Justia Banking Opinion Summaries

Petitioners obtained a loan from a Lender by taking out a second mortgage on their residence secured by a deed of trust on that property. The Lender sold the loan to another entity, to whom it assigned the loan instruments. That entity, in turn, sold the loan and assigned the loan instruments. After Petitioners had paid off the note and Respondent had released the deed of trust, Petitioners sued the Lender and Respondent, alleging that Lender had violated the Maryland Secondary Mortgage Loan Law (SMLL) at the time of the original transaction. The circuit court granted summary judgment for Respondent. The court of special appeals affirmed, holding (1) Petitioners’ sole recourse against an assignee such as Respondent for the Lender’s violations of the SMLL would be by way of recoupment, but (2) because Petitioners filed suit only after they had paid off the loan, that remedy was not available to them. The Court of Appeals affirmed, holding (1) Respondent was not liable for violations of the SMLL committed by the Lender when the loan was originated, and (2) Respondent was not derivatively liable under statute or the common law for a violation of the SMLL committed by the Lender. View "Thompkins v. Mountaineer Invs., LLC" on Justia Law

A Law Firm had an escrow account with a Bank and authorized an employee to sign checks on the account by herself. The employee began embezzling money from the Firm’s various escrow accounts by engaging in a scheme called “check-kiting,” which involved the employee writing and depositing checks between the Bank account and the Law Firm’s account at another bank. More than three years after the last activity on the Bank account the Law Firm sued the Bank, raising four claims, including violations of the Uniform Commercial Code and common-law causes of action. The court of appeals concluded that the claims were barred by the one-year repose period of Ky. Rev. Stat. 355.4-406. The Supreme Court affirmed on other grounds, holding that the claims were barred by the three-year statute of limitations under Ky. Rev. Stat. 355.4-111.View "Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co." on Justia Law

Asset Acceptance, LLC filed a complaint against Amy Newby, alleging that Newby had received a credit card from Asset and that her account was past due and remained unpaid. Newby asserted counterclaims against Asset. Asset subsequently filed a motion to compel arbitration, claiming that the credit card was issued to Newby by Chase Bank and was subject to a cardholder agreement that contained an arbitration provision. The circuit court denied the motion, concluding that Asset had waived its right to arbitration by filing its complaint in the circuit court. The Supreme Court affirmed, holding that the circuit court did not err in (1) denying Asset’s motion to compel arbitration, and (2) denying sanctions against Asset pursuant to Ark. R. Civ. P. 11. View "Asset Acceptance LLC v. Newby" on Justia Law

Appellant entered into a mortgage contract with Pawtucket Credit Union (PCU) for the purchase of real property in Rhode Island. The mortgage agreement included a private contractual remedy, authorized by R. I. Gen. Laws 34-11-22, that allowed PCU, in the event Appellant defaulted on her loan payments, to accelerate its loan and invoke its statutory power of sale. PCU later declared Appellant in default, invoked its statutory power of sale, and began the foreclosure process. Appellant filed suit against PCU in federal district court, alleging that foreclosure pursuant to section 34-11-22 violated her federal and state due process rights. The district court dismissed the case for lack of subject matter jurisdiction. The First Circuit Court of Appeals affirmed, holding that none of the statutory bases cited in Appellant’s complaint conferred federal jurisdiction.View "Grapentine v. Pawtucket Credit Union" on Justia Law

The Rhode Island Joint Reinsurance Association brought an interpleader action against multiple defendants for the purpose of determining the proper disposition of insurance proceeds. Bank of America, N.A. (BANA), one of the defendants, moved for summary judgment on the interpleader claim and against defendant Genoveva Santana-Sosa’s cross-claim. The superior court granted summary judgment for BANA, concluding that BANA was entitled to the entire amount of the insurance proceeds and that Santana-Sosa was entitled to none of the disputed funds. The Supreme Court affirmed, holding that BANA was entitled to judgment as a matter of law.View "R.I. Joint Reinsurance Ass’n v. Santana-Sosa" on Justia Law

