2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
6-16-2005 

# In Re: J oub e r t
P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al D ocke t N o . 04-1373

F o l low thi s a nd a dd it ion al work s at : http://d i git alc ommon s .l a w . vi l l a no va . e du/thir dc ir c uit_2005

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2005 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. F or mor e inform at ion, p le as e c on t a ct Be n j amin
. C a rl s on@l a

w . vi l l a no va . e du
. Re c omme nde d C it at ion

" In Re: J oube r t " (2005). 2005 D e cisio n s . P ape r 917. http://d i git alc ommon s .l a

w . vi l l a no va . e du/thir dc ir c uit_2005/917P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT C as e N o: 04- 1373

I N RE: M ARI ANN E J OUBERT

M AR I AN NE J OU BERT, A ppel l ant

v. ABN AM RO M ORTGAGE GROUP, I NC. f / k / a AT L ANT I C MORT GAGE AND I NVE S T M E NT CO RP OR AT I ON

O n A p p e a l f

ro m th e U n ited S tate s D istric t C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia D i s t r i ctC our tN o. : 03- C V

- 4290 D i s t r i ctJ udge: T he H onor abl e H erbertJ

. H ut t on

A r gued on J anuary20, 2005 B e f o re : A L IT O , M c K E E , a n d S M IT H , C i r cui tJudges2 ( Fi l ed: J une 16, 2005) St uar tA

. E i s enber g, E s qui r e [A r gued] M cC u ll o u g h & E isen b erg 530 W es tSt r eetR oad Sui t e 201 W ar m i ns t er , PA

. 18974 C ouns el f orAppel l ant

D an iel S

. B ern h eim , 3 rd, E sq u ir e J onathan J

. B ar t , E s qui r e [A r gued] Si l ver m an, B er nhei m & V ogel T w o Penn C ent erPl aza Sui t e 910 Phi l adel phi a, PA 19102 C ouns el f orAppel l ee

OPI NI ON O F THE COURT

S M IT H , C i r cui tJudge

. M a r i a n n e J o u b e r t , a d i s c h a r g e d d e b t o r i n b a n k ru p t c y, i ni t i at ed thi s put at i ve cl as s act i on i n t he D i s t r i ctC our ts eeki ng dam ages an d inj un ct i ve rel i ef t o com bat w hat s he co ntends i s a w i des pr ead pr act i ce by m or t gagee s of ass es s i ng, w i t houtnot i ce t o m ort gag ors, po st -pet i t i on , pre- con fi rm at i on at t orneyfees.Be causeJ oubert’s c omplaint requires a deter mination of the 1 scope of a statutory

provision within the Bankr uptcy Code, the District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1334. We exercise appe llate jurisdiction pursuant to 28 U.S.C. § 1291. 3 A cc o rdin g to Jo u b ert, this prac ti ce v iolates 1 1 U

. S

. C

. § 5 0 6 (b)’s comm and thatt he bankru pt cycour tfi r s tadj udge s uch fe es “r eas onabl e. ” Though Joubertconce des t hat§ 506( b) does not in itse lf a f f o rd h e r a p r iv a te c a u se o f a c tio n , sh e a ss e rts th a t a p riv a te r e m e d ym a yb e im p lied u n d e r 1 1 U .S .C . § 1 0 5 (a ) to r edr es s t he § 506( b) vi ol at i on. T he D i s t r i ctC our tr ej ect ed that a ss e rtio n , g ra n ted A B N A M R O M o r tg a g e C o m p a n y ’s R u le 12 (b )(6) m oti on t o d i sm i ss, and decli ned t o ex erci se s uppl ement al j ur i s di ct i on overJ oubert ’ s s t at e l aw cl ai m s . For the re aso n s set fo rt h b elow , the ju d g m en t of the D istri ct C o u rt w i l l be af

fi r m ed. 1
I. B a ck g ro u n d a n d F a cts A cc o rdin g to Jo u b ert’s am en d ed co m p lai n t, in Ja n u ary 1 9 9 6 s h e e n t e r e d i n t o a r e s i d e n t i a l mo r t g a g e wi t h ABN AM RO M o rt g ag e C o m p an y ’s (A B N ) pre d ec esso r-i n -i n terest. In Sept ember 1999, J ouber tfi l ed a C hapt er13 pet i t i on w i t h t he U ni t ed St at es B ankrupt cyC our tfort he Easter n D i s t r i ctof Penns y l v an ia. A B N ’ s amended pr oof of c l ai m i n t hatact i on i ncl uded pr e- pet i t i on at t or neyfee s r el at ed t o i t s ear l i er for ecl os ur e ac t i on, buti tdi d noti ncl ude pos t
- pet i t i on at t or ney4 fe es re lat ed to it s p re p ara ti o n o f p roo fs o f c lai m . Jo u b ert’s C h a p ter 1 3 p lan , w h ich p ro v id e d f o r A B N ’s c laim to b e p a id in ful l , w as confi r m ed on M ay2, 2000. J ouber tm etherpaym ent obl i gat i ons t o A B N i n acc or dance w i t h t he pl an. In S e p tem b e r 2 00 2, Joub ertrefi nan c e d h e r m o rtg a g e w ith anot herl ender

