Justia Banking Opinion Summaries

Spring Street, seeking to recover against Bayou and its owner Douglas Lam on defaulted promissory notes, claimed that certain transfers that defendants made were fraudulent: (1) Bayou's transfer of "hard assets" to LT Seafood when LT Seafood took over Bayou's retail operations at the 415 East Hamilton location; (2) Douglas Lam's transfer of his 49% interest in LT Seafood to DKL & DTL; and (3) DKL & DTL's subsequent transfer of this 49% interest to Vinh Ngo. The court concluded that Spring Street could pierce DKL & DTL's corporate veil on the basis of fraud and impose individual liability on the LLC members. Accordingly, the court affirmed the district court's summary judgment in favor of Spring Street with regard to these claims. However, the court concluded that Ten Lam and Ngo have raised a genuine dispute of fact as to both which "hard assets" Bayou transferred to LT Seafood and the value of those assets on the date of the transfer. Accordingly, the court vacated the judgment in regards to Spring Street's fraudulent transfer claim against Lam and Ngo for the amount of $150,000 and remanded for further proceedings. View "Spring Street Partners v. Lam, et al." on Justia Law

Plaintiffs alleged that various foreign investment vehicles secretly funneled investors' assets to Madoff Securities. The district court granted defendants' motion to dismiss plaintiffs' claims against JPMorgan and BNY on the ground that the claims were precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 15 U.S.C. 78bb(f), and, alternatively, by New York's Martin Act, N.Y. Gen. Bus. Law 352 et seq. In this instance, the allegations were more than sufficient to satisfy SLUSA's requirement that the complaint alleged a "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security." Accordingly, the court affirmed the judgment, concluding that plaintiffs' claims against JPMorgan and BNY were properly dismissed as precluded by SLUSA. View "Trezziova v. Kohn" on Justia Law

The Supreme Court consolidated two cases for the purposes of this opinion. Each of the plaintiffs in these cases attended a foreclosure auction, was the successful bidder at that auction, paid money for the auctioned property, and received a foreclosure deed to the property. Each plaintiff brought an ejectment action under Alabama law, claiming good title to the property at issue and the right to eject the original debtor. Upon review, the Supreme Court concluded that the trial courts had subject-matter jurisdiction over these cases, including any issue as to the validity in fact of the plaintiffs' title to the property (this being one of the elements of proof required in an ejectment action). The Supreme Court reversed the trial court in the "Strudivant" case, but affirmed in the "Harris" case. View "Sturdivant v. BAC Home Loans Servicing, LP" on Justia Law

Deutsche Bank filed a complaint for foreclosure against Wilk, 14 M.R.S. 6321, attaching documents, including a 2005 mortgage ($459,375) from Wilk in favor of the original lender’s nominee, MERS; a 2008 assignment from MERS to IndyMac; and a 2010 assignment by the FDIC, as the receiver for IndyMac, to Deutsche Bank. Trial evidence included a 2011 assignment from OneWest Bank to Deutsche Bank, executed approximately two weeks prior to the FDIC conveyance to OneWest Bank, purporting to grant “all interest” OneWest Bank then held in the mortgage to Deutsche Bank. On cross-examination, Deutsche Bank’s only witness confirmed that the assignment from OneWest Bank to Deutsche Bank was prior in time to the assignment from the FDIC to OneWest Bank. Deutsche Bank did not introduce the 2010 mortgage assignment, which it had attached to the complaint and which purported to transfer the mortgage from the FDIC to Deutsche Bank. The court entered a judgment of foreclosure. The Maine Supreme Court vacated, holding that Deutsche Bank failed to prove that it is the assignee of the mortgage. View "Deutsche Bank Nat'l Trust Co. v. Wilk " on Justia Law

U.S. Bank appealed the bankruptcy court's order authorizing AMR and American (collectively, "Debtors") to obtain postpetition financing; authorizing Debtors to repay certain prepetition notes held by U.S. Bank and secured by aircraft; and denying U.S. Bank's request to lift an automatic stay. The court concluded that: (1) under the language of the Indentures, American's voluntary petition for bankruptcy triggered a default and automatically accelerated the debt, the satisfaction of which required no make-whole payment; (2) ipso facto clauses in a nonexecutory contract were not unenforceable under 11 U.S.C. 365(e) or any other Bankruptcy Court provision identified by U.S. Bank; Debtors complied with its 11 U.S.C. 1110(a) elections to perform its obligations under the Indentures and cure any nonexempt defaults by making regularly schedule principal and interest payments; it was not required to cure its Section 4.01(g) default; and (4) the bankruptcy court did not abuse its discretion in denying U.S. Bank's motion to lift the automatic stay. Accordingly, the court affirmed the judgment of the district court. View "In re: AMR Corp." on Justia Law

