Jones v. Wells Fargo Home Mortgage Inc. (In re Jones)

Michael Jones (plaintiff) filed for chapter 13 bankruptcy. Wells Fargo (defendant) held a mortgage secured by Jones’s residence and filed a proof of claim for the account. During the chapter 13 plan, Jones sought to refinance his mortgage. Wells Fargo provided a payoff amount that Jones believed was too high, but Wells Fargo refused to provide a clear accounting of the loan. Jones brought an action in bankruptcy court to obtain a correct accounting. The court found that Wells Fargo had made substantial errors in its accounting of the loan, charged Jones unreasonable fees and costs, failed to apply payments properly, and willfully violated the automatic stay imposed by 11 U.S.C. § 362. Wells Fargo was ordered to repay Jones for overpayments that he had been charged and paid. Rather than imposing punitive damages, the bankruptcy court ordered Wells Fargo to institute correct accounting procedures. Jones appealed the denial of punitive damages to the United States Court of Appeals for the Fifth Circuit. Shortly after, Wells Fargo was before this court again in an almost identical case, In re Stewart, 391 B.R. 327 (Bank. E.D. La. 2008). In Stewart the court determined that Wells Fargo had not complied with the order in the Jones case, but rather had continued with the same egregious pattern of incorrect accounting, overcharging, and failing to apply payments properly. The court in Stewart ordered Wells Fargo to audit and provide a complete loan history for every proof of claim in all current cases, amend those proofs of claim as needed, and provide a correct accounting for all closed cases. Wells Fargo appealed to the Fifth Circuit. The Fifth Circuit ruled on Stewart prior to hearing Jones’s appeal and held that the lower court’s ordered accounting procedures were an improper exercise of authority. The Fifth Circuit vacated the order. Both cases were remanded for reconsideration of monetary sanctions.