IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-20499

CAESAR R CAMPBELL; PAMELA A CAMPBELL

Plaintiffs-Appellees

v.

COUNTRYWIDE HOME LOANS INC.

Defendant-Appellant

Appeal from the United States Bankruptcy Court 

for the Southern District of Texas

Before HIGGINBOTHAM, STEWART, and SOUTHWICK, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

ThePlaintiffs, Caesar andPamela Campbell, broughtthis suit againstthe

purchase money lender on their residence, Countrywide Home Loans, Inc. They

alleged Countrywide violated the automatic stay in their Chapter 13 bankruptcy.

The bankruptcy court granted partial summary judgment in favor of the

Campbells, finding that Countrywide had violated the automatic stay by the

wording of the claim it filed. Countrywide was granted the right to appeal from

this interlocutory order. We agree with the bankruptcy court’s determination

that certain unpaid amounts due under the Campbells’ security agreement to

Countrywide were claims under the Bankruptcy Code, but reverse its holding

that Countrywide’s actions in the bankruptcy court violated the automatic stay.

United States Court of Appeals

Fifth Circuit

F I L E D

August 26, 2008

Charles R. Fulbruge III

Clerk
No. 07-20499

2

I. Factual and Procedural Background

The principal issue in this case is whether the following is a claim to be

submitted by a lender under the Bankruptcy Code: the amount by which a

bankrupt homeowner is delinquentin monthly payments during the bankruptcy

year for insurance and property taxes that would be maintained in escrow by the

lender until due. The relevant loan was obtained on October 23, 2002, by Caesar

Campbell, in the principal amount of $72,800, for the purchase of a home in

Richmond, Texas. Caesar Campbell and his wife Pamela also executed a Texas

Home Security Instrument. Countrywide is the servicer of the loan.

Under the terms of the Note and Security Instrument (collectively “loan

documents”), the Campbells’ monthly mortgage payment contained two distinct

elements. The first was a monthly payment for principal and interest in the

amount of $620.13. In addition, the loan documents provided Countrywide the

right (which it exercised) to collect other amounts on a monthly basis to cover

expenses such as insurance and taxes, to retain these payments in an escrow

account, and to pay these expenses as they became due.

The amount Countrywide could collect as a monthly escrow is governed by

the Real Estate Settlement Procedures Act (“RESPA”). 12 U.S.C. § 2601 et seq.

RESPA provides that a loan servicer can estimate the property taxes and

insurance that will be due on the property for the ensuing twelve months and

adjust the monthly payments under the mortgage by 1/12 of the total

calculations to cover the estimated expenses. RESPA also allows the lender to

include an additional 1/6 of the monthly escrow payment to provide a cushion to

cover any estimate shortfalls. See § 2609(a)(1).

On April 3, 2006, the Campbells filed a Voluntary Petition under Chapter

13 of the Bankruptcy Code. Countrywide was listed as a creditor and filed a

Proof of Claim on April 10, 2006. Countrywide’s Proof of Claim was for

$16,348.32. Countrywide had three categories of claims. First, Countrywide
No. 07-20499

3

listed fifteen delinquent pre-petition monthly principal and interest payments.

Second, Countrywide’s claim included amounts that Countrywide expended to

cover escrow expenses in years prior to the petition year (with credit for any

escrow payments made by the Campbells). Finally, Countrywide included

certain other costs and fees it was entitled to recover under the loan documents.

Countrywide did not include in its claim the unpaid escrow payments that

accrued between January 2006 and the date of the Campbells’ bankruptcy

petition in April 2006. 

Significant for this appeal, in addition to its listed claims, Countrywide

included the following language in its Proof of Claim – indicating that

Countrywide intended to increase the Campbells’ monthly mortgage payment

post-petition:

THE POST PETITION PAYMENT FOR THIS LOAN IS $1,047.35.

EFFECTIVE 6/1/2006 THE POST PETITION PAYMENT WILL

INCREASE TO $1,124.97 . . . .

The increased amount would have recouped the escrow monthly payments

that were unpaid beginning in January 2006 and ending on the filing of the

bankruptcy petition in April 2006. The Campbells filed an objection to this

increase in the mortgage payment. The bankruptcy court ultimately approved

Countrywide’s $16,348.32 arrearage claim but disallowed the increased

mortgage payment. The confirmed plan required mortgage payments in the

amount of the Campbells’ pre-petition payments.