. A B N ’ s not i ce a dvi s i ng J ouber tof t he amount due on herm or t gage w it h A B N i ncl uded a $500 c har ge denomi nat ed “c orpor at e advanc e bal ance . ” J ouber tpai d and d id n o t ch a llen g e th e $ 5 0 0 c h a rg e a t h e r re f in a n c in g se ttl e m e n t. Jo u b ert m ad e h er f

inal p ay m en t t o the C h ap ter 13 tru stee a s p art of t he s et t l emen t, and, fol l ow i ng t he trus t ee’ s fi nal r epor tand acc ount i n g , an orde rdi s char gi ng J ouber tw as ent er ed on February28, 2003.
F iv e m o n th s a f

ter h e r d isc h a rg e , Jo u b e rt in iti a te d th is p u rpo rt ed c la s s ac ti o n in the D istri ct C o u rtfo r t h e E astern D i s t r i ctof Penns y lva ni a. J ouber tal l eged thatt he $500 “corpor at e adva nce ba l ance ” A B N char ged J ouber t w hen s he r efi nance d repr es ent ed A B N ’ s pos t
- pet i t i on, pr e- confi r m at i on a t t o r n e yf

e e s . Ac c o r d i n g t o J o u b e r t , t h e c o l l e c t i o n o f t h i s s u m, w h ic h A B N h a d n o t in c lu d e d in its p ro o f s o f c laim p rio r to co n firm ati o n , v iolated 1 1 U

. S

. C

. § § 5 0 6 (b ) an d 1 1 3 2 (e). Jo u b e rt a ss e rte d th a t sh e w a s en tit led to se e k re d re ss , fo r h e rse lf a n d o n b e h a lf

o f th e p u rp o rte d c las s, f

o r th is “ V io latio n o f

T itl e 11” i n a l aw s ui t br ought i n t he D i s t r i ct C our t “thr ough the in ju n c tiv e p o w e rs o f

1 1 U .S .C . § 1 0 5 .”Se c tio n 5 06 (b ) p ro vid e s: 2 To the extent that an allowed se cure d

claim is secured by

proper ty the value of which, af ter a ny rec overy 5 T he D i s t r i ct C our t gr ant ed A B N ’ s R ul e 12( b) ( 6) m ot i on t o di s m i s s , and r efuse d to e xer ci s e s uppl ement al j ur i s di ct i on o v er Jou b ert’s stat e l aw claim s. In do ing so , the D istri ct C o u rt adopt ed the r at i onal e of e ar l i erdeci s i ons in the D i s t r i ctw hi ch hel d t hat§§ 506( b) and 105( a) do notaffo rd a pr i vat e r i ghtof act i on t o r edr es s a vi ol at i on of § 506( b) of t he B ankrupt cyC ode. D

. C t
. O r der , at1 n. 2 ( ci t i ng Henthor n v. G M A C Mor t

gage C or p. , 2 9 9 B .R . 3 5 1 (E .D . P a . 2 0 0 3 ); W i l l is v. C has e M

anhat t an Mort ga ge C orp , 2 0 0 1 W L 1 0 7 9 5 4 7 (E .D . P a . 2 0 0 1 ))

. II . A n a ly sis
A s w e exer ci s e pl enary r evi ew over t he gr antof a mot i on to d ism iss , “w e a c c e p t as tru e a ll alle g a ti o n s in th e c o m p lain t, gi vi ng t he P l ai nt i ff t he bene fi tof eve r yfavor abl e i nfer ence t hat can be dr aw n fr o m t he al l egat i ons . ” B oar d of Trus t ees of Team s t ers Local863 P ens i on Fund v. Foodt ow n, I nc. , 296 F. 3d 1 6 4 , 1 6 8 (3 d C ir . 2 0 0 2 ).
Sect i on 506( b) al l ow s over s ecur ed cr edi t or s t o add r e a s o n a b le p o s t- p e tit io n , p re -c o n f irm a tio n a tto rn e yf

