Justia Banking Opinion Summaries

Med‐1 buys delinquent debts and purchased Suesz’s debt from Community Hospital. In 2012 it filed a collection suit in small claims court and received a judgment against Suesz for $1,280. Suesz lives one county over from Marion. Though he incurred the debt in Marion County, he did so in Lawrence Township, where Community is located, and not in Pike Township, the location of the small claims court. Suesz says that it is Med‐1’s practice to file claims in Pike Township regardless of the origins of the dispute and filed a purported class action under the Fair Debt Collection Practices Act venue provision requiring debt collectors to bring suit in the “judicial district” where the contract was signed or where the consumer resides, 15 U.S.C. 1692i(a)(2). The district court dismissed after finding Marion County Small Claims Courts were not judicial districts for the purposes of the FDCPA. The Seventh Circuit initially affirmed, but, on rehearing en banc, reversed, holding that the correct interpretation of “judicial district or similar legal entity” in section 1692i is the smallest geographic area that is relevant for determining venue in the court system in which the case is filed. View "Suesz v. Med-1 Solutions, LLC" on Justia Law

In 2005 Detroit created not-for-profit corporations and issued debt instruments through those corporations, which passed the proceeds from sales of certificates on to the city, to fund pensions. The city covered the principal and interest payments. Some of the certificates had floating interest rates. To hedge that risk, the service corporations executed interest-rate swaps with banks. When interest rates fell below a threshold, the city had to pay the banks, which was offset by low interest rates owed to investors. If interest rates rose, the city would owe debtholders more interest, but received swap payments. Investors were unwilling to buy certificates and banks were unwilling to execute swaps unless an insurer guaranteed the obligations. Syncora insured the city’s obligations ($176 million in certificates; $100 million in swaps). A 2009 credit downgrade gave the banks the right to terminate the swaps and demand payment ($300 million). To avoid that, the city agreed (Syncora consented) to give the banks an optional early termination right, effectively ending the hedge protection, and established a “lockbox” system, under which the city would place excise taxes it receives from casinos into an account to be held until the city deposits its swap obligations (about $4 million per month). The agreement authorized the banks to “trap” the funds in the event of default or termination. In 2013 Syncora served notice that default had occurred. The city obtained a restraining order requiring release of the funds. The city filed for bankruptcy under Chapter 9 one week later. The bankruptcy court held that Syncora had no right to trap tax revenues, which were protected by the automatic stay under 11 U.S.C. 362(a)(3). The district court declined to consider an appeal, pending appeal of a determination that the city was an eligible debtor. The Sixth Circuit granted a petition for mandamus, requiring the court to rule.View "In re: Syncora Guar. Inc." on Justia Law

In 2006, Ingram executed a promissory note in favor of Loancity in the amount of $212,500 to finance the purchase of property in Providence and executed a mortgage on the property. The documents identified Mortgage Electronic Registration Systems (MERS) as “a separate corporation that is acting solely as nominee for Lender and Lender’s successors and assigns.” After a series of assignments in 2009, Deutsche Bank held both the note and the mortgage to the property. Ingram failed to make the required payments. OneWest, under power of attorney for Deutsche Bank, mailed notice that a foreclosure sale on the property was scheduled for March 25, 2010. The foreclosure sale was advertised in the Providence Journal. At the scheduled sale, Deutsche Bank purchased the property for $95,066.40. Ingram sought declaratory relief and to quiet title to the property. The superior court dismissed. The Rhode Island Supreme Court affirmed, rejecting various allegations of improper procedure.View "Ingram v. Mortg. Elec. Registration Sys., Inc" on Justia Law

Wellesly owned real property subject to a first deed and a junior mechanic's lien. The holder of the mechanic's lien subsequently filed suit to foreclose its lien, arguing that the lien was not eliminated by a foreclosure. The court held that, under well-established California law, the senior beneficiary's lien and title ordinarily do not merge when a deed in lieu of a foreclosure is given if there are junior lienholders of record; the foreclosure after acceptance of the deed was therefore valid and eliminated all junior liens, including plaintiff's mechanic's lien; and the third party now owns the property free of all such junior encumbrances. Accordingly, the court reversed the superior court's foreclosure order on the mechanic's lien.View "Decon Group v. Prudential Mort." on Justia Law

