Justia Banking Opinion Summaries

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The Supreme Court reversed the holdings of the lower courts in this case, holding that wages can be "earnings" under Kan. Stat. Ann. 60-2310(a)(1) even after they are paid if the employee can specifically and directly identify the funds as wages.Plaintiff sued Defendant for $3,008, and Defendant consented to the judgment. At issue was a garnishment order issued under Kan. Stat. Ann. 61-3505(b)(1). Defendant objected to the garnishment, arguing that the funds in his bank account were "earnings" and could only be garnished under Kan. Stat. Ann. 61-3507. The district court and court of appeals ordered the bank to pay the withheld funds, concluding that Defendant's wages lost their status as "earnings" and could be garnished under section 61-3505 once his paycheck was deposited in his bank account. The Supreme Court reversed, holding (1) "paid" wages may in certain circumstances be deemed earnings for purposes of garnishment; and (2) this case must be remanded for further factual findings. View "Stormont-Vail Healthcare, Inc. v. Sievers" on Justia Law

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The Supreme Court reversed in part the judgment of the trial court sustaining Plaintiffs' administrative appeal and remanding this case to the Commissioner of Banking for further proceedings as to Plaintiffs' entitlement to tribal sovereign immunity in administrative proceedings, holding that the trial court erred in part.At issue was whether a business entity shared sovereign immunity with Otoe-Missouria Tribe of Indians, a federally-recognized tribe. On appeal, Plaintiffs - Clear Creek Lending, Great Plains Lending, LLC, and John Shotton, chairman of the Tribe - claimed that the trial court improperly allocated the burden of proving entitlement to tribal sovereign immunity to Plaintiffs, improperly required proof of a functioning relationship between the entities and the tribe, and improperly failed to find Shotton immune in further administrative proceedings. The Supreme Court reversed in part, holding (1) the entity claiming arm of the tribe status bears the burden of proving its entitlement to that status; (2) Great Plains was an arm of the tribe and Shotton was entitled to tribal sovereign immunity but not injunctive relief; and (3) there was insufficient evidence that Clear Creek was an arm of the tribe as a matter of law. View "Great Plains Lending, LLC v. Department of Banking" on Justia Law

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Palladinetti and others purchased 30 Chicago-area apartment buildings and resold individual apartments as condominiums. Using a process that Palladinetti helped create, his co-defendants bought the buildings, falsely representing to lenders that they had made down payments. Palladinetti served as his co-defendants’ attorney for the purchases and sales and as the registered agent for LLCs formed to facilitate the scheme. The group recruited buyers for the condominiums and prepared their mortgage applications, misrepresenting facts to ensure they qualified for the loans.Palladinetti and his co-defendants were charged with seven counts of bank fraud, 18 U.S.C. 1344(1) and (2), and nine counts of making false statements on loan applications, 18 U.S.C. 1014 and 2. Count one involved a $345,000 mortgage that Palladinetti’s wife obtained for the purchase of a residence. That mortgage application was prepared using the group’s fraudulent scheme in July 2005. The government agreed to dismiss all other counts if Palladinetti were convicted on count one. Because Palladinetti stipulated to almost all elements of section 1344(1), the trial was limited to whether the bank he defrauded was insured by the FDIC when the mortgage application was submitted.The Seventh Circuit affirmed his conviction. The testimony and exhibits demonstrated that one entity was continuously insured, 1997-2008, that on the date the mortgage was executed that entity was “Washington Mutual Bank” and also did business as “Washington Mutual Bank, FA,” and that entity was the lender for the mortgage at issue. View "United States v. Palladinetti" on Justia Law

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Halkbank, a commercial bank that is majority-owned by the Government of Turkey, was charged with crimes related to its participation in a multi-year scheme to launder billions of dollars' worth of Iranian oil and natural gas proceeds in violation of U.S. sanctions against the Government of Iran and Iranian entities and persons. Halkbank moved to dismiss the indictment but the district court denied the motionThe Second Circuit held that it has jurisdiction over the instant appeal under the collateral order doctrine. The court also held that, even assuming the Foreign Sovereign Immunities Act (FSIA) applies in criminal cases—an issue that the court need not, and did not, decide today—the commercial activity exception to FSIA would nevertheless apply to Halkbank's charged offense conduct. Therefore, the district court did not err in denying Halkbank’s motion to dismiss the Indictment. The court further concluded that Halkbank, an instrumentality of a foreign sovereign, is not entitled to immunity from criminal prosecution at common law. View "United States v. Bankasi" on Justia Law

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Heine and Yates, bank executives, were convicted of conspiracy to commit bank fraud (18 U.S.C. 1349) and 12 counts of making a false bank entry (18 U.S.C. 1005). The government told the jury that the two conspired to deprive the bank of accurate financial information in its records, the defendants’ salaries, and the use of bank funds.The Ninth Circuit vacated. There is no cognizable property interest in the ethereal right to accurate information. Distinguishing between a scheme to obtain a new or higher salary and a scheme to deceive an employer while continuing to draw an existing salary, the court held that the salary-maintenance theory was also legally insufficient. Even assuming the bank-funds theory was valid, the government’s reliance on those theories was not harmless. The court instructed the jury that it could find the defendants guilty of making false entries as co-conspirators, so the court also vacated the false-entry convictions. The court noted that insufficient evidence supported certain false entry convictions. View "United States v. Yates" on Justia Law