e e s, in ter e st, an d co sts t o the a m o u n t of their sec u re d claim

. Jo u b ert 2under subse ction (c) of this section, is greate r than the a

mount of such claim, thereshall be allowe d to the holder of suc h claim, intere st on such c la im, and

any re a so na blefe e s, c os ts, or cha rg es provided f

or under the a gre e me nt u

nd e r whic h s uc h c la im arose . 11 U.S.C. § 506(b) (2005). 6 acknow l edges t hatt he mort gag e agr eement s comm on t o t he pu rport ed cl ass provide for at t orney fees un de r t hese ci r cumst ance s , buts he cont ends t h atA B N fai l ed t o gi ve m or t gagor s w ri tt en not i ce of t he fe es as r equi r ed byt he ag ree m en ts, thu s d ep ri v ing the c lass o f b a n k rup tcyco u rt ov ers i gh tof the fees’ r easona bleness

. Joub ertcon cede s th a t § 5 0 6 (b) d o es n o t in it self af fo rd a p ri v ate ri g h t o f a cti o n . R athe r, s he as ks u s t o i m pl ys uch a r emedyder i vat i vel yt hr ough § 1 0 5 (a), w h ich a u tho ri ze s fe d era l cou rt s to “ issue an yo rde r, pr oces s or j udgm ent t hat i s nece s s ary orappr opr i at e t o carr yout th e p ro v is io n s ” o f

th e B a n k ru p tc yC o d e . Joub erti s corr ectt hat this case present s a m at t er of fi rs t im p re ss io n in th e f

e d e ra l co u rts o f

a p p e a ls, b u t th e n o v e ltyis o n lya m a tter o f

tim in g , n o t p rin c ip le. T yp ica lly , c h a llen g e s to credi t or col l ect i on effo rt s occur po st -di scharge, and t hu s ar i se under 11 U

. S. C

. § 524, w hi ch governs t he eff ectof bankrupt cy di s char ges . I ndeed, J ouber tal l eges thatform os tof t he put at i ve7 cl as s , A B N w ai t ed unt i l t he debt or ’ s di s char ge orot herexi tfr om ban kruptcybefo re at t em pti ng t o co l l ectt he att orneyfees.
I n hercas e, i f nott hat of m os t m ember s of t he w oul d- be cl as s , how ever , J ouber tal l eges t hatt he cont es t ed att orneyfee s w er e fi r s tdi s cl os ed i n t he i nt er i m betw een c onfi r m at i on and di s c h a r g e . Th e r e f

o r e , J o u b e r tc o u l d n o tc h a l l e n g e t he rea so n ab lene ss o f th e $ 5 0 0 ch arg e b ef o re the b an k rup tcyco u rt att he t i m e of t he C hapt er 13 pl an confi r m at i on, nor w as t her e a di s char ge i n pl ace t o vi ol at e w hen s he fi r s tl earn ed of t he char ge, s o § 524 w as not i m pl i cat ed. A l t hough w e s y m pathi ze wi t h t h e d i l e mm a s u g g e s t e d b yt h e f a c t s J o u b e r ta l l e g e s , we co n side r t h e a n alog o u s § 5 2 4 c a s e law ap p li ca b le t o h er § 506( b)

- base d clai m , and hol d t hat§ 105( a) does notaff or d a pr i v a t e c a u s e o f

a c t i o n t o r e d r e s s a n a l l e g e d 5 0 6 ( b ) v i o l a t i on. J ouber t ’ s l one r emedyi s a cont empt pr ocee di ng pursua n t to § 1 0 5 (a ) in b a n k ru p tcy co u rt.
I n I n r e C ont i nentalA i r l i nes , 2 0 3 F

. 3 d 2 0 3 (3d C ir

. 20 00 ), w e ob ser ved t hat § 105 (a) “sup plem ents cou rt s’ s peci fi cal l yenumer at ed bankrupt cypow er s byauth o ri zi ng or der s nece s s ary or appr opr i at e t o carr y out pr ovi s i ons of t he B ankrupt cy C ode. ” Id

. at211. W e ca ut i oned that§ 105( a) “has a lim ited sc o p e . It d o e s n o t ‘c re a te su b sta n tiv e rig h ts th a t w o u ld o therw ise b e u n av ail ab le un d er the B an k rup tcyC o d e.’” I d. ( quot i ng U

ni t ed St at es v. P epper m an , 976 F. 2d 123, 131 ( 3d C i r . 1992) )

