Justia Banking Opinion Summaries

In August 2007, C.W. Mining, an entity operating a coal mine in Utah, deposited $362,000 with the Bank of Utah; in turn, the Bank issued a certificate of deposit to C.W. Mining for that same amount. In January 2008, creditors filed an involuntary Chapter 11 bankruptcy petition against C.W. Mining. The Chapter 11 proceeding was converted to a Chapter 7. The Bank liquidated the certificate of deposit, which then had a value of $383,099. Utilizing its common-law right of offset, it applied the proceeds to the balance owing on two of three promissory notes executed by C.W. Mining in favor of the Bank in 2005, 2006, and 2007. Although the Bank knew of the bankruptcy proceeding when it liquidated the certificate of deposit, it did not inform the Trustee. The Trustee became aware of the transfer after the Bank assigned its remaining secured interest in the promissory notes and loan agreements to a third party and the third party sought payment from the Estate. The Trustee then commenced an adversary proceeding seeking to recover $383,099 from the Bank. The parties filed cross-motions for summary judgment. In his motion, the Trustee argued the transfer should be avoided under 11 U.S.C. 549 as an unauthorized post-petition transfer and he should have been permitted to recover the $383,099 pursuant to 11 U.S.C. 550. In the alternative, he sought a declaration the transfer was void as a violation of the automatic stay under 11 U.S.C. 362(a) and an order for turnover pursuant to 11 U.S.C. 542. After considering all of these arguments, the bankruptcy court entered summary judgment in favor of the Bank. Finding no reversible error, the Tenth Circuit affirmed the grant of summary judgment to the Bank. View "C.W. Mining Company, et al v. Bank of Utah, et al" on Justia Law

In an effort to save Quartz Mountain Aerospace, some of its investors and directors took out large loans from First State Bank of Altus for the benefit of the company. The Bank failed, and the Federal Deposit Insurance Corporation (FDIC) took over as receiver and filed suit to collect on the loans. The Borrowers raised affirmative defenses to the FDIC’s claims and brought counterclaims, alleging that the Bank’s CEO had assured them that they would not be personally liable on any of the loans. The district court granted summary judgment for the FDIC because the CEO’s alleged promises were not properly memorialized in the Bank’s records. The Borrowers appealed on two grounds: (1) that the district court should not have granted summary judgment before allowing them to conduct discovery, and (2) that the district court should have set aside the summary judgment because they presented newly discovered evidence of securities fraud by the Bank. The Tenth Circuit affirmed the district court on both of the Borrowers' claims. View "FDIC v. Arciero, et al" on Justia Law

The Federal Depository Insurance Corporation (FDIC), acting as receiver of the New Frontier Bank, used proceeds from the sale of cattle belonging to a limited liability company (LLC) to pay down a loan of one of the two LLC members. According to the complaint, the FDIC had no authority to do so because the payment was contrary to the members' agreement. Ignoring the separate entity status of an LLC, the other LLC member brought suit in its own name against the United States under the Federal Tort Claims Act (FTCA) for what it claimed to be the FDIC's wrongful disbursement of the proceeds. The LLC sued the government under the Fifth Amendment Takings Clause. The district judge dismissed the suit for failure to state a claim. The Tenth Circuit agreed dismissal was appropriate, the Appellate Court concluded dismissal should have been for lack of jurisdiction as to the member's claims and as to the LLC's claim because the United States Court of Federal Claims had exclusive jurisdiction. View "ECCO Plains, LLC., et al v. United States" on Justia Law

The National Credit Union Administration (NCUA) placed two credit unions, U.S. Central Federal Credit Union and Western Corporate Federal Credit Union (WesCorp), into conservatorship. Then, as liquidating agent, NCUA sued 11 defendants on behalf of U.S. Central, alleging federal and state securities violations.In a separate matter, NCUA sued one defendant on behalf of U.S. Central and WesCorp, alleging similar federal and state securities violations. The United States District Court for the District of Kansas consolidated the cases. All defendants moved for dismissal, arguing that NCUA’s claims were time-barred. The district court denied the motion, concluding that the "Extender Statute" applied to NCUA’s claims. Defendants moved for an interlocutory appeal for the Tenth Circuit to determine whether the Extender Statute applied to NCUA's claims. Finding that it did, the Tenth Circuit affirmed. View "National Credit Union Admin. v. Nomura Home Equity Loan, et al" on Justia Law

Plaintiffs filed a class-action lawsuit in state court, alleging that the defendants had conducted non-judicial foreclosure sales that did not comply with Utah law. After removal, the district court dismissed the complaint for failure to state a claim, concluding that whether federal law “incorporates Utah or Texas law, Recon[Trust] had not operated beyond the law by acting as a foreclosure trustee in Utah.” On the limited record presented on appeal, the Tenth Circuit concluded that the district court erred in determining it had jurisdiction to hear this case. View "Dutcher, et al v. Matheson, et al" on Justia Law

