Justia Banking Opinion Summaries

Salem Logistics entered into a loan agreement with Ark Royal Capital that required Salem to instruct its customers to send payments directly to an account maintained by Ark at Wachovia Bank. Salem subsequently agreed to provide freight bill auditing services to Variety Wholesalers. Salem requested that Variety send the amounts on the master invoices directly to the Wachovia account but did not inform Variety that the account was actually controlled by Ark. Variety later terminated its contract with Salem and filed suit for recovery of money it had forwarded to Salem that had not been paid to carriers. When Variety discovered the Wachovia account actually belonged to Ark, Variety added Ark as a defendant. The trial court entered summary judgment for Variety on its claim of conversion against Ark and for Ark on Variety's claim of constructive trust and ordered Ark to pay Variety $888,000. The court of appeals reversed and entered summary judgment for Ark on both issues. The Supreme Court reversed and remanded on both issues, holding (1) summary judgment was improper because there were genuine issues of material fact to be resolved; and (2) accordingly, the trial court also erred in its award of damages to Variety. View "Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs." on Justia Law

Respondent Hook Point, LLC (Hook Point) was granted a preliminary injunction preventing Appellant Branch Banking and Trust Company (BB&T) from drawing on, and Defendant First Reliance Bank (First Reliance) from honoring, a $1.5 million letter of credit. BB&T appealed. In late 2007, Hook Point sought a loan from BB&T for the purpose of developing a subdivision on property Hook Point owned on Lake Murray called Panama Pointe. BB&T issued a commitment letter to Hook Point in September 2007 indicating that it would loan the company $5.1 million and establish a $2 million line of credit to enable Hook Point to develop the subdivision. Security for the loan included a first mortgage on the Panama Pointe property, personal guarantees of Hook Point’s four principals, and a $1.5 million standby letter of credit issued by First Reliance in favor of BB&T. On December 23, Hook Point filed suit alleging several causes of action against BB&T, including for fraudulent misrepresentation by which BB&T induced Hook Point to enter into a loan agreement. Hook Point admitted to being $70,000 in arrears on interest but argued that the terms of the agreement did not permit BB&T to draw the full amount of the letter of credit (LC) if that exceeded the amount of interest due. It also sought an ex parte temporary restraining order to prevent First Reliance from honoring a draft on the LC by BB&T, which the court granted. After a hearing, the court also granted a preliminary injunction against drafts on or honor of the LC beyond amounts of accrued interest, requiring extension of the LC for one year, and requiring Hook Point to post a $50,000 bond with the court. The Supreme Court reversed the circuit court's grant of the injunction: "[t]he standard under which a fraud in the transaction claim must be measured when deciding whether to enjoin honor of a letter of credit requires that the beneficiary have no colorable claim or basis in fact for asserting its rights under the letter of credit. In this case BB&T has, in [the Court's] view, not only a colorable claim but an undeniable basis in fact for asserting its rights under the letter of credit. Therefore, the circuit court erred when it granted the preliminary injunction." View "Hook Point v. Branch Banking" on Justia Law

Dean and Stacey Norcutt bought a home for cash and satisfied the existing first mortgage held by Zions National Bank. They later discovered the home was also subject to a judgment lien obtained by Sourcecorp, Inc. that far exceeded the property's value. Sourcecorp subsequently initiated a sheriff's sale to foreclose on its judgment lien, and the Norcutts sued to enjoin the sale. The trial court granted relief to the Norcutts, and the court of appeals reversed. On remand, the trial court entered summary judgment for Sourcecorp. The Court of appeals reversed, holding that the Norcutts were equitably subrogated to the position of Zions Bank in priority over Sourcecorp. The Supreme Court affirmed, holding that the Norcutts were equitably subrogated to the mortgage lien's priority for the amount they paid to satisfy the mortgage. Remanded. View "Sourcecorp, Inc. v. Norcutt" on Justia Law

Fred and Nancy Eagerton appealed a summary judgment granted in favor of Vision Bank in the bank's action seeking to enforce the Eagertons' obligations under certain guaranty contracts. "Dotson 10s, LLC" was organized to operate a tennis club in Fairhope. Dotson 10s executed a note and security agreement with Vision Bank, and the bank obtained in exchange, unlimited personal guarantees from John and Elizabeth Dotson, and limited guarantees from the Eagertons. The Dotsons executed a second loan to which the Eagertons were not a party. The Dotsons defaulted on both loans, and the bank sued the Dotsons as the primary obligors, and the Eagertons as personal guarantors. Dotson 10s then filed for bankruptcy protection. Part of the reorganization plan provided in part that the two loans would be combined and paid in full. Dotson 10s subsequently defaulted on the bankruptcy plan. The properties were foreclosed and sold, with the proceeds applied to the consolidated loan. The circuit court then entered a partial summary judgment in favor of the bank against Dotson 10s, but denied the motion as to the Eagertons. The bank argued that the Eagertons were still responsible under their guaranty contracts for the deficiency remaining on the consolidated loan. The Eagertons argued that the creation of the consolidated loan without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. Upon review, the Supreme Court agreed, and reversed the circuit court's judgment in favor of the bank, and remanded the case for further proceedings. View "Eagerton v. Vision Bank " on Justia Law

