Justia Banking Opinion Summaries

Principals of Cybercos defrauded lending institutions out of more than $100 million in loan. In 2002, Huntington granted Cyberco a multi-million-dollar line of credit, and Cyberco granted Huntington a continuing security interest and lien in all of Cyberco's personal property, including deposit accounts. After discovering the fraud, the government seized approximately $4 million in Cyberco assets, including $705,168.60 from a Huntington Bank Account. Cyberco principals were charged in a criminal indictment with conspiring to violate federal laws relating to bank fraud, mail fraud, and money laundering. Count 10 issued forfeiture allegations against individuals regarding Cyberco assets, including the Account. In their plea agreements, defendants agreed to forfeit any interest they possessed in the assets or funds. The district court entered a preliminary order of forfeiture with regard to the assets, including the Account. Huntington filed a claim, asserting ownership interest in the forfeited Account. The district court found that Huntington did not have a legal claim. On remand, the district court again denied the claim. The Sixth Circuit reversed. A party who takes a security interest in property, tangible or intangible, in exchange for value, can be a bona fide purchaser for value of that property interest under 21 U.S.C. 853(n)(6)(B). View "United States v. Huntington Nat'l Bank" on Justia Law

In 2005, Appellants Billy and Jeanette Baber executed a promissory note ("Note") payable to Ameriquest Mortgage Company, Inc. ("Lender"). To secure payment of the Note, Appellants executed and delivered to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Lender, as mortgagee, a mortgage which conveyed and mortgaged to the mortgagee certain real property located in Oklahoma County. In both the Note and Mortgage, Ameriquest Mortgage Company is named as the Lender and Payee. Appellants defaulted on the Note. Appellee initiated foreclosure proceedings in 2006. A copy of the non-indorsed Note and Mortgage was included with the petition. In their answer, Appellants demanded strict proof of the ownership of the Note and Mortgage. Appellee U.S. Bank as trustee for the Lender, moved for summary judgment; in an attached affidavit, Appellee asserted it currently held both the Note and Mortgage at issue, and again produced a copy of both the unindorsed Note and Mortgage. The trial court granted judgment on the Note and foreclosure on the mortgage in favor of U.S. Bank. Appellants moved to vacate that judgment, arguing they were denied their statutory right to respond to the bank's cross-motion for summary judgment that the motion was not delivered to them in a timely fashion and that they did not receive notice of a hearing that occurred on September 5, 2010. Upon review, the Supreme Court found that the bank by its unindorsed Note and Mortgage, did not prove that it was entitled to enforce either. The Court reversed the trial court's grant of summary judgment and remanded the case for further proceedings. View "U.S. Bank National Ass'n v. Baber" on Justia Law

Plaintiff-Appellant Bruce McDonald took out a loan (Note) secured by a deed of trust on Colorado real property in favor of the lender, IndyMac Bank. Plaintiff made payments on the loan from its 2003 inception until April 2009, including while IndyMac was operated in receivership by the Federal Deposit Insurance Corporation (FDIC). The FDIC sold IndyMac to a holding company that operated it as Defendant-Appellee OneWest, F.S.B. and OneWest, as the new loan servicer, notified Plaintiff of the sale. Plaintiff stopped making payments because OneWest "did not provide [him] with the instrument or reasonable evidence of authority to make such a presentment" in accordance with his demands for the original Note. Ultimately, OneWest foreclosed on the property and obtained a Rule 120 Order authorizing the sale of the property, after it produced the original Note, the deed of trust, and a pooling and servicing agreement governing the Note. The property was sold in 2010. OneWest purchased it, later assigning its interest in the property to the Federal Home Loan Mortgage Corp (FHLMC). Plaintiff filed suit in state district court claiming that OneWest was not entitled to payment on the Note and the order of sale was void. FHLMC filed a forcible entry and detainer action against Plaintiff seeking to evict him; Plaintiff obtained a stay pending resolution of his state court action. Plaintiff then amended his state-court complaint to join FHLMC and include a quiet title action; neither defendant answered and the state district court granted a default judgment quieting title in Plaintiff. Onewest appealed the default judgment. While the appeal was pending, Plaintiff filed this federal action against OneWest Bank on civil RICO, pattern of racketeering activities, violation of the Fair Debt Collection Practices Act, fraud, and violation of the Colorado Consumer Protection Act. The federal district court noted that it probably lacked subject matter jurisdiction under the Rooker-Feldman doctrine given that Plaintiff was attempting to litigate the same claims that the Rule 120 court had rejected. The court ultimately dismissed the action on the basis of Plaintiff's failure to state a claim. Plaintiff appealed. Upon review of the case, the Tenth Circuit found that Plaintiff's counsel admitted that the issue of the validity of the Note was presented at state court, but was not covered by the notice of appeal to the Tenth Circuit. Furthermore, Plaintiff's Rule 60 motion was not filed until nearly six months after the notice of appeal was filed, and no new notice of appeal was entered on this issue. Therefore, the Tenth Circuit was unable to consider these claims in this appeal, and affirmed the judgment of dismissal. View "McDonald v. OneWest Bank" on Justia Law

