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Date/Time of Request: Monday, June 7, 2010 07:47 CentralClient Identifier: RAND PAULDatabase: ALLCASESCitation Text: 2010 WL 1993520Lines: 2060Documents: 1Images: 0

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United States Bankruptcy Court,S.D. Texas,

Houston Division.In re Antoinette DE LA FUENTE, and Lenord De

La Fuente, Debtor.Antoinette De La Fuente, and Lenord De La

Fuente, Plaintiffs,v.

Wells Fargo Bank, N.A., Defendant.Bankruptcy No. 03-43483-H4-13.

Adversary No. 08-03291.May 18, 2010.

Background: Chapter 13 debtors who had success-fully completed their payments under cure-and-maintenance plan and obtained dischargesought to recover for mortgage lender's allegedcontempt of agreed judgment.

Holdings: The Bankruptcy Court, Jeff Bohm, J.,held that:(1) bankruptcy court had jurisdiction over postdis-charge motion filed by debtors to hold mortgagelender in contempt;(2) mortgage lender violated agreed judgmententered upon completion of debtors' payments un-der their cure-and-maintenance plan, and could beheld in contempt absent showing of its inability tocomply with judgment or other relevant defense;(3) lender failed to establish, by way of defense topost-discharge civil contempt proceedings, that lim-itations in its accounting software prevented it fromcorrecting its records;

(4) debtor-borrowers were under no obligation toassist mortgage lender in performing tasks that ithad agreed to perform in agreed judgment;(5) excuse of "mistakes happen" lacked all credencewhen mistakes on part of lender in its handling of debtors' loan happened not once, not twice, but re-peatedly;

(6) as civil contempt sanction, court would imposea coercive per diem fine; and(7) attorney fees, in amount of $4,544, would beawarded.So ordered.

West Headnotes

[1] Bankruptcy 051k0 k.Bankruptcy court had jurisdiction over postdis-charge motion filed by Chapter 13debtors to hold mortgage lender in contempt forfailing to correct its loan records to reflect thatdebtors were current with their mortgage loan andowed principal balance in amount stipulated byparties in agreed judgment previously entered bycourt; motion involved enforcement of bankruptcycourt's own prior order, i.e., this earlier agreed judgment.

[2] Bankruptcy 051k0 k.Bankruptcy courts have civil contempt powers.

[3] Contempt 093k0 k.Party seeking an order of contempt need only estab-lish: (1) that court order was in effect; (2) that thisorder required certain conduct by respondent; and(3) that respondent failed to comply with order.[4] Contempt 093k0 k.To determine alleged contemnor's noncompliancewith previous order of court, court simply askswhether he performed the acts required by order; if he did not, the burden shifts to alleged contemnor

to rebut this conclusion, demonstrate an inability tocomply, or present other relevant defenses.

[5] Bankruptcy 051k0 k.Mortgage lender violated agreed judgment enteredupon completion of Chapter 13 debtors' payments

2010 WL 1993520 Page 1--- B.R. ----, 2010 WL 1993520 (Bankr.S.D.Tex.)(Cite as: 2010 WL 1993520 (Bankr.S.D.Tex.))

2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
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under their cure-and-maintenance plan, and couldbe held in contempt absent showing of its inabilityto comply with judgment or other relevant defense,by failing to correct its loan records to reflect thatdebtors were current with their mortgage loan andowed principal balance in amount stipulated byparties, by incorrectly stating amount of monthlypayment that debtors would be required to makegoing forward, by failing to properly account forexcess payments that debtors had made once itlearned that monthly mortgage payment was over-stated, and by improperly reflecting that late chargehad been assessed against debtors' account, despitefact that debtors either made all post-plan paymentsin timely fashion or included late fee with any pay-

ments that were late.

[6] Bankruptcy 051k0 k.Once Chapter 13 debtor-borrowers demonstratedthat mortgage lender had failed to comply withterms of prior agreed judgment entered by bank-ruptcy court, inter alia, in not correcting its loan re-cords to reflect that debtors were current with theirmortgage loan and owed principal balance inamount stipulated by parties in agreed judgment,burden shifted to mortgage lender, in order to avoid

sanctions for civil contempt, to demonstrate its in-ability to comply with agreed judgment or establishother relevant defense.

[7] Bankruptcy 051k0 k.Mortgage lender failed to establish, by way of de-fense to post-discharge civil contempt proceedingsinstituted against it by Chapter 13 debtor-bor-rowers, that limitations in its accounting softwareprevented it from correcting its records to reflect,inter alia, that debtors were current with their mort-gage loan after successfully completing their cure-and-maintenance plan, and that principal balance of loan and debtors' monthly payments going forwardwere in amounts stipulated by parties in agreed judgment, especially where judgment providedlender with 30 days to implement the agreed

changes, and where lender was capable of flurriesof activity to correct improper entries one day priorto hearing on contempt motion.

[8] Bankruptcy 051k0 k.Chapter 13 debtor-borrowers were under no obliga-tion to assist mortgage lender in performing tasksthat it had agreed to perform in agreed judgment,by correcting its loan records to reflect that debtorswere current with their mortgage loan and owedprincipal balance in amount stipulated by parties,and debtors' failure, when complaining that loanbalances reflected upon lender's online recordswere not accurate, to specifically advise lender that

it was not in compliance with agreed judgment didnot provide lender with any defense to resultingcontempt motion.

[9] Bankruptcy 051k0 k.Mortgage lender failed to establish, by way of de-fense to post-discharge civil contempt proceedingsinstituted against it by Chapter 13 debtor-bor-rowers, that the agreed judgment previously enteredagainst it, which required it to correct its records toreflect that debtors were current with their mort-

gage loan and that they owed principal balance inamount stipulated, did not require it to correct theonline records on which debtors relied, becausethese online records were not "official" records of bank, and that debtors, in conducting banking busi-ness online, relied on these online records at theirperil; any such argument by bank had to be rejectedas disingenuous in the current computer age.

[10] Bankruptcy 051k0 k.There was no requirement that, in order to be in

civil contempt of agreed judgment previouslyentered by bankruptcy court to reflect that Chapter13 debtors were current with their mortgage loanafter successfully completing their cure-and-maintenance plan, mortgage lender's noncom-pliance with this judgment had to be willful; lack of willfulness was no defense to motion to hold it in


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contempt for not complying with judgment, interalia, by not correcting its loan records to reflect thatdebtors were current with their loan and owed prin-cipal balance in amount stipulated by parties.

[11] Bankruptcy 051k0 k.Mortgage lender could not successfully assert, byway of defense to post-discharge civil contemptproceedings instituted against it by Chapter 13debtor-borrowers for failing to correct its records toreflect that debtors were current with their mort-gage loan and owed principal balance in amountstipulated following completion of their paymentsunder cure-and-maintenance plan, that "Mistakes

happen, and we're all human"; excuse of "mistakeshappen" lacked all credence when mistakes on partof lender in its handling of debtors' loan happenednot once, not twice, but repeatedly, and when ac-tions were not taken by bank to correct these mis-takes within reasonable period of time.

[12] Bankruptcy 051k0 k.Even assuming that mortgage lender's error rate inhandling of borrowers' loans was very low, a con-tention for which there was lack of evidence in re-

cord, mere fact that bank may have properly admin-istered other borrowers' loans did not provide itwith viable defense to contempt proceedings arisingout of its numerous, repeated mistakes in recordingprincipal balance on Chapter 13 debtors' loan afterthey successfully completed their payments undercure-and-maintenance plan, in falsely reporting thatloan was in default status, in overstating amount of debtors' monthly payments going forward, and infailing to properly account for overpayments thatdebtors made after it learned of its error in calculat-ing monthly payment amount.