Borrowers applied from a home mortgage loan from Lender. During the transaction, a loan officer made an incorrect statement about lien priority. Borrowers later filed breach of fiduciary and negligent misrepresentation claims against Lender, alleging that the junior status of Lender’s lien decreased the marketability and value of their home and exposed them to increased liability. The trial court granted Lender’s motion for summary judgment on all claims. The Court of Appeals concluded that material issues of fact barred summary judgment on Borrowers’ breach of fiduciary duty claim, reasoning that Lender’s assurance of a first priority lien on Borrowers’ new mortgage loan was an act beyond the scope of a normal debtor-creditor relationship. The Supreme Court reversed, holding that the trial court correctly granted summary judgment for Lender on both claims where no fiduciary duty existed and where Plaintiffs did not forecast evidence that they made a reasonable inquiry into the validity of the loan officer’s statements.View "Dallaire v. Bank of Am., N.A." on Justia Law

In 2005, Starr’s husband, Bernard, invested millions in Atlanta-area residential developments. Following the 2008 financial crisis, the investments were $10 million in debt. Bernard sought to refinance and approached Bryan, a BB&T Bank loan officer. BB&T concluded that Bernard and his company were not independently creditworthy to refinance both loans. To refinance one loan, Bernard agreed to pledge 40,000 shares of BB&T stock and a corporate debenture. Starr agreed to pledge her independently-owned BB&T shares, for a total of $8.8 million of collateral. Bernard executed a personal guaranty. Bryan asserts that he suggested that Bernard’s daughters provide collateral or a guaranty and that Bernard suggested that Starr act as guarantor. Bernard insists that Bryan demanded that Starr provide a guaranty. BB&T’s summary of its requirements reads: “[Starr] will be required to co-sign the notes.” Starr never spoke with anyone from BB&T; Bernard told her that BB&T required her signature. Starr claims she felt tremendous pressure to sign. The loan for $6.4 million, plus interest, closed with each executing a guaranty. As of the 2010 due date, they had paid less than $2 million of the principal. BB&T’s successor sued, including a claim of breach of guaranty against Starr. Starr asserted that her guaranty was unenforceable as violating the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 and Regulation B’s prohibition on requiring spouses to guarantee loans. The district court held that Starr could not raise violations of ECOA and Regulation B as an affirmative defense. The Sixth Circuit vacated, holding that the violations can be asserted as an affirmative defense of recoupment.View "RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC" on Justia Law

GE Plaintiffs filed suit against Worthington under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Comm. Code 24.009(a), seeking to void transfers that Worthington received from the GE Plaintiffs' predecessor-in-interest, allegedly with notice of the transfers' fraudulent nature. The jury found in favor of the GE Plaintiffs and the district court entered judgment for the amount of the transfers. The court concluded that the factual commonality in this case did not suffice to count the contractual dispute settlement against TUFTA's limit on recovery for a single avoidance "claim," or to render Citibank a joint tortfeasor for one-satisfaction rule purposes. Accordingly, the district court did not err in denying Worthington a settlement credit for the settlement proceeds that the GE Plaintiffs received from Citibank. The court rejected Worthington's argument that the district court erred as a matter of law in interpreting TUFTA's good faith defense as an objective standard. Accordingly, the court affirmed the judgment of the district court.View "GE Capital Commercial, Inc., et al. v. Wright & Wright, Inc." on Justia Law

Choice filed suit against BancorpSouth for lost funds and BancorpSouth counterclaimed for attorney's fees. The court concluded that the loss of funds from Choice's account falls on Choice because there was no genuine dispute of fact as to whether BanCorpSouth's security procedures - which included password protection, daily transfer limits, device authentication, and dual control - were commercially reasonable; BancorpSouth met its burden of establishing that it accepted the payment order at issue in good faith; and BanCorpSouth complied with procedures or Choice's instructions. The court also concluded that the portion of the indemnification provision relating to attorney's fees was not inconsistent with Article 4A of the UCC and that BancorpSouth may seek attorney's fees from Choice under this provision. Accordingly, the court affirmed the district court's grant of summary judgment to BancorpSouth, reversed the district court's dismissal of BancorpSouth's counterclaim on the pleadings, and remanded for further proceedings.View "Choice Escrow and Land Title v. BancorpSouth Bank" on Justia Law

The United States and others filed suit against several mortgage servicers, including Wells Fargo, alleging claims under the False Claims Act, 31 U.S.C. 3729 et seq., and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), 12 U.S.C. 1833(a), based on Wells Fargo's alleged misconduct in issuing home mortgage loans insured by the FHA. The parties agreed on a settlement where the United States agreed to release certain claims. On appeal, Wells Fargo challenged the district court's order denying its motion to enforce the consent judgment. The court concluded that the Release's plain text forecloses Wells Fargo's interpretation. View "United States, et al. v. Bank of America Corp., et al." on Justia Law