. T hi s ins t ruct i on w as cons i s t entw i t h ourear l i er obs er vat i on i n I

n r e Mor r is t ow n & Eri e Rai l r oad C o. , 885 F. 2d8 9 8 (3d C ir

. 1 9 9 0 ), that § 1 0 5 (a)

a u th o riz e [ s] th e b a n k ru p tcy co u rt, o r th e d istric t co u rt si ttin g in b a n k rup tcy , to f

ash ion su ch o rde rs as ar e r equi r ed t o fur t hert he s ubs t ant i ve pr ovi s i ons of t he C ode. S ec ti o n 1 0 5 (a) g ives the c o u rt g e n e ra l eq u itab le p o w e rs, b u t o n ly i ns ofar as t hos e pow er s ar e appl i ed i n a m an n ercons i s t entw i t h t he C ode. N or does s ect i on 105( a) gi ve th e c o u rt th e p o w e r to c r e a te su b sta n ti v e r ig h ts th a t w o u ld ot herw i s e be unavai l abl e undert he C ode. I d. a t 1 0 0 (c ita tio n s o m itte d ).
Mor r is t ow n re v e a ls th is C o u rt’s c o n sid e re d v iew th a t § 1 0 5 (a ) is a p o w e rf

u l, ve rsa til e to o l, bu t th a t ito p e ra tes o n ly w i t hi n t he cont exto f b ankrupt cypr ocee di ngs . Sect i on 105( a) e m p o w e rs b a n k ru p tcy co u rts a n d d istric t co u rts s ittin g in bankrupt cyt o fas hi on or der s i n fur t her ance of B ankrupt cyC ode pr ovi s i ons . T o add pri vat e caus es of act i on t o § 105( a) ’ s ar s enal of r emedi es , w e w oul d have t o concl ude t hat s uch w as t he i nt ent o f C o n g re s s . A l exande rv. Sandoval , 5 3 2 U

. S

. 2 7 5 (20 0 1 ):

L i ke s ubs t ant i ve fe dera l l aw i t s el f,9 pr i vat e r i ght s of ac t i on t o enfor ce fede r al l aw m us tbe cr eat ed by C o n g re ss . T h e ju d icia l tas k is to i nt erpr ett he s t atu te C ongr es s has p a ss e d to d e ter m in e w h e th e r it dis play s an i ntent t o cr eat e no tj ust a p riv a te r ig h t b u t als o a p riv a te re m e d y . S tatu to ryin ten t o n th is l at t er poi nt i s d eterm inative

. W i t ho u t i t , a ca us e of a ct i on does n o t ex ist a n d c o u rts m a yn o t cr e a te one, no m at t erhow des ir abl e that m i ghtbe as a pol i cym at t er , orhow compat i bl e w i t h t he s t atut e. I d. at 28 6 (cit ati o n s o m itted).
U nder§ 524( a) ( 2) , a di s char ge oper at es as an i nj unct i on agai ns ta br oad arr ayof cr edi t oreff or t s t o col l ectdebt s as per s onal l i abi l i t i es of t he di s char ged debt or . T hi s C our thas not addr es s ed w hether § 524 i m pl i es a pr i vat e r i ghtof ac t i on, ei t her a lo n e o r th ro u g h § 1 0 5 (a ), b u t th e w e ig h t o f c irc u it au th o rityis th a t it d o e s n o t. See P ert uso v. For d Mot or C r edi tC o. , 233 F. 3d 417, 421- 23 ( 6t h C i r . 2000) ( anal y zi ng t he l egi s l at i ve hi s t or yof § 5 2 4 , co n tra stin g § 5 2 4 w ith C o n g re ss ’s c h o ice in § 3 6 2 (h ) to creat e p riv a te c a u se s o f

a c tio n f o r v io latio n s o f

b a n k ru p tcy stays , and conc l udi ng § 524 does noti m pl i edl ycr eat e a pr i vat e r i ght o f a c tio n ); Wal l

s v . Wel l s Fa r g o Ba n k , N. A. , 276 F. 3d 502, 507- 10 ( 9t h C i r . 2002) ( t r acki ng and adopt i ng P er t us o ’s an aly sis) ;Contrary to the sug g estion in Pe rtuso , 233 F.3d at 423 n. 1, 3 we do not re ad Bessette as supportingthe proposition that § 105(a) can bootstra

p private c auses of

action from Ba

nkruptcy Code provisions that do not otherwise provide this re medy

. Bessette was an appe al from a

district court sitting in bankr uptcy , and weview Be sse tte ’s h o l d i n g s i mp l y