[13] Bankruptcy 051k0 k.As civil contempt sanction for mortgage lender's re-peated, continuous violation of agreed judgmententered after completion of Chapter 13 debtors'payments under cure-and-maintenance plan, inter

alia, in not correcting its loan records to reflect thatdebtors were current with their mortgage loan andowed principal balance in amount stipulated, evenafter repeated complaints by debtors that lender'srecords were inaccurate and after several monthshad passed, bankruptcy court would impose coer-cive per diem fine of $1,261.28, until bank broughtitself into full compliance with agreed judgmentand paid the $11,825.60 in per diem fines alreadyaccrued.

[14] Bankruptcy 051k0 k.Bankruptcy court would not award any compensat-ory damages where Chapter 13 debtor-borrowers

did not contend that they had sustained any dam-ages as result of mortgage lender's civil contempt,inter alia, in not correcting its loan records to re-flect that debtors were current with their mortgageloan and owed principal balance in amount stipu-lated in agreed judgment, but would require lenderto refund the overpayments that it had collected asresult of misrepresenting amount of debtors'monthly mortgage payment once they had success-fully completed their payments under cure-and-maintenance plan.

[15] Contempt 093k0 k.Civil contempt can serve two purposes, either bycoercing compliance with order or by compensatingparty who has suffered unnecessary injuries or costsbecause of contemptuous conduct.

[16] Contempt 093k0 k.Attorney fees incurred in rectifying another party'scontemptuous conduct are type of injury or costthat can be compensated in suit for civil contempt.

[17] Bankruptcy 051k0 k.To determining what is reasonable attorney's feesaward, bankruptcy court must follow three-stepprocess, under which it: (1) ascertains the natureand extent of services supplied by attorney with ref-


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erence to attorney time records submitted; (2) as-sesses value of those services; and (3) briefly ex-plains the findings and reasons upon which awardis based, including a discussion of how each of thetwelve Johnson factors affected its decision.

[18] Bankruptcy 051k0 k.Attorney fees, in amount of $5,129, that weresought by Chapter 13 debtors as contempt sanctionfor mortgage lender's violation of agreed judgmententered following completion of debtors' paymentsunder cure-and-maintenance plan, in failing to cor-rect its loan records to reflect that debtors were cur-rent with their mortgage loan and owed principal

balance in amount stipulated by parties, would gen-erally be allowed as reasonable award, givenlender's nonchalant attitude and longstanding fail-ure to properly administer debtors' account, andgiven that attorneys' efforts efficiently achieveddebtors' twin objectives of achieving both accuracyand piece of mind, with the exception of $585billed for senior attorney's presence at hearing con-ducted primarily by junior attorney, at which seniorattorney did not introduce evidence into record, ad-duce testimony, or appear to provide any other ser-vices specifically pertinent to representation of

debtors.

[19] Bankruptcy 051k0 k.While mortgage lender's failure to correct its recordfollowing completion of Chapter 13 debtors' pay-ments under cure-and-maintenance plan resulted inoverstatement of principal balance of loan by onlyabout $5,000, this did not preclude award of $4,544in attorney fees as contempt sanction for efforts of Chapter 13 debtors' attorney in successfully suingto bring lender into compliance with agreed judg-ment, where lender's violations included not just anoverstatement of principal balance of mortgageloan, but in erroneous reporting that loan was in de-fault and that debtors would have to pay thousandsof dollars to avoid foreclosure and in overstatingdebtors' monthly mortgage payment, with result

that debtors were consistently overcharged in con-nection with mortgage payments made followingcompletion of their plan; fee award was warrantedgiven that attorneys' efforts efficiently achieveddebtors' twin objectives of achieving both accuracyand piece of mind.Miriam Trubek Goot t, Walker Patterson PC, Hous-ton, TX, for Plaintiffs.

John Harlan El y, Ewing Jones PLLC, Houston, TX,for Defendant.

MEMORANDUM OPINION ON DEBTORS'MOTION FOR AN ORDER OF CIVIL CON-

TEMPT AGAINSTWELLS FARGO BANK, N.A. [Adv. Docket No.

26]JEFF BOHM , United States Bankruptcy Judge.

I. INTRODUCTION*1 This adversary proceeding involves a sad andfrustrating tale of how two successfully reorganizeddebtors unsuccessfully attempted to deal directlywith their home lender, Wells Fargo Bank, N.A.(Wells Fargo). Their communications concernedthe proper amounts that they owe Wells Fargo pur-suant to certain orders of this Court entered during

their Chapter 13 case. Only when their efforts atdirect dialogue failed did the debtors turn to theircounsel for assistance. This assistance first camethrough the filing of the above referenced adversaryproceeding. Second, it came through the filing of amotion for contempt (the Motion for Contempt)when Wells Fargo failed to correct the debtors' loanrecords pursuant to an agreed judgment that itsigned in order to settle the adversary proceedingand avoid a trial. This Memorandum Opinion dis-cusses the reasons why this Court has decided togrant the Motion for Contempt.

II. FACTUAL AND PROCEDURAL BACK-GROUND

A. Background of this Chapter 13 Case

On September 9, 2003, Antoinette De La Fuenteand Lenord De La Fuente (the De La Fuentes) filed


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a Chapter 13 petition, primarily to save theirhomestead from foreclosure. [Main Case Doc. No.1]; see [Adv. Doc. No. 1, 5]. Lenord works as amechanic. [Main Case Doc. No. 24, AmendedSchedule I]. Antoinette raises their two sons. [MainCase Doc. No. 37, Amended Schedule I]. In manyways, the De La Fuentes represent the Americannuclear family, fallen on hard times, and desper-ately trying to hold on to their piece of the Americ-an dream.

And, indeed, in order to keep their home, the De LaFuentes dutifully proposed a plan which called forsixty monthly payments to the Chapter 13 Trustee(the Trustee), who would then make distributions to

their creditors, including their home lender. [FN1][Main Case Doc. Nos. 40, 51 & 52]. On June 14,2004, the Court entered an Order Confirming theDe La Fuentes' Chapter 13 plan (the ConfirmationOrder). [FN2] Pursuant to the Confirmation Order,the De La Fuentes were required to make monthlypayments to the Trustee, who, in turn, would dis-burse monies to their creditors, including WellsFargo. The disbursements made to Wells Fargowere only for arrearages-- i.e., the amount in defaultas of the date of the filing of the Chapter 13 peti-tion. Under the Confirmation Order, the De La

Fuentes themselves were required to make all regu-lar monthly payments which became due after thepetition's filing. Stated differently, the Trustee wasthe disbursing agent solely for amounts that weredue pre-petition, and not for any amounts that be-came due post-petition. [FN3 ]

The De La Fuentes did in fact begin making pay-ments in 2004, pursuant to the Confirmation Order,and continued to do so for the next five years; theirplan ended successfully upon them making theirsixtieth payment to the Trustee in 2009. During thisfive-year period, the Trustee distributed to WellsFargo the amount of $5,349.19, [FN4] representingthe arrearages owed under the Confirmation Order.And, after the De La Fuentes finished making all of their required payments under the Confirmation Or-der, this Court issued its order discharging the De

La Fuentes. [Main Case Doc. No. 106].

*2 Overall, the record reflects that the De LaFuentes were model Chapter 13 debtors. They filedtheir petition, obtained confirmation of their plan,and made all of their payments pursuant to theirplan. Thus, they achieved the twin objectives of thebankruptcy process: they received a discharge; andtheir creditors, including Wells Fargo, receivedpayment on their allowed claims. See In re Lots by Murphy, Inc., 2010 Bankr.LEXIS 873, at *10-11(Bankr.S.D.Tex.2010) ("[T]he twin pillars of bank-ruptcy are: (1) the discharge of the debtor, in orderto obtain a 'fresh start'; and (2) the satisfaction of valid claims against the estate.") (citing Fin. Sec.