The FDIC, as receiver for the Bank, challenged the judgment of the lower courts that the tax sharing agreement between NetBank, the parent company, and its subsidiary, Bank, established a debtor-creditor relationship between the parties and awarding the tax refund to the bankruptcy estate of NetBank. The court reversed and remanded with instructions to enter judgment in favor of the FDIC, concluding that the parties to the tax sharing agreement in this case intended to create an agency relationship rather than a debtor-creditor relationship with respect to IRS refunds attributable to the Bank. View "FDIC v. Zucker" on Justia Law

Mortgagors appealed the district court's grant of judgment on the pleadings to their lenders in a dispute regarding a home loan. At issue on appeal was whether mailing a notice of rescission within three years of consummating a loan was sufficient to "exercise" the right to rescind a loan transaction under 15 U.S.C. 1635(a) or, alternatively, whether a party seeking to rescind the transaction was required to file a lawsuit within the three-year statutory period. The court held that a party seeking to rescind a loan transaction must file suit within three years of consummating the loan. Accordingly, the court affirmed the district court's judgment on the pleadings in favor of the lenders. View "Jesinoski, et al. v. Countrywide Home Loans, Inc., et al." on Justia Law

The defendants, affiliated companies, owned ATMs in Indianapolis bars that were popular with college students. Plaintiffs filed a purported class action, based on violation of the Electronic Funds Transfer Act, 15 U.S.C. 1693b(d)(3). At the time, the Act required a sticker notice on the ATM and an onscreen notification during transactions. Defendants provided onscreen notice but not, according to the complaint, a sticker. The Act has been amended to remove the sticker notice requirement. The district court decertified the class. The Seventh Circuit reversed, finding that the district judge did not provide adequate explanation. While the compensatory function of the class action has no significance in this case, the damages sought by the class, and, more importantly, the attorney’s fee that the court will award if the class prevails, will likely make the suit a wake‐up call and have a deterrent effect on future violations of the Electronic Funds Transfer Act. View "Hughes v. Kore of IN Enters., Inc." on Justia Law

Northern Grain Equipment, LLC entered into contracts with Thimjon Farms Partnership and Hagemeister Farms to construct grain-handling systems on their respective properties. Neither Thimjon nor Hagemeister were customers of First International Bank & Trust. Both Thimjon and Hagemeister made down payments to Northern Grain, which were deposited in Northern Grain's account at First International. Northern Grain never constructed the grain-handling systems and discontinued business. Thimjon and Hagemeister brought separate actions against First International, alleging First International's decision to cease loaning money to Northern Grain resulted in Northern Grain breaching its contracts with Thimjon and Hagemeister and that First International intentionally misled Northern Grain to the detriment of Thimjon and Hagemeister. First International moved for summary judgment. While the motion was pending, Thimjon and Hagemeister moved to amend their complaints to add a claim for deceit and to seek exemplary damages. The district court denied the motion to amend, granted First International's motion for summary judgment and entered judgment dismissing Thimjon's and Hagemeister's claims with prejudice. Thimjon and Hagemeister appealed, arguing the district court erred by granting First International's motion and by denying their motion to amend. Finding no error in the district court's judgment, the Supreme Court affirmed. View "Thimjon Farms Partnership v. First International Bank & Trust" on Justia Law

Gray’s friend Johnson offered to act as co‐borrower to help Gray buy a house, if Gray promised that she would only be on the loan as a co‐borrower for two years. In return, Johnson received a finder’s fee from the daughter of the builder-seller (Hinrichs). Mortgage broker Bowling sent their application to Fremont, a federally insured lender specializing in stated‐income loans, with which the lender typically did not verify financial information supplied by applicants. Bowling testified that he told both women that they would be listed as occupants, that their incomes would be inflated, and what the monthly payment would be. The closing proceeded; Gray and Johnson received a $273,700 mortgage from Fremont and, on paper, a $48,300 second mortgage from Hinrichs. Gray and Johnson acknowledge that the application that they signed contained several false statements. Bowling became the subject of a federal investigation. Sentenced to 51 months’ imprisonment, he agreed to testify against his clients. The Seventh Circuit affirmed the convictions of Gray and Johnson under 18 U.S.C. 1014, which prohibits “knowingly” making false statements to influence the action of a federally insured institution. Rejecting an argument that the district court erred by denying an opportunity to present testimony to show Bowling’s history of duping clients, the court stated that his prior wrongdoing was not very probative of Gray’s and Johnson’s guilt. View "United States v. Gray" on Justia Law