t o b e th at§ 1 0 5 (a ) c o nt emp tp ro ce ed i n gs grounded in § 524 do not haveto be brought in the same cour t that issued the orig inal discharg e order. Se eBe sse tte , 230 F.3d at 446. Indeed, Bessette observe d, “[Section] 105 does not itself cre ate a private right of

action, but a c ourt may

invoke § 105(a) ‘if the equitable remedy

utiliz ed is demonstrably

nece ssary

to preser ve a right elsewhe re provided in the Code... .’” Id . at 444-45 (c itation omitted). Consist ent with this readingof Be sse tte , in W

all s the 10 C o x v. Z al e D elaw ar e, I nc. , 239 F. 3d 910, 917 ( 7t h C i r . 2001) ( agr eei ng w i t h t he r es ul ti n Per t uso a n d c o n c lu d in g th a t a cont empt act i on i n t he bankrupt cy co u rt t hati s s ued the di s char ge is t he onl yr el i ef a vai l abl e t o r emedyal l eged § 524 v io latio n s); see al

so B es s et t e v. A VC O F i n. Ser vs , I nc. , 230 F. 3d 439, 444- 45 ( 1s t C i r . 2000) ( r efus i ng t o addr es s w hether§ 524 im p lie s a ri g h t o f a c tio n , b e c a u s e , in th e F ir s t C ir c u it’ s v ie w , a b an k rup tcyco u rt ’s co n te m p t po w er u n d er § 1 0 5 (a) o ff ers s u f f ic ie n t r e m e d ie s ).
M or eover , the Si xt h C i r cui ti n P ert uso a n d th e N in th C i r cui ti n W

a lls , i n s epar at e s ect i ons of t hos e opi ni ons , r ej ect ed th e a rg u m e n t th a t § 1 0 5 (a ) a u th o riz e s p riv a te c a u se s o f a c tio n to re m e d yb a n k ru p tc yd is c h a rg e v io la tio n s . See W a lls , 276 F. 3d at 507 ( r eas oni ng t hatt o add thi s r emedy t o § 105( a) w oul d be an a c t o f leg isla tin g ); P ert uso , 233 F. 3d at423 ( s ame)

. W e agr ee 3Ninth Circuit noted that the district court in that ca se had referre d the§ 1 05 (a) c onte mpt

proc e e din gto t

heba nk ru ptc y c ourt wh ile reje ctingthe plaintiff’s a

rgument that §§ 524 and 105(a) createa private right of

action. W

all s , 276 F.3d at 506-07. 11 w ith th e re a so n in g o f th e se c a se s, a n d se e n o re a so n w h yth e ru le s houl d be di ffe r entforact i ons as s er t ed under§ 506( b) r ather t han § 5 24

. T he essence o f t he com plai nt i s the sam e regardl ess of w hen the al l eged vi ol at i on w as di s cl os ed: T he mort gagee purpos el yom i t t ed pos t
- pet i t i on, pr e- confi r m at i on at t or neyfee s fro m it s p roo f o f c lai m an d then asse rt ed that the f ee s w ere p art of i t s s e c u r e d i n t e r e s t a t a t i me whe n t h e mort g a g o r was i n no pos i t i on t o cont es ttheir re as onabl enes s . W hethert he as s er t ed s ecur i tyi n terest, w h ich a rose b ef o re c o n firm ati o n , w as di s cl os ed i n t he i nt er i m betw een confi r m at i on and di s char ge (i n v o ki ng §506( b) ) , oraft erdi s char ge ( i n v o k i ng bot h §§ 506( b) and 524( a) ( 2) ) , has no bear i ng i n det er m i ni ng w het h er § 105( a) a u th o riz e s an in d e p e n d e n t c a u se o f a c tio n in D ist r ic t C o u rt. T hus , w e conc l ude thatt he dec i s i ons hol di ng t hat§ 105( a) does notaut hor i ze s epar at e l aw s ui t s as a r emedyforbankrupt cy v io latio n s, th o u g h e sta b lish e d in th e § 5 2 4 c o n tex t, are e q u a lly appl i cabl e w hen t he under l y i ng compl ai nti s gr ounded i n § 5 0 6 (b).
I I I . C oncl usi on B ec au se § 1 0 5 (a) o f th e B an k rup tcy C o d e do es no t aff o rd debt or s a pr i vat e caus e of act i on t o r emedyal l eged vi ol at i ons of12 § 506( b) , w e w i l l aff

i r m t he D i s t r i ctC our t’ s or dergr ant i ng A B N ’s m oti on t o d i sm i ss.