Assur. v. T-H New Orleans Ltd. P'ship ( In re T-H New Orleans Ltd. P'ship ), 188 B.R. 799, 807(E.D.La.1995) aff'd 116 F.3d 790 (5th Cir.1997 )).

B. Wells Fargo's involvement with the De LaFuentes

On June 27, 2007, Wells Fargo acquired the De LaFuentes' homestead loan from Washington MutualBank, F.A. [Main Case Doc. No. 61]. In January of 2008, the De La Fuentes were dutifully fulfillingtheir obligations under the Confirmation Order

(including remitting their regular monthly paymentsto Wells Fargo in addition to sending their monthlypayments to the Trustee, who was then distributingmonies to Wells Fargo to cure the arrearage). Nev-ertheless, Wells Fargo sent the De La Fuentes a let-ter accusing them of being delinquent on their loanby $8,400.06. [Adv. Doc. No. 1, 18]. [FN5] Theletter threatened that unless the De La Fuentes be-came current with their payments by February 14,2008, Wells Fargo would foreclose on theirhomestead. [FN6] Knowing that the allegations inWells Fargo's letter were incorrect, the De La

Fuentes directly contacted Wells Fargo and attemp-ted to correct the mistake. [Adv. Doc. No. 1, 19].Nevertheless, Wells Fargo insisted, and the De LaFuentes, out of fear of losing their home, enteredinto a temporary forbearance agreement [WellsFargo Ex. Nos. 5 & 6] and loan modification agree-ment in lieu of foreclosure on April 10, 2008 .


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[FN7] [Adv. Doc. No. 1, 20]. This was in spite of the fact that the pre-petition mortgage arrears werealready provided for in the Confirmation Order and,therefore, could not be collected in a different man-ner or time frame than set forth in the ConfirmationOrder without this Court's approval. Wells Fargo'sactions therefore violated the Confirmation Order.Wells Fargo knew the De La Fuentes were Chapter13 debtors and that both they and Wells Fargo werebound by the Confirmation Order; yet, Wells Fargofrightened the De La Fuentes into making paymentsto Wells Fargo in violation of the Confirmation Or-der.

C. The history of the pending adversary pro-

ceedingIn June of 2008, approximately two months afterentering into the Loan Modification Agreement andthe Temporary Forbearance Agreement, the De LaFuentes decided to retain the law firm of Walker &Patterson, P.C. (W & P) to represent them in themain case after the Trustee took the position thatthey needed to modify the Plan. [Main Case Doc.No. 65]. W & P had not been initial counsel of re-cord for the De La Fuentes, but the firm undertook the representation and resolved this matter with the

Trustee, plus other matters relating to their Chapter13 case. [Main Case Doc. Nos.79, 81, & 96]. Atsome point after W & P began its representation of the De La Fuentes in the main case, the De LaFuentes reviewed with W & P the communicationsthat they had exchanged with Wells Fargo andprovided W & P with copies of the Loan Modifica-tion Agreement and the Temporary ForbearanceAgreement. As a result of communications betweenthe De La Fuentes and W & P, the former author-ized the latter to file suit against Wells Fargo. Ac-cordingly, on August 13, 2008, the De La Fuentesfiled the Complaint initiating the instant adversaryproceeding against Wells Fargo (the Adversary Pro-ceeding), alleging willful violation of the automaticstay and violation of the Confirmation Order. [Adv.Doc. No. 1]. On September 19, 2008, Wells Fargofiled an Original Answer, primarily denying the De

La Fuentes' allegations, and praying that the Courtdeny the relief sought by the De La Fuentes. [Adv.Doc. No. 6]. This Court issued a scheduling order,which set discovery deadlines, a pre-trial confer-ence for April 16, 2009, and a trial date for theweek of April 20, 2009. [Adv Doc. No. 2]. There-after, the parties conducted discovery and filed theirrespective pre-trial statements. [Adv. Doc. Nos. 10& 11]. At the pre-trial conference on April 16,2009, the parties announced that they were readyfor trial, and this Court set the trial date for April21, 2009.

D. The first "Settlement Agreement"

*3 On April 21, 2009, this Court called the Ad-versary Proceeding for trial. At that time, counselfor both parties announced that they were in theprocess of negotiating a global settlement. Counselfor the parties then recited into the record thoseterms upon which they had reached agreement.While counsel for the De La Fuentes stated that theparties had reached agreement on many terms, henoted that there were two material points overwhich the parties had yet to reach agreement: theamount of the De La Fuentes' attorneys' fees to bepaid by Wells Fargo for prosecuting the Adversary

Proceeding and the amount of the monthly escrowpayment to be paid in the future. [FN8 ] Counsel forboth parties asked the Court to conduct an immedi-ate trial on the amount of attorneys' fees; and coun-sel for each party stated that they would conferthereafter in an effort to reach an agreement on thespecific amount of the escrow payment. See [TapeRecording, April 21, 2009 Trial at 9:22:03 am.-9:25:00 a.m.; 10:35:04 a.m-10:36:06 a.m.].

The Court then heard testimony on the amount of attorneys' fees, and issued an oral ruling from the

bench awarding reasonable attorneys' fees to the DeLa Fuentes in the amount of $25,895.00. The Courtthen requested counsel for both parties to submit anagreed judgment in writing within one week and re-minded them that this judgment needed to includenot only the agreed terms announced into the re-cord, but also the fee award and the escrow amount




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that the parties were to agree upon after furtherconsultation. [Tape Recording, April 21, 2009 Tri-al, 10:35:04 am-10:36:07 a.m.].

Unfortunately, the parties thereafter failed to reachan agreement on the escrow amount. Not surpris-ingly, counsel never submitted a signed, writtenagreed judgment to this Court. However, on June10, 2009, Wells Fargo unilaterally filed a Motionfor Entry of Final Judgment [Adv. Doc. No. 12] re-questing that this Court sign an order approving: (1)those terms announced into the record at the April21, 2009 hearing; (2) attorneys' fees to the De LaFuentes in the amount of $25,895.00 ( i.e., theamount decided upon by this Court at the April 21

trial); and (3) the monthly escrow amount desiredby Wells Fargo but which the De La Fuentes wouldnot voluntarily accept.

On July 20, 2009, this Court issued an order deny-ing Wells Fargo's motion and a MemorandumOpinion explaining the reasons for its decision .[FN9] [Main Case Doc. Nos. 18 & 19]. In its orderdenying Wells Fargo's motion, the Court also settrial for July 28, 2009. Moreover, the Court ex-pressly stated in this order that any future negoti-ated settlement must be reduced to writing in the

form of an agreed judgement and signed by allcounsel of record. [Main Case Doc. No. 19]. Inshort, the Court was telegraphing to the parties thatif they were going to resolve their dispute, theyreally needed to focus on all of the terms and re-duce all of those terms to writing so that therewould be absolutely no room for misunderstandingabout what the duties and obligations of the partieswere in any settlement.