Plaintiff-Appellant Jean Rosenfield appealed a district court's order that granted a motion to dismiss filed by Defendant-Appellee HSBC Bank, USA (HSBC). Plaintiff brought claims seeking declaratory and injunctive relief, and damages against HSBC for alleged violations of the Truth in Lending Act (TILA), contending her lender failed to make required disclosures in a residential loan refinancing agreement executed by the parties, and that because of this, she was entitled to a rescission of her loan agreement. Plaintiff argued that the district court erred in dismissing her claims and by holding that she failed to timely exercise her right of rescission within the applicable three-year time bar specified by TILA. Upon review, the Tenth Circuit agreed with the district court and affirmed its judgment. View "Rosenfield v. HSBC Bank, USA" on Justia Law

Investors joined together to buy property. To finance the purchase, they formed a distinct limited liability company, IPA, to negotiate and execute a loan on their behalf with Morgan Stanley. Okun was manager of IPA, which was not allowed to hold an ownership interest in any of the investors. Morgan Stanley sold the loan to an Okun-controlled entity, Lender, LLC, and agreed to offset the purchase price by the amount of funds available in escrow, reserve, and impound accounts, in which it held a security interest and which were, under the terms of the loan, required to reimburse investors for maintenance, taxes, and other property-related expenses. Lender LLC never reestablished the accounts, depriving the Investors of $1,361,184.63. Abandoning their suit against Lender, LLC, the investors claimed that Morgan Stanley breached their loan agreement and committed conversion. The district court granted summary judgment for Morgan Stanley. The Seventh Circuit affirmed. Morgan Stanley was not barred by the Note, the Mortgage, or the RSA from assigning its interest in the escrow accounts to Okun or structuring a sale of the loan as it wished; it committed neither breach of contract nor conversion. View "IP of A W. 86th St.t 1, LLC v. Morgan Stanley Mortg. Capital Holdings, LLC" on Justia Law

Stokes owned 1Point, which managed employee-benefits plans and 401(k) retirement plans as a third-party administrator (TPA). Most were governed by the Employee Retirement Income Security Act, 29 U.S.C. 1002. TPAs generally provide record-keeping and assist in transferring money, but do not handle money or securities. Stokes directed clients to send funds to accounts he had opened in 1Point’s name. Cafeteria plan clients deposited $45 million and 401(k) clients deposited $5.7 million in accounts at Regions. Because the accounts bore 1Point’s name, Stokes was able to transfer money. Between 2002 and 2006, Stokes stole large sums. Regions failed to comply with the Bank Secrecy Act, 31 U.S.C. 3513, requirements to report large currency transactions, file suspicious-activity reports, verify identities for accounts, and maintain automated computer monitoring. In 2004, the U.S. Financial Crimes Enforcement Network assessed a $10 million fine against Regions. In 2006, Stokes and 1Point filed for bankruptcy. The Trustee filed suit against Regions in bankruptcy court on behalf of victimized plans for which he assumed fiduciary status. The suit was consolidated with plaintiffs’ suit. The district court withdrew the Trustee’s case from bankruptcy court, dismissed ERISA claims, and found that ERISA preempted state law claims. The Sixth Circuit affirmed. View "McLemore v. Regions Bank" on Justia Law