According to the Campbells’ complaint, Countrywide’s actions were an

impermissible attempt to “recover a claim against the debtor that arose before

the commencement of the case.” 11 U.S.C. § 362(a)(6). The bankruptcy court

agreed with the Campbells – granting partial summary judgment and holding

that Countrywide’s actions were an attempt to collect a pre-petition debt. The

court also held that this action constituted a willful violation of the automatic

stay. Countrywide challenges both the finding that it was attempting to collect
No. 07-20499

4

a pre-petition debt and the finding that its actions violated the automatic stay.

The statute under which the Campbells bring their claim allows costs, attorneys’

fees, and punitive damages in certain circumstances. 11 U.S.C. § 362. The

bankruptcy court left open the issue of damages. The bankruptcy court granted

Countrywide’s petition for permission to appeal under 28 U.S.C. § 158. In

addition, we subsequently granted Countrywide’s petition to appeal. 

II. Discussion

(a) The contractual relationship between the Campbells and Countrywide

As with other summary judgments, a bankruptcy court’s fact findings are

reviewed for clear error and conclusions of law are reviewed de novo. Robertson

v. Dennis (In re Dennis), 330 F.3d 696, 701 (5th Cir. 2003). 

To understand the relevant law, we begin with the relationship between

Countrywide and the Campbells as set out in the loan documents. The

promissory note established the principal and interest on the loan; the following

provisions in the mortgage documents also required monthly escrow payments:

1. Payment of Principal, Interest, Escrow Items, and Late Charges.

Borrower shall pay when due the principal of, and interest on, the

debt evidenced by the Note and any late charges due under the

Note. Borrower shall also pay funds for Escrow Items pursuant to

Section 3.

. . .

3. Funds for Escrow Items. Borrower shall pay to Lender on the

day Periodic Payments [defined as “the regularly scheduled amount

due for (i) principal and interest under the Note, plus (ii) any

amounts under Section 3 [Escrow Items] of this Security

Agreement”] are due under the Note, until the Note is paid in full,

a sum (the “Funds”) to provide for payment of amounts due for: (a)

taxes . . .; (c) premiums for any and all insurance required by

Lender . . . . These items are called “Escrow Items.”. . . Borrower

shall pay Lender the Funds for Escrow Items unless Lender waives

Borrower’s obligation to pay the Funds for any or all Escrow Items.

. . .

Lender may, at any time, collect and holdFunds in an amount

(a) sufficient to permit Lender to apply the Funds at the time
No. 07-20499

5

specified under RESPA, and (b) notto exceed the maximum amount

a lender can require under RESPA. Lender shall estimate the

amount of Funds due on the basis of current data and reasonable

estimates of expenditures of future Escrow items or otherwise in

accordance with Applicable Law. 

. . .

4. Charges; Liens. Borrower shall pay all taxes . . . attributable to

theProperty which can attain priority over this Security Instrument

. . . . To the extent that these items are Escrow Items, Borrower

shall pay them in the manner provided in Section 3.

Upon the Campbells’ failure to make their monthly mortgage payment, the

loan documents granted Countrywide the right to “do and pay for whatever is

appropriate to protect Lender’s interest in the Property and rights under the

Security Instrument. . . .” Though Countrywide disputes that the unpaid escrow

amounts were Bankruptcy Code “claims,” it concedes that it had the right under

the just-quoted provision to proceed against the Campbells for unpaid monthly

mortgage payments, including escrow sums. We find that under the loan

documents, the Campbells had an obligation to pay, and Countrywide had a

right to collect, past-due mortgage payments. 

Though Countrywide had contractual rights to collect the principal,

interest and escrow amounts, its argument for not having to file these unpaid

amounts as a claim arises from additional rights under RESPA (which are

expressly incorporated by the loan documents). RESPA arguably allowed

Countrywide to recalculate monthly escrow payments if necessary to ensure that

there would be a sufficient balance in the Campbells’ escrow account to satisfy

the escrow expenses as they became due. According to Countrywide, RESPA

allows recalculation any time there were insufficientfunds in the escrow account

to cover escrow expenses in the ensuring year. Though that may be true, the

issue is whether such a right overrides bankruptcy principles.

