Justia Banking Opinion Summaries

Plaintiffs controlled Mutual Bank. In an effort to save the bank from insolvency, at the request of FDIC-Corporate, they raised about $30 million mostly in the form of note purchases. In 2008, FDIC-Corporate requested another $70 million, which they were unable to raise. In 2009, regulators issued warnings about the bank. The bank’s board voted to redeem the notes and create deposit accounts for plaintiffs, essentially returning their money. Before FDIC-Corporate responded to a request for required approval, 12 U.S.C. 1821(i), the bank was declared insolvent and FDIC was appointed as receiver. Mutual Bank’s branches opened as branches of United Central Bank the next day. The plaintiffs filed proofs of claim, seeking to redeem the notes and obtain depositor-level priority in post-insolvency distribution scheme. FDIC Receiver rejected the claims and the plaintiffs filed suit, alleging that they had been misled into investing in the bank and prevented from getting their money back. The district court dismissed as moot. The Seventh Circuit affirmed, characterizing the claim as an unauthorized request for “money damages,” 5 U.S.C. 702. The plaintiffs did not first seek administrative review of what was essentially a challenge to the FDIC’s regulatory decision not to act on the redemption approval request. View "Veluchamy v. Fed. Deposit Ins. Corp." on Justia Law

Prime Realty, Inc. (Prime) acted as general partner for two limited partnerships (collectively, the Partnerships). Without the Partnerships' limited partners' knowledge, Prime took out two loans from a bank (the Bank) and, by deed of trust, secured the loans with Partnerships' property. The Bank ultimately sold the collateral and applied the proceeds to the loans. The Partnerships sued the Bank for conversion, alleging that the loans were for a nonpartnership purposes and, as such, Prime lacked authority to offer the Partnerships' property as collateral without the limited partners' consent under the Partnership agreements. The district court concluded that the Bank had converted the Partnerships' property and awarded the Partnerships damages and prejudgment interest. The Supreme Court affirmed, holding (1) the Partnerships' complaint was timely; (2) the Bank converted the Partnerships' property; (3) the district court improperly awarded damages in the full amount of the proceeds applied to the loans because a portion of the first loan served a Partnership purpose; and (4) prejudgment interest was proper only in the amount the Bank applied to the second loan. View "Brook Valley Ltd. P'ship v. Mut. of Omaha Bank" on Justia Law

Plaintiffs filed a Chapter 7 bankruptcy petition and sought to surrender their home. When Plaintiffs' mortgage lenders (collectively, Beneficial) refused to foreclose or otherwise take title to the residence, Plaintiffs demanded that the mortgage lien be released. After Beneficial also refused to release the mortgage lien, Plaintiffs began an adversary proceeding claiming a discharge injunction violation. The bankruptcy court found Beneficial did not violate the discharge injunction. The bankruptcy appellate panel affirmed. Plaintiffs appealed, arguing that because the facts of this case so closely mirrored those in Pratt v. General Motors Acceptance Corp., the same result should follow. The First Circuit Court of Appeals affirmed the bankruptcy court's judgment, holding that the bankruptcy court's legal conclusions were correct and that the court did not err in its judgment. View "Canning v. Beneficial Me., Inc." on Justia Law

Petitioner challenged the OCC and the Board's authority to issue cease-and-desist orders pursuant to Section 19 of the Federal Deposit Insurance Act (FDIA), 12 U.S.C. 1829, as well as their respective conclusions that petitioner's agreement with the prosecutor triggered Section 19. Section 19 restricted who could participate in the affairs of insured depository institutions and bank and savings and loan holding companies. Because the agencies applied an improper definition of "pretrial diversion or similar program" and failed to adequately justify their positions on petitioner's expunction, the court granted petitioner's petitions for review in part, vacated the agencies' orders, and remanded for the agencies to determine whether the Agreement at issue fell within the parameters the court identified. The court denied the petition in all other respects. View "DeNaples v. Office of the Comptroller of Currency" on Justia Law

Mortgagors appealed from the district court's dismissal of their claims against the FHLMC and other financial institutions, a law firm, and others. Mortgagors asserted twenty-one claims under Minnesota law related to defendants' rights to the mortgages on the mortgagors' homes. The court rejected the mortgagors' argument that the district court improperly dismissed their claims against the law firm and their contention that their complaint made out a Minnesota slander-of-title action. The court also concluded that the mortgagors did not make out a quiet title claim and the district court properly dismissed their claims against the financial institutions. View "Peterson, et al v. CitiMortgage, Inc., et al" on Justia Law