E. The second "Settlement Agreement"

*4 On July 27, 2009, the day before trial, theparties entered into and filed an Agreed Final Judg-ment (the Agreed Judgment). The Agreed Judgmentrepresented the parties' second attempt at settle-ment, but this time, all of the terms were reduced towriting and signed by counsel for both parties.Upon submission, this Court reviewed and signed

the Agreed Judgment, which expressly ordered that:(1) the De La Fuentes' loan serviced by Wells Fargowas deemed to be contractually current throughApril 2009, with the next monthly mortgage pay-ment due in May 2009; (2) the principal balance of the De La Fuentes' loan immediately prior to theposting and application of the De La Fuentes' May2009 loan payment was deemed to be $66,572.80;(3) the De La Fuentes' monthly principal and in-terest payment is $551.69 and shall remain thesame until the last scheduled payment, which isApril 1, 2029; (4) all future monthly payments of principal and interest shall be applied as reflectedon Exhibit A; [FN10 ] (5) the De La Fuentes' escrowaccount shall show a positive balance of $1,700.00

as of April 31, 2009; [FN11 ] (6) until the nextscheduled escrow analysis, the De La Fuentes shallpay, in addition to the principal and interest pay-ment, $410.24 per month to be applied to their es-crow account; (7) the De La Fuentes' loan shallshow no outstanding fees, costs, charges or corpor-ate advances as of April 31, 2009; [FN12 ] (8) to theextent Wells Fargo is required to make correctingentries on the De La Fuentes' loan records to reflectthe amounts set out in the Agreed Judgment, suchcorrecting entries shall be completed within 30 daysfrom the entry on the docket of this Agreed Judg-ment ( i.e., by August 26, 2009); [FN13] (9) nothingin the Agreed Judgment shall affect the special es-crow account held by Wells Fargo which containsinsurance proceeds paid as the result of damages tothe homestead of the De La Fuentes; and (10) WellsFargo shall pay the De La Fuentes' attorneys, Walk-er & Patterson, P.C., the reasonable fees and costsfor prosecuting the Adversary Proceeding in theamount of $30,895.00, with such payment to bemade within 10 days of the entry of the AgreedJudgment. [Adv. Doc. No. 23].

Having entered into the Agreed Judgment, the DeLa Fuentes believed, among other things, that all of their concerns over the inaccuracies of their loan re-cords at Wells Fargo had been put to rest. In thewords of Ms. De La Fuente: "When the settlementcame through, and we got the final judgment from




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the Court and everything, I called your office [ i.e.,her attorney's office]. And we were happy andpleased." [Feb. 9, 2010 Tr. 11:2-4]. Unfortunately,the De La Fuentes' sense of closure was misplaced.

F. Discovery by the De La Fuentes of WellsFargo's failure to comply with the Agreed Judg-ment

The De La Fuentes first discovered that WellsFargo was violating the Agreed Judgment whenthey received the Monthly Mortgage Statementdated 11/13/09. [Exhibit No. 2]. This Statement in-correctly reflected, among other things, that the un-paid principal balance of the loan was $70,938.84[Exhibit No. 2]; it should have reflected that the un-paid principal balance was $65,753.16 pursuant tothe Agreed Judgment. [Exhibit No. 1]. Thereafter,according to W & P's timesheets, Ms. De La Fuentemet with Miriam Goott (Goott), an attorney at W &P, on November 18, 2009. [Exhibit No. 5]. Thetime sheets reflect that on November 22, 2009 andDecember 7, 2009, Goott worked on a draft of amotion for contempt. However, no motion for con-tempt was filed in December of 2009.

*5 In January of 2010, Ms. De La Fuente went on-

line to make the monthly payment to Wells Fargo.[Feb. 9, 2010 Tr. 7:10-14]. However, she was un-able to make this online payment because when shehit the appropriate key on her computer to make thepayment, her computer screen told her that she hadto call Wells Fargo because of the status of her ac-count. [Feb. 9, 2010 Tr. 7:15-18]. She thereforecalled Wells Fargo, and as she was on the phone,she noticed that the balance of the loan appearingon the screen had increased [Feb. 9, 2010 Tr.7:19-21], a fact which surprised her because herhusband and she had made all of the payments

since May of 2009. [Feb. 9, 2010 Tr. 7:10-11]. Shealso noticed that the screen reflected that WellsFargo had reversed several of the payments that herhusband and she had made since May of 2009.[Feb. 9, 2010 Tr. 7:20- 22]. She inquired about thepayment reversals, and the Wells Fargo employeewith whom she was speaking told her that "it was a

computer glitch and that they would fix it. Give it acouple of days." [Feb. 9, 2010 Tr. 12:11-12]. And,indeed, the De La Fuentes waited a couple of daysfor Wells Fargo to correct both the payment re-versals and the balance of the loan. Unfortunately,Wells Fargo failed to make these corrections; infact, the balance had increased even further. [Feb.9, 2010 Tr. 12:13-16].

Thereafter, still in January, Ms. De La Fuente onceagain tried to make a payment online, and was pre-vented from doing so. [Feb. 9, 2010 Tr. 14:21-22].She, once again, called Wells Fargo "[a]nd that'swhen they told me that I had been put in bank-ruptcy status, and that I needed to make my loan

current. And they wanted me to pay more than whatI wanted to pay, that was my monthly payment.And I didn't want to pay more, because I didn't owemore than that." [Feb. 9, 2010 Tr. 14:24-15:3].Thus, in the eyes of the De La Fuentes, Wells Fargocontinued to violate the Agreed Judgment because,among other things, the balance on their loan stilldid not track with what the balance of the loanshould be pursuant to the amortization schedule at-tached to the Agreed Judgment. [FN14 ] Stated dif-ferently, the De La Fuentes were now painfullyaware that Wells Fargo had not corrected the

entries in its internal records as required by theAgreed Judgment.

G. The filing of the Motion For Contempt

The De La Fuentes authorized W & P to file theMotion for Contempt, which was done on January18, 2010. [Adv. Doc. No. 26]; [Exhibit No. 5]. OnJanuary 21, 2010, this Court, through the Office of the Clerk of Court, docketed a notice that the hear-ing for the Motion for Contempt would be held onFebruary 9, 2010. [Adv. Doc. No. 27]. On January

22, 2010, counsel for the De La Fuentes sent noticeof this hearing to counsel for Wells Fargo. [Adv.Doc. No. 29]. However, Wells Fargo did not file awritten response to the Motion for Contempt. In-stead, Wells Fargo chose to simply appear at thehearing and defend itself.




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H. The hearing on the Motion for Contempt

1. The February 9, 2010 part of the hearing (theFebruary 9 Hearing)

*6 The hearing on the Motion for Contempt beganon February 9, 2010. On this day, Ms. De LaFuente testified, and she did so very credibly .[FN15] Her testimony revealed that Wells Fargowas not in compliance with the Agreed Judgment inseveral respects.

First, Ms. De La Fuente testified about Exhibit No.2. She noted that this Exhibit was the MonthlyMortgage Statement dated 11/13/09 that her hus-band and she had received from Wells Fargo. Thisstatement sets forth that the unpaid principal bal-ance is $70,938.84. She emphasized that this figuredoes not track with the language of the AgreedJudgment. The Agreed Judgment sets forth that theprincipal balance "immediately prior to the postingand application of the Plaintiffs' [ i.e., the De LaFuentes'] May, 2009 loan payment is $66,572.80."She also testified that her husband and she hadmade all of their monthly payments to Wells Fargosince May of 2009 [Feb. 9, 2010 Tr. 7:10-11].Thus, there is no way that in November of 2009,

the unpaid principal balance could be $70,938.84.The unpaid principal balance as of 11/13/09 wouldhave to be in an amount less than the figure of $66,572.80 for May of 2009 set forth in the AgreedJudgment. And, indeed, a review of Exhibit A tothe Agreed Judgment-- which sets forth the amort-ization schedule to be used for the remaining life of the loan--indicates that, as of 11/01/2009, the un-paid principal balance is $65,753.16, which is anamount less than $66,572.80. Thus, as of the Febru-ary 9 Hearing, Wells Fargo was not in compliancewith the Agreed Judgment because the 11/13/09

Monthly Mortgage Statement which it sent to theDe La Fuentes overstated the unpaid principal bal-ance by $5,185.68 ( i.e., $70,938.84-- $65,753.16 =$5,185.68).