Defendant was convicted of armed bank robbery, 18 U.S.C. 2113(a), and sentenced to the statutory maximum of 240 months, in part because of previous convictions for the same crime. The Seventh Circuit affirmed, upholding exclusion of a defense witness on the ground that he was an alibi witness and the defense had not given the prosecution the notice required before trial by FRCP 12.1(a). The proposed testimony, that defendant was calm at his employment as a personal trainer two hours after the robbery, would have no probative value. The court also rejected a challenge to the photo array shown the bank manager, whom the robber had confronted after forcing entry shortly after the bank had closed. The array was suggestive, but any error was harmless. There was no doubt that the dust mask found outside the bank was the robber’s, and DNA found on the dust mask matched defendant’s DNA; all of the bank employees gave a description that matched defendant. View "United States v. Ford" on Justia Law

After the owner of a construction project defaulted on its obligations to various creditors, mortgage holder Pinnacle Bank foreclosed on the real property securing its mortgage. Junior mortgage holder American National Bank (ANB) and construction lienholder Michael's Construction, Inc. (Michael's) both sought payment from the surplus funds resulting from the foreclosure proceeding. The district court declared that ANB's mortgage was superior to Michael's lien, but denied ANB's request for contractual interest from the date of foreclosure through the date of final judgment. The Supreme Court (1) affirmed the district court's order regarding the priority of liens; but (2) reversed the order regarding interest, holding that the district court did not have the discretion to limit ANB's recovery by denying it interest at the contractual rate from the time of foreclosure through final judgment. Remanded to determine the amount of interest due ANB under the promissory note for that time period. View "Michael's Constr., Inc. v. Am. Nat'l Bank " on Justia Law

Plaintiff contracted to sell a furniture business to Mendoza in 2004. Westernbank provided partial funding and obtained a first mortgage. To secure a deferred payment of $750,000, Mendoza signed a mortgage in favor of plaintiff and a contract under which plaintiff consigned goods with expected sales value of more than $6,000,000. An account was opened at Westernbank for deposit of sales proceeds. Plaintiff alleges that Westernbank kept funds to which plaintiff was entitled for satisfaction of Mendoza’s debts to Westernbank. Mendoza filed for bankruptcy and transferred its real estate to Westernbank in exchange for release of debt to the bank. Plaintiff agreed to forgive unpaid debts in order to obtain relief from the stay and foreclose its mortgage, then sued Westernbank, employees, and insurers, alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-68, and Puerto Rico law causes of action. After BPPR became successor to Westernbank, plaintiff agreed to dismiss the civil law fraud and breach of fiduciary duty claims and the RICO claim. The district court later dismissed remaining claims for lack of subject matter jurisdiction, declining to exercise supplemental jurisdiction over non-federal claims. The First Circuit affirmed. View "Fabrica de Muebles J.J. Alvare v. Inversiones Mendoza, Inc." on Justia Law

Westin Hills West Three Townhome Owners Association (the Association) appealed an order of the district court, which entered summary judgment in favor of the owner of the property, Federal National Mortgage Association, doing business as Fannie Mae (FNMA). In this foreclosure of lien case, the Association claimed that the recording of its declaration of covenants before the deed of trust gave the assessment lien recorded after the deed of trust first priority. The district court rejected this claim. The Supreme Court affirmed, holding that the court did not err in granting FNMA's motion for summary judgment, as the deed of trust was superior to any assessment lien mentioned in the declaration of the Association. View "Westin Hills Townhome Owners Ass'n v. Fed. Nat'l Mortgage Ass'n" on Justia Law