Justia Banking Opinion Summaries

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Defendant and her then-husband bought a condo for $525,000 with the intention of making it their primary residence. To finance the purchase, the couple took out a mortgage with the Plaintiff bank. Defendant did not sign the note but consented to her husband doing so. The mortgage contained a "future advances" clause, which granted Plaintiff a security interest in the Mortgage covering future funds Defendant's husband might borrow.Four years later, Defendant's husband borrowed additional funds from Plaintiff to keep his business afloat. Defendant did not sign the note. A few months later, Defendant's husband filed for Chapter 7 bankruptcy and the condo was sold for $650,000, approximately $250,000 of which was deposited in escrow. The couple divorced and Defendant moved out of the state.In Defendant's husband's bankruptcy case, the court held a portion of the escrowed sale proceeds must pay down his business notes pursuant to the mortgage’s future advances clause and that he could not claim a homestead exemption. Plaintiff was granted summary judgment on its claims that Defendant's proceeds were also subject to the future advances clause and that Plaintiff could apply those proceeds to Defendant's husband's business note.Defendant appealed on several grounds, including unconscionability, contract formation, and public policy, all of which the court rejected, affirming the district court's granting of summary judgment to Plaintiff. View "Sanborn Savings Bank v. Connie Freed" on Justia Law

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Plaintiff Bainbridge Fund Ltd. is the beneficial owner of bonds issued by the Republic of Argentina. Argentina defaulted on these bonds back in 2001, but Bainbridge didn’t sue to recover them until 2016. The district court dismissed Bainbridge’s claims as untimely under New York’s six-year statute of limitations for contract actions and the Second Circuit’s nonprecedential decisions. Bainbridge appealed, asking the Second Circuit to reconsider those decisions. Specifically, Bainbridge argues that (1) the twenty-year statute of limitations for recovery on certain bonds under N.Y. C.P.L.R. 34 Section 211(a) applies to its claims against Argentina; and (2) even if the six-year limitations period for contract actions applies, it was tolled under N.Y. Gen. Oblig Law Section 17-101 because Argentina “acknowledged” this debt when it publicly listed the bonds in its quarterly financial statements (the “Quarterly Reports”).   The Second Circuit rejected Plaintiff’s arguments. First, the twenty-year statute of limitations does not apply to claims on Argentine bonds because a foreign sovereign is not a “person” under N.Y. C.P.L.R. Section 211(a). Second, tolling under N.Y. Gen. Oblig. Law Section 17-101 is inapplicable because the Quarterly Reports did not “acknowledge” the debt at issue in a way that reflected an intention to pay or seek to influence the bondholders’ behavior. To the contrary, Argentina repeatedly stated that the bonds “may remain in default indefinitely.” Bainbridge’s claims are thus time-barred. View "Bainbridge Fund Ltd. v. The Republic of Argentina" on Justia Law

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Plaintiff took out a home equity loan on a house in Texas (“Property”). Deutsche Bank National Trust Company (“Deutsche Bank”) is the trustee of the loan. Deutsche Bank sought a non-judicial foreclosure order on the Property.   Plaintiff sued Deutsche Bank in Texas state court, alleging violations of the Texas Debt Collection Act (“TDCA”), breach of the common-law duty of cooperation, fraud, and negligent misrepresentation. Despite the stipulation, Deutsche Bank removed the case to federal district court. Plaintiff then moved to remand the case back to Texas state court because, in his view, the amount in controversy could not exceed the stipulated maximum of $74,500. The district court denied Plaintiff’s motion to remand.   The Fifth Circuit reversed and concluded that the district court erred in denying Plaintiff’s motion to remand, and it lacked subject-matter jurisdiction when it entered final judgment. The court reasoned that Deutsche Bank failed to establish that the amount in controversy exceeds the jurisdictional floor of $75,000.   The court first noted that the bank points out that Plaintiff’s suit requested relief which might be read to suggest Plaintiff also sought injunctive relief. But the bank makes that argument only to establish that Plaintiff’s initial pleading seeks nonmonetary relief not to establish that the requested nonmonetary relief put the house in controversy. Whatever the merit of that latter contention might otherwise be, the court held that Deutsche Bank forfeited it. Moreover, the mere fact that Plaintiff pleaded a demand for specific damages cannot support bad faith. View "Durbois v. Deutsche Bank Ntl Trust" on Justia Law

