IN RE: TERRY D. JACKS, SANDRA C. JACKS, Debtors. TERRY D. JACKS, SANDRA C. JACKS, Plaintiffs-Appellants, versus WELLS FARGO BANK, N.A., Defendant-Appellee.
No. 09-16146
United States Court of Appeals, Eleventh Circuit
June 7, 2011
D. C. Docket No. 09-01537-CV-2-RBP, BKCY No.07-03515-TBB-13. [PUBLISH]
(June 7, 2011)
BLACK, Circuit Judge:
Plaintiff-Appellants Terry and Sandra Jacks filed this purported class action as an adversary proceeding before the bankruptcy court. Their amended complaint alleged their mortgage lender, Wells Fargo Bank, N.A., violated various provisions of the Bankruptcy Code and Bankruptcy Rules by failing to disclose certain fees on the proof of claim it filed in the Jacks’ Chapter 13 bankruptcy case. Prior to considering class certification, the bankruptcy court chose to address the merits of the Jacks’ individual claims. Following a hearing in which it made findings of fact and conclusions of law, the bankruptcy court granted summary judgment in favor of Wells Fargo on all counts. The Jacks appealed this decision to the district court, which affirmed the bankruptcy court‘s decision.
We affirm the grant of summary judgment in Wells Fargo‘s favor as to all claims except those based on actions that Wells Fargo may take after the Jacks’ bankruptcy case is dismissed or discharged. We determine to the extent the Jacks’ claims are based on events that may take place later, they are not ripe, and we dismiss them.
I. BACKGROUND
On September 6, 2007, Wells Fargo filed a proof of claim asserting a secured claim of $162,205.57. Exhibit A to the proof of claim was an “Itemization of Claim and Summary of Supporting Documents.” This exhibit listed the Jacks’ total debt of $162,205.57.1 It did not list any pre-petition attorney fees or costs, but stated at the end of the itemization section:
Please be advised that reasonable fees and costs for the review of the bankruptcy pleadings, review of client information, preparation and filing of the Proof of Claim will be charged to the lender/servicer for post-petition services rendered subsequent to the filing of this bankruptcy matter. Further, note that future fees and costs for bankruptcy related services are expected to accrue throughout the life of this bankruptcy case, and will be charged to the lender/servicer. If such fees and costs or charges are not paid through the bankruptcy, the lender reserves the right, at the lender‘s discretion, to seek future
reimbursement for the fees, costs and charges related to services rendered and expenses incurred pursuant to the terms provided for in the underlying security instrument, the bankruptcy code and other applicable law.
After the proof of claim was filed, Wells Fargo‘s outside law firm submitted to Wells Fargo an invoice documenting $310 in fees and expenses associated with preparing and filing the proof of claim in the Jacks’ case.
On October 17, 2007, the Jacks filed an Amended Chapter 13 Plan. The plan called for the Jacks to continue to make their regular monthly payment directly to Wells Fargo. It did not list any arrearage to be paid by the trustee. The plan also noted, “Debtors also may have a potential lawsuit against Wells Fargo Home Mortgage for violations of the automatic stay,
On July 29, 2008, the Jacks filed a complaint against Wells Fargo in the U.S. Bankruptcy Court for the Northern District of Alabama. The Jacks, claiming to act on behalf of themselves and a class of similarly situated mortgagors, alleged
The $310 in fees had been recorded on the Jacks’ “Customer Account Activity Statement” as two charges in the amount of $150 each and one charge for $10 posted on October 25, 2007. A litigation representative for Wells Fargo explained in her deposition testimony that the Customer Account Activity Statement tracks payments and disbursements related to the servicing of a loan, including bankruptcy-related fees and expenses. It may include fees paid by Wells Fargo that are provisionally assessed to the loan for bookkeeping purposes. In this case, the fees were attorney‘s fees and other costs paid by Wells Fargo to its
The record reflects that the Jacks became aware of the proof of claim fees when the Customer Account Activity Statement was sent to Sandra Jacks after she called Wells Fargo to request the activity history on her account. The Customer Account Activity Statement is the only document in evidence that lists the $310 in fees. Sandra Jacks stated in her deposition she had never been billed for or asked to pay the charges or told she would be expected to pay them. Similarly, Terry Jacks testified Wells Fargo had never done anything to attempt to collect these fees. Wells Fargo continued to send statements for the regular monthly payment due under the mortgage and did not add any additional charges to these statements.
