Justia Banking Opinion Summaries

This appeal involves a dispute between the Trustee, appointed to protect public customers and creditors in the liquidation of LBI, and purchasers of LBI's assets over the entitlement to two sets of LBI assets: (1) the Margin Assets and (2) the Clearance Box Assets (CBAs). The district court held that Barclays was entitled to both the Margin Assets and the CBAs, and was conditionally entitled to the Rule 15c-3 Assets. The Trustee appealed from the Margin Assets and CBA rulings. Barclays cross-appealed from the Rule 15c3-3 Assets ruling but the settlement had disposed of that issue and cross-appeal. The court concluded that the transfer of the Margin Assets to Barclays was contemplated in the Asset Purchase Agreement and confirmed in the Clarification Letter. The court agreed with the district court that extrinsic evidence showed an intent to transfer the CBAs to Barclays. Accordingly, the court affirmed the judgment of the district court.View "In Re: Lehman Brothers Holdings Inc." on Justia Law

The Hawaii AG filed suit in state court against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products. The card providers removed to federal court and the AG moved to remand. The district court denied the motion to remand. The court concluded that the state law claims were not preempted by the National Bank Act of 1864, 12 U.S.C. 85-86. The court joined the Fifth Circuit in holding that sections 85 and 86 did not completely preempt the claims, as there is a difference between alleging that certain customers are being charged too much, and alleging that they should have never been charged for the service in the first place. Therefore, the AG did not plead a completely preempted claim and the district court erred in finding federal question jurisdiction. The court agreed with its sister circuits in holding that the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. 1332(d), does not completely preempt state law. Because the complaints unambiguously disclaimed class status, these actions cannot be removed under CAFA. There is no basis for federal jurisdiction and the cases should have been remanded to state court. Accordingly, the court reversed and remanded.View "State of Hawaii v. HSBC Bank of Nevada" on Justia Law

Ghazi Abbar, manager of the Abbar family trusts, lost $383 million invested with a United Kingdom affiliate of Citigroup and seeks to arbitrate his grievances under the rules of FINRA against a New York affiliate. The district court permanently enjoined the arbitration because Abbar is not a "customer" of the New York affiliate. The court held that a "customer" under FINRA Rule 12200 is one who, while not a broker or dealer, either (1) purchases a good or service from a FINRA member, or (2) has an account with a FINRA member. While Abbar was certainly a "customer " of Citi UK, that relationship does not allow Abbar to compel arbitration against its corporate affiliates. Because Abbar was not a customer of Citi NY, a FINRA member, he cannot arbitrate his claims against Citi NY.View "Citigroup Global Markets Inc. v. Abbar" on Justia Law

S.D. Codified Laws 53-9-6 prohibits parties from contractually limiting the statute of limitations except in the case of a “surety contract.” In this case, First Dakota National Bank purchased a financial institution bond from BancInsure, Inc. to provide coverage for liability issues that could arise in the course of the bank’s operations. The bond outlined that claims must be brought within two years of the discovery of a loss. In 2004, First Dakota issued a loan, which was obtained through forgery. First Dakota sought coverage under the bond for the loan, but BancInsure denied coverage on the ground that First Dakota had not brought suit within two years since the loss was discovered. First Dakota sued BancInsure in federal court seeking coverage under the bond and damages for the bank’s refusal to pay the claim. The district court certified to the Supreme Court the question of whether the financial institution bond in this case was a surety contract. The Supreme Court answered the question in the negative, holding that the bond in this case was not a surety contract.View "First Dakota Nat’l Bank v. BancInsure, Inc." on Justia Law

In 2008, Musgrave, a CPA, became involved in a tire recycling venture with Goldberg. Musgrave obtained a loan, guaranteed by the Small Business Administration (SBA), through Mutual Federal Savings Bank. The venture ultimately lost the $1.7 million loan and Musgrave lost his $300,000 investment. In 2011, the two were indicted. Goldberg pled guilty to one count of misprision of felony, and the recommended a sentence of three years of probation, restitution, and a special assessment. Musgrave was convicted of: conspiracy to commit wire and bank fraud and to make false statements to a financial institution, 18 U.S.C. 1349; wire fraud, 18 U.S.C. 1343; bank fraud, 18 U.S.C. 1344. The district court sentenced him to one day of imprisonment with credit for the day of processing, a variance from his Guidelines range of 57 to 71 months and below the government’s recommendation of 30 months. The Sixth Circuit vacated, noting that economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity and are prime candidates for general deterrence. The district court relied on impermissible considerations and failed to address adequately how what amounted to a non-custodial sentence afforded adequate general deterrence in this context. . View "United States v. Musgrave" on Justia Law

