IN RE NOLETTO, (Bankr.S.D.Ala. 2000)

MARGARET A. MAHONEY, Chief Bankruptcy Judge.

This matter is before the Court on the Defendant's Motion for Summary Judgment against the Plaintiffs in this case. The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334 and 157 and the Order of Reference of the District Court. This is a core proceeding pursuant to 28 U.S.C. § 157(b) and the Court has the authority to enter a final order. For the reasons indicated below, the Court is denying the motion of HomeSide Lending, Inc. for summary judgment in this case.

FACTS,

The Court concludes that Plaintiff's Exhibits 8, 9, 10, and 11 are admitted for purposes of this ruling. The manuals were sufficiently identified.

The Court admits into evidence the highlighted depositions taken in the case as submitted by the Plaintiff. The Defendant asserts that the highlighting is inappropriate and unfair since Defendant did not submit highlighted copies of the same deposition. The Court concludes that there is no harm in admitting the highlighted depositions and since the Court reviewed all of the testimony, there is no prejudice to Defendant.

The Nolettos borrowed $63,497.00 from Nationsbanc on August 21, 1995. There is no dispute over the validity of the debt or the perfection of the lien. On October 22, 1998, the Nolettos filed a chapter 13 bankruptcy case in the Southern District of Alabama. The Court confirmed the Nolettos' plan on January 11, 1999. The plan treated Nationsbanc as a secured creditor. It pledged to pay all postpetition payments directly to it and to pay all prepetition arrearages in full through the plan.

The Nolettos were current on their mortgage payments at the time of the chapter 13 case filing.

On March 16, 1999, Nationsbanc filed a timely proof of claim in the case. The claim was filed in the total amount of $62,261.00. The claim stated that "the amount of arrearage and other charges at time case filed included in secured claim, if any: $0.00." The proof of claim included an attachment itemizing a "Total to Payoff" of $62,136.10. This sum included:

Principal Balance — $61,715.66

Interest 11/1/98 — 411.44

Total Fees — 9.00

No attorneys fee is itemized on the proof of claim, but a $125.00 fee was charged. The only way to ascertain that a fee was added to the debt is to subtract the $62,136.10 from the $62,261.00 amount. The $9 fee disclosed on the claim form is a fee that the debtors had not yet incurred, but would incur in the future if there were an actual payoff of the loan. The $125 fee is added to the corporate advance account balance of the debtor when it is paid by Nationsbanc.

On June 24, 1999, this adversary case was filed containing four counts which are:

1. Fees and charges assessed by the defendant postpetition are not reasonable, authorized, or allowable under the Bankruptcy Code and defendant's claims for any of these fees or charges should be disallowed and any of these fees or charges actually collected by the defendant should be reimbursed with interest.

2. Fees and charges assessed by defendant postpetition are assessable only with specific bankruptcy court approval pursuant to § 506(b) of the Bankruptcy Code, defendants failed to obtain such approval, and these fees and charges collected by defendants after the filing of a bankruptcy petition, which would not have been claimed absent bankruptcy, should be disallowed, and any of these fees or charges collected should be reimbursed with interest where defendants have failed to obtain specific approval of the bankruptcy court as required by law.

3. Defendant violated the automatic stay of § 362 of the Bankruptcy Code by assessing and/or collecting postpetition, fees or charges which would not have been claimed absent bankruptcy, without specific approval of the bankruptcy court and these fees or charges should be disallowed and any of these fees or charges actually collected should be reimbursed with interest where the defendants have failed to obtain specific approval of the bankruptcy court.

4. Plaintiffs are entitled to an order declaring defendant's acts and practices to be in violation of bankruptcy law, and permanently enjoining the defendant from engaging in such acts and practices in the future with respect to any debtor who is, or could become, a member of the class, and an order requiring the defendant to disgorge all amounts collected by defendant as a result of such illegal fees and charges with interest.

On August 2, 1999, the Nolettos converted their case to one under chapter 7. The chapter 7 trustee filed his report of no distribution due to a lack of nonexempt assets for distribution on December 15, 1999.

The Nolettos did not file an objection to the claim of Nationbanc during the chapter 13 or the chapter 7 case. The $125 fee and the $9 fee have not been paid by the Nolettos to date.