(b) The Campbells’ bankruptcy
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We now turn to the relevant portions of the Bankruptcy Code. After a

bankruptcy petition is filed, an automatic stay arises in favor of the debtor. The

stay prohibits “all entities” from making collection efforts against the debtor or

the property of the debtor’s estate. 11 U.S.C. § 362(a). The stay prohibits the

collection of any pre-petition debt, but does not apply to claims that arise postpetition. United States v. Ripley (In re Ripley), 926 F.2d 440, 443 (5th Cir. 1991).

While the automatic stay halts collection efforts, the Bankruptcy Code

provides creditors a procedure to assert claims against the debtor’s estate. The

Bankruptcy Code entitles each creditor of the bankrupt “to file a proof of claim

– i.e., a document providing proof of a ‘right to payment’ . . . against the debtor’s

estate.” Travelers Cas. & Sur. Co. of America v. Pacific Gas & Elec. Co., 127 S.

Ct. 1199, 1204 (2007) (quoting 11 U.S.C. § 101(5)(a)). A “claim” is a “right to

payment, whether or not such right is reduced to judgment, liquidated,

unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,

legal, equitable, secured, or unsecured.” 11 U.S.C. § 101(5)(a). The concept of

a claim is broad, and it includes “all legal obligations of the debtor, no matter

how remote or contingent . . . [that will] be dealt with in the bankruptcy case.”

In re Egleston, 448 F.3d 803, 812 (5th Cir. 2006).

(c) The Countrywide claim

Having set out the relevant contractual and statutory provisions, we now

turn to the first question raised in this appeal: when the Campbells failed to pay

the escrow portion of their mortgage payment between January and April 2006,

and then filed bankruptcy, were these unpaid amounts a “claim” which

Countrywide was prohibited from recovering post-petition without authorization

of the bankruptcy court?

Countrywide alleges that it had no “claim” to the January through April

escrow payments at the time that the Campbells filed bankruptcy. Instead,

Countrywide argues that a claim for the unpaid escrow payments would only
No. 07-20499

7

accrue when Countrywide paid an escrow expense, and there were insufficient

funds in the escrow account to cover the expenses. For example, Texas property

taxes are assessed and billed in October and become due in January.

Countrywide argues that it had no claim to assert regarding the property tax

until Countrywide actually paid the taxes and there was a deficit in the

Campbells’ escrow account. Countrywide asserts that its position is supported

by RESPA, which requires Countrywide to make payments from the escrow

account for taxes “as such payments become due.” 12 U.S.C. § 2605(g). 

Countrywide’s imaginative argument disregards its rights and the debtor’s

obligations under the loan documents. We have discussed that Countrywide had

the contractual right to proceed against the Campbells upon a failure to pay

monthly escrow payments. The “touchstone of any ‘claim’ is that there is an

‘enforceable obligation’ of the debtor or an enforceable ‘right to payment’ from

the debtor.” Carrieri v. Jobs.com Inc., 393 F.3d 508, 524 (5th Cir. 2004). There

was a right to the pre-petition escrow payments – which matured into a claim

on behalf of Countrywide – each time the Campbells failed to make the payment.

Countrywide’s argument that it had no rights against the Campbells until the

escrow expenses were paid ignores the terms of the loan documents.

Countrywide responds that the loan documents incorporate its rights

under RESPA. It points to a provision of RESPA which states that a servicer

such as Countrywide “shall not be prohibited from requiring additional monthly

deposits in such escrow accountto avoid or eliminate such deficiency.” 12 U.S.C.

§ 2609(a). Based on this contractual right, Countrywide argues that it is entitled

to disregard the January through April escrow defaults, recalculate the monthly

escrow estimates, and increase the mortgage payments post-petition in the

manner that it did. Countrywide argues that any attempt by the bankruptcy

court to modify its right to recalculate the escrow payments (and increase the

mortgage payment post-petition) is a violation of 11 U.S.C. § 1322(b)(2), which
No. 07-20499

8

provides that a bankruptcy court does not have the power to modify the rights

of a secured creditor whose claim is secured only by a security interest in real

property that is the debtor’s principal residence. 

