Please ensure Javascript is enabled for purposes of website accessibility
Home / Opinion Digests / Bank fails to dismiss false statement claims

Bank fails to dismiss false statement claims

Where debtors alleged that a bank filed notices stating that the debtors had requested forbearance, which was false, they plausibly alleged claims under Rule 3002.1, for violations of the automatic stay and for contempt under the court’s inherent powers and 11 U.S.C. § 105.


This adversary proceeding stems from alleged acts by defendants Wells Fargo & Co. and Wells Fargo Bank NA after the onset of the COVID-19 pandemic. Plaintiffs, who are debtors in open Chapter 13 bankruptcy cases in various courts around the country, allegedly had their mortgage loans placed in forbearance status by defendants without the plaintiffs’ permission, knowledge or request.

Additionally, the plaintiffs allege that defendants filed a notice of forbearance on the claims register through a Rule 3002.1 notice or a notice of forbearance on the main case docket in each case, all of which contained false statements that the plaintiffs had requested forbearance from defendants. Defendants have filed a motion to dismiss.

Rule 3002.1

Defendants argue that Rule 3002.1 does not give rise to a cause of action, the notices at issue explicitly disclaimed compliance with that rule and that this court lacks jurisdiction over the claims for debtors in other courts.

While not explicitly stated in the rule, other courts have held that filing a notice pursuant to Rule 3002.1 containing incorrect statements can be as damaging as failing to file such notice timely when required and can constitute a violation of Rule 3002.1 for which relief is available. The existing case law supports applying Rule 3002.1 to inaccurate statements in 3002.1 notices.

Defendants argue that a disclaimer was added to the notices stating the form did not purport to apply the Rule 3002.1 provisions. However, debtors, trustees and any party monitoring the case should be able to give weight and authority to official forms. This disclaimer does not rid the form of false statements, and the form as completed and filed does not comply with the defendants’ obligations under Rule 3002.1.

Finally, the court believes that Rule 3002.1 must have teeth to achieve its purposes, and that, different from a private right of action for compensatory damages, punitive, non-compensatory sanctions can be warranted to achieve its purposes.

Automatic stay

Defendants are alleged to have violated the automatic stay by preparing, executing, filing and serving false forbearance notices that impacted the plaintiffs’ and other putative class members’ ability to either confirm their Chapter 13 plans or perform according to Chapter 13 plan confirmation orders, all without obtaining relief from stay or the plaintiffs’ prior consent.

Defendants argue that providing forbearance relief and filing notices of forbearance are not attempts to collect a debt or conduct otherwise prohibited by 11 U.S.C. § 362. The court finds that the plaintiffs allege sufficient facts to support a plausible claim the defendants acted to exercise control over bankruptcy estate property in violation of § 362(a)(3).

However, courts have found that merely sending statements, such as a transaction history or bookkeeping entries, without further “allegation that the mortgage company has attempted to collect the debt” does not violate the automatic stay. Thus, the plaintiffs do not establish a claim for a violation of the automatic stay under § 362(a)(6).

Inherent authority

Counts Six, Seven and Eight ask the court to invoke its inherent powers and § 105. Defendants assert that these counts should be dismissed because § 105 is not a “roving commission to do equity” and because the second amended complaint does not allege conduct that could trigger its application.

The court finds that the plaintiffs have alleged a plausible claim for contempt under the court’s inherent powers and § 105 powers, including violating the confirmation orders. The court is unpersuaded, however, that a plausible claim has been asserted to invoke its inherent powers and § 105(a) based on a theory of fraud on the court.

Veil piercing

The defendants assert that Wells Fargo & Co., or WFC, should be dismissed from this case as the plaintiffs have not pleaded that WFC took any of the actions alleged in the second amended complaint, nor did they allege sufficient facts to support piercing the corporate veil and holding WFC responsible for the acts of its subsidiary. The court finds that the plaintiffs fail to allege facts beyond mere implications that, because the defendants may have to some extent collaborated in business operations, WFC directly participated in WFC’s alleged misconduct. The defendants’ motion to dismiss WFC will be granted.

Defendants’ motion to dismiss the second amended complaint granted in part and denied in part.

Harlow v. Wells Fargo & Co., Case No. 20-07028, Dec. 12, 2022. WDVA Bankr. at Roanoke (Black). VLW No. 022-4-030. 26 pp.

VLW 022-4-030