Eric Mwangi v. Wells Fargo Bank

I. FACTS AND PROCEDURAL HISTORY

The Debtors filed a voluntary Chapter 7 bankruptcy petition on August 3, 2009. At that time, the Debtors held four accounts at Wells Fargo, with an aggregate balance of $17,075.06. The Debtors did not list two of the four accounts in their original Schedule B, nor did they claim an exemption for any account funds in their original Schedule C. But the Debtors did list Wells Fargo as an unsecured creditor for two debts totaling $52,000. Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi II), 473 B.R. 802, 804 (D. Nev. 2012).

Each night, Wells Fargo runs a computerized comparison of all newly filed Chapter 7 bankruptcy petitions against its list of account holders. When Wells Fargo discovered the Debtors’ bankruptcy filing, it placed a “temporary administrative pledge” on all four of their accounts. Id. Wells Fargo then sent a letter dated August 6, 2009, to the Chapter 7 trustee, requesting instructions as to how Wells Fargo should dispose of the account funds. In the letter to the trustee, Wells Fargo stated that upon the filing of the bankruptcy petition, the account funds became property of the bankruptcy estate, payable only to the trustee or upon…