Justia Banking Opinion Summaries

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The First Circuit reversed the order of the district court remanding this removed case to Puerto Rico's Court of First Instance, holding that the district court erred when it remanded to the local Puerto Rico court a suit asserting claims by Constructora Japimel, Inc. against Doral Bank under the circumstances of this case.Contrary to the text of 12 U.S.C. 1819(b)(2)(B), the district court remanded this case to the local Puerto Rico court Japimel's lawsuit against Doral, a failed bank, after the Federal Deposit Insurance Corporation (FDIC) had become Doral's receiver, had filed a notice of substitution in state court to become a party to the suit, and had timely removed the suit to federal court. The FDIC timely appealed the remand order. The First Circuit reversed, holding that the district court erred by ignoring section 1819(b)(2)(B)'s clear language and remanding the case to the Court of First Instance. View "Federal Deposit Insurance Co. v. Constructora Japimel, Inc." on Justia Law

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The First Circuit reversed the judgment of the district court granting Wilmington Savings Fund Society, FSB a declaratory judgment declaring invalid a home equity line of credit (HELOC) that had previously been granted to Nina Collart's father, Lucien, on property in Massachusetts and granting Wilmington an equitable lien in the property, holding that the court abused its discretion in granting Wilmington an equitable lien.Wilmington sued Nina in her individual capacity as trustee of the Lucien R. Collart, Jr. Nominee Trust and the Anne B. Collart Nominee Trust and also named as a defendant Thomas Mann, Jr., named in his capacity of the Nina B. Collart Trust. Wilmington sought a declaratory judgment that the HELOC was a valid encumbrance on the property and further sought an equitable lien on the property. The district court held that the HELOC was invalid and that Wilmington was entitled to an equitable lien against the property. The First Circuit reversed, holding that the lien was based on an error of law and that the defendants should have had judgment entered in their favor. View "Wilmington Savings Fund Society v. Collart" on Justia Law

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The Supreme Court reversed the district court's order granting summary judgment in favor of Defendant in this foreclosure action, holding that the loan servicer timely commenced the action after the foreclosure sale and sufficiently demonstrated that a regulated entity under the Federal Housing Finance Agency's (FHFA) conservatorship owned the loan.Defendant purchased property at a foreclosure sale. Plaintiff JPMorgan Chase Bank filed a complaint seeking a declaration that the first deed of trust survived the sale and for quiet title. Plaintiff offered evidence that it was servicing the loan on behalf of Freddie Mac, which had previously been placed into an FHFA conservatorship and that the first deed of trust therefore survived under the Federal Foreclosure Bar. Applying a three-year limitations period, the district court entered summary judgment for Defendant, concluding that the foreclosure sale extinguished the deed of trust. The Supreme Court reversed, holding (1) the claims underlying the action are best described as sounding in contract for purposes of the House and Economic Recovery Act statute of limitations, which provides for a six-year statute of limitations; and (2) the Federal Foreclosure Bar prevented the foreclosure sale from extinguishing gate first deed of trust, and therefore, Defendant took the property subject to that deed of trust. View "JPMorgan Chase Bank, National Ass'n v. SFR Investments Pool 1, LLC" on Justia Law

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Robert V. Bolinske, Sr., appealed an order denying his motion to vacate a default judgment. Discover Bank (“Discover”) sued Bolinske for unpaid debt in the amount of $3,915.53 on a credit card Discover issued to Bolinske. Notice of entry of judgment was served on Bolinske on December 23, 2019. Bolinske moved to vacate judgment on January 10, 2020. Bolinske claimed he attempted to respond to Discover’s summons and complaint by mail on December 6, 2019, but accidentally misaddressed the envelope to Discover’s counsel and sent his answer and counterclaims to an incorrect address. Bolinske argued after his answer and counterclaims were returned as undelivered, he mailed them to the proper address on December 16, 2019. Bolinske argued that same day, he placed a call to Discover’s counsel and left a voicemail stating that he was making an appearance to avoid a default judgment and explaining he had sent his answer and counterclaim to the wrong address. Discover’s counsel asserted she did not receive Bolinske’s voicemail until after e-filing the motion for default judgment, but acknowledged the voicemail was received on December 16. Bolinske argued in his brief supporting his motion to vacate that his voicemail left with Discover’s counsel constituted an appearance entitling him to notice before entry of default. Bolinske also argued that he was entitled to relief from judgment due to his mistake, inadvertence, and excusable neglect. The district court denied Bolinske’s motion on January 31, 2020 without holding a hearing, stating Bolinske had not demonstrated sufficient justification to set the judgment aside. Fining no reversible error in the district court judgment, the North Dakota Supreme Court affirmed. View "Discover Bank v. Bolinske, Sr." on Justia Law