Plaintiffs appealed the district court's dismissal of their claims against four trusts to which their loans and mortgages were assigned in transactions involving the mortgagee bank, and against those trusts' trustee. The district court granted defendants' motion to dismiss for failure to state a claim, finding that plaintiffs were neither parties to nor third-party beneficiaries of the assignment agreements and therefore lacked standing to pursue the claims. It is undisputed that in 2009 or 2010, each plaintiff was declared to be in default of his mortgage, and foreclosure proceedings were instituted in connection with the institution of said foreclosure proceedings, the trustee claimed to own each of plaintiff's mortgage and that plaintiffs are not seeking to enjoin foreclosure proceedings. Assuming that these concessions have not rendered plaintiffs' claims moot, the court affirmed the district court's ruling that plaintiffs lacked standing to pursue their challenges to defendants' ownership of the loans and entitlement to payments. Plaintiffs neither established constitutional nor prudential standing to pursue the claims they asserted.View "Rajamin v. Deutsche Bank Nat'l Trust Co." on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law

In 2009, David and Debra Sawyer defaulted on a mortgage held by U.S. Bank N.A. In 2012, the Bank filed a complaint for foreclosure. At the time the complaint was filed, J.P. Morgan Chase Bank N.A. had taken over as loan servicer. Four court-ordered mediations subsequently took place, during which time the Sawyers attempted to negotiate a modification with Chase. The mediations were unsuccessful, largely due to Chase’s repeated delays and requests to submit documentation that the Sawyers had already submitted. At a show cause hearing, the superior court subsequently dismissed the Bank’s complaint with prejudice, concluding that the Bank was not prepared to proceed at the hearing. The Supreme Court affirmed, holding (1) the sanction was not excessive under the circumstances, and (2) there was evidence that the Sawyers were prejudiced by the Bank’s failure to participate in the mediation process in good faith.View "U.S. Bank, N.A. v. Sawyer" on Justia Law

Plaintiff filed suit alleging that CitiMortgage's responses to requests for information about her mortgage violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601-2617; the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692-1692p; and N.Y. General Business Law (GBL) section 349. The district court dismissed the complaint for failure to state a claim under Rule 12(b)(6). The court concluded that plaintiff failed to allege that CitiMortgage did not properly designate a qualified written address (QWR) or that any or her lawyer's letters were sent to the designated address. Because plaintiff's lawyer's letters are not QWRs, CitiMortgage's RESPA duties were not triggered, and therefore the district court properly dismissed the RESPA claims. The district court did not err in dismissing the FDCPA claims where the amended complaint failed to alleged that CitiMortgage qualified as a debt collector under the FDCPA. The district court did not err in dismissing the section 349 claim where CitiMortgage's QWR address notice was not inadequate. Finally, the court affirmed the judgment of the district court and denied her request for leave to amend.View "Roth v. CitiMortgage Inc." on Justia Law

Freed and Weiss were the sole managing members of a legal practice, CLG. Freed claims to have provided CLG’s operating capital through loans of $12 million. Under the partnership agreement between the two, Freed was entitled to repayment before CLG could make distributions to other members. According to Freed, shortly after he received partial repayment from CLG in 2011, Weiss began taking steps to terminate Freed’s control of CLG and to create a new limited liability company without him, by moving CLG funds held by Chase into other accounts, to which Freed lacked access. Freed demanded that Chase freeze CLG accounts. Freed contends that Chase employees informed Weiss, who then removed all funds from Chase. Freed sued Weiss in state court, alleging improprieties primarily regarding access to records and funds, breach of fiduciary duties and of the partnership agreement, and seeking a declaration of voluntary termination of CLG. Weiss counterclaimed, seeking to expel Freed from CLG. Freed sued Chase claiming that Chase facilitated Weiss’s unauthorized transfer, tortious interference with contractual rights, and aiding Weiss’s breaches of fiduciary duties. The suit was removed to federal court and Chase brought third-party claims for indemnity or contribution. Freed filed suit in federal court against Weiss, his father, and CLG, asking the court to force CLG to purchase Freed’s distributional interest. The district court found that abstention in the federal court cases was proper and stayed both pending the outcome of the state court proceedings. The Seventh Circuit agreed.View "Freed v. Weiss" on Justia Law