Justia Banking Opinion Summaries
United States v. Yates
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
Johnson v. BOKF National Ass’n
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
City of Oakland v. Wells Fargo & Co.
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
First Dakota National Bank v. Gregg
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
Federal Deposit Insurance Corp. v. Chicago Title Insurance Co.
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
Next Investments, LLC v. Bank of China
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
Nationstar Mortgage v. Kemp
In this case questioning whether the addition of a definition of "lender" to the Maryland Usury Law during code revision effected a significant change in that law that lay latent for four decades before this case arose, the Court of Appeals held that code revision did not change Maryland law applicable to assignees of mortgage loans.Donna Kemp entered into a mortgage loan secured by a deed of trust on her home. The loan was later assigned to Fannie Mae, which contracted with the predecessor of Nationstar Mortgage, LLC to service the loan. Nationstar later declared Kemp to be in default. Kemp, Fannie Mae, and Nationstar entered into a loan modification agreement to resolve the default, but Kemp objected to the assessment of property inspection fees. Kemp filed a complaint, which the circuit court dismissed for failure to state a cause of action. The Court of Appeals held (1) the prohibition on property inspection fees applied to Nationstar as the agent of Fannie Mae; and (2) Kemp's complaint adequately stated a claim under the Maryland Consumer Debt Collection Act. View "Nationstar Mortgage v. Kemp" on Justia Law
53rd Street, LLC v. U.S. Bank National Ass’n
The Second Circuit vacated the district court's grant of summary judgment to plaintiff in a quiet title action regarding a property subject to a mortgage held by the bank. The district court, relying on a statement in Milone v. U.S. Bank, N.A., 164 A.D.3d 145 (2d Dep't 2018), held that U.S. Bank's purported de-acceleration was motivated only by a desire to avoid the expiration of the limitations period and was therefore insufficient to de-accelerate. While this appeal was pending, the New York Court of Appeals, in Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1 (2021), abrogated the proposition of Milone on which the district court relied. Therefore, this intervening decision undermined the reasoning of the district court. The court remanded for further proceedings. View "53rd Street, LLC v. U.S. Bank National Ass'n" on Justia Law
Lexon Insurance Co., Inc. v. Federal Deposit Insurance Corp.
The Fifth Circuit affirmed the district court's grant of summary judgment to the FDIC receiver (FDIC-R) and the Federal Rule of Civil Procedure 12(b)(1) dismissal of Lexon's Federal Tort Claims Act (FTCA) claim against the FDIC in its corporate capacity. In this case, Lexon filed suit against the FDIC-R alleging violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).The court concluded that the district court did not err in sua sponte granting summary judgment. Although the district court erred in failing to notify the parties, that error was harmless. The court held that letters of credit are repudiable contracts for the purposes of 12 U.S.C. 1821(e)(1); the FDIC-R repudiated the letters of credit within a "reasonable period" under section 1821(e)(2); and Lexon lacks "actual direct compensatory damages" under FIRREA. The court also concluded that Lexon failed to establish an analogous private liability and the district court correctly dismissed Lexon's FTCA claim for lack of subject-matter jurisdiction. View "Lexon Insurance Co., Inc. v. Federal Deposit Insurance Corp." on Justia Law
United States v. Kahn
The Second Circuit affirmed the district court's judgment in favor of the government against defendants as co-executors of the estate of Harold Kahn, in the principal penalty amount of $4,264,728, plus statutory additions and interest, for Kahn's undisputedly willful failure, in violation of 31 U.S.C. 5314, to file in 2009 a Report of Foreign Bank and Financial Accounts ("FBAR") for his two foreign bank accounts whose balances, at the time of his failure to file, totaled $8,529,456. The Estate contends that the district court erred in refusing to limit the per-willful-violation maximum penalty for failure to file an FBAR to the $100,000-per-account maximum set by the 1987 Treasury Department Regulation, 31 C.F.R. 1010.820(g)(2).The court concluded that the district court correctly ruled that the penalty limitation provided in the 1987 regulation, which had tracked the penalty provision enacted in a prior version of the statute, was superseded by the 2004 statutory amendment to 31 U.S.C. 5321 increasing the penalty maximum. View "United States v. Kahn" on Justia Law