Mortgagors filed suit in Minnesota state court against defendants, alleging numerous deficiencies in the assignment of their mortgages and in their foreclosures. In this appeal, plaintiffs asserted that the district court erred in denying their motion to remand when it concluded that they failed to make out claims for slander of title, declaratory judgment, and quiet title, and in mistakenly relying on Jackson v. Mortgage Registration Sys. Because the court recently concluded that nearly identical claims against a resident law firm had no reasonable basis in law and fact under Minnesota law and constituted fraudulent joinder, the court rejected plaintiffs' contention that the district court erred by dismissing the claims against the law firm and denying remand; the court disposed of the slander-of-title claim because the court recently upheld the dismissal of a virtually identical claim in Butler v. Bank of America; the court denied plaintiffs' request for declaratory judgment to determine whether defendants had "any true interest in or right to foreclose on their properties" and whether the notes were properly accelerated by the correct party; and the court affirmed the district court's dismissal of the quiet title action. View "Karnatcheva, et al v. JP Morgan Chase Bank, et al" on Justia Law

This case arose from a land development project dispute where the Retreat took out a short-term purchase loan from a Georgia bank to finance the acquisition of the land. At issue was the district court's interpretation of an exclusion in a title insurance policy issued by First American to the bank and the district court's decision that First American was entitled to summary judgment based on that exclusion. The court held that the district court correctly interpreted the terms of the title insurance contract; the district court's conclusion that the affidavit at issue would be admissible at trial was not an abuse of discretion; and the evidence demonstrated that the bank was fully aware of the Retreat property's lack of dedicated access when it extended the purchase loan and took out the insurance policy from First American. Because there were no genuine issues of material fact in dispute and because First American was entitled to judgment as a matter of law, summary judgment was appropriate. View "Cynergy, LLC v. First American Title Ins. Co." on Justia Law

This case stemmed from defendant's arrest for bank fraud. The government appealed the district court's denial of its motion in limine to admit a state court temporary restraining order as evidence against defendant. The court held that, because the government was seeking to admit the state court order for a non-hearsay purpose and because the district court's analysis pursuant to Federal Rule of Evidence 403 did not account for the order's probative value if offered to show knowledge, the court vacated the district court's order and remanded for further proceedings. View "United States v. Dupree" on Justia Law

Porayko entered bankruptcy in 2009, having $10,000 in a checking account at TCF. Crowell, holding a $73,000 judgment against Porayko, served Porayko with a citation to discover assets, asserting a lien. 735 ILCS 5/2-1402(m). Crane, the bankruptcy trustee, argued that only a citation served directly on the bank would establish a lien. The bankruptcy judge lifted the automatic stay, 11 U.S.C. 362(d). The district court and Seventh Circuit affirmed. The statute provides that a citation to discover assets creates a lien on all “nonexempt personal property, including money, choses in action, and effects of the judgment debtor,” including “all personal property belonging to the judgment debtor in the possession or control of the judgment debtor or which may thereafter be acquired or come due to the judgment debtor.” A bank account may be an intangible interest, but intangible rights are personal property and a checking account’s holder controls the right to designate who receives the funds on deposit, which makes its value a form of “personal property” under Illinois law. View "Crane v. Crowell" on Justia Law

In 1986, appellee personally guaranteed a loan made by Petra to AEGIS. Appellee subsequently sued Petra in district court in late 2008, seeking a declaratory judgment that he did not have any obligations under a Guaranty Agreement. Petra counter-sued in early 2009, seeking to enforce the Guaranty Agreement. The court concluded that Petra's claim was time-barred where the limitations period began in 1987 when AEGIS declared bankruptcy and appellee was obligated to pay Petra under the Guaranty Agreement, and the limitations period expired in 1999. The court also concluded that Petra should have the opportunity to produce evidence sufficient to create a substantial question of material fact to the governing issues of the case. Accordingly, the court vacated the district court's grant of summary judgment and remanded for further proceedings. View "Farouki v. Petra Int'l. Banking Corp., et al" on Justia Law