LAW A.

This is a motion for summary judgment filed by the defendant pursuant to Fed.R.Bankr.P. 7056. Rule 7056 states that the Court shall grant summary judgment to the moving party if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Bankr.P. 7056(c). The moving party bears the burden of proving that there is no issue of material fact. In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), the Supreme Court found that a judge's function is not to determine the truth of the matter asserted or weight of the evidence presented, but to determine whether or not the factual disputes raise genuine issues for trial. Anderson, at 249. In making this determination, the facts are to be looked upon in the light most favorable to the nonmoving party. Id.; Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). All inferences are resolved in favor of the nonmoving party. Stewart v. Booker T. Washington Ins., 2000 WL 1681226 (11th Cir. 2000); Stewart v. Happy Herman's Cheshire Bridge, Inc., 117 F.3d 1278, 1285 (11th Cir. 1997).

B.

The overriding issue to be considered is whether there is any requirement that a creditor seek bankruptcy court approval, pursuant to § 506(b) or any other section of the Bankruptcy Code and Federal rules of Bankruptcy Procedure, of fees added to a secured claim against a principal residence of debtors in chapter 13 or chapter 7 cases. This Court concludes a creditor needs to seek approval and disclose fees if the fee claim arises preconfirmation and the debtor proposes to pay any mortgage arrearage in the plan in a chapter 13 case. The disclosure may be in the proof of claim filed by the creditor or in a separate application for fees. In a chapter 7 case, no approval is needed unless the mortgage lender seeks payment of the fees from property of the estate.

I. Chapter 13 Cases a.

The Bankruptcy Code section at issue in this case concerning postpetition/preconfirmation fee claims is § 506(b). It states:

To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.

The plaintiffs assert that secured creditors must file applications seeking approval of any fees sought under this section. Otherwise, without such an application and a court order specifically approving the fees, the fees cannot be charged to the debtor. Nationsbanc asserts that no fee application is needed for the fees. In fact, unless Nationsbanc wants to have the fees paid from the bankruptcy estate, no disclosure of the fee is necessary at all. The fee can be charged later outside the bankruptcy case.

The Court concludes that the U.S. Supreme Court case of Rake v. Wade controls and the fees must be disclosed and claimed in the proof of claim or a separate fee application if a chapter 13 debtor proposes to pay all preconfirmation mortgage arrearages in his or her plan. Rake v. Wade, 508 U.S. 464, 113 S.Ct. 2187, 124 L.Ed.2d 424 (1993). In Rake v. Wade, the Court dealt with how postpetition/preconfirmation interest on oversecured creditors' claims was to be handled. The Court concluded that chapter 13 plans that proposed to cure prepetition mortgage arrearages through payments in the plans should include in the proposed cure amount the postpetition interest accrued preconfirmation on the arrearages.

[W]hile payments of principal and interest on the underlying debts were simply "maintained" according to the terms of the mortgage documents during the pendency of petitioners' [debtors'] cases, each plan treated the arrearages as a distinct claim to be paid off within the life of the plan pursuant to repayment schedules established by the plans. Thus, the arrearages, which are a part of respondent's home mortgage claims were "provided for" by the plans.

Rake, 508 U.S. at 473.

Since "interest" and "fees" are both included in § 506(b), the treatment of postpetition/preconfirmation interest and fees should be the same. There is no logical reason for any distinction. Telfair v. First Union Mortgage Corp., 216 F.3d 1333, 1339 (11th Cir. 2000); In re Harko, 211 B.R. 116, 119 (2d Cir. BAP 1997).

In this case, Natonsbanc assessed a $150 attorney's fee. Is this a postpetition/preconfirmation claim? A "claim" is "a right to payment." 11 U.S.C. § 101(5). The claim for an attorneys fee arose when the attorneys did the work for which Nationsbanc claims a right to payment. This is not clear from the evidence presented to date. For summary judgment purposes, the Court gives the nonmovant — the debtor — the benefit of the doubt.

