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In re Joubert

June 16, 2005

IN RE: MARIANNE JOUBERT
MARIANNE JOUBERT, APPELLANT
v.
ABN AMRO MORTGAGE GROUP, INC. F/K/A ATLANTIC MORTGAGE AND INVESTMENT CORPORATION



On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court No.: 03-CV-4290 District Judge: The Honorable Herbert J. Hutton

The opinion of the court was delivered by: Smith, Circuit Judge

PRECEDENTIAL

Argued on January 20, 2005

Before: ALITO, McKEE, and SMITH, Circuit Judges

OPINION OF THE COURT

Marianne Joubert, a discharged debtor in bankruptcy, initiated this putative class action in the District Court seeking damages and injunctive relief to combat what she contends is a widespread practice by mortgagees of assessing, without notice to mortgagors, post-petition, pre-confirmation attorney fees.

According to Joubert, this practice violates 11 U.S.C. § 506(b)'s command that the bankruptcy court first adjudge such fees "reasonable." Though Joubert concedes that § 506(b) does not in itself afford her a private cause of action, she asserts that a private remedy may be implied under 11 U.S.C. § 105(a) to redress the § 506(b) violation. The District Court rejected that assertion, granted ABN AMRO Mortgage Company's Rule 12(b)(6) motion to dismiss, and declined to exercise supplemental jurisdiction over Joubert's state law claims. For the reasons set forth below, the judgment of the District Court will be affirmed.*fn1

I. Background and Facts

According to Joubert's amended complaint, in January 1996 she entered into a residential mortgage with ABN AMRO Mortgage Company's (ABN) predecessor-in-interest. In September 1999, Joubert filed a Chapter 13 petition with the United States Bankruptcy Court for the Eastern District of Pennsylvania. ABN's amended proof of claim in that action included pre-petition attorney fees related to its earlier foreclosure action, but it did not include post-petition attorney fees related to its preparation of proofs of claim. Joubert's Chapter 13 plan, which provided for ABN's claim to be paid in full, was confirmed on May 2, 2000. Joubert met her payment obligations to ABN in accordance with the plan.

In September 2002, Joubert refinanced her mortgage with another lender. ABN's notice advising Joubert of the amount due on her mortgage with ABN included a $500 charge denominated "corporate advance balance." Joubert paid and did not challenge the $500 charge at her refinancing settlement. Joubert made her final payment to the Chapter 13 trustee as part of the settlement, and, following the trustee's final report and accounting, an order discharging Joubert was entered on February 28, 2003.

Five months after her discharge, Joubert initiated this purported class action in the District Court for the Eastern District of Pennsylvania. Joubert alleged that the $500 "corporate advance balance" ABN charged Joubert when she refinanced represented ABN's post-petition, pre-confirmation attorney fees. According to Joubert, the collection of this sum, which ABN had not included in its proofs of claim prior to confirmation, violated 11 U.S.C. §§ 506(b) and 1132(e). Joubert asserted that she was entitled to seek redress, for herself and on behalf of the purported class, for this "Violation of Title 11" in a lawsuit brought in the District Court "through the injunctive powers of 11 U.S.C. § 105."

The District Court granted ABN's Rule 12(b)(6) motion to dismiss, and refused to exercise supplemental jurisdiction over Joubert's state law claims. In doing so, the District Court adopted the rationale of earlier decisions in the District which held that §§ 506(b) and 105(a) do not afford a private right of action to redress a violation of § 506(b) of the Bankruptcy Code. D. Ct. Order, at 1 n.2 ( citing Henthorn v. GMAC Mortgage Corp., 299 B.R. 351 (E.D. Pa. 2003); Willis v. Chase Manhattan Mortgage Corp, 2001 WL 1079547 (E.D. Pa. 2001)).

II. Analysis

As we exercise plenary review over the grant of a motion to dismiss, "we accept as true all allegations in the complaint, giving the Plaintiff the benefit of every favorable inference that can be drawn from the allegations." Board of Trustees of Teamsters Local ...


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