court’s arising under or arising in jurisdiction.
In re Nat’l Gypsum Co.,
This Court’s
In re Padilla
decision previously considered a bankruptcy court’s post-discharge subject matter jurisdiction over allegations of violations of orders confirming a plan and Rule 2016.
In re Padilla,
“[I]t is well established that courts retain jurisdiction to enforce their own orders”. Koehler v. Grant,213 B.R. 567 (8th Cir.BAP1997) (citing Shillitani v. U.S., 384 U.S. 364 , 370,86 S.Ct. 1531 , 1535,16 L.Ed.2d 622 (1966); Ex Parte Robinson,19 Wall. 505 ,86 U.S. 505 , 510,22 L.Ed. 205 (1873); In re Bradley,989 F.2d 802 , 804 & n. 3 (5th Cir.1993); In re Ragar,3 F.3d 1174 , 1179 (8th Cir. 1993)). The partial summary judgment motions in this case contain allegations that Wells Fargo and Novastar violated the court order confirming the Padillas’ and Sanders’ confirmed plans.
The Fifth Circuit has also found that after a bankruptcy case is closed, subject matter jurisdiction remains in the Bankruptcy Court to assure that the rights afforded to a debtor by the Bankruptcy Code are fully vindicated. In re Bradley,989 F.2d 802 (5th Cir.1993). In Bradley, the Court held that the alleged post-discharge employment discrimination against a debtor under 11 U.S.C. § 525 mandated that the Court exercise its subject matter jurisdiction. Id. at 804. This case is analogous. If a lender could wait until the conclusion of a bankruptcy case — and then impose disallowed charges — the debtor’s fresh start would not be fresh at all. It is well-recognized that a fresh start is a fundamental purpose of current bankruptcy law. Marrama v. Citizens Bank of Massachusetts,549 U.S. 365 ,127 S.Ct. 1105 , 1115,166 L.Ed.2d 956 (2007).
Id.
“While courts may choose to rely on ‘related to’ jurisdiction because it is the broadest category of federal bankruptcy jurisdiction when examining their own jurisdiction, it certainly is not incumbent upon them to do so, because, as occurred here, a party may argue and a court may decide that a proceeding falls within one of the narrower categories of jurisdiction, such as ‘arising in’ jurisdiction ...”
In re Seven Fields,
ii. Plaintiffs’ Claims Fall Within the Court’s “Arising In” and “Arising Under” Authority
GMAC contends that its mortgage contracts authorized GMAC to charge, collect, and allocate the fees and costs in the manner alleged. Plaintiffs do not dispute this contention. Rather, Plaintiffs’ claims assume that, even if GMAC’s mortgage contracts allowed them to engage in the collection practices alleged, the Bankruptcy Code, Bankruptcy Rules, and court orders did not.
A matter concerning the administration of a chapter 13 bankruptcy plan concerns
The majority of Plaintiffs’ claims also fall under the Court’s “arising under” jurisdiction. Plaintiffs allege that GMAC charged, collected, and allocated fees and costs in violation of Rule 2016, the Court orders confirming Plaintiffs’ plans, and a host of Bankruptcy Code rights incorporated by the orders, particularly the right to cure arrearages and maintain payments provided by § 1322(b)(5). At its core, this complaint raises issues that implicate a fundamental right and purpose of the Bankruptcy Code: the fresh start.
Marrama,
The Fifth Circuit has left no doubt that bankruptcy courts have “arising under” subject matter jurisdiction over adversary proceedings alleging violations of a confirmed plan.
Mackey v. M.C. Invs. (In re Martinez),
Accordingly, the Court rejects GMAC’s argument that the Court lacks subject matter jurisdiction because certain putative class members’ claims could not affect a particular bankruptcy case. The Court has authority to consider Plaintiffs’ claims based on the “arising in” and “arising under” prongs of bankruptcy jurisdiction.
B. Nationwide Class Action Jurisdiction
GMAC makes two arguments with respect to the Court’s jurisdiction over nationwide class actions. First, GMAC reasserts its argument that a court’s jurisdiction is limited to matters that could conceivably have an effect on a bankruptcy case. As discussed above, GMAC’s argument conflates the “related to” prong of bankruptcy jurisdiction with the “arising in” and “arising under” prongs. Second, GMAC contends that the District Court’s General Order of Reference limits referrals to bankruptcy cases filed in the Southern District of Texas and adversary proceedings related to those bankruptcy cases. GMAC misconstrues the scope of bankruptcy court jurisdiction.