Nationsbanc asserts that the claim arose when it paid its counsel, not when the work was done. Considering the evidence in the light most favorable to the Nolettos for summary judgment purposes, the fees appear to be a preconfirmation claim. A creditor cannot dictate when a claim arises simply by controlling when it pays a bill. In re First Jersey Securities, Inc., 180 F.3d 504 (3d Cir. 1999). When the work was done on Nationsbanc's behalf is the operative fact. Therefore, the Court assumes for purposes of this motion that the attorneys fee is a postpetition/preconfirmation fee, and all of the Rake v. Wade ramifications inure to the claim. Mr. and Mrs. Noletto's chapter 13 plan provided that the Nationsbanc arrearage claim if any would be paid through the plan. Nationsbanc needed to claim its attorney's fee on its proof of claim or in a separate fee application.

b.

The conclusions stated above also are consistent with the Eleventh Circuit's ruling in a recent case which dealt with a related issue. Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th cir. 2000). In the Telfair case, the Eleventh Circuit held that a creditor could apply postconfirmation loan payments made outside a chapter 13 plan directly to the creditor to postconfirmation attorneys fees and costs without obtaining any court approval of the fund's application or the fees. The Court concluded that § 506(b) applied only to postpetition/preconfirmation fees and interest relying on the reasoning of the U.S. Supreme Court in Rake v Wade. The Court found that the attorneys fees assessed by First Union for postconfirmation work done by its attorneys due to a postconfirmation delinquency in postpetition mortgage payments were not part of First Union's secured claim. "[T]hey arose apart from the plan and after confirmation." Telfair at 1339.

The Telfair case also found that the fees were not being paid from property of the estate because the plan did not provide that any assets of the debtor remained property of the estate except monies paid to the chapter 13 trustee as plan payments. See §§ 1306 and 1328.

Therefore, in a chapter 13 case, a creditor must file a proof of claim or fee application if it wishes to collect postpetition/preconfirmation interest, fees, charges or expenses if the debtor's plan provides that any arrearage will be paid through the plan. If the interest, fees, charges or expenses are not included in the creditor's proof of claim or fee application, then they are discharged when the debtor completes his or her plan payments and the amount cannot be collected from the debtor after the bankruptcy case without violating the bankruptcy discharge. Telfair only applies to fees arising postconfirmation.

In the instant case, Nationsbanc filed a proof of claim, but did not include the fees in the arrearage as Rake would require. There was no disclosure of the fees on the proof of claim or elsewhere.

c.

In order to be paid, the fees must be claimed in a manner appropriate under the Bankruptcy Code and Rules. Rake v. Wade did not speak to this issue. Rake v. Wade, 508 U.S. 464, 113 S.Ct. 2187, 124 L.Ed.2d 424 (1993).

The Bankruptcy Code, at § 503, contains a procedure for allowance of administrative expenses. Administrative expenses are postpetition claims against the bankruptcy estate. Allowable administrative expenses are not just those listed in § 503(b). Pursuant to case law, they are expenses which benefit the estate. Burlington Northern Railroad Co. v. Dant Russell, Inc. (In re Dant Russell, Inc.), 853 F.2d 700 (9th Cir. 1988); In re Mid-American Waste Systems, Inc., 228 B.R. 816, 821 (Bankr.D.Del. 1999). Section 503 expenses include compensation to professional persons approved by the Court and professionals employed by creditors whose services benefit the estate. 11 U.S.C. § 503(b)(2) and (b)(3)(A)-(D). The fees of a creditor that has a claim under § 506(b) are not like the claims allowed under § 503. Payment of a secured creditor's attorneys fees do not benefit the estate as a whole.

There is an Eleventh Circuit case, Alabama Surface Mining Commission v. N.P. Mining Co., Inc. (In re N.P. Mining Co., Inc.), 963 F.2d 1449 (11th Cir. 1992), that states that an administrative expense need not have "[a] connection to some benefit to the estate." The Court found that administrative expenses include certain expenses that result from the ordinary operation of a business, even if they are not beneficial to the estate. The Court reasoned that trustees must operate an estate in compliance with state law. Otherwise a debtor could file bankruptcy and knowingly continue violating laws while avoiding the full penalties for those violations. Even if this Court were to extend its analysis to include as administrative expenses those that are ordinarily incident to the operation of a business, regardless of their benefit to the estate, the § 506(b) expenses at issue here still would not fall under § 503.

