Justia Banking Opinion Summaries

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Nathan Reardon, who had been self-employed for 24 years, was convicted of bank fraud after submitting fraudulent applications for loans under the Paycheck Protection Program (PPP), a financial assistance program enacted by Congress in response to the economic fallout of the COVID-19 pandemic. Reardon used several of his businesses to submit the fraudulent applications and misused the funds from the approved loan. He was sentenced to twenty months of imprisonment and three years of supervised release. As part of his sentence, the district court imposed a special condition prohibiting Reardon from all forms of self-employment during his supervised release term.Reardon appealed this special condition, arguing that it was overly restrictive and unnecessary. The government suggested a "middle ground" where the condition could be modified to avoid a total prohibition against self-employment, but the district court overruled Reardon's objection and imposed the self-employment ban without explaining why it was the minimum restriction necessary to protect the public, as required by the U.S. Sentencing Guidelines.The United States Court of Appeals for the First Circuit found that while the district court was justified in imposing an occupational restriction, it did not provide sufficient explanation for why a total ban on self-employment was the minimum restriction necessary to protect the public. The court therefore vacated the self-employment ban and remanded the case for reconsideration of the scope of that restriction. View "United States v. Reardon" on Justia Law

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In 2000, Betty J. Brown took title to a property in Charlotte, North Carolina. She obtained a loan from First Horizon Home Loan Corporation in 2004, secured by a deed of trust. In 2010, a judgment was entered against Brown in South Carolina, which was domesticated and recorded in North Carolina in 2014. In 2016, Brown refinanced the First Horizon loan with Nationstar Mortgage LLC, which paid off the remainder of the First Horizon loan. The deed of trust for the Nationstar loan was recorded after the 2010 judgment. MidFirst Bank is Nationstar’s successor in interest for the 2016 loan. In 2019, enforcement proceedings began against Brown to collect the 2010 judgment. The property was seized and sold at an execution sale, with Brown's daughter, Michelle Anderson, placing the successful bid.The trial court granted summary judgment to MidFirst Bank, asserting that the Nationstar deed of trust still encumbered the property even after the execution sale. The court also held that the doctrine of equitable subrogation applied, allowing Nationstar to assume the rights and priorities of the First Horizon deed of trust. The Court of Appeals reversed this decision, holding that the Nationstar lien was extinguished by the execution sale and that the doctrine of equitable subrogation was not available to MidFirst Bank because it was not "excusably ignorant" of the publicly recorded judgment.The Supreme Court of North Carolina reversed the decision of the Court of Appeals, holding that it erred by applying the incorrect standard regarding equitable subrogation. The court held that the doctrine of equitable subrogation applies when money is expressly advanced to extinguish a prior encumbrance and is used for this purpose. The court remanded the case to the Court of Appeals to be remanded to the trial court for reassessment under the correct legal standard. View "MidFirst Bank v. Brown" on Justia Law

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The case involves a dispute over a contract between a plaintiff, Pamela Phillips, and the defendant, Charlotte Metro Credit Union. In 2014, Phillips opened a checking account with the Credit Union and agreed to a standard membership agreement. This agreement included a "Notice of Amendments" provision, which allowed the Credit Union to change the terms of the agreement upon notice to Phillips. In 2021, the Credit Union amended its membership agreement to require arbitration for certain disputes and to waive members' right to file class actions. Phillips did not opt out of this amendment within the given 30-day window. Later that year, Phillips filed a class action complaint against the Credit Union for the collection of overdraft fees on accounts that were never overdrawn. The Credit Union responded by filing a motion to stay the action and compel arbitration.The trial court denied the Credit Union's motion to stay and compel arbitration, concluding that the "Notice of Amendments" provision did not permit the Credit Union to unilaterally add an arbitration provision. The Credit Union appealed this decision to the Court of Appeals, which reversed the trial court's determination and remanded the case to the trial court to stay the action pending arbitration.The Supreme Court of North Carolina affirmed the decision of the Court of Appeals. The court concluded that the Arbitration Amendment was within the universe of terms of the contract between the parties, and thus complies with the implied covenant of good faith and fair dealing and does not render the contract illusory. As such, the Arbitration Amendment is a binding and enforceable agreement between Phillips and the Credit Union. View "Canteen v. Charlotte Metro Credit Union" on Justia Law