Second, Ms. De La Fuente testified about ExhibitNo. 3. She stated that she found this page online in

January 2010 when she looked up her mortgage ac-count on the "Wells Fargo Business Online" web-site [Feb. 9, 2010 Tr. 9:15-21]. This document rep-resents that the last payment received from the DeLa Fuentes was on 12/30/09. That is the good news;it is an accurate representation. Unfortunately, thebad news is that this document reflects that the out-standing principal balance is $71,337.82. Thus,Wells Fargo was not in compliance with the AgreedJudgment because this document reflects that theunpaid principal balance is not $65,632.98 (as setforth in the agreed upon amortization schedule at-tached to the Agreed Judgment), but rather$71,337.82--which means that this document over-states the unpaid principal balance by $5,704.84 (

i.e., $71,337.82--$65,632.98 = $5,704.84). Further,even though the De La Fuentes had made theirNovember and December 2009 payments, WellsFargo's records reflect that the unpaid principal bal-ance rose from $70,938.84 ( i.e., the incorrect figureset forth in the Monthly Mortgage Statement of 11/13/09) to $71,337.82 ( i.e., the incorrect figureset forth in the Business Online Account Activityfrom January of 2010). Stated differently, WellsFargo's internal system increased the principal bal-ance even when the De La Fuentes made timelypayments.

*7 But there is more. The online statement markedas Exhibit No. 3 contains a line that reads as fol-lows: "Total amount due to make loan current:$8,934.72." Not surprisingly, Ms. De La Fuentetestified that this representation was wrong. Shewas very clear in stating that her husband and shewere current on the loan. [Feb. 9, 2010 Tr.9:24-10:8]. This Court agrees. Because: (a) theAgreed Judgment expressly stated that the De LaFuentes' loan was contractually current throughApril 2009; (b) the De La Fuentes had made all of their regular monthly payments to Wells Fargosince May of 2009 [Feb. 9, 2010 Tr. 7:10-11]; (c)the Agreed Judgment had been entered on the dock-et and become a final order [Adv. Doc. No. 24];and (d) the Trustee had paid to Wells Fargo the en-tire arrearage of $5,349.19 pursuant to the Confirm-




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ation Order [Main Case Doc. No. 109], there is noway that the De La Fuentes needed to pay$8,934.72 to bring their loan current. They werecurrent! Thus, Wells Fargo was not in compliancewith the Agreed Judgment because according to theterms of the Agreed Judgment, the De La Fuenteswere current through April of 2009; and given thatthey had made all of their payments from May of 2009 and thereafter--a fact, it should be noted, thatWells Fargo does not dispute-- there is no way thatthe De La Fuentes needed to pay $8,934.72 to bringtheir loan current. The information in Wells Fargo'sBusiness Online Account Activity therefore contra-dicted the representations that Wells Fargo gave tothe De La Fuentes and to this Court in the Agreed

Judgment.

Ms. De La Fuente's testimony about Exhibit No. 4tracks with her testimony about Exhibit No. 3. Shestated that she found Exhibit No. 4 online in Febru-ary 2010 when she looked up her mortgage accounton the Wells Fargo Business Online website [Feb.9, 2010 Tr. 10:9-16]. This document reflects thatthe last payment received from the De La Fuenteswas on 01/29/10. Once again, that is the good news;it is an accurate representation. Unfortunately, thebad news is that this document, just like Exhibit

No. 3, reflects that the outstanding principal bal-ance is a number different from what it should bebased upon the agreed amortization schedule at-tached to the Agreed Judgment. According to thatamortization schedule, the outstanding principalbalance--assuming that the De La Fuentes havemade all of their payments through January of 2010, which they have--is $65,390.24. Yet, ExhibitNo. 4, which Ms. De La Fuente printed off of theWells Fargo Business Online website within 24hours of the February 9 Hearing, reflects that theoutstanding principal balance is $66,572.80. In oth-er words, the outstanding principal balance isshown to be $1,182.56 greater than what WellsFargo agreed it should be in the Agreed Judgment.

Granted, the figure of $66,572.80 is the figure ref-erenced in the Agreed Judgment as the outstanding

principal balance, but the Agreed Judgment unequi-vocally sets forth that this figure is the principalbalance immediately prior to the posting of the loanpayment made by the De La Fuentes for May of 2009. The problem for Wells Fargo is that becausethe De La Fuentes had made their monthly pay-ments for each month since May of 2009, the bal-ance of $66,572.80 had decreased. Thus, ExhibitNo. 4 demonstrates that Wells Fargo was not incompliance with the Agreed Judgment because theoutstanding principal balance figure was overstatedand did not match with the figure set forth in theamortization schedule attached to the Agreed Judg-ment ( i.e., $65,390.24). [FN16 ]

*8 But, once again, just as with Exhibit No. 3, thereis more. The online statement marked as ExhibitNo. 4 contains a line that reads as follows: "Totalamount due to make loan current: $9,421.52." Notsurprisingly, Ms. De La Fuente testified that thisfigure had increased from $8,934.72 ( i.e., the num-ber in Exhibit No. 3) to $9,421.52. [Feb. 9, 2010Tr. 10:9-23]. As already noted, the De La Fuenteswere current on their loan in February of 2010, justas they were current on their loan in January of 2010. Hence, there is no way that any document forwhich Wells Fargo is responsible should be show-

ing that in February of 2010, the De La Fuentesneeded to pay $9,421.52 to bring their loan current.What is particularly peculiar about the figure of $9,421.52 is that it represents an increase of $486.80 from January of 2010 to February of 2010,while, at the same time, the De La Fuentes weremaking timely monthly payments to Wells Fargo.Thus, Wells Fargo was not in compliance with theAgreed Judgment because according to the terms of the Agreed Judgment, the De La Fuentes were cur-rent through April of 2009. Given that they hadmade all of their payments from May of 2009 andthereafter--another fact that Wells Fargo does notdispute--there is no way that the De La Fuentesneeded to pay $9,421 . 52 to bring their loan cur-rent. The information in Wells Fargo's BusinessOnline Account Activity therefore contradicted therepresentations that Wells Fargo gave to the De La




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Fuentes and to this Court in the Agreed Judgment.

After Ms. De La Fuente finished giving testimony,counsel for the De La Fuentes stated that they hadno further witnesses to call in their case-in-chief onWells Fargo's failure to comply with the AgreedJudgment. Counsel for Wells Fargo then informedthe Court that Wells Fargo wanted to call one wit-ness, but that this witness had been unable to fly toHouston due to inclement weather. The Court there-fore agreed to continue the hearing until February23, 2010, so that this witness could give testimonyon behalf of Wells Fargo.

However, having heard the testimony of Ms. De LaFuente, and having reviewed the exhibits, thisCourt did make a finding that because the amortiza-tion table of the Agreed Judgment required theprincipal balance to be $65,390.24 as of February 1,2010, and because Exhibit No. 4 (the Wells FargoBusiness Online Account Activity) showed the bal-ance to be $66,572.80, Wells Fargo was thereforein violation of the Agreed Judgment. [Feb. 9, 2010Tr. 25:6-26:16]. Citing F.D.I.C. v. LeGrand, thisCourt concluded that the De La Fuentes had mettheir burden in satisfying the three elements re-quired to establish that Wells Fargo was in con-

tempt of this Court's judgment--namely, the AgreedJudgment. [FN1 7] [Feb. 9, 2010 Tr. 26:10-15];F.D.I.C. v. LeGrand, 43 F.3d 163, 170 (5thCir.1995) . The Court then stated that the burdennow fell on Wells Fargo to demonstrate that it wasunable to comply with the Agreed Judgment or thatit had some other relevant defense. [Feb. 9, 2010Tr. 26:17- 19; 27:5-9]. The Court informed counselfor Wells Fargo that the Court would hear testi-mony from Wells Fargo's representative at the con-tinued hearing to be held on February 23, 2010.[Feb. 9, 2010 Tr. 28:11].