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The Fifth Circuit affirmed the district court's dismissal of plaintiff's putative class action against the Bank for failure to state a claim because extended overdraft charges were not "interest" under the National Bank Act of 1864. In this case, deference to the Office of the Comptroller of the Currency's interpretation of these regulations is appropriate, and the agency's determination in Interpretive Letter 1082 that the type of bank fees at issue here—that the Bank refers to as extended overdraft charges—are noninterest charges is a sufficient basis to resolve this case. The court explained that, because extended overdraft charges are non-interest charges, they are not subject to the Act's usury limits. Finally, the court concluded that plaintiff already availed herself of the opportunity the district court provided to conduct discovery, and because plaintiff's complaint is deficient under Federal Rule of Civil Procedure 8, she is not entitled to discovery. View "Johnson v. BOKF National Ass'n" on Justia Law

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The City of Oakland sued under the Fair Housing Act, claiming that Wells Fargo’s discriminatory lending practices caused higher default rates, which triggered higher foreclosure rates that drove down the assessed value of properties, ultimately resulting in lost property tax revenue and increased municipal expenditures. In 2020, the Ninth Circuit affirmed the denial of Wells Fargo's motion to dismiss claims for lost property-tax revenues and affirmed the dismissal of Oakland's claims for increased municipal expenses.On rehearing, en banc, the Ninth Circuit concluded that all of the claims should be dismissed. Under the Supreme Court’s 2017 holding, Bank of America Corp. v. City of Miami, foreseeability alone is not sufficient to establish proximate cause under the Act; there must be “some direct relation between the injury asserted and the injurious conduct alleged.” The downstream “ripples of harm” from the alleged lending practices were too attenuated and traveled too far beyond the alleged misconduct to establish proximate cause. The Fair Housing Act is not a statute that supports proximate cause for injuries further downstream from the injured borrowers; the extension of proximate cause beyond that first step was not administratively possible and convenient. Oakland also failed sufficiently to plead proximate cause for its increased municipal expenses claim. View "City of Oakland v. Wells Fargo & Co." on Justia Law

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The Supreme Court affirmed the judgment of the circuit court determining that Arthur and Jerilyn Gregg were not estopped from asserting that their son-in-law, Tyler McGregor, had no rights in their cattle, and therefore, First Dakota National Bank did not have a security interest in the Greggs' cattle, holding that the circuit court did not err.Tyler and Rebecca McGregor operated a cattle feedlot, and First Dakota was their lender. In 2015, Tyler agreed to feed 289 head of cattle owned by the Greggs. When First Dakota conducted an inspection of the McGregors' cattle operation, Tyler misled the bank into believing that he owned the Greggs' cattle. First Dakota later filed this declaratory judgment action seeking a judgment against the Greggs for the value of the cattle returned to the Greggs. The court held that the Greggs were not estopped from asserting that the McGregor had no rights in the Greggs' cattle, and therefore, First Dakota could not claim a security interest in them. The Supreme Court affirmed, holding that the evidence did not support the first inquiry necessary to establish an estoppel claim. View "First Dakota National Bank v. Gregg" on Justia Law

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In 2006, the borrowers concealed, from their lender, their lack of equity in four Chicago properties. All defaulted and the lender went into receivership. As receiver for that bank, the FDIC sued the title insurance company that conducted the closings and an appraisal company that aided the transactions. The FDIC settled with the appraisal company and went to trial against the title insurance company, winning a $1,450,000 verdict, less than the $3,790,695 the FDIC wanted. The court granted deducted $500,000 from the verdict to account for the money the FDIC received from its settlement with the appraisal company.The Seventh Circuit affirmed but remanded with instructions to add the setoff amount back into the judgment. A statute telling courts to award “appropriate” prejudgment interest in FDIC receivership cases that blend federal and state law, 12 U.S.C. 1821(l), gave the district court authority to exercise its discretion and to look to state law for guidance. There was no legal error or abuse of discretion in denying prejudgment interest. Because of difficult causation issues, the district court did not abuse its discretion in refusing to amend the jury verdict to add more damages. The district court erred in giving the title company a $500,000 setoff. View "Federal Deposit Insurance Corp. v. Chicago Title Insurance Co." on Justia Law

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In 2013, Nike and its subsidiary, Converse, brought a trademark infringement action under the Lanham Act against hundreds of participants in Chinese counterfeiting networks. The district court entered five prejudgment orders, a default judgment, and one postjudgment order against defendants, who never appeared in court. Each order enjoined defendants and all persons acting in concert or in participation with any of them from transferring, withdrawing or disposing of any money or other assets into or out of defendants' accounts regardless of whether such money or assets are held in the U.S. or abroad. In 2019, Nike's successor-in-interest, Next, moved to hold appellees—six nonparty Chinese banks—in contempt for failure to implement the asset restraints and for failure to produce certain documents sought in discovery.The Second Circuit affirmed the district court's judgment, holding that the district court did not abuse its discretion in denying Next's motion for contempt sanctions against the Banks because (1) until the contempt motion, Nike and Next never sought to enforce the asset restraints against the Banks; (2) there is a fair ground of doubt as to whether, in light of New York's separate entity rule and principles of international comity, the orders could reach assets held at foreign bank branches; (3) there is a fair ground of doubt as to whether the Banks' activities amounted to "active concert or participation" in defendants' violation of the asset restraints that could be enjoined under Federal Rule of Civil Procedure 65(d); and (4) Next failed to provide clear and convincing proof of a discovery violation. View "Next Investments, LLC v. Bank of China" on Justia Law