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This action is one of many related to the collapse of First NBC Bank of New Orleans. The FDIC filed an action in the district court seeking to enforce an administrative subpoena that ordered defendant to submit to a deposition. The district court granted the motion to enforce the subpoena and defendant appealed. In the interim, the district court denied defendant's request for a stay pending the outcome of this appeal. Defendant then sat for the deposition.The Fifth Circuit vacated the district court's judgment enforcing the FDIC's subpoena and remanded for further proceedings. The court held that the district court erred by holding that the FDIC, in its capacity as the Bank's receiver, was "the appropriate Federal functional regulator" in this case, entitling it to receive otherwise confidential and privileged documents from the Public Company Accounting Oversight Board (PCAOB). Rather, the FDIC was not "the appropriate Federal functional regulator" in this case, and the PCAOB lacked the authority under 15 U.S.C. 7215(b)(5)(B) to share transcripts of defendant's deposition testimony before it with the FDIC. View "Federal Deposit Insurance Corp. v. Belcher" on Justia Law

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Degroot defaulted on a debt owed to Capital. AllianceOne sent Degroot a letter, stating: The amount of your debt is $425.86 ... interest and fees are no longer being added. Degroot understood that Capital had “charged-off” his account, meaning that his debt would no longer accrue interest or other fees for any reason. Capital subsequently transferred the account to CSI. CSI's 2019 letter stated: BALANCE DUE: $425.86 and “NEW INFORMATION ON YOUR ACCOUNT,” indicating that Capital had placed the account with CSI for collections, with an itemized summary of Degroot’s balance. After offering to resolve the debt, with disclosures required by certain states, concluded by stating “no interest will be added to your account balance through the course of” CSI collection effortsDegroot filed a purported class action, alleging that CSI’s letter misleadingly implied that Capital would begin to add interest and fees to previously charged-off debts if consumers failed to resolve their debts with CSI and that he was “confused.” Degroot asserted that CSI violated the Fair Debt Collection Practices Act. 15 U.S.C. 1692. The Seventh Circuit affirmed the dismissal of the suit. The 2019 letter accurately disclosed the amount of the debt and did not imply fees or interest would be added in the future. Even if CSI’s letter did imply that fees and interest could begin to accrue if the debt remained outstanding, the statement was not misleading given that Wisconsin law provided for the assessment of fees and interest on “static” debts in certain circumstances. View "Degroot v. Client Services, Inc." on Justia Law

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Quail's 47,480-square-foot unincorporated Sonoma County property contained two houses, garages, and several outbuildings. In 2013, a building with hazardous and unpermitted electrical wiring, hazardous decking and stairs, unpermitted kitchens and plumbing, broken windows, and lacking power, was destroyed in a fire. Two outbuildings, unlawfully being used as dwellings, were also damaged. One report stated: “The [p]roperty . . . exists as a makeshift, illegal mobile home park and junkyard.” After many unsuccessful attempts to compel Quail to abate the conditions, the county obtained the appointment of a receiver under Health and Safety Code section 17980.7 and Code of Civil Procedure section 564 to oversee abatement work. The banks challenged a superior court order authorizing the receiver to finance its rehabilitation efforts through a loan secured by a “super-priority” lien on the property and a subsequent order authorizing the sale of the property free and clear of U.S. Bank’s lien.The court of appeal affirmed in part. Trial courts enjoy broad discretion in matters subject to a receivership, including the power to issue a receiver’s certificate with priority over pre-existing liens when warranted. The trial court did not abuse its discretion in subordinating U.S. Bank’s lien and confirming the sale of the property free and clear of liens so that the receiver could remediate the nuisance conditions promptly and effectively, but prioritizing the county’s enforcement fees and costs on equal footing with the receiver had no basis in the statutes. View "County of Sonoma v. U.S. Bank N.A." on Justia Law