Plaintiffs-Appellants Bryan and JoLynne Toone executed a promissory note secured by a deed of trust on their home. The note was assigned several times. After the Toones defaulted on the Note, their home was scheduled to be sold at a trustee’s foreclosure sale. They filed suit to halt the foreclosure and to obtain damages and declaratory relief based on alleged violations of statutory and common-law duties by numerous parties who had current or prior interests in the Note and Trust Deed or were involved in the foreclosure efforts. The district court denied relief and the Toones appealed. Finding no abuse of the district court's discretion in denying the Toones relief, the Tenth Circuit affirmed the lower court's decision. View "Toone v. Wells Fargo Bank, N.A." on Justia Law

Plaintiffs-Appellants Theodore L. Hansen, Interstate Energy Corp. and Triple M, L.L.C., appealed a district court’s judgment in favor of Defendant-Appellee PT. Bank Negara Indonesia (Persero) Tbk. ("BNI"). Plaintiffs sued BNI and various other defendants based on BNI's refusal to honor certain bank guaranties and letters of credit. Eventually, the district court granted BNI's motion for summary judgment for lack of jurisdiction under the Foreign Sovereign Immunities Act of 1976. Finding no error or abuse of the district court's discretion, the Tenth Circuit affirmed. View "Hansen, et al v. PT Bank Negara Indonesia, et al" on Justia Law

During routine examinations, the Federal Deposit Insurance Corporation (FDIC) raised an issue with Frontier State Bank Oklahoma City's use of a "leverage strategy" whereby the bank funded long-term investments with short-term borrowing in order to generate profits from the "spread" between long-term and short-term interest rates. The FDIC's enforcement staff obtained a cease-and-desist order from the FDIC Board which required the Bank mitigate the risks associated with its leverage strategy. Frontier appealed the Board's mitigation order to the Tenth Circuit. The FDIC argued that the Court lacked authority to review the order's leverage capital requirements, and defended the order as a reasonable exercise of the FDIC Board's authority. Upon review, the Tenth Circuit concluded that the Board's order was not arbitrary or capricious, and denied its petition for review. View "Frontier State Bank Oklahoma v. FDIC" on Justia Law

Stephanie and Kenneth Woolsey attempted to discharge a second mortgage on their home held by Citibank, N.A. through Chapter 13 bankruptcy. In their plan, they took the position that the bankruptcy code voided Citibank’s lien because it was unsupported by any current value in the home. The bank objected to the Woolseys’ plan and eventually persuaded the bankruptcy court to reject it. The district court affirmed the bankruptcy court, and the Woolseys appealed to the Tenth Circuit. In their argument on appeal, "[t]hey choose to pursue instead and exclusively a line of attack long foreclosed by Supreme Court precedent. To be sure, the Woolseys argue[d] vigorously and with some support that the Supreme Court ha[d] it wrong. But, as Justice Jackson reminds us, whether or not the Supreme Court is infallible, it is final." The Tenth Circuit was "obliged" to apply the Supreme Court's current case law and affirmed the district and bankruptcy court's decisions. View "Woolsey, et al v. Citibank, N.A." on Justia Law

In 2007, while Plaintiffs-Appellants Scott and Lisa Sanders were attempting to refinance their home, they discovered Salt Lake City Credit Union had “reported twelve new maxed-out accounts on the Sanders[es]’ credit [reports].” They say this “destroyed [their] credit and made it impossible to refinance.” Afterward, the credit union “apologized for the misreporting” and “offered to make amends by providing [them] with a ‘free’ refinance.” They accepted this conciliatory offer and closed on the refinancing loan in July 2007. Salt Lake City Credit Union later merged with appellee Mountain America. In March 2009, the Sanderses applied to Mountain America to again refinance their loan. They completed the application by phone, but Mountain America denied their application at the end of the call. Pertinent to this appeal, the Sanderses’ complaint alleged: (1) they had not been provided with the disclosures required under the Truth-in-Lending Act (TILA) thereby entitling them to invoke statutory rescission; (2) Mountain America violated the Equal Credit Opportunity Act (ECOA) when it failed to provide a notice of adverse action after denying their application for refinancing; and (3) Mountain America’s inaccurate credit reporting violated the Fair Credit Report Act (FCRA). The district court dismissed these claims on the pleadings. Although the Tenth Circuit had not addressed the issue, several circuits allow district courts to equitably condition the creditor’s duty on the borrower’s ability to repay the loan proceeds. In this case, however, the district court went further by concluding a borrower seeking to compel rescission must plead ability to repay. The court invoked this rule to dismiss the TILA rescission claim of the Sanderses. It also dismissed their claims under the Equal Credit Opportunity Act and Fair Credit Reporting Act. Upon review, the Tenth Circuit affirmed in part, reversed in part, and remanded for further proceedings: the Court affirmed with respect to the FCRA claim and reversed with respect to the TILA rescission and ECOA claims. View "Sanders v. Ethington" on Justia Law