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The case involves J and L Farms, Inc. (J&L), a South Dakota company, and First Bank, a Florida banking corporation. J&L had an ongoing business relationship with Jackman Wagyu Beef, LLC (Jackman), a Florida-registered company, where Jackman would purchase cattle from J&L. In 2018, Jackman proposed a change in their payment terms, offering to pay for the cattle within 30 days of placing an order, instead of paying prior to the cattle being shipped. To secure each payment, Jackman proposed that J&L would be given a bank guarantee from First Bank. First Bank issued three separate guaranty letters to J&L to secure payment for the sale of cattle. However, Jackman failed to provide full payment for two orders, and First Bank refused to satisfy the outstanding balance.The circuit court of the Fifth Judicial Circuit in Brown County, South Dakota, entered a default judgment against Jackman after it failed to plead or defend against J&L’s complaint. First Bank filed a motion to dismiss for lack of personal jurisdiction, arguing that it did not have sufficient minimum contacts for a South Dakota court to exercise personal jurisdiction over it. The circuit court denied the motion.The Supreme Court of the State of South Dakota affirmed the circuit court's decision. The Supreme Court found that First Bank had sufficient minimum contacts with South Dakota to establish personal jurisdiction. The court reasoned that First Bank purposefully availed itself of the privileges of acting in South Dakota by issuing three guaranty letters to J&L, a South Dakota company, to facilitate the purchase of South Dakota cattle. The court also found that the cause of action against First Bank arose from its activities directed at South Dakota, and that the acts of First Bank had a substantial connection with South Dakota, making the exercise of jurisdiction over First Bank reasonable. View "J&l Farms" on Justia Law

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The case revolves around a dispute over the ownership of funds in a joint checking account following the death of one of the parties named on the account. Karon “Kelly” Kelso was originally a joint owner of a checking account with his wife, Sandra Kelso. After Sandra's death, Linda Applington, a friend of Kelly’s, began helping Kelly process his monthly bills. Kelly later added Linda on his checking account as a joint owner with the right of survivorship. After Kelly's death, his son, Greg Kelso, became the personal representative and sole heir of Kelly’s estate. Greg sought to have the funds transferred to Kelly’s estate, but Linda claimed ownership of the account under the right of survivorship and declined to transfer the funds.The district court granted summary judgment in favor of Linda, finding clear and convincing evidence that Kelly intended Linda to have the funds in his account upon his death. Greg appealed to the Supreme Court of the State of Idaho.The Supreme Court of the State of Idaho reversed the district court’s grant of summary judgment and remanded for a jury trial. The court found that there were inconsistencies in the testimonies of Linda and Janet Overman, an employee of the bank, which raised questions about their credibility. The court held that summary judgment was not proper when the record raises any question as to the credibility of witnesses. The court also vacated the award of attorney fees to Linda, stating that the prevailing party has not been determined and fees may be considered at the conclusion of the case. View "Kelso v. Applington" on Justia Law