This was an appeal from the denial of declaratory and injunctive relief against the foreclosure sale of an apartment complex for elderly and disabled low-income residents by HUD. The complex was funded by Section 811 of the Cranston-Gonzalez National Affordable Housing Act (Section 811), 42 U.S.C. 8013. Following the district court's grant of summary judgment and denial of injunctive relief against the foreclosure sale, HUD resumed foreclosure proceedings. HUD subsequently sold the property to a third party not before the court. Consequently, the court could not grant NBC effective relief and dismissed the appeal as moot. View "NBC-USA Housing, Inc, et al. v. Donovan, et al." on Justia Law

Judith Kehl and Port of Call, LLC filed a motion to modify an order of prejudgment attachment and attachment on trustee process that had been entered in favor of Centrix Bank and Trust, following a contested hearing, ten months earlier. The superior court denied the motion. The Supreme Court dismissed the appeal without reaching its merits, concluding that the final judgment rule barred the appeal because (1) Appellants' motion raised arguments that should have, and could have, been raised before the attachment order was issued and on direct appeal from that order, and therefore, Appellants waived any rights by failing to challenge the attachment order through proper procedural avenues; and (2) no exception to the final judgment rule applied in this case. View "Centrix Bank & Trust v. Kehl" on Justia Law

Plaintiff appealed the district court's judgment granting Chase's motion to dismiss her putative class action claim brought pursuant to the Maryland Credit Grantor Closed End Credit Provisions (CLEC), Md. Code Ann., Com. Law 12-1001 et seq. The district court concluded that federal regulations preempted relevant portions of the CLEC and that the retail sales installment contract signed by plaintiff and Chase's predecessor in interest did not mandate that Chase comply with the CLEC. The court held that the district court erred in concluding that the CLEC was preempted by the National Bank Act (NBA), 12 U.S.C. 1 et seq., or the Office of the Comptroller of the Currency (OCC) regulations. The court also held that the district court erred in dismissing plaintiff's breach of contract claim and remanded for further proceedings. View "Epps v. JP Morgan Chase Bank, N.A." on Justia Law

Midland Funding obtained judgments against Plaintiff Susan Ballou in two cases. The small claims court entered installment payment orders pursuant to Conn. Gen. Stat. 52-356d. Defendant, the Law Offices Howard Lee Schiff, P.C., which represented Midland in small claims court, did not apply for an order of postjudgment interest in either of the two cases, and the small claims court did not issue an order of postjudgment interest in either case. Defendant thereafter sought a bank execution against Plaintiff for the judgment amounts and directed the state marshal to add postjudgment interest of ten percent to the amount of the judgments. Plaintiff commenced an action in the U.S. district court disputing the amount of the debts. At issue before the court was whether postjudgment interest accrues automatically on any unpaid balance under a judgment for which the court has entered an installment payment order. The Connecticut Supreme Court accepted certification to answer this question and held that section 52-356d(e) does not provide for the automatic accrual of postjudgment interest on all judgments in which an installment payment order has been entered by the court. View "Ballou v. Law Offices Howard Lee Schiff, P.C." on Justia Law

In 2002 Bell established mutual funds and raised about $2.5 billion for investment. Most of the firms to which the funds routed money were controlled by Petters. He was running a Ponzi scheme. There was no inventory. New investments paid older debts, with some money siphoned off for personal use. When Petters was caught in 2008, the funds collapsed; about 60% of the money was gone. The funds' bankruptcy trustee filed suit against the funds' auditor, alleging negligence. The district court dismissed without deciding whether the auditor had acted competently, invoking the doctrine of in pari delicto, based on Bell's knowledge of the scheme. The Seventh Circuit vacated, noting that Bell was not stealing funds and that the extent of his knowledge cannot be determined at this stage. An allegation that Bell was negligent but not criminally culpable in 2006 and 2007 makes the claim against the auditor sufficient. View "Peterson v. McGladrey & Pullen, LLP" on Justia Law

This case arose when plaintiffs acquired on the secondary market hundreds of millions of dollars of non-performing bonds issued by the Republic of Argentina. In due course, plaintiffs began to bring suit in the United States courts to collect the debt. In these eleven consolidated appeals, they moved to attach a New York bank account owned by ANPCT. The court held that the district court correctly held that the funds in the ANPCT account were subject to attachment pursuant to 28 U.S.C. 1610 because they were "used for a commercial activity in the United States." View "NML Capital, Ltd. v. Republic of Argentina" on Justia Law