*9 Finally, because the Court concluded that WellsFargo was in contempt of the Agreed Judgment dueto the failure of Exhibit No. 4 to show that the prin-cipal balance was $65,390.24 (instead of $66,572.80), the Court issued an oral ruling thatWells Fargo would be liable to the Clerk of Court

on a per diem basis in the amount of $1,182.56 foreach day thereafter until the figure of $65,390.24was showing as the principal balance. [FN18 ] [Feb.9, 2010 Tr. 26:20-27:4]. The Court noted that uponhearing testimony from the Wells Fargo witness atthe February 23, 2010 hearing, it would make a de-termination whether Wells Fargo had met its bur-den to establish that it could not comply with theAgreed Judgment and whether Wells Fargo wouldhave to pay any amounts that accrued for each daythat passed where the figure of $65,390.24 was notshowing as the principal balance. [Feb. 9, 2010 Tr.27:10-13].

2. The February 23, 2010 part of the hearing (the

February 23 Hearing)

On February 23, 2010, Wells Fargo presented itscase in chief by calling one witness, John Grissom(Grissom), and by introducing two exhibits. [FN19 ]Additionally, the De La Fuentes recalled Ms. De LaFuente on rebuttal, and also adduced testimonyfrom their counsel on the amount of attorneys' feesthat they had incurred in prosecuting the Motion forContempt.

i. Testimony of the Wells Fargo representative,

John Grissom

Grissom identified himself as a senior counsel of Wells Fargo. [Feb. 23, 2010 Tr. 10:12-13]. Heworks out of a Wells Fargo office in Iowa. [Feb. 9,2010 Tr. 1:12-13]. He stated that he directed hisparalegal in July of 2009 to make the changes with-in Wells Fargo's system in accordance with theterms of the Agreed Judgment. [Feb. 23, 2010 Tr.10:13-18]. He also admitted that the adjustmentsthat his paralegal was supposed to make at that timeincluded reducing the principal balance to the fig-

ure of $66,572.80. [Feb. 23, 2010 Tr. 10:19-21]. Hethen admitted that this particular adjustment wasnot done. [Feb. 23, 2010 Tr. 10:22-23]. When coun-sel for Wells Fargo asked Grissom why the adjust-ment was not made, Grissom responded: "This onewas a mistake. It was one that fell through thecracks." [Feb. 23, 2010 Tr. 10:25-11:1]. Indeed,


http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1995027465&ReferencePosition=170


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Grissom stated that he first learned that the adjust-ment had not been made when the Motion for Con-tempt was filed on January 18, 2010--almost sixmonths after the entry of the Agreed Judgment onthe docket, and almost five months after the dead-line for Wells Fargo to make the adjustments pursu-ant to the Agreed Judgment. See [Feb. 23, 2010 Tr.11:7-11]. Thus, Grissom, by his own testimony,confirmed that Wells Fargo was not in compliancewith the Agreed Judgment. Counsel for WellsFargo thereafter attempted to adduce testimonyfrom Grissom to convince this Court that WellsFargo did not have the ability to make the adjust-ment or, alternatively, that Wells Fargo had someother defense.

First, Grissom stated that once he learned about thefiling of the Motion for Contempt, he "directed myparalegal to work with the information systemspeople to get this account corrected." [Feb. 23,2010 Tr. 11:19-21]. According to Grissom, thesepersonnel undertook this task and made the appro-priate adjustments pursuant to the Agreed Judg-ment. [Feb. 23, 2010 Tr. 11:22-23; 14:10-23].

*10 Second, Grissom asserted that if, prior to thefiling of the Motion for Contempt, he had received

notice about Wells Fargo's failure to comply withthe Agreed Judgment, the adjustment would havebeen made earlier: "Oh, absolutely absolutely. If I'dreceived a call or an e-mail from you or anything,we would have taken care of getting this done muchsooner." [Feb. 23, 2010 Tr. 15:17- 19].

Third, Grissom emphasized that Wells Fargo's fail-ure to make the adjustment in accordance with theAgreed Judgment by the thirty-day deadline setforth in that judgment ( i.e., by August 26, 2009)was not a willful failure on Wells Fargo's part.

[Feb. 23, 2010 Tr. 11:2-6].

On cross-examination, Grissom unequivocally testi-fied that Wells Fargo is now in complete compli-ance with the Agreed Judgment. [Feb. 23, 2010 Tr.17:21- 18:5]. Yet, on further cross-examination,Grissom then had to concede that his statement was

incorrect. First, he admitted that, pursuant to theAgreed Judgment, the monthly payment for prin-cipal and interest is $551.69, the monthly escrowpayment is $410.24, and the sum of these two fig-ures is $961.93. [Feb. 23, 2010 Tr. 19:12-23]. Hethen had to concede that Exhibit 2 (the monthlyMortgage Statement dated 11/30/2009) indicatesthat the combined monthly payment of principal,interest, and escrow is $984.00, not $961.93. [Feb.23, 2010 Tr. 19:24-20:4]. Indeed, he admitted thatall of the Monthly Mortgage Statements throughFebruary of 2010 indicated that the De La Fuenteshad to pay $984.00 instead of $961.93. [Feb. 23,2010 Tr. 19, 20:3-16]. [FN20 ] Thus, he had to con-cede that Wells Fargo had been violating the

Agreed Judgment by over-charging the De LaFuentes each month by $22.07 for the ten monthperiod from May of 2009 to February of 2010 .[FN21] [Feb. 23, 2010 Tr. 22:2-10].

Grissom attempted to explain away this violation of the Agreed Judgment by stating that as of close of business on February 22, 2010, Wells Fargo hadmade all the necessary corrections in its loan re-cords to come into compliance with the AgreedJudgment. [Feb. 23, 2010 Tr. 12:16-19; 20:3-8].And, indeed, Exhibit A (internal records of Wells

Fargo) reflects that the total monthly payment isnow shown to be $961.93. The problem, however,is that until Wells Fargo refunds to the De LaFuentes the $22.07 for each of the ten months thatit overcharged them, Wells Fargo is indeed in viola-tion of the Agreed Judgment, which expressly setsforth that the proper amount of the monthly pay-ment is $961.93, not $984.00.

Grissom also attempted to navigate his way aroundthis problem by stating that when Wells Fargo re-ceives more funds than is required, the excess mon-ies go into a "suspense account." [Feb. 23, 2010 Tr.22:11-15; 24:11-25:9]. In other words, Wells Fargodoes not return excess funds, but rather keeps themin an account which it controls. According to Gris-som, that is what Wells Fargo did with the monthlyexcess of $22.07 that the De La Fuentes remitted.




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And, indeed, Exhibit A (internal records of WellsFargo) shows that there is a suspense account forthe De La Fuentes loan. But, there is a problem. Ex-hibit A shows that as of February 22, 2010, the bal-ance of the suspense account is $109.76. Given thatthe De La Fuentes paid $22.07 for ten months, andthat the sum of these ten payments is $220.70, thereis a shortfall of $110.94 ( i.e., $220.70- $109.76) forwhich Wells Fargo cannot account. Indeed, whenasked why Exhibit A does not show the suspenseaccount to have $220.70 instead of $109.76, Gris-som had to concede that: "I do not know the answerto that question." [Feb. 23, 2010 Tr. 23:1]. Thus,Wells Fargo's own records show that the "suspenseaccount" has fewer funds in it then it should have.