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After his taxes were paid late from his mortgage escrow account, causing him to incur $895 in penalties, the homeowner-borrower filed a putative class action against the company that serviced his mortgage. Under the Real Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C. 2601, if a mortgage contract requires the borrower to place property tax payments in escrow, “the servicer” must make those tax payments on time. The right to service a mortgage is subject to purchase and sale. The rights to service the plaintiff’s mortgage had been transferred between the time of the plaintiff’s payment into the escrow account and the tax’s due date.Reversing the district court, the Fourth Circuit concluded that when servicing rights are transferred in the window between the borrower’s payment to escrow and the tax’s due date, RESPA requires taxes to be paid by the entity responsible for servicing the mortgage at the time the tax payment is due. By requiring “the servicer” to make tax payments “as [they] become due,” RESPA connects the servicer’s obligation to a payment’s due date, not the date of payment into escrow by the borrower. View "Harrell v. Freedom Mortgage Corp." on Justia Law

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In 2005-2007, the borrowers obtained residential home mortgages on California properties. California law would normally have entitled them to “at least 2 percent simple interest per annum” on any funds held in escrow, California Civil Code Section 2954.8. The lender, a federal savings association organized and regulated under the Home Owners’ Loan Act of 1933 (HOLA), 12 U.S.C. 1461, did not pay interest because HOLA preempts California law. In a suit against the lender’s successor, Chase, a national bank organized and regulated under the National Bank Act, 12 U.S.C. 38, the district court denied the lender’s motion to dismiss; the Ninth Circuit has held that there is no “conflict preemption” between the National Bank Act and the California law.The Ninth Circuit reversed. HOLA field preemption principles applied to the claims against Chase even though its conduct giving rise to the complaint occurred after it acquired the loans in question. Because California’s interest-on-escrow law imposed a requirement regarding escrow accounts; affected the terms of sale, purchase, investment in, and participation in loans originated by savings associations; and had more than an incidental effect on the lending operations of savings associations, it was preempted by 12 C.F.R. 560.2(b)(6) and (b)(10), and 560.2(c). View "McShannock v. JP Morgan Chase Bank NA" on Justia Law

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DLJ brought a debt and foreclosure action against the Sheridans and the IRS. At the close of DLJ’s case-in-chief, the district court granted judgment in favor of DLJ under FRCP 52(c), concluding that DLJ satisfied all elements of its claim. The Third Circuit affirmed. Sheridan was “fully heard” prior to judgment. At the close of its case-in-chief, DLJ moved for judgment based on partial findings. Sheridan did not object to the consideration of the motion. The parties made their respective arguments as to whether DLJ met its burden of providing evidence sufficient to establish its debt and foreclosure claims and whether DLJ had standing. Sheridan could have only challenged the validity of the loan documents through cross-examination of DLJ’s witness, Holmes, which he was given the opportunity to do, or through his own testimony, to the extent he had any personal knowledge. Sheridan has not indicated what additional admissible evidence he intended to present to contest DLJ’s standing. The court heard and considered Sheridan’s arguments concerning the transfer of the note and the validity of the assignment. He was fully heard with regard to DLJ’s standing to foreclose. Sheridan’s original answer asserted boilerplate affirmative defenses, none of which contained any allegations of fraud or violations of the Truth in Lending Act; Sheridan’s motion to amend was untimely, and the late assertion of fraud would have prejudiced DLJ. View "DLJ Mortgage Capital, Inc. v. Sheridan" on Justia Law