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Wells Fargo Bank NA v. Thompson

United States District Court, E.D. Wisconsin

April 21, 2016

WELLS FARGO BANK NA, Appellant,
v.
PAMELA A. THOMPSON and DENNIS E. THOMPSON, Appellees.

ORDER

J.P. Stadtmueller U.S. District Judge

This is the third appeal to this Court for this eleven-year-old bankruptcy matter. Wells Fargo appeals the bankruptcy court’s latest order dated July 22, 2015 (Docket #1). For the reasons stated below, the Court will affirm.

1. JURISDICTION AND STANDARD OF REVIEW

Wells Fargo timely filed its Notice of Appeal (Docket #1) on August 5, 2015, fourteen days after the bankruptcy court’s latest memorandum and order (Docket #1-2, 3-1 at 405). Bankr. R. 8002(a)(1). This Court reviews the bankruptcy court’s findings of fact for clear error and its legal conclusions de novo. In re Marcus-Rehtmeyer, 784 F.3d 430, 436 (7th Cir. 2015).

2. PROCEDURAL HISTORY

On May 29, 2015, the Court ruled on appeals by each party regarding the bankruptcy court’s October 21, 2014 order. Thompson v. Ocwen Loan Servicing, LLC, Nos. 14-CV-1502-JPS, 14-CV-1522-JPS, 2015 WL 3454726 (E.D. Wis. May 29, 2015).[1] The Court disposed of all issues in those appeals save one: whether the bankruptcy court had authority to order Wells Fargo to reimburse the Thompsons’ direct payments to the Thompsons themselves (Reimbursement Order). Id. at *6. The Reimbursement Order was vacated, and the cause remanded. Id. at *8.

On July 22, 2015, the bankruptcy court issued a “Memorandum Decision on Remand” (Remand Decision) addressing this Court’s concerns regarding the authority issue. (Docket #1-2). The bankruptcy court maintained that Wells Fargo was obliged to refund the Thompsons’ payments and gave various reasons in support. The bankruptcy court revised the Reimbursement Order in one respect, however, directing that the refund be paid to the Thompsons’ trustee. (Revised Order, Docket #3-1 at 405). Wells Fargo now appeals that revised order.

3.FACTS RELEVANT TO THIS APPEAL

3.1Brief Litigation History

The Thompsons originally objected to Wells Fargo’s proof of claim regarding their home mortgage in 2005.[2] The parties litigated for years to resolve various issues on the claim. On March 19, 2013, the bankruptcy court disallowed the claim (after having previously allowed it) because an evidentiary hearing showed that Wells Fargo could not properly support its claim to be the holder of the Thompsons’ mortgage. This Court affirmed that determination on January 7, 2014.

Afterwards, the Thompsons filed motions seeking, inter alia, return of their voluntary payments to Wells Fargo during the bankruptcy, made prior to the claim being disallowed (Reimbursement Motion). On October 21, 2014, the bankruptcy court granted the Thompsons’ requested relief and ordered Wells Fargo to disgorge $73, 041.49 to the Thompsons. Both parties appealed; Wells Fargo sought to avoid disgorgement entirely, and the Thompsons wanted other relief which the bankruptcy court had denied. On May 29, 2015, this Court addressed each point and affirmed the bankruptcy court on all save one.

3.2The May 29, 2015 Appeal Order

As noted above, this Court disposed of all but one point on appeal in the May 29, 2015 order. In relevant part, this Court noted that the bankruptcy court failed to provide statutory or other legal authority for the Reimbursement Order. Thompson, 2015 WL 3454726 at *3. This Court examined the Reimbursement Order and found three potential bases to support it:

(1) a finding that allowing Wells Fargo to keep the payments would constitute unjust enrichment; (2) a finding that allowing Wells Fargo to keep the payments would be inequitable; or (3) the fact that the disgorgement was ...

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