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Leslie Atkinson purchased a 2003 Chevrolet Avalanche through a retail installment sales contract, which granted the seller a security interest in the vehicle. The seller assigned the sales contract and the security interest to Credit Acceptance Corporation. When Atkinson defaulted on her payments, Credit Acceptance hired Carolina Repo to repossess the vehicle. During the repossession, Atkinson attempted to drive off in the vehicle, leading to a confrontation with the Carolina Repo representative. The representative called the Harnett County Sheriff’s Office for assistance, and Deputy Brent Godfrey arrived on the scene. Godfrey ordered Atkinson out of the vehicle so that the Carolina Repo representative could repossess it.Atkinson sued Godfrey and Sheriff Wayne Coats under 42 U.S.C. § 1983, alleging violations of the Fourth, Fifth, and Fourteenth Amendments. She claimed that Godfrey, in his individual capacity, violated her Fourth Amendment right against unreasonable seizures of property by facilitating Carolina Repo’s repossession. She also alleged that Coats, in his official capacity as the sheriff, failed to train officers and created policies that deprived her of the Fourth Amendment’s protection against unreasonable seizures of property.The defendants moved to dismiss Atkinson’s § 1983 claim, asserting that Atkinson did not allege facts showing they acted under color of law, that Godfrey was entitled to qualified immunity, and that, without an underlying constitutional violation, Atkinson failed to bring an actionable claim against the Sheriff’s Office through Coats in his official capacity. The district court denied the motion, finding it could not determine as a matter of law that Godfrey’s actions did not constitute state action, that Godfrey was entitled to qualified immunity, and that the Sheriff’s Office’s liability could be ruled out. Godfrey and Coats appealed the district court’s denial of their motion.The United States Court of Appeals for the Fourth Circuit reversed the district court’s denial of Godfrey’s motion to dismiss based on qualified immunity. The court found that neither the Supreme Court, the Fourth Circuit, the highest court of North Carolina, nor a consensus of other circuit courts of appeals had determined that conduct similar to that of Godfrey was unconstitutional. Therefore, the right alleged to be violated was not clearly established. The court remanded the case with instructions to grant Godfrey’s motion to dismiss. The court dismissed the appeal with respect to the claim against Coats, as the issues it presented were not inextricably intertwined with the resolution of the qualified immunity issues. View "Atkinson v. Godfrey" on Justia Law

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The case revolves around Intellectual Tech LLC (IT), a wholly owned subsidiary of OnAsset Intelligence, Inc. (OnAsset), and its patent dispute with Zebra Technologies Corporation (Zebra). In 2019, IT asserted U.S. Patent No. 7,233,247 against Zebra, claiming that it was the owner and assignee of the patent. However, Zebra moved to dismiss the complaint, arguing that IT lacked standing. The district court initially denied the motion, but later granted it based on its determination that IT lacked constitutional standing, leading to the dismissal of all claims without prejudice.Previously, OnAsset had granted Main Street Capital Corporation (Main Street), a lender, a security interest in its patents, including the one in question, as part of a loan agreement. When OnAsset defaulted on the loan, Main Street gained certain rights. Subsequently, OnAsset assigned the patent to IT, which also defaulted on its obligations. The district court found that Main Street's ability to license the patent upon default deprived IT of all its exclusionary rights, leading to a lack of constitutional standing.The United States Court of Appeals for the Federal Circuit disagreed with the district court's interpretation. The appellate court found that IT retained at least one exclusionary right, even considering the rights Main Street gained upon default. The court clarified that a patent owner has exclusionary rights as a baseline matter unless it has transferred all exclusionary rights away. The court concluded that IT still suffered an injury in fact from infringement even if IT and Main Street could both license the patent. Therefore, the appellate court reversed the district court's decision and remanded the case for further proceedings. View "Intellectual Tech LLC v. Zebra Technologies Corp." on Justia Law

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This case involves Commerzbank AG, a German bank, and U.S. Bank, N.A., an American bank. Commerzbank sued U.S. Bank, alleging that it had failed to fulfill its duties as a trustee for residential mortgage-backed securities (RMBS) that Commerzbank had purchased. The case revolved around three main issues: whether Commerzbank could bring claims related to trusts with "No Action Clauses"; whether Commerzbank's claims related to certificates held through German entities were timely; and whether Commerzbank could bring claims related to certificates it had sold to third parties.The district court had previously dismissed Commerzbank's claims related to trusts with No Action Clauses, granted judgment in favor of U.S. Bank on the timeliness of Commerzbank's claims related to the German certificates, and denied Commerzbank's claims related to the sold certificates. Commerzbank appealed these decisions.The United States Court of Appeals for the Second Circuit affirmed the district court's decisions on the timeliness of the German certificate claims and the denial of the sold certificate claims. However, it vacated the district court's dismissal of Commerzbank's claims related to trusts with No Action Clauses and remanded the case for further proceedings. The court found that Commerzbank's failure to make pre-suit demands on parties other than trustees could be excused in certain circumstances where these parties are sufficiently conflicted. View "Commerzbank AG v. U.S. Bank, N.A." on Justia Law