Questions regarding “the jurisdictional wonderland of bankruptcy” should begin by defining the jurisdiction of
There is no question that federal district courts have jurisdiction over class actions based on federal claims. Nor is there any doubt that a bankruptcy court has authority over class claims filed against a single debtor.
In re Am. Reserve Corp.,
The Fifth Circuit has implied that bankruptcy courts have jurisdiction over nationwide bankruptcy class actions.
Bolin v. Sears, Roebuck & Co.,
The Fifth Circuit’s
Bolin
decision is consistent with the plain language of §§ 1334 and 157. Nothing within
[Section] 1334(b) does not confer “related to” jurisdiction only upon the specific district court presently exercising jurisdiction over a particular bankruptcy case “under title 11.”
Instead, the district courts generally enjoy § 1334(b)’s grant of “related to” bankruptcy jurisdiction. All district courts are empowered by the statute to hear cases “related to” specific bankruptcies pending in other district courts.
Maritime Elec. Co., Inc. v. United Jersey Bank,
Accordingly, § 1334(b) grants subject matter jurisdiction over any debtor claims that fall within the court’s “related to,” “arising in,” or “arising under” jurisdiction, regardless of where the claimant’s bankruptcy petition was filed. As Professors Warren and Westbrook concluded:
Because there is no limitation on the district court’s power to establish a national class even though venue is proper only with regard to the class representatives, there is no limitation on the bankruptcy court’s power to exercise that jurisdiction within the constraints of § 157 of Title 28. The concern about “bankruptcy” jurisdiction over a multi-case, multi-district class is a bad pun. The issue is bankruptcy law jurisdiction, not bankruptcy court jurisdiction. As with any other class action, if venue is proper for the class representatives in a particular court, a class can be certified that includes all those claimants who would have been required to bring individual actions in a number of other federal district courts as a matter of venue. There is nothing about the debtor-protection side of bankruptcy that is any different.
Class Actions for Post-Petition Wrongs: National Relief Against National Creditors, 22 Mar Am. Bankr.Inst. J. 14 (2003). Nothing in § 1334 or any other provision of title 28 tethers a bankruptcy court’s subject matter jurisdiction over adversary proceedings to the location of a bankruptcy case.
This Court is not alone in finding that bankruptcy courts have subject matter jurisdiction over nationwide class action proceedings, particularly over claims falling within the court’s “arising in” or “arising under” jurisdiction.
Bank United,
The fact that some members of the putative class have or had bankruptcy cases pending in other districts does not impact the jurisdictional analysis. Venue provisions may mandate dismissal of an “arising in” or “arising under” claim brought before this Court on an individual versus class basis. But subject matter jurisdiction is distinct from venue. The only question presented is whether Plaintiffs’ claims fall within § 1334’s grant of bankruptcy jurisdiction.
Plaintiffs’ claims are based on alleged violations of Bankruptcy Code provisions, Bankruptcy Rules, and bankruptcy court orders. The claims could only arise in the context of a bankruptcy case and, in part, are based on substantive rights provided by the Bankruptcy Code. Accordingly, the claims fall within § 1334’s “arising in” and “arising under” jurisdiction. All of plaintiffs’ claims fall under the “arising in” and “arising under” prongs of § 1334. Nothing within the jurisdictional provisions or the General Order of Reference adds an additional requirement that “arising in” and “arising under” claims be tied to any particular bankruptcy case within any particular jurisdiction. As the Third Circuit noted, section “1334(b) does not confer ‘related to’ jurisdiction only upon the specific district court presently exercising jurisdiction over a particular bankruptcy case ‘under title 11.’”
Mar. Elec. Co.,
i. Cases Finding No Subject Matter Jurisdiction Over National Class Actions
GMAC cites opinions holding that bankruptcy courts do not have jurisdiction over nationwide class action lawsuits. The cited opinions are based on three lines of reasoning: (a) section 1134(e) vests the “home court” with exclusive jurisdiction over adversary proceedings involving debtors; (b) bankruptcy court jurisdiction over adversary proceedings is limited to adversaries that are “related to” a bankruptcy ease filed within that court; and (c) contempt sanctions can only be issued by the court that issued the order that was violated.
a. 28 U.S.C. § 1334(e)
One line of cases is based on a restrictive interpretation of § 1334(e).
