Justia Banking Opinion Summaries

A new customer of the bank (Ott) obtained a loan to finance the purchase of a motor home from the dealership that Ott himself owned. Ott presented the certificate of origin and pledged the motor home as collateral. When Ott defaulted two years later, the bank discovered that the certificate of origin was a fake and the motor home did not exist. The bank’s insurer denied recovery because the fake certificate of origin did not meet the insurance bond definition of "Counterfeit." The district court ruled in favor of the insurer. The Seventh Circuit affirmed. The certificate of origin did not imitate an actual, original certificate of origin for a 2007 motor home because there never was an actual, valid, original certificate for the vehicle pledged as collateral: the manufacturer never produced the vehicle described.View "North Shore Bank, FSB v. Progressive Cas. Ins. Co." on Justia Law

In 2008, defendant was in the U.S. illegally and, at the direction of another, purchased a house for the purpose of obtaining multiple home equity lines of credit. He submitted loan applications that contained false statements about citizenship, employment, and intent to reside in the house, and concealed other loan applications He pled guilty to engaging in a scheme to defraud financial institutions and to obtain monies and funds owned by and under the custody and control of the financial institutions by means of materially false and fraudulent pretenses, representations, promises, and omission, 18 U.S.C. 1344. He was sentenced to 51 months and ordered to pay $337,250 in restitution. The Seventh Circuit affirmed the restitution order, rejecting an argument that he could not be ordered to pay restitution for conduct to which he did not plead guilty. The transactions to which he pled guilty resulted in no actual loss because he was arrested before the loans were funded. The court noted that his plea declaration described the scheme as a whole and the ultimate loss to the lender. View "United States v. Dong" on Justia Law

This case required the court to determine whether a mortgage company violated Hawaii state law when it did not publicly announce the postponement of a foreclosure sale of property owned by appellant, and if so, to ascertain the proper remedy for that violation. The court held that the lack of public announcement did violate Hawaii's nonjudicial foreclosure statute, and this defect was a deceptive practice under state law. Accordingly, the court affirmed the bankruptcy court's avoidance of the foreclosure sale. However, the court remanded to the bankruptcy court for a proper calculation of attorney's fees and damages under Hawaii Revised Statute 480-13. View "Kekauoha-Alisa, et al. v. Ameriquest Mortgage Co., et al." on Justia Law

Plaintiff appealed the district court's dismissal of his civil action under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692. The district court concluded that plaintiff's claim was covered by the FDCPA but that he did not allege acts that violated the FDCPA. Accepting plaintiff's allegations as true and construing them in the light most favorable to plaintiff, the statement on the May 2009 notice that BAC was plaintiff's "creditor" was a false representation and was made by a "debt collector" as defined by section 1692a. Therefore, the complaint stated a claim upon which relief could be granted under the FDCPA and the judgment of the district court was vacated and remanded. View "Bourff v. Lublin, LLC" on Justia Law

Plaintiff filed a putative class action against M&T Bank, alleging that it improperly charged its checking account customers overdraft fees. The district court denied M&T Bank's renewed motion to compel arbitration, finding that plaintiff's claims were not within the scope of the parties' arbitration agreement. The court held that, under the delegation provision, the decision of whether plaintiff's claims were within the scope of the arbitration agreement was a decision for an arbitrator, and the district court erred in making the decision itself. Further, the court believed that it was prudent for the district court to reconsider its unconscionability determination in light of AT&T Mobility LLC v. Conception, so the court did not reach whether the arbitration agreement was unconscionable. Accordingly, the court vacated and remanded. View "Given v. M&T Bank Corp, et al." on Justia Law

Three individuals (once known as the "Bad Boys' of Chicago Arbitrage") established "Loop" as a closely-held corporation for their real estate holdings in 1997. A family trust for Loop's corporate secretary (50% owner) owns Banco, which gave Loop a $9.9 million line of credit in 2000. On the same day, Loop subsidiaries entered into a participation agreement on the line of credit through which they advanced $3 million to Loop, giving the subsidiaries senior secured creditor status over Loop's assets. The now-creditor subsidiaries were also collateral for funds loaned Loop. In 2001 Loop received a margin call from Wachovia. The Banco-Loop line of credit matured and Loop defaulted. Banco extended and expanded the credit. Loop’s debt to Wachovia went unpaid. Loop invested $518,338 in an Internet golf reservation company; moved real estate assets to Loop Properties (essentially the same owners); and paid two owners $210,500 “compensation” but never issued W-2s. Wachovia obtained a $2,478,418 judgment. The district court pierced Loop’s corporate veil, found the owners personally liable, and voided as fraudulent Banco’s lien, the “compensation” payments, and payments to the golf company. The Seventh Circuit affirmed, except with respect to the golf company. View "Wachovia Secs., LLC v. Banco Panamericano, Inc." on Justia Law