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Plaintiff experienced financial difficulties and applied for a loan modification. In response, CitiMortgage mailed Plaintiff an offer to participate in a Trial Period Plan (“TPP”). The TPP provided that “the terms of your  TPP are effective on the day you make your first trial period payment, provided you have paid it on or before the last day of [January 2019].” Plaintiff effectively accepted the terms of the TPP when he made the first trial period payment of $1,293.66. CitiMortgage sent him a letter informing him that he was “ineligible” for the loan modification and then posted Plaintiff’s property for foreclosure.   Plaintiff filed suit against CitiMortgage in state court, asserting claims for breach of contract. The district court granted summary judgment to CitiMortgage concluding that Plaintiff failed to comply with the TPP’s payment deadlines.   The Fifth Circuit reversed finding that Plaintiff met his obligations under the TPP by making timely payments. CitiMortgage, by contrast, violated its obligations by refusing to grant the permanent loan modification and proceeding with foreclosure. The court explained that the TPP establishes a grace period. It accepts payment so long as it is made “in the month in which it is due.” Neither the TPP nor the parties use the term “grace period” to describe this language. But that is plainly what the text contemplates. And no one disputes that Plaintiff’s payments comply with the governing grace periods. CitiMortgage has offered no reason why favoring the monthly deadlines and ignoring the grace period would “do the least damage” to the text of the TPP. View "Burbridge v. CitiMortgage" on Justia Law

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The FDIC removed Calcutt, a bank executive and director, from his position, prohibited him from participating in the conduct of the affairs of any insured depository institution, and imposed civil money penalties. Calcutt challenged the conduct and findings in his individual proceedings and brought constitutional challenges to the appointments and removal restrictions of FDIC officials. His first hearing occurred before an FDIC ALJ in 2015. Before the ALJ released his recommended decision, the Supreme Court decided Lucia v. SEC (2018), which invalidated the appointments of similar ALJs in the Securities and Exchange Commission. The FDIC Board of Directors then appointed its ALJs anew, and in 2019 a different FDIC ALJ held another hearing in Calcutt’s matter and ultimately recommended penalties.The Sixth Circuit denied Calcutt’s petition for review, concluding that his 2019 hearing satisfied Lucia’s mandate. Even if he were to establish a constitutional violation with respect to FDIC Board of Directors and ALJs being shielded from removal by the President, he would not be entitled to relief. Any error by the ALJ in curtailing cross-examination about bias of the witnesses was harmless. Substantial evidence supports the FDIC Board’s findings regarding the elements of 12 U.S.C. 1818(e)(1). View "Calcutt v. Federal Deposit Insurance Corp." on Justia Law

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Plaintiffs sued the Inter-American Development Bank (the “IDB” or the “Bank”), alleging that the IDB violated its internal investigatory procedures when investigating allegations that the Plaintiffs had engaged in “Prohibited Practices”—e.g., corruption, fraud, coercion, collusion, obstruction and misappropriation—in the performance of IDB-financed contracts, an investigation that ultimately led to the imposition of severe sanctions against the Plaintiffs. The IDB moved to dismiss the suit for lack of subject matter jurisdiction, asserting immunity under the International Organizations Immunities Act (IOIA), 22 U.S.C. Sections 288–288l. Plaintiffs countered that their case fell within two exceptions to IOIA immunity: the commercial activity exception and the waiver exception. Rejecting the Plaintiffs’ arguments, the district court granted the IDB’s motion to dismiss.   The DC Circuit affirmed the district court’s ruling, holding that Plaintiffs’ cases did not fall within the IOIA immunity exceptions. The court reasoned that in the context of a multilateral bank like the IDB, the Court has generally looked to whether waiver of immunity serves to “enhance the marketability” of an international organization’s financial products “and the credibility of its activities in the lending markets. Weighing the costs and benefits here, the court saw no reason to find a waiver of immunity. It is true that the IDB is obligated to, among other things, “promote the investment of public and private capital for development purposes” and “encourage private investment,” IDB Charter art. I, Section 2(a), meaning that the Plaintiffs’ argument that judicial review would assuage commercial partners’ “fears that [the Sanctions Procedures] will be applied in bad faith,” and thereby promote investment, is, at the very least, colorable. View "Noah Rosenkrantz v. Inter-American Development Bank" on Justia Law