The bankruptcy court addressed the merits of the Jacks’ claim prior to considering class certification and entered summary judgment for Wells Fargo on all counts. The district court affirmed.2
II. DISCUSSION
A. Claims for Violations of the Automatic Stay
Upon the filing of a bankruptcy petition,
The Jacks claim Wells Fargo violated three separate automatic stay provisions: (1) section 362(a)(3), which prohibits “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;” (2) section 362(a)(5), which prohibits “any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;” and (3) section 362(a)(6), which prohibits “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title.” Wells Fargo contends the Jacks cannot establish any automatic stay violation because the mere recordation of charges on the Customer Account Activity Statement is not an “act” in violation of the automatic stay.
We consider each of the Jacks’ automatic stay violation claims below, and as to each claim, we affirm the grant of summary judgment in favor of Wells Fargo.
1. Section 362(a)(3).
As stated above,
As Wells Fargo points out, however, while the loan documents may give it the right to modify the mortgage to include the fees at issue, there is no evidence Wells Fargo has actually exercised this right by adding these fees to the loan balance, nor is there evidence it has otherwise collected or attempted to collect the $310 in bankruptcy-related fees. In fact, as Sandra Jacks testified, the monthly statements sent by Wells Fargo after the filing of the bankruptcy petition reflected only the normal payment due under the mortgage and did not include any additional fees. The Jacks learned of the recordation of these fees only because Sandra Jacks specifically requested a copy of the account history.
The mere recordation of fees incurred by Wells Fargo on its internal records, without any attempt to collect these fees from the debtor or estate or to modify the mortgage, is not an “act” in violation of § 362(a)(3). The First Circuit
2. Section 362(a)(5).
3. Section 362(a)(6).
Section 362(a)(6) prohibits “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title.” As an initial matter, we note some doubt over whether this section–which applies to actions regarding pre-petition claims–applies to actions in connection with fees that accrued post-petition. In any case, however, the Jacks’ claim under § 362(a)(6) fails for the same reason as their other claims for violations of the automatic stay: Wells Fargo has not committed any “act” in violation of the stay.
B. Claims Relating to Wells Fargo‘s Failure to Disclose the Proof of Claim Fees
The Jacks claim that district court erred in affirming summary judgment in favor of Wells Fargo on their claims that Wells Fargo violated the Bankruptcy Code and Rules by recording the fees without disclosing them. Specifically, the Jacks contend Wells Fargo‘s failure to disclose the postpetition fees violated
Section 506 addresses the “Determination of secured status” on a creditor‘s claims. Subsection (b) provides:
To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement or State statute under which such claim arose.
Rule 2016(a) governs an “Application for compensation or reimbursement.” It requires, “An entity seeking interim or final compensation for services, or reimbursement of necessary expenses, from the estate shall file an application setting forth a detailed statement of (1) the services rendered, time expended and expenses incurred, and (2) the amounts requested.” Bankr. Rule 2016(a).