By the same token, secured creditor's attorneys fees are not prepetition claims which fit the scheme established under 11 U.S.C. § 502 either. Some postpetition claims are specifically included in § 502, but § 506(b) claims are not listed. E.g., 11 U.S.C. § 502(f), (g), (h) and (i).

The difficulty with these claims and the reason lawsuits such as this one have arisen is that there is no specific procedure established in the Bankruptcy Code for treatment of § 506(b) claims. Courts have simply not been asked to deal with the issue until recently in cases in this court and others around the country. E.g., Tate v. NationsBanc Mortgage Corp. (In re Tate), 253 B.R. 653 (Bankr.W.D.N.C. 2000); Manley v. Bank United, No. 99-70632, AP99-70084 (Bankr.N.D.Ala. June 30, 2000) (one of five pending class action cases under Judge C. Michael Stilson). The Court concludes that either filing an application for fees in compliance with § 503 and Rule 2016 or filing a proof of claim which very specifically claims the postpetition fee is sufficient to comply with due process requirements for payment. Due process requires that the debtor not be "deprived of a protected interest without sufficient process." New Concept Housing, Inc. v. Poindexter (In re New Concept Housing, Inc.), 951 F.2d 932, 938 n. 7 (8th Cir. 1991); Zipperer v. City of Fort Myers, 41 F.3d 619 (11th Cir. 1995). Notice must be given which is "reasonably calculated, under all the circumstances, to apprize interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v.

Central Hanover Bank Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). Filing a fee application and filing a proof of claim both satisfy due process concerns or the procedures would not be the statutory and procedural means used for twenty years to deal with claims. In both situations, a debtor has an opportunity to object and be heard. The fact that the debtor must file the claim objection and bears the initial burden of proof if the creditor puts the fee in its proof of claim, and the creditor bears the burden of proof in a fee application does not change the fact that both afford the parties due process.

There is support in a well known bankruptcy treatise and in the Eleventh Circuit for the position that a claim for § 506(b) expenses on a proof of claim is sufficient. Collier on Bankruptcy, § 506.04[6] acknowledges the uncertainty with § 506(b) claims and states in a section entitled, "Filing of Proof of Claim Advisable":

Technically speaking, the Code and Rules do not require the filing of a proof of claim with respect to postpetition interest, fees, costs and charges. At times, however, courts have appeared to assume otherwise. (footnotes omitted). Accordingly, any secured creditor intending to seek allowance of postpetition amounts under section 506(b) would be well advised to make that fact clearly known in its proof of claim.

Collier on Bankruptcy, 15th Edition, § 506.04[6], p. 506-121 (King, et al, ed. Matthew Bender Co., 2000). The Eleventh Circuit acknowledged in Fawcett v. U.S. (In re Fawcett), 758 F.2d 588 (11th Cir. 1985), that a claim of postpetition interest under § 506(b) on a creditor's proof of claim was sufficient notice of the claim to make the debtor liable for the interest in a chapter 13 case.

The Court therefore respectfully disagrees with Tate v. NationsBanc Mortgage Corp., 253 B.R. 653 (Bankr.W.D.N.C. 2000). The requirement of a fee application in all cases is too narrow a holding. Section 503 and Fed.R.Bankr.P. 2016 do not cover secured creditors' fees any more clearly than § 502 and Fed.R.Bankr.P. 3001, 3002, 3003, and 3007 do. The key issue is notice. If sufficient notice of the claim is provided, the claim should be allowed unless, after objection by a party in interest, the court disallows the claim.

II. Chapter 7 Cases

The reasoning applied to the chapter 13 cases above also applies to chapter 7 cases, but with a different result. Rake v. Wade concludes that § 506(b) allows oversecured creditors to add interest and fees to their claims postpetition. Therefore, an oversecured mortgage lender could add interest, fees, costs and charges to the date it files its proof of claim if it wished. However, unless the lender sought to be paid from property of the chapter 7 estate which was not part of its collateral, there would be no need to seek court approval of the fees or interest. A court is not going to rule on the validity of the items. The claim can be determined by an appropriate court at the time the interest and fees are paid (if ever) with no effect on other creditors.