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Plaintiff sued Select Portfolio Servicing ("Portfolio"), a mortgage servicer, under the Fair Debt Collections Practices Act ("FDCPA") and the Florida Consumer Collection Practices Act ("FCCPA"). Plaintiff claimed that several mortgage statements sent by Portfolio misstated a number of items, including the principal due, and that by sending these incorrect statements, Portfolio violated the FDCPA and FCCPA. The district court dismissed Plaintiff's complaint, finding the mortgage statements were not "communications" under either statute.The Eleventh Circuit reversed, holding that monthly mortgage statements may constitute "communications" under the FDCPA and FCCPA if they "contain debt-collection language that is not required by the TILA or its regulations" and the context suggests that the statements are an attempt to collect or induce payment on a debt. View "Constance Daniels v. Select Portfolio Servicing, Inc." on Justia Law

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In 2008, Morris defaulted on her home mortgage. After negotiating a loan modification, she again defaulted in 2009. Morris and her husband, Mazhari, then filed two bankruptcy proceedings. Mazhari died while the second bankruptcy was pending. Morris unsuccessfully tried to obtain another loan modification. Following the 2016 lifting of the automatic stay in her third bankruptcy, Morris’s home was sold at public auction to Chase, the deed of trust beneficiary and successor to the original lender. Morris claims that the trustee’s sale occurred without notice to her because Chase and then Rushmore, the loan servicer, pursued foreclosure secretly while giving her false assurances that loan modification terms were forthcoming and shuttling her between uninformed representatives who gave her inconsistent information about her modification request.Morris sought post-foreclosure relief, including damages, an order setting aside the trustee’s sale, and a declaration quieting title under the California Homeowner Bill of Rights (HBOR) (Civ. Code 2923.6, 2923.7) and other theories. In 2018, the trial court dismissed all claims. After another delay occasioned by another bankruptcy, Morris appealed. The court of appeal reversed in part, with respect to claims alleging failure to appoint a single point of contact (HBOR 2923.7), dual tracking (2923.6), and failure to mail upon request a notice of default and notice of trustee’s sale 2924b). The court otherwise affirmed. View "Morris v. JPMorgan Chase Bank N.A." on Justia Law

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The Supreme Court reversed the opinion of the circuit court affirming the district court's order liquidating a trust's assets, holding that the order was arbitrary, unreasonable, unfair, and unsupported by sound legal principles.J.P. Morgan Chase Bank, N.A., obtained a Jefferson District Court Court order that improperly directed the Bank to liquidate certain trust assets and pay them into the Jefferson Registry of Court. The circuit court affirmed the district court's action. The Supreme Court reversed, holding (1) the Bank violated its statutory and fiduciary duties by liquidating the trust's assets when the legislature has provided an adequate mechanism and remedy for the settlement and distribution of trust assets; and (2) as a remedy, the district court is to order an accounting and appropriate damages. View "Estate of Worrall v. J.P. Morgan Bank, N.A." on Justia Law

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Plaintiff Wells Fargo Bank filed a statutory-interpleader action after facing conflicting demands for access to the checking account of Mesh Suture, Inc. Mark Schwartz, an attorney who founded Mesh Suture with Dr. Gregory Dumanian, was named as a claimant-defendant in the interpleader complaint but was later dismissed from the case after the district court determined that he had disclaimed all interest in the checking account. The district court ultimately granted summary judgment to Dr. Dumanian as the sole remaining claimant to the bank account, thereby awarding him control over the funds that remained. Schwartz appealed, arguing: (1) the district court lacked jurisdiction over the case because (a) there was not diversity of citizenship between him and Dr. Dumanian and (b) the funds in the checking account were not deposited into the court registry; (2) he did not disclaim his fiduciary interest in the checking account, and (3) the award of funds to Dr. Dumanian violated various rights of Mesh Suture. Finding no reversible error, the Tenth Circuit affirmed the district court judgment. View "Wells Fargo Bank v. Mesh Suture, et al." on Justia Law