The Bankruptcy Appellate Panel for the First Circuit affirmed the bankruptcy court’s reduction of the mortgage creditor’s attorney fee “penalty” against the debtor, where the penalty, ten percent of the original loan, was provided for in the mortgage document. RNPM, LLC v. Alvarez, No. 11-80 (B.A.P. 1st Cir. June 28, 2012). [Read more…] about Puerto Rican Law Justifies Reduction of Attorney Fee Penalty
Ninth Circuit BAP Permits Appellate Attorney Fee Award for Stay Violation
When a debtor is forced to defend both the ruling that the creditor violated the automatic stay and the award of sanctions for that violation, the debtor may recover her appellate attorney fees under section 362(k). Schwartz-Tallard v. America’s Servicing Co., No. 11-1429 (B.A.P. 9th Cir. June 28, 2012). [Read more…] about Ninth Circuit BAP Permits Appellate Attorney Fee Award for Stay Violation
RESPA Prohibition Against Fee-Splitting not Applicable to Undivided Unearned Fee
The Supreme Court declined to interpret RESPA’s prohibition against fee-splitting as applying to the situation in which fees were charged for services that were not provided but where the fees were not divided between two or more parties. Freeman v. Quicken Loans, No.10-1042, __U.S.___ (May 24, 2012). [Read more…] about RESPA Prohibition Against Fee-Splitting not Applicable to Undivided Unearned Fee
$3,000,000.00 Award Against Wells Fargo
In Charles Dickens’ “A Tale of Two Cities,” there is a scene in which the wealthy Monsieur the Marquis, riding in his carriage through a crowd, runs over and kills a small, poor child. When the crowd cries out in outrage, he carelessly throws a few coins out of the window of the carriage with the words, “It is extraordinary to me that you people cannot take care of yourselves and your children.” With that, he rides on. Thus begins the French Revolution.
For many years, Wells Fargo has been carelessly throwing coins out of its carriage window at the debtors overrun by its policies that unfairly compound their already onerous financial burdens. But, debtors, with the help of the courts, are fighting back.
The recent battlefield was the Bankruptcy Court for the Eastern District of Louisiana in the case of Jones v. Wells Fargo Home Mortgage, No. 03-16518 (Bankr. E.D. La, April 5, 2012). In that case Judge Elizabeth Magner reviewed an order for sanctions after remand by the Fifth Circuit, in light of the Fifth Circuit’s decision in Wells Fargo Bank, N.A. v. Stewart (In re Stewart), 647 F.3d 553 (5th Cir. 2011) (finding that Bankruptcy overstepped its mandate in ordering Wells Fargo to audit every case it was involved in in the district). [Read more…] about $3,000,000.00 Award Against Wells Fargo
Fee-Only Plans Not Per Se Bad Faith
Making specific reference to NACBA’s “helpful” amicus brief, the First Circuit Court of Appeals found that fee-only chapter 13 plans are not per se bad faith under Section 1325(a)(3). In re Puffer, No. 11-1831 (1st Cir. March 22, 2012). Debtor’s Chapter 13 plan proposed to pay $2,900 to his counsel, $300 to general unsecured creditors, and $400 as trustee fees. The bankruptcy court declined to confirm the plan on the basis that it was per se bad faith to file a plan in which the debtor’s bankruptcy counsel was essentially the only beneficiary. In reversing, the first circuit borrowed the totality of the circumstances analysis from Section 706(a), placing the burden on the debtor to establish that the facts are such that the Chapter 13 plan is in good faith. The decision will make bankruptcy relief more available to debtors who otherwise could not find competent counsel and for whom proceeding pro se is a poor alternative. [Read more…] about Fee-Only Plans Not Per Se Bad Faith
Fee-Only Chapter 13
NACBA has filed an amicus brief opposing the imposition of a bright line rule prohibiting attorney-fee-only chapter 13 cases as being filed in bad faith. Berliner v. Pappalardo (In re Puffer), No. 11-1831 (1st Cir.). [Read more…] about Fee-Only Chapter 13
Berliner v. Pappalardo (In re Puffer), No. 11-1831 (1st Cir.)
NACBA has filed an amicus brief opposing the imposition of a bright line rule prohibiting attorney-fee-only chapter 13 cases as being filed in bad faith. Berliner v. Pappalardo (In re Puffer), No. 11-1831 (1st Cir.). The brief emphasizes that bad faith is necessarily a case-by-case, fact specific inquiry, and that there exist legitimate, good faith, reasons for seeking chapter 13 relief solely to make payments toward attorney fees and administrative costs. Because debtors eligible for chapter 7 relief frequently cannot afford to pay the attorney fees to file their cases, chapter 13 presents a viable alternative and nothing in the Code prohibits such filing. NACBA member David Baker filed the brief on NACBA’s behalf.
Brief
In re Bellamy, No. 07-11332 (Bankr. D. Md)
Type: Amicus
Date: October, 2007
Description: Whether chapter 13 trustee must pay debtor’s attorney fees approved under section 1326(a)(2) ahead of claims from unsecured and secured creditors.
Result: Debtor won. 379 B.R. 86 (Bankr. D. Md. 2007)
Fifth Circuit Affirms Denial of Attorney Fees to Wells Fargo
In a per curiam decision, the Fifth Circuit, in In re Collins, No. 10-20658 (5th Cir. August 15, 2011), upheld the lower courts’ findings that Wells Fargo was not entitled to attorney fees for filing a proof of claim where it disputed the amount of the debt as listed in the debtor’s proof of claim. The lower courts found that interpretation of the Deed of Trust did not support Wells Fargo’s position, see In re Collins, No. 07-38246, 2009 Bankr. LEXIS 1554 (Bankr. S.D. Tex. June 8, 2009), aff’d sub nom. Wells Fargo Bank, N.A. v. Collins, No. H:09-2483, 2010U.S. Dist. LEXIS 85195 (S.D.Tex. Aug. 19, 2010). In affirming, the Fifth Circuit explained that it found no reversible error in that conclusion. NACBA assisted with the debtor’s brief.