Wells Fargo has not properly accounted for all of these funds. Indeed, according to Grissom, any bor-rower, including the De La Fuentes, have the rightto have the funds sitting in a "suspense account" ap-plied against outstanding principal. [Feb. 23, 2010Tr. 24:5-25:9]. Thus, if the De La Fuentes reques-ted that Wells Fargo apply the $220.70 that theyoverpaid against their outstanding principal, WellsFargo would have only $109.76 to apply. In otherwords, Wells Fargo could not even comply with itsown internal procedures.

*11 Wells Fargo is in violation of the Agreed Judg-ment in another respect. The Agreed Judgment ex-pressly sets forth that "the Plaintiffs' [ i.e., the De LaFuentes'] loan shall show no outstanding fees,costs, charges or corporate advances as of April 31,2009." [FN22 ] [Adv. Doc. No. 24]. Yet, in ExhibitA (internal records of Wells Fargo), there is a cat-egory entitled "LC DUE." When asked what thisphrase means, Grissom responded: "Late chargedue." The following exchange then took placebetween counsel for the De La Fuentes and Gris-som:

Counsel for the De La Fuentes: "So this state-ment says that the debtors have a late charge?"Grissom: "Correct."Counsel for the De La Fuentes: "But they are cur-rent?"Grissom: "Yes."

Counsel for the De La Fuentes: "Can you explainto me how that is possible?"Grissom: "They may have made a payment late.If they make a payment after the due date, theywould have a late charge."Counsel for the De La Fuentes: "So, if the debt-ors have evidence that they made their paymentson time and paid a late fee, that wouldn't be there,correct?"Grissom: "Should not be there."

[Feb. 23, 2010 Tr. 25:22-25:9].

There is no doubt that the De La Fuentes havetimely made all of their payments with the excep-tion of their payments for October and December of

2009. [Ex. No. 3]; [February 23, Tr. 42:22-43:7].Further, Ms. De La Fuente testified that when thesetwo late payments were made, the late fee was in-cluded with the regular monthly payment.[February 23, Tr. 42:20-43:7]. Indeed, Exhibit No.3 (Wells Fargo's Business Online Account Activitypage) indicates that the De La Fuentes were as-sessed two late charges in the six months prior to01/21/2010-one on 10/16/09 and one on 12/16/09.And Exhibit No. 3 also shows that the De LaFuentes made their monthly payments shortly afterthese late fees were assessed, and included the ad-

ditional amounts with their regular monthly pay-ment to pay for the late fee as well. Therefore, be-cause the De La Fuentes made all of their regularmonthly payments, and also paid any late feesshortly after they were incurred, the De La Fuentesare totally current on their loan with Wells Fargo.In fact, Grissom himself unequivocally stated--notonce, not twice, not three times, but four times--thatthe De La Fuentes were current. [February 23, Tr.16:23-24; 16:25-17:1; 23:7-8; 25:16- 17].Moreover, Grissom unequivocally stated that therewere no late charges imposed for any of the adjust-ments that Wells Fargo finally made on the eve of the February 23 Hearing. [February 23, Tr.12:20-14:4]. Given all of this testimony, there is ab-solutely no basis for Exhibit A reflecting that theDe La Fuentes owe a late charge of $78.72. [FN23 ]Accordingly, because the Agreed Judgment ex-




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pressly represents that the De La Fuentes loan re-cords shall show no outstanding charges, and be-cause the De La Fuentes have made all of their pay-ments (including payment of the two late chargesfor October and December of 2009), the late chargenow appearing on Exhibit A violates the AgreedJudgment. Wells Fargo's records should actuallyshow that there are no late charges due; and untilthe records so reflect, Wells Fargo is in violation of the Agreed Judgment.

*12 Having had to admit that there were errors inWells Fargo's records in violation of the AgreedJudgment, Grissom attempted to persuade thisCourt that the De La Fuentes' hands are sufficiently

unclean that any relief they request should thereforebe denied. For example, Grissom testified to the ef-fect that the De La Fuentes or their counsel shouldhave contacted Wells Fargo or him prior to filingthe Motion for Contempt. According to Grissom, if they had done so, then Wells Fargo would havequickly made the corrections to the loan recordsand there would have been no need to file the Mo-tion for Contempt. [February 23, 2010 Tr.15:14-19]. Second, Grissom, in conceding incon-sistencies in the information set forth in the WellsFargo's Business Online Account Activity (Ex.

Nos. 2, 3, & 6), suggested that the De La Fuenteswere at fault for relying on this Business OnlineAccount Activity. Set forth below is the exchangebetween Grissom and counsel for the De LaFuentes about why the Business Online AccountActivity sometimes shows a line item that says"Total Amount Due to Bring Loan Current" andother times does not:

Counsel for the De La Fuentes (referring to Ex-hibit No. 6, which is the Wells Fargo BusinessOnline Account Activity for January and Febru-ary of 2010): "Why is it that on February 19ththere isn't a line item that says "Total AmountDue to Bring Loan Current?"Grissom: "I can't answer that question."Counsel for the De La Fuentes: "So sometimesit's on there and sometimes it's not?"Grissom: "This is not an official record of Wells

Fargo. This is their online process. This is a con-venience for the customer. This is not consideredan official record of Wells Fargo."Counsel for the De La Fuentes: "This is what thedebtor has to look at to see if they owe money, if payments have been received. They shouldn't relyon this document?"Grissom: "Well, again, when they look at this inthe middle of all the corrections that are beingmade to the account, it is going to be skewed byall of the changes that are being made. I mean,this shows that they were due for-- next paymentwas due on May 1st of 2009. Clearly, that wasn'tcorrect. But I don't know why it doesn't have theamount needed to bring the account up to date. I

can't answer that question for you."[February 23, 2010 Tr. 38:1-20].

Finally, Grissom blamed the computer system forWells Fargo's failure to comply with the AgreedJudgment. [February 23, 2010 Tr. 12:9-15, 15:2-8].

ii. Rebuttal testimony of Ms. De La Fuente

Ms. De La Fuente gave very credible testimony thather husband and she had made all of their monthlypayments and, when they missed the deadline on

two of the payments, they not only paid the$961.93, but also simultaneously paid the latecharge. [February 23, 2010 Tr. 42:14-44:14].

iii. Testimony of Johnie Patterson, a partner at thelaw firm of Walker & Patterson, PC, counsel for the De La Fuentes

*13 Johnie Patterson (Patterson), a partner at W &P, which is the firm representing the De La Fuentes,gave testimony about the services rendered on be-half of the De La Fuentes in the prosecution of theMotion for Contempt. Patterson has approximatelytwenty years of experience practicing bankruptcylaw and is board certified in consumer bankruptcylaw. [February 23, 2010, Tr. 48:18-21]. Pattersonalso testified that Miriam Goott's hourly rate on thismatter is $225.00. Goott is an associate attorneywho has worked for W & P for seven years, and has




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done so as an attorney practicing bankruptcy lawfor approximately five to six years. [February 23,2010 Tr. 48:22-49:1].