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The case involves 21 U.S. citizens and the family of a deceased U.S. citizen who were victims of rocket attacks by the Hizbollah terrorist organization in Israel in 2006. The plaintiffs allege that the Lebanese Canadian Bank (LCB) provided financial services to Hizbollah, including facilitating millions of dollars in wire transfers through a New York-based correspondent bank. In 2011, LCB and Société Générale de Banque au Liban SAL (SGBL), a private company incorporated in Lebanon, executed a purchase agreement where SGBL acquired all of LCB's assets and liabilities. In 2019, the plaintiffs brought similar claims against SGBL, as LCB's successor, in the Eastern District of New York for damages stemming from the 2006 attacks.The federal district court dismissed the action for lack of personal jurisdiction over SGBL. The court interpreted several Appellate Division and federal decisions to allow imputation of jurisdictional status only in the event of a merger, not an acquisition of all assets and liabilities. On appeal, the Second Circuit certified two questions to the New York Court of Appeals, asking whether an entity that acquires all of another entity's liabilities and assets, but does not merge with that entity, inherits the acquired entity's status for purposes of specific personal jurisdiction, and under what circumstances the acquiring entity would be subject to specific personal jurisdiction in New York.The New York Court of Appeals answered the first question affirmatively, stating that where an entity acquires all of another entity's liabilities and assets, but does not merge with that entity, it inherits the acquired entity's status for purposes of specific personal jurisdiction. The court declined to answer the second question as unnecessary. The court reasoned that allowing a successor to acquire all assets and liabilities, but escape jurisdiction in a forum where its predecessor would have been answerable for those liabilities, would allow those assets to be shielded from direct claims for those liabilities in that forum. View "Lelchook v Société Générale de Banque au Liban SAL" on Justia Law

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The plaintiff, PennyMac Loan Services, LLC, a mortgage company, held a mortgage interest in a property in Coventry, Rhode Island. The mortgagor, Domenico Companatico, failed to pay 2018 fire district taxes, leading to a tax sale auction where the property was sold to Roosevelt Associates, RIGP. Roosevelt later filed a petition to foreclose any right of redemption, and the Superior Court clerk issued a citation notifying interested parties. The citation did not include a street address for the property. Despite receiving the citation, PennyMac failed to respond and was defaulted. A Superior Court justice entered a final decree foreclosing the right of redemption, and Roosevelt sold the property to Coventry Fire District 5-19, RIGP, which later sold it to Clarke Road Associates, RIGP.PennyMac filed an action to challenge the foreclosure decree, arguing that the citation failed to provide adequate notice, thus denying PennyMac its right to procedural due process. The parties filed cross-motions for summary judgment, and a second trial justice concluded that PennyMac had received adequate notice of the petition to foreclose all rights of redemption. The justice also found that the fire district taxes constituted a superior lien on the property and that PennyMac is statutorily barred from asserting a violation of the Uniform Voidable Transactions Act.The Supreme Court of Rhode Island affirmed the amended judgment of the Superior Court. The court found that the citation, despite lacking a street address, did not constitute a denial of due process. The court also concluded that PennyMac's claim under the Uniform Voidable Transactions Act was barred due to its failure to raise any objection during the foreclosure proceeding. Finally, the court determined that the recent U.S. Supreme Court decision in Tyler v. Hennepin County, Minnesota did not alter the outcome of this case. View "PennyMac Loan Services, LLC v. Roosevelt Associates, RIGP" on Justia Law