Plaintiff-school opened a bank account for its operating fund with Defendant-bank. One of Plaintiff’s employees later opened a bank account with Defendant that Plaintiff had not authorized and deposited into that account several hundred checks originating from, or intended to be deposited into, Plaintiff’s bank account with Defendant. Over the course of approximately four years, the employee deposited $832,776 into this bank account and withdrew funds just short of that amount. Defendant refused Plaintiff’s demand to return the funds that the employee had funneled through this account to himself. Thereafter, Plaintiff commenced this action, alleging breach of contract, violations of the Uniform Commercial Code (UCC), negligence, and common law conversion. The trial court rendered judgment in favor of Plaintiff on each of the counts and awarded $832,776 in total compensatory damages. The Supreme Court affirmed in all respects with the exception of the damages award, holding that some of Plaintiff’s claims under the UCC were time barred and that the trial court did not otherwise err in its judgment. Remanded with direction to reduce the award by $5,156 and to proportionately reduce prejudgment interest, .View "Saint Bernard Sch. of Montville, Inc. v. Bank of Am. " on Justia Law

Coquina invested in a Ponzi scheme perpetrated by Scott Rothstein and lost over $6.7 million when his scheme collapsed. Coquina then filed suit against TD Bank, claiming that the bank made material misrepresentations and took other actions to help Rothstein perpetrate the fraud. The court concluded that Coquina had Article III standing; the district court did not err in regards to the testimony of TD Bank's regional vice president; although the district court erroneously admitted into evidence the settlement agreement between Coquina and the Trustee, the error did not cause substantial prejudice to TD Bank; the court affirmed the damages award and rejected TD Bank's arguments concerning the award; and affirmed the sanctions imposed. The court also found no abuse of discretion in the district court's denial of Coquina's motion to amend. Accordingly, the court affirmed the judgment of the district court in all respects.View "Coquina Investments v. TD Bank, N.A." on Justia Law

Plaintiffs filed suit against Chase and WaMu, alleging claims arising out of allegedly fraudulent acts by WaMu concerning the refinancing of their mortgage. WaMu was later placed into receivership of the FDIC and the FDIC transferred plaintiffs' mortgage to Chase. The court concluded that plaintiffs' claims in their complaint are "claims" for purposes of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1821(d)(3)(D), and related to WaMu's acts or omissions for purposes of section 1821(d)(13)(D). Because plaintiffs have not exhausted their administrative remedies under section 1821(d), the plain language of section 1821(d)(13)(D)(ii) stripped the district court of jurisdiction to consider plaintiffs' complaint. Accordingly, the court affirmed the district court's dismissal of plaintiffs' claims.View "Rundgren v. Washington Mutual" on Justia Law

Attorney Valeriano Diviacchi represented Camilla Warrender in an action brought against Warrender by her mortgagee, Sovereign Bank, which sought to collect on a loan secured by certain real property. Shortly after Diviacchi entered his appearance, Warrender, without Diviacchi’s assistance, agreed to a settlement pursuant to a stipulation that Warrender’s property be sold to a third party. Diviacchi filed a notice of attorney’s lien pursuant to Mass. Gen. Laws ch. 221, 50 (section 50). The property was subsequently sold to a third-party, and Sovereign Bank dismissed its claims against Warrender. The district court denied the motion to enforce the attorney’s lien, concluding that the lien was not enforceable under section 50 because Diviacchi “failed to make a showing that he incurred reasonable fees and expenses….” The First Circuit affirmed, holding that Diviacchi’s lien was not legally enforceable against the sale proceeds.View "Sovereign Bank v. Diviacchi" on Justia Law

In 2000, Marr’s father founded Equipment Source, which sold used forklifts. Marr managed sales and daily operations, advertising online and selling online or by phone. In 2002, his father opened a merchant account at Palos Bank, to process credit card transactions, with Marr as a signatory. Marr sold forklifts that he never owned or possessed. Customers would contact Marr to complain that they received an invoice and notice of shipment, and that Equipment Source charged the credit card, but that the forklift never arrived. While Marr gave varying explanations, he rarely refunded money or delivered the forklifts. Customers had to contact their credit card companies to dispute the charges. The credit card company would send notice of the dispute to Palos Bank, which noticed a high incidence of chargebacks on Equipment Source’s merchant account and eventually froze the company’s accounts. Its loss on Equipment Source’s merchant account was $328,881.89. In 2003, the FBI executed a search warrant at Equipment Source’s offices and Equipment Source ceased doing business. Eight years later, the government charged Marr with six counts of wire fraud. At trial, the government presented testimony from 14 customers who paid for forklifts but never received them; two bank employees who dealt with chargebacks, and a financial expert witness, who confirmed the $328,881.89 loss. The Seventh Circuit affirmed Marr’s conviction, rejecting arguments that the government relied upon improper propensity evidence, that jury instructions incorrectly explained the law, and that the district court lacked the authority to order restitution.View "United States v. Marr" on Justia Law