10
Williams v. Sears, Roebuck & Co.,
This Court agrees that the home court has exclusive control over property of the estate. However, control over property of the estate is distinct from determining whether rights in a lawsuit are meritorious. Analysis of the venue and jurisdictional statutes clarify that § 1334(e) does not vest the home court with exclusive jurisdiction over determining rights relating to lawsuits that are property of estate. As Judge Margaret Mahoney’s well-reasoned
Noletto
opinion explained, the restrictive view of § 1334(e) would render removal, abstention, and venue provisions meaningless.
In re No-letto,
Section 1452 mandates parties to remove a case originally filed in a state court to the district court for the district in which the state court suit was pending. 28 U.S.C § 1452. For example, “A” may file a state court lawsuit against “B” in Illinois. If “B” then files for bankruptcy in Texas, the state court lawsuit may be removed to federal court. However, § 1452 requires the lawsuit to be removed to the federal court in Illinois, not the Texas bankruptcy court.
Section 1334(c) provides for permissive and mandatory abstention of certain state-law claims. 28 U.S.C. § 1334(c). If abstention is warranted, then the adversary proceeding is remanded back to a state court. “ ‘Exclusive jurisdiction’ would preclude abstention when most appropriate.”
In re Noletto,
Section 1409 mandates venues other than the home court for certain adversary proceedings. 28 U.S.C. § 1409. Section 1409(b) mandates that certain adversaries be filed “only in the district court for the district in which the defendant resides.” 11 U.S.C. § 1409(b). Subsections (c)-(d) similarly limit venue to prescribed district courts. 11 U.S.C. § 1409(c)-(d). If the restrictive view of § 1334(e) were accepted, than all adversary proceedings would have to be filed in the district in which the bankruptcy case was filed. The venue provisions would be meaningless and unworkable.
In re Noletto,
As Judge Mahoney, noted, courts should avoid statutory interpretations that render other statutory provisions superfluous.
In re Noletto,
A second line of cases arise from the Western District of Washington and the Northern District of Illinois and are based either on an assumption about bankruptcy-court jurisdiction that is not supported by title 28 or involve only “related to” matters.
Cline v. First Nationwide Mortgage Corp. (In re Cline),
The above cases confuse bankruptcy jurisdiction in district courts with a bankruptcy judge’s authority. As set forth in detail above, all bankruptcy jurisdiction originally vests with the United States district courts. Bankruptcy judges act as units of the district courts. 28 U.S.C. § 151 (“In each judicial district, the bankruptcy judges in regular active service shall constitute a unit of the district court ... Each bankruptcy judge, as a judicial officer of the district court, may exercise the authority conferred under this chapter with respect to any action, suit or proceeding ... ”).
It is beyond cavil that the United States District Court for the Southern District of Texas has jurisdiction over this class action under § 1334, The courts referenced above mistakenly assumed that jurisdiction of the district court and the authority of a bankruptcy judge are distinct concepts. In fact, a bankruptcy judge’s authority must be viewed from the perspective of the district court’s jurisdiction. 28 U.S.C. §§ 1334, 157,
&
151. Many of the cases also ignored the plain language of §§ 1334 and 157 and simply conclude that allowing bankruptcy courts to adjudicate nationwide class actions “impermissibly broadens the bankruptcy court’s jurisdictional purpose — to serve as a single forum to resolve all claims against the estate of the debtor.”
In re Cline,
Congress alone has the privilege of implementing policy through statutes. The policy behind Rule 23 supports rather than cautions against bankruptcy court authority over nationwide class actions. The class action device was created so that numerous claims could be heard in a single forum to reduce costs and ensure the enforcement of claims that, alone, are not of sufficient pecuniary value to warrant a lawsuit.
In re Am. Reserve Corp.,
Where the statutory language is clear, the Court must enforce the statute’s plain language.
U.S. v. Ron Pair Enters., Inc.,
c. Civil Contempt
A third line of cases deals only with claims seeking civil contempt damages for violations of a particular court’s order.