Unlike in chapter 13 or in chapter 11, there is no ability to pay mortgage arrearages through a plan. There is no way that payments on the debt will be from property of the estate unless there are very unique circumstances which are not present in this case.

The Nolettos converted their case to one under chapter 7. Once converted, all postpetition claims are treated as prepetition claims in the chapter 7 case. 11 U.S.C. § 348(d) (1999). Therefore, any claim Nationsbanc had for attorneys fees is a prepetition claim. There are no assets for distribution in the case. No amounts will be paid on the claim, including the postpetition attorneys fees, from property of the estate. Thus, the Court will not be required to rule on the amount of Nationsbanc's claim, and no separate approval of the attorneys fee need be sought. The secured claim rides through the case to the extent there is collateral to secure it.

III.

Does § 506(b) give a chapter 13 debtor a cause of action for damages if a creditor has not properly treated a claim for postpetition/preconfirmation fees? Nationsbanc asserts that, even if it had not filed a proper proof of claim, Mr. and Mrs. Noletto would have no right under § 506(b) for damages. The creditor asserts this is true based on a case which has so held. Radke v. First Naitonal Bank of Liberal, Kansas, 1986 U.S. Dist. LEXIS 17483 (D.Kan., Nov. 19, 1986). It also relies on the reasoning of other cases which held that there was no private cause of action under other provisions of the Bankruptcy Code. E.g., Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir.) (no private right of action under § 524); Bessette v. Avco Financial Services, 240 B.R. 147, 155 (D.R.I. 1999) (no private right of action under § 523(d)); Smith v. Keycorp Mortgage, Inc., 151 B.R. 870, 876 (N.D.Ill. 1993) (no private cause of action under § 1322); Costa v. Welch (In re Costa), 172 B.R. 954, 965-66 (Bankr.E.D.Cal. 1994) (no private cause of action under § 524). The cases conclude that Congress knew how to spell out such a right if it intended one. Section 362(h), which does explicitly contain language providing for a private cause of action shows that Congress could provide such a right if it wanted to do so. ("An individual injured by any willful violation of a stay . . . shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances may recover punitive damages.").

If this Court were to look to § 506(b) for a remedy for the Nolettos, it would conclude that § 506(b) does not meet the criteria for an implied right of action either. In Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), the U.S. Supreme Court set forth four factors which must be met if a court is to imply a private right of action from a federal statute.

The factors are: (1) whether there is any express or implicit indication of congressional intent to provide a private remedy; (2) whether the plaintiff is a member of the class for whose benefit the statute was enacted; (3) whether a private remedy would be consistent with the underlying purpose of the statutory scheme; and (4) whether the cause of action is typically left to state law. This Court agrees that § 506(b) does not meet these criteria. See also, Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir.).

However, this argument misses the point. The Court does not need to imply a right of action under § 506(b) of the Bankruptcy Code to be able to consider an injunction or damages on the debtor's behalf. Section 105(a) of the Bankruptcy Code states that a bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." Section 105 has been used by courts to give relief to debtors under many sections of the Code, including § 506(b). E.g., Bessette v. Avco Financial Services, Inc., 230 F.3d 439 (1st Cir.) (relief under § 524); In re Tate, 253 B.R. 653 (Bankr.W.D.N.C. 2000) (relief under § 506(b)).

This Court concludes that the Bessette and Tate cases, finding relief available to debtors through § 105(a), are well reasoned decisions and adopts their rationale. Section 105 does not give bankruptcy judges expanded powers; but it does give them all necessary power to insure that no provision of the Bankruptcy Code can be ignored because violation of it is without penalty.

IV.

Mr. and Mrs. Noletto contend that Nationsbanc violated the automatic stay when it posted the attorneys fee and the $9 fee to the debtors' account. Section 362(a) provides that the following are improper: (3) any act to obtain possession of property of the estate or of property from the estate . . .

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case . . .

The situation in chapter 13 is easy. No matter what action Nationsbanc took (or did not take), it could not violate § 362(a)(6) while the case was in chapter 13. Its claim for a postpetition proof of claim fee and a $9 fee cannot be a prepetition claim.

