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In Re, Bruce Douglas v. Wells Fargo Bank

May 3, 2011

IN RE, BRUCE DOUGLAS,
DEBTOR,
BRUCE DOUGLAS, PLAINTIFF,
v.
WELLS FARGO BANK, N.A.,
SUCCESSOR BY MERGER TO WELLS FARGO HOME MORTGAGE, INC., DEFENDANT.



BANKR NO. 10-33792-C-7 DC No. SW-2

The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

Chapter 7

Adv. No. 10-02778

ORDER

This matter is before the court on defendant Wells Fargo Bank, N.A.'s ("defendant") motion to withdraw reference to the bankruptcy court pursuant to 28 U.S.C. § 157(d) and Bankruptcy Rule 5011(a). Plaintiff Bruce Douglas ("plaintiff") opposes the motion. For the reasons set forth below,*fn1 defendant's motion is DENIED.

BACKGROUND

On December 2, 2010, plaintiff initiated an adversarial proceeding against defendant in the United States Bankruptcy Court. (See Compl., filed December 2, 2010.) As alleged in the complaint, plaintiff was laid off from his job in September 2008. (Id. ¶ 4.) In December 2008, plaintiff contracted with Pro City Mortgage ("Pro City") to assist him with obtaining a loan modification with defendant. (Id.) Pro City submitted documents to defendant on plaintiff's behalf but was told that plaintiff did not qualify for a permanent modification. (Id. ¶ 6.) In May 2009, plaintiff ceased making his mortgage payments. (Id. ¶ 7.) On October 27, 2009, defendant filed its Notice of Default. (Id. ¶ 8.)

On November 20, 2009, plaintiff and defendant entered into a trial modification arrangement. (Id. ¶ 10.) Under this arrangement, plaintiff was to show that he "could make three reduced payments on time while [defendant] reviewed [p]laintiff's mortgage loan." (Id.) The first payment was due on January 1, 2010 and plaintiff made this payment in person, on December 31, 2009 at a Wells Fargo Bank Branch. (Id. ¶ 11.) A week later, defendant contacted plaintiff notifying him that defendant had not received the payment. (Id.) Defendant removed plaintiff from the trial modification. (Id.)

On January 28, 2010, plaintiff was advised by a friend that defendant had recorded a Notice of Trustee's Sale and the foreclosure sale was set for February 17, 2010. (Id. ¶ 13.) On January 29, 2010, plaintiff made a second payment which was due February 1, 2010. (Id. ¶ 15.) From February 2010 through May 2010, defendant continued to request additional documentation from plaintiff. (Id. ¶ 16.) "Plaintiff . . . provided documents but then never heard back from [defendant]." (Id.)

On May 25, 2010, defendant notified plaintiff that he would need to pay $10,000 for 30-day postponement of the Trustee Sale with no assurance of a loan modification. (Id. ¶ 17.) On that same day, plaintiff filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court. (Id. ¶ 20). "Plaintiff's Chapter 7 bankruptcy case remains open and no property, including his residence, has been abandoned back to plaintiff by the Chapter 7 Trustee." (Def.'s Mot. to Withdraw Reference ["Def.'s Mot."], filed February 7, 2011 at 2.)

Based on these events, plaintiff alleges causes of action for breach of contract, fraud, breach of covenant of good faith and fair dealing, unfair business practices, and declaratory relief. (Id. ¶¶ 21-66.)

STANDARD

District courts, rather than bankruptcy courts, have original jurisdiction over all bankruptcy matters. 28 U.S.C. § 1334(b). However, district courts may refer all bankruptcy matters to a bankruptcy court. Id. § 157(a). 28 U.S.C. § 157(d) provides that, in certain circumstances, a referred case may be transferred from the bankruptcy court back to the district court by withdrawing the reference. Withdrawal can be mandatory or permissive. Id. § 157(d). The ...


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