According to the Jacks, these provisions promote the Bankruptcy Code‘s goal of giving debtors a “fresh start.” See Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007) (“The principal purpose of the
The Jacks rely on a line of bankruptcy court decisions that, in varying degrees, support the proposition that pursuant to § 506(b), Rule 2016, or both of these provisions, a secured creditor must disclose and obtain court approval of postpetition legal expenses. See, e.g., Jones v. Wells Fargo Home Mortg. (In re Jones), 366 B.R. 584, 594 (Bankr. E.D. La. 2007) (concluding postpetition charges that may be included in the debts necessary to cure a default under a bankruptcy plan “must be disclosed and are subject to review by the bankruptcy court for reasonableness“); Dean v. First Union Mortg. Corp. (In re Harris), 280
Although we express no opinion as to the specific holdings in those cases, we note many of the cases on which the Jacks rely involved creditors who had actually collected or attempted to collect the undisclosed fees either during the bankruptcy or upon discharge. See, e.g., Rodriguez v. Countrywide Home Loans, Inc. (In re Rodriguez), 421 B.R. 356, 372 (Bankr. S.D. Tex. 2009) (noting the mortgage holder “admits that it attempted to collect fees and expenses, which accrued during the Plaintiffs’ cases, after the Plaintiffs had emerged from bankruptcy” and that it “threatened foreclosure on account of the unpaid fees and expenses” (footnote omitted)); In re Jones, 366 B.R. at 594 (noting the
Assuming arguendo that § 506(b) and Rule 2016(a) require disclosure of postpetition fees in some circumstances, we hold those provisions are not violated when a creditor merely records costs it has incurred in association with a mortgagee‘s bankruptcy for internal bookkeeping purposes and makes no attempt to collect the fees or otherwise add them to the debtor‘s balance. Therefore, to the extent the Jacks’ disclosure claims rely on events that have occurred during the course of their Chapter 13 case, the district court did not err in affirming the bankruptcy court‘s order granting summary judgment in Wells Fargo‘s favor.5
This conclusion does not entirely resolve the Jacks’ disclosure claims, however, because the Jacks claim the failure to disclose the fees renders them uncollectible at any point, including when their case is either discharged or
We do not reach these arguments because we conclude these claims are not ripe for adjudication. “The ripeness doctrine raises both jurisdictional and prudential concerns.” Cheffer v. Reno, 55 F.3d 1517, 1524 (11th Cir. 1995). “It asks whether there is sufficient injury to meet Article III‘s requirement of a case or controversy and, if so, whether the claim is sufficiently mature, and the issues sufficiently defined and concrete, to permit effective decisionmaking by the court.” Id. In deciding whether a claim is ripe, we consider: “(1) the fitness of the issues for judicial decision, and (2) the hardship to the parties of withholding court consideration.” Id. (citing Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967)). A claim is not ripe when it is based on speculative possibilities. Bowen v. First Family Fin. Servs., Inc., 233 F.3d 1331, 1341 n.7 (11th Cir. 2000).
Here, we do not know whether the Jacks’ bankruptcy will end in a discharge or a dismissal. We note that Wells Fargo represents on appeal that it will not seek to collect the charges if the Jacks successfully complete their Chapter 13 plan and receive a discharge. Although we are “reluctant to accept mere bald assurances . . . it cannot be said with any confidence that [Wells Fargo‘s] collection efforts are
C. Objection to the proof of claim
Finally, the Jacks contend the bankruptcy court erred in granting summary judgment in Wells Fargo‘s favor on their objection to the proof of claim. Section 502 governs the “Allowance of claims or interests.” Section 502(a) makes clear, “A claim or interest, proof of which is filed under section 501 . . . is deemed allowed, unless a party in interest . . . objects.” Section 502(b)(1), the provision on which the Jacks rely, provides that if an objection is made, the court should determine the amount of the claim and “shall allow such claim in such amount, except to the extent that [] such claim is unenforceable against the debtor and
We agree Wells Fargo‘s failure to include the proof of claim fees on the proof of claim does not provide a valid basis for an objection. Under § 502(b)(1), a claim asserted in a proof of claim is allowed in the amount asserted “except to the extent that [] such claim is unenforceable.” “Such claim” refers to the claim actually asserted on the proof of claim. As to this amount–in this case, $162,205.57–the Jacks have identified no reason why such amount is unenforceable. Wells Fargo was therefore entitled to summary judgment.
III. CONCLUSION
To the extent the Jacks’ claims are based on events that have occurred during the pendency of their bankruptcy, we hold that Wells Fargo was entitled to summary judgment in its favor on these claims. To the extent the Jacks premise claims on events that have not yet occurred, we conclude these claims are not ripe, and we dismiss them.