Jones v. Wells Fargo Bank, N.A. (In re Jones)

Michael Jones (plaintiff) filed a voluntary chapter 13 bankruptcy petition in August 2003. Jones owed money to Wells Fargo Bank, N.A. (defendant) on a debt secured by Jones’s home. Wells Fargo had started foreclosure proceedings against Jones before Jones filed for bankruptcy. In the bankruptcy action, Wells Fargo filed a proof of claim setting forth the amounts Jones owed to Wells Fargo as of the date Jones filed the bankruptcy petition. The proof of claim stated that Jones owed a total of $22,259.69 in mortgage payments, late charges, foreclosure fees, and other related expenses. However, Wells Fargo made several errors in calculating the amounts Jones owed. Wells Fargo later tried to add amounts to the alleged prepetition arrearage owed by Jones but never amended the proof of claim or notified the bankruptcy trustee or court of the additional charges. Wells Fargo also sought payment of post-bankruptcy-petition charges incurred for attorneys’ fees, statutory expenses, and inspection fees. However, Wells Fargo provided no invoices detailing its claimed attorneys’ fees, did not explain the statutory expenses, and attempted to charge fees for 16 inspections over the course of 29 months while the property’s condition remained unchanged. Jones’s bankruptcy-reorganization plan included making monthly payments to the bankruptcy trustee, which were to be used to pay Wells Fargo for Jones’s prepetition arrearage as set forth in Wells Fargo’s proof of claim. Jones was also responsible for continuing to pay his ongoing monthly mortgage payments directly to Wells Fargo. However, when Jones made the required direct payments to Wells Fargo, Wells Fargo did not treat the amounts as postpetition payments toward Jones’s ongoing mortgage obligation. Instead, Wells Fargo applied the payments to Jones’s prepetition amounts due. This resulted in significant unnecessary interest charges being added to Jones’s loan. In January 2006, Jones refinanced his mortgage, and Wells Fargo informed Jones that he owed $231,463.97 to close out the prior loan. Jones thought that this amount was high, and he brought an action against Wells Fargo in bankruptcy court to obtain a correct accounting of the amount he owed. Wells Fargo collected $231,463.97 from Jones at the closing of the refinancing but later returned $7,598.64 to Jones.