We agree with the bankruptcy court that the pre-petition escrow payments

are a “claim” for purposes of the automatic stay, a holding that does not limit

Countrywide’s rights under RESPA or the Bankruptcy Code. The automatic

stay operates to halt collection of pre-petition claims, even those claims held by

a creditor protected by the anti-modification provision of Section 1322(b)(2):

[E]ven if a claim secured only by a security interest in real property

used as the principal residence of the debtor is not subject to

modification under the chapter 13 plan by reason of section

1322(b)(2), the holder of such claim is nonetheless stayed from

collection of its claim, from taking possession of the real property

encumbered by the lien, and from enforcement of its lien. The

holder of such a claim must obtain relief from the automatic stay

before proceeding unless the stay does not come into effect or

terminates because of a prior bankruptcy filing.

8 COLLIER ON BANKRUPTCY ¶ 1322.06[1][a] (15th ed. rev. 2007). The stay does

not determine a creditor’s claim but merely suspends an action to collect the

claim outside the procedural mechanisms of the Bankruptcy Code. Therefore,

staying Countrywide’s attempt to collect pre-petition escrow amounts does not

bar Countrywide from asserting its contractual rights in the bankruptcy court.

Our decision is a narrow one. We determine only that unpaid escrow

payments that accumulate pre-petition in the year that a bankruptcy petition

is filed, and which the creditor had a right to collect under the loan documents,

constitute a “claim” under the Bankruptcy Code. We do not address a right to

recalculate the amount of escrow payments in subsequent years.

In sum, we affirm the bankruptcy court’s determination that the escrow

obligations that arose pre-petition were “claims” of Countrywide as that term is

utilized in the Bankruptcy Code. Countrywide could not attempt to collect those
No. 07-20499

9

amounts post-petition. We now turn to whether the bankruptcy court properly

held that Countrywide violated the automatic stay. 

(d) Violation of the automatic stay

When a bankruptcy petition is filed, an automatic stay operates as a selfexecuting injunction. The stay prevents creditors from taking any collection

actions against the debtor or the property of the debtor’s estate for pre-petition

debts. 11 U.S.C. § 362(a). When the automatic stay is violated, the Bankruptcy

Code creates a private right of action in favor of the debtor:

[A]n individual injured by any willful violation of a stay provided by

this section shall recover actual damages, including costs and

attorney’s fees, and, in appropriate circumstances, may recover

punitive damages.

11 U.S.C. § 362(k). This court has held that a “willful” violation of the automatic

stay means acting with knowledge of the stay:

A willful violation does not require a specific intent to violate the

automatic stay. Rather, the statute provides for damages upon a

finding that the defendant knew of the automatic stay and the

defendant’s actions which violated the stay were intentional.

Whether the party believes in good faith that it had a right to the

property is not relevant to whether the act was “willful” or whether

compensation must be awarded.

In re Chesnut, 422 F.3d 298, 302 (5th Cir. 2005) (citation omitted). Therefore,

to establish an actionable violation of the automatic stay the Campbells must

establish: (1) that Countrywide knew of the existence of the stay; (2) that

Countrywide’s actions were willful; and (3) that Countrywide’s actions violated

the automatic stay. In re Repine, – F.3d – , No. 06-20807, 2008 WL 2801898, at

*4 (5th Cir. July 22, 2008). It is undisputed that Countrywide knew of the

existence of the stay and that it acted willfully and intentionally when it

asserted the right to an increased mortgage payment in its Proof of Claim. The

only legitimate issue is whether Countrywide’s actions violated the stay.
No. 07-20499

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The bankruptcy courtfound thatthe amount by which Countrywide stated

in its Proof of Claim that it would increase the debtor’s mortgage payment postpetition was an attempt to collect the escrow payments that the Campbells had

failed to pay in January through April, 2006. This factual finding is reviewed

for clear error and may only be set aside if, after reviewing the evidence, the

court is left with “the definite and firm conviction that a mistake has been

committed.” In re Dennis, 330 F.3d at 701 (quotation marks and citation

omitted). Having considered the bankruptcy court’s calculations, we find no

clear error. 

The bankruptcy court then held that by including these amounts in its

Proof of Claim, Countrywide violated the automatic stay. In assessing the

validity of that conclusion, we review Countrywide’s actions. It filed a Proof of

Claim and included a paragraph that the Campbells’ post-petition payments

would be higher. Countrywide did not collect this new amount or take any

action outside the bankruptcy proceeding to collect it. We must decide whether

making an assertion in a Proof of Claim violates the automatic stay.