Much of Patterson's testimony concerned ExhibitNo. 5, which is an invoice dated February 22, 2010,setting forth a description of the services renderedby both Patterson and Goott. The invoice reflectsservices rendered from November 18, 2009 (whenGoott first consulted with Ms. De La Fuente aboutthe inaccuracies set forth on the Monthly MortgageStatement dated November 13, 2009) through Feb-ruary 22, 2010 (when Goott prepared for the Febru-ary 23 Hearing). Patterson testified that the De LaFuentes were seeking an order from this Court that

Wells Fargo pay the total value of the fees andcosts set forth in this invoice--a total of $3,754.00,representing the sum of $3,720.00 in fees for pro-fessional services and $34.00 in costs incurred inrelation to the Motion for Contempt. He also testi-fied that his clients want this Court to require WellsFargo to pay the fees for services rendered by Goottand Patterson on February 23, 2010, which are notreflected in Exhibit 5. According to Patterson'stestimony, Goott and he spent approximately twoand a half hours each on this day in the courtroom.Goott's hourly rate is $225.00, which results in a

value of $562.50 for her services rendered on Feb-ruary 23. Patterson's hourly rate is $325.00, whichresults in a value of $812.50 for his servicesrendered on February 23. The sum of $562.50 plus$812.50 is $1,375.00. [February 23, Tr.46:15-50:15]. Thus, the total amount of fees andexpenses which the De La Fuentes seek to recoverfrom Wells Fargo is $3,754.00 plus $1,375.00--fora total of $5,129.00.

III. CREDIBILITY OF WITNESSES

At the February 9 Hearing, counsel for the De LaFuentes called one witness, Ms. De La Fuente, totestify on Wells Fargo's handling of the mortgageloan. Ms. De La Fuente also provided rebuttal testi-mony at the February 23 Hearing. The Court findsMs. De La Fuente to be very credible in all aspectsof her testimony.

At the February 23 Hearing, counsel for the De LaFuentes also called Patterson, one of the attorneysrepresenting the De La Fuentes. Patterson gavetestimony about the services rendered by his firmon behalf of the De La Fuentes in prosecuting theMotion for Contempt. The Court finds Patterson tobe very credible.

At the February 23 Hearing, counsel for WellsFargo called one witness, Grissom, Senior Counselfor Wells Fargo, to testify on Wells Fargo's hand-ling of the De La Fuente's mortgage loan and thecorrections made to Wells Fargo's records in rela-tion to this loan. The Court finds Grissom's credib-ility to be lacking in certain respects. First, he gave

a Shermanesque statement that Wells Fargo wasnow in compliance with the Agreed Judgment[February 23, 2010 Tr. 17:17-18:5], but then sub-sequently had to admit that Wells Fargo's recordsstill contained errors in violation of the AgreedJudgment. [February 23, 2010 Tr. 22:9-23:8].Second, he could not explain why there are latecharges appearing on Wells Fargo's records.[February 23, 2010 Tr. 25:19-26:9]. Grissom's fail-ure on these key points, combined with his nonchal-ance on the stand, reflects a troubling lack of per-spective regarding how much is at stake for honest

and diligent Chapter 13 debtors, such as the De LaFuentes, who are trying to hold on to their home,and how important it is for Wells Fargo to abide bythis Court's orders when dealing with debtors. Gris-som appears to be representative of the absence of any sense of urgency within Wells Fargo to main-tain accurate records and comply with the law. In-deed, the following testimony from Grissom under-scores this point:

*14 Question (from counsel for the De LaFuentes): "And is that a correct figure?"Answer (from Grissom): "Well, it is--I don't be-lieve it is correct. However, it is correct becausethat's what we're presenting to the Court today."

[February 23, 2010 Tr. 27:14-17]. Apparently, itdoes not bother Wells Fargo, whose representativeis a licensed attorney at law, to testify under oath inone breath that an escrow amount is both correct




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and incorrect. And, perhaps even worse, to say thatthis amount is correct because "that's what we'representing to the Court today," even though heknows full well that it is incorrect.

IV. CONCLUSIONS OF LAW

A. Jurisdiction and Venue

[1] The Court has jurisdiction over this proceedingpursuant to 28 U.S.C. 1334(b ) and 157(a ). Thisparticular dispute is a core proceeding pursuant to28 U.S.C. 157(b)(2)(C ), (L), (O), and the gener-al "catch-all" language of 28 U.S.C. 157(b)( 2).See In re Southmark Corp., 163 F.3d 925, 930 (5t hCir.1999) ("[A] proceeding is core under section157 if it invokes a substantive right provided bytitle 11 or if it is a proceeding that, by its nature,could arise only in the context of a bankruptcycase."); De Montaigu v. Ginther (In re Gin ther Trusts), Adv. No. 06-3556, 2006 WL 3805670, at*19 (Bankr.S.D.Tex. Dec.22, 2006) (holding that an"[a]dversary [p]roceeding is a core proceeding un-der 28 U.S.C. 157(b)(2 ) even though the laundrylist of core proceedings under 157(b)(2 ) does notspecifically name this particular circumstance.").Finally, this Court has jurisdiction over this pro-

ceeding because it involves the enforcement of anorder issued by this Court; namely, the AgreedJudgment. Travelers Indem. Co. v. Bailey, --- U.S. ----, ----, 129 S.Ct. 2195, 2205, 174 L.Ed.2 d 99(2009) ; In re Cano, 410 B.R. 50 6, 546(Bankr.S.D.Tex.2009) .

Venue is proper pursuant to 28 U.S.C. 140 8 and1409 .

B. Wells Fargo has been in contempt of theAgreed Judgment for several months

1. The De La Fuentes have satisfied the elements of civil contempt by Wells Fargo

[2][3][4] The Fifth Circuit has held that bankruptcycourts have civil contempt powers. Matter of Terre-bonne Fuel & Lube, 108 F.3d 609, 612- 13 ( 5thCir.1997) . Pursuant to Fifth Circuit precedent, "[i]n

a civil contempt proceeding, the party seeking anorder of contempt need only establish (1) that acourt order was in effect, and (sic)(2) that the orderrequired certain conduct by the respondent, and (3)that the respondent failed to comply with the court'sorder." F.D.I.C. v. LeGrand, 43 F.3d 163, 170 (5t hCir.1995) (citing U.S. v. Hayes 722 F.2d 723, 72 5(11th Cir.1984 ); In re Bradley, 588 F.3d 254, 26 4(5th Cir.2009 ). "To determine compliance with anorder, the court simply asks whether the respondenthas [performed the acts required by the order]. If hehas not, the burden shifts to the respondent to rebutthis conclusion, demonstrate an inability to comply,or present other relevant defenses." LeGrand, 43F.3d at 17 0 (citing Matin v. Trinity Indus. Inc., 959

F.2d 45, 47 (5th Cir.1992 )); Star Brite Dist., Inc. v.Gavin, 746 F.Supp. 633, 643 (N.D.Miss.199 0); Inre Bradley, 588 F.3d at 264 .

*15 [5] In the dispute at bar, the evidence unam-biguously indicates that Wells Fargo is in contemptof this Court. The first element is satisfied becausethe Agreed Judgment became effective when it wasentered onto the docket on July 27, 2009.

The second element is satisfied because the AgreedJudgment requires certain conduct by Wells Fargo.

Specifically, the Agreed Judgment requires WellsFargo, by August 26, 2009, to make correctingentries on the loan records of the De La Fuentes toreflect the agreements on various points concerningthis particular loan all of which are set forth in theAgreed Judgment. The specific agreements set forthin the Agreed Judgment are as follows: (1) the loanof the De La Fuentes is contractually currentthrough April of 2009; (2) the principal balance of the De La Fuentes' loan immediately prior to theapplication of the May 2009 monthly payment is$66,572.80; (3) the amount of the monthly paymentfor principal and interest, effective May of 2009, is$551.69, and this amount will remain the same untilthe last scheduled payment of April 1, 2029; (4)Wells Fargo will apply all future monthly paymentsin accordance with the amortization schedule at-tached to the Agreed Judgment; (5) until the next


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