Its entire claim became a prepetition claim upon conversion of the Nolettos' case to chapter 7. 11 U.S.C. § 348(d) (1999). However, an action taken prior to that conversion cannot violate the stay either. Section 362(h) requires that the creditor's act be a knowing, intentional one. Since the creditor could not anticipate the conversion, the posting of a fee preconversion cannot be "knowing," "intentional" or "willful." U.S. v. Flynn (In re Flynn), 185 B.R. 89 (S.D.Ga. 1995).

As to § 362(a)(3), a creditor cannot post a postpetition/preconfirmation fee against "property of the estate." 11 U.S.C. § 541 (1999). In the chapter 7 case of the Nolettos, there is no equity in the homestead for the estate, so the posting of the fee against the debtors' interest in the property was not a violation of the stay since the property against which the fee is assessed is not property of the estate. As stated above, the fees in a chapter 7 case do not need to be approved by the Court when the only source of payment is nonestate property. The imposition of fees and payment is between the debtor and the creditor under those circumstances.

In the chapter 13 case, filing a proof of claim which discloses the fees as part of the postpetition mortgage arrearage, is not a violation of the stay. The posting of the fees to the debtor's account is a different matter. In this case, the attorneys fee was not disclosed and was not included in the mortgage arrearage where it should have been. The attorneys fee was not properly payable and should have been removed from the Noletto's account balance. The $9 fee was disclosed, but was not included in the mortgage arrearage balance to be paid through the plan. This treatment is correct since the fee is only incurred at payoff of the loan and no payoff has occurred. The fee is a future cost. Therefore, placing it on the proof of claim form as done was not a violation of the stay. Without payment outside of the plan, it has yet to violate the stay. It is not an assessment of a prepetition charge under § 362(a)(3); it is not an attempt to take property of the estate or to obtain possession of property from the estate unless paid.

Therefore, although the posting of the attorneys fee charge without approval of the attorneys fee through the claims allowance process or fee application is inappropriate, it is not a violation of the stay until it is paid during the case from estate property.

CONCLUSION

The Nolettos filed their chapter 13 case and sought to pay all mortgage arrearages in their plan. Nationsbanc filed a proof of claim seeking no mortgage arrearage cure amount under the plan. However, without ever disclosing that it was charging a fee, Nationsbanc added a $125 fee to the Nolettos mortgage balance in the claim it filed and has posted that charge to the Nolettos' corporate advance account.

Nationsbanc included a $9 loan payoff fee in the proof of claim it filed. The sum was not called a mortgage arrearage. It was added to the principal balance of the loan. It was not paid during the chapter 13 or chapter 7 cases.

On August 2, 1999, the Nolettos converted their case to one under chapter 7. The case was discharged on November 17, 1999. There were no assets available to distribute to creditors.

Based upon the reasoning above, the evidence in the record, reviewed in the light most favorable to the plaintiffs, dictates summary judgment for the defendant. Nationsbanc should not have added the attorneys fee for filing a proof of claim to the Nolettos' mortgage debt without more specific disclosure of the fee. The fee should also have been claimed as an arrearage which needed to be cured through the plan. The Nolettos' conversion to chapter 7 made the attorneys fee claim a prepetition claim. Prepetition claims cannot be assessed or collected postdischarge unless they are part of a secured claim which survived the plan as a claim against the property. Since that is exactly what the attorneys fee is in the converted case, the Nolettos have no claim in bankruptcy court against Nationsbanc. The same is true as to the $9 fee. It is not a prepetition fee, but it will not be collected (if ever) from property which is property of the estate. The debt will only be collected from property which was not property of the estate and the debtor is not personally liable. Once the case converted to chapter 7, whether Nationsbanc disclosed the fee or not did not affect the bankruptcy estate. Therefore, the issue, if any, is between the Nolettos and Nationsbanc outside bankruptcy court.

The Nolettos do not have a present claim they can assert against NationsBanc. The issue of whether the entire case must be dismissed or whether a plaintiff with standing can be substituted for the Nolettos will be discussed in the companion Order Granting Class Certification Motion dated December 29, 2000.

THEREFORE, IT IS ORDERED AND ADJUDGED:

1. The motion of Nationsbanc for summary judgment is GRANTED as to Claude and Terry Noletto only.