Certain categories of actions are statutorily identified as prohibited by the

automatic stay, including: (1) the commencement or continuation of a judicial,

administrative, or other action or proceeding against the debtor that was or

could have been commenced before the bankruptcy filing; (2) enforcement of a

judgment obtained before the commencement of the bankruptcy case; (3) acts to

obtain possession or exercise control over property of the bankruptcy estate; (4)

acts to create, perfect, or enforce a lien against property of the bankruptcy

estate; (5) acts to create, perfect, or enforce liens against property of the debtor

(as opposed to property of the bankruptcy estate); (6) any act “to collect, assess,

or recover a claim againstthe debtor that arose before the commencement” ofthe

bankruptcy case; (7) any setoff of a debt owing to the debtor that arose prepetition; and (8)the commencement or continuation of certain proceedings before
No. 07-20499

1 Our discussion is limited to whether Countrywide’s conduct in this case constitutes a

violation of the automatic stay under Section 362. Of course, the bankruptcy court has other

mechanisms to impose sanctions on parties who may attempt to abuse the procedural

mechanisms within the bankruptcy court. See 11 U.S.C. § 105 and Fed. R. Bankr. P. 9011. 

11

the United States Tax Court. 11 U.S.C. § 362(a)(1) - (8); see generally 3 COLLIER

ON BANKRUPTCY ¶ 362.03 (15th ed. rev. 2007). 

None of these sections bars a creditor’s filing a Proof of Claim pursuant to

Section 501 of the Bankruptcy Code. We find no precedents in which a court has

held that asserting a right to payment in a Proof of Claim constitutes a violation

of the automatic stay.1In fact, a number of courts, including the District of

Columbia Circuit, have found that an automatic stay has no effect on actions

that are expressly allowed under the Bankruptcy Code. United States v. Inslaw,

Inc., 932 F.2d 1467, 1474 (D.C. Cir. 1991). In a case similar to ours, the

Bankruptcy Court for the District of South Carolina put a finer point on this

more general principle: 

[T]he automatic stay serves to protect the bankruptcy estate from

actions taken by creditors outside the bankruptcy court forum, not

legal actions taken within the bankruptcy court. The filing of a

Proof of Claim before a bankruptcy court . . . is the logical

equivalent of a request for relief from the automatic stay, which

cannot itself constitute a violation of the stay . . . .

In re Sammon, 253 B.R. 672, 681 (Bankr. D.S.C. 2000); see also Rogers v. B-Real,

L.L.C. (In re Rogers), No. 3:08-ap-01011, 2008 WL 2810593, at *6 (Bankr. M.D.

La. July 21, 2008) (adopting In re Sammon’s analysis and collecting other cases

that have done so). 

The just-quoted In re Sammon opinion analyzed procedural rules, Code

provisions, and case law before concluding that even the filing of a “grossly

overstated” amount on a Proof of Claim would not violate the automatic stay.

Id. at 680. Most convincing to us is the point that there would not be any

damages because any disagreement with the claim may be addressed
No. 07-20499

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immediately by the debtor’s counsel by responding to that official court filing.

Id. at 681. Indeed, a dispute within the bankruptcy court over the Countrywide

filing began almost immediately. 

The analysis in these cases is persuasive. The Bankruptcy Code allows

creditors to assert any claim even if that claim is contingent, unmatured, or

disputed. 11 U.S.C. §§ 101(5), 501(a). A debtor may object to the claim; the

bankruptcy court then determines whether to allow the claim. 11 U.S.C. § 502;

see Simmons v. Simmons (In re Simmons), 765 F.2d 547, 552 (5th Cir. 1985)

(filing an objection “join[s] issue in a contested matter, thereby placing the

parties on notice that litigation is required to resolve an actual dispute between

the parties”). In this case, Countrywide filed a claim asserting a right to

increased mortgage payments under the loan documents. The Campbells

objected, and the bankruptcy court sustained the objection. These actions were

permitted by the Bankruptcy Code and did not violate the automatic stay.

For the foregoing reasons, we agree with the bankruptcy court’s

determination that the pre-petition monthly escrow payments were a prepetition “claim” of Countrywide, but we REVERSE and RENDER on the holding

that Countrywide’s actions violated the automatic stay.