Wells Fargo Bank, N.A. v. Singleton (In re Singleton),
Plaintiffs’ claims seek damages, in part, for violations of orders confirming Plaintiffs’ chapter 13 plans that were issued by courts outside the Southern District of Texas. To the extent Plaintiffs seek damages for civil contempt arising out of the Court’s inherent authority, the Court may lack authority. However, Plaintiffs’ claims are not dependent on this Court’s inherent contempt authority. Ultimately, Plaintiffs seek relief pursuant to § 105. As discussed in greater detail later in this Memorandum Opinion, the Court’s remedial authority is distinct from the Court’s inherent civil contempt authority. Section 105 provides broad, statutory authority to enter necessary orders and judgments to enforce provisions of the Bankruptcy Code. To the extent GMAC violated court orders confirming chapter 13 plans, the conduct also violated specific Bankruptcy Code provisions incorporated by the plans and Bankruptcy Rule 2016.
ii. Prudential Concerns
GMAC’s argument that bankruptcy jurisdiction over adversary proceedings is tied to the location of a bankruptcy case and many of the cases cited by GMAC are based on prudential concerns. Plaintiffs’ claims may require this Court to consider other courts’ orders — orders confirming Plaintiffs’ chapter 13 plans — and issue orders and judgments that may affect a case pending in another court. Plaintiffs’ claims may even constitute a “collateral attack” to the extent other courts have issued orders allowing the fees and costs at issue. The Court does not disregard these prudential concerns. Rather, the Court views the prudential-based arguments as premature. Subsection (b)(3)(B) of Rule 23 requires the court to consider the nature of other litigation “already begun or against class members.” Fed.R.CivP. 23(b)(3)(B);
In re Noletto,
For all the above reasons, the Court denies GMAC’s motion to dismiss based on subject matter jurisdiction.
Conclusion
For the reasons set forth above, the Court grants GMAC’s Motion to Dismiss with respect to Plaintiffs’ claims under §§ 362, 506, 524, 1322(a)(1), 1322(b)(5), 1326(c), 1327, and 1328 of the Bankruptcy Code. The Court denies the balance of
Notes
. Both deeds of trust and mortgages grant a lender a security interest in a debtor's home. However, the debtor retains title to the home under a mortgage. A neutral third party (a trustee) holds title to the home under a deed of trust. Texas is a "Deed of Trust” state. Nevertheless, common parlance utilizes the terms interchangeably. For the purposes of this opinion, the differences are irrelevant. For convenience, the Court refers to deeds of trust and mortgages interchangeably.
. For the reasons set forth in this Memorandum Opinion, the Court refrains from considering Plaintiffs' claims for breach of contract, contempt, and abuse of process at this juncture.
. Section 1141(a) uses similar language to § 1327 to describe the effect of a chapter 11 plan’s confirmation. Section 1141(a) states: “Except as otherwise provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan.’’ 11 U.S.C. § 1141(a). Accordingly, cases decided under § 1141(a) with respect to this issue are analogous.
. Because any improper allocation did not involve "property of the estate,” § 362(a)(4) is also not applicable Section 362(a)(4), like § 362(a)(3), requires the prohibited “act” to be taken against "property of the estate.” As set forth below, once the funds were received by the Lenders, they were no longer property of the estate.
Strumpf,
. The Court notes that mortgage lenders may be liable for a violation of the discharge injunction for cases filed after 2005. The 2005 Bankruptcy Code amendments added subsection (i) to § 524, which provides that "the willful failure of a creditor to credit payments received under a plan confirmed under this title ... shall constitute a violation of an injunction under subsection (a)(2) if the act of the creditor to collect and failure to credit payments in the manner required by the plan caused material injury to the debtor." 11 U.S.C. § 524(i) This provision only applies to cases filed before October 17, 2005. The putative class does not include any such cases.
. This Court previously held that fees or costs not authorized by § 506(b) and charged during the narrow window between the date of the bankruptcy petition and the date of plan confirmation could give rise to a disgorgement claim.
In re Padilla,
. Section 1327(a) provides: "The provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to has accepted, or has rejected the plan.” 11 U.S.C. § 1327(a).
. Rule 2016(a) provides: "Application for Compensation or Reimbursement. An entity seeking interim or final compensation for services, or reimbursement of necessary expenses, from the estate shall file with the court an application setting forth a detailed statement of (1) the services rendered, time expended and expenses incurred, and (2) the amounts requested ... The requirements of this subdivision shall apply to an application for compensation for services rendered by an attorney or accountant even though the application is filed by a creditor or other entity.” Fed. R. Bankr.P.2016(a) (emphasis added).
. The Court previously rejected GMAC’s private right of action argument.
In
re
Rodriguez,
. Section 1334(e) provides: "The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction—
(1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate; and (2) over all claims or causes of action that involve construction section 327 of title 11, United States Code, or rule relating to disclosure requirements under section 327.”
28 U.S.C. § 1334(e).