This case arose when Mirant, an energy company, sought to expand its European operations by acquiring nine power islands from General Electric. When the power island deal fell through, Mirant made payments pursuant to a guaranty and soon thereafter sought bankruptcy protection. Mirant, as debtor-in-possession, sued Commerzbank and other lenders in bankruptcy court to avoid the guaranty and to recover the funds Mirant paid pursuant to the guaranty. After Mirant's bankruptcy plan was confirmed MCAR, plaintiff, substituted into the case for Mirant. Commerzbank and other lenders, defendants, filed a motion to dismiss based on Rules 12(b)(1) and 12(b)(6). The district court subsequently denied defendants' motion to dismiss based on plaintiff's alleged lack of standing. Thereafter, the district court granted summary judgment for defendants. Both sides appealed. While the court agreed that the district court correctly determined that there was standing to bring the avoidance claim, the court vacated the judgment of dismissal because the district court erroneously applied Georgia state law rather than New York state law to the avoidance claim. View "MC Asset Recovery LLC v. Commerzbank A.G., et al." on Justia Law

This was the second of two related lawsuits filed by Torrington Livestock Cattle Company (TLCC) against Daren and Jennifer Berg. In the first suit, Daren was found liable for breach of contract, conversion, and fraud. The court entered judgment in the favor of TLCC in the amount of $517,635, but the judgment remained unsatisfied. While the first suit was pending, the Bergs signed a promissory note with the First Bank of Torrington. As collateral, the bank acquired security interests in a variety of the Bergs' property, including livestock and ranching equipment. Later, the bank assigned the promissory note to TLCC. After the Bergs did not make the first payment, TLCC commenced the instant action, alleging breach of contract for promissory note and to enforce security agreement. The district court determined that no material issues of fact existed and TLCC was entitled to summary judgment. The Supreme Court summarily affirmed the judgment of the trial court based upon the deficient brief offered by the Bergs and their failure to follow the rules of appellate procedure. View "Berg v. Torrington Livestock Cattle Co." on Justia Law

Plaintiffs, a group of investors defrauded by the "Millennium Ponzi scheme," sought recourse against JPMorgan, alleging that WaMu aided and abetted the Ponzi scheme by providing banking services to several companies controlled by the scheme's principals despite actual knowledge of the fraud. JPMorgan, they argued, was liable as successor in interest of WaMu and was liable because it continued WaMu's problematic processes following assumption. The district court dismissed plaintiffs' complaints for failure to exhaust the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 183. The court concluded that litigants could not avoid FIRREA's administrative requirements through strategic pleading. Accordingly, the court concluded that a claim asserted against a purchasing bank based on the conduct of a failed bank must be exhausted under FIRREA. Claims based on a purchasing bank's post-purchase actions are not governed by FIRREA. They could not, and accordingly need not, be exhausted before the FDIC. Although the court agreed with plaintiffs' legal argument on this score, the court concluded that it had no application to the case at bar. Plaintiffs did not adequately plead a claim based on JPMorgan's independent conduct; they relied instead solely on conclusory allegations. Therefore, the district court's dismissal of plaintiffs' claims, along with its subsequent denial of plaintiffs' Rule 60(b) motion was proper. View "Benson, et al. v. JPMorgan Chase Bank, N.A.; Lowell, et al. v. JPMorgan Chase Bank, N.A., et al." on Justia Law

Respondents the Commissioner of the New Hampshire Banking Department and the New Hampshire Banking Department (collectively, the Department), appealed an order of the Superior Court that permanently enjoined the Department from pursuing an administrative proceeding against Petitioner Jeffrey Frost on the ground that the Department lacked subject matter jurisdiction. Petitioners Frost, Chretien/Tillinghast, LLC, and Frost Family, LLC, cross-appealed, arguing that the trial court erred by denying their request for attorney’s fees. Frost is a member and designated manager of Chretien/Tillinghast, LLC (Chretien), and a member of Frost Family, LLC (Frost Family). Chretien and Frost Family (collectively, the LLCs) are New Hampshire limited liability companies organized for the purpose of real estate acquisition, holding, and development. The underlying dispute arose as the result of two seller-financed real estate transactions, one conducted by Frost Family and the other by Chretien. After both instances of seller-financing, Petitioner submitted a loan originator license application to the Department. At the time the administrative proceedings were initiated, the Department notified Petitioner that he could request a hearing with the Department. Petitioner did not file such a request. Instead, all Petitioners initiated a declaratory judgment proceeding in superior court, which included a request for a temporary restraining order. The petitioners contended that Respondents lacked subject matter jurisdiction to proceed against Frost and violated the State Constitution's prohibition against retrospective laws by seeking to impose a $25,000 fine for each alleged violation. After a hearing, the trial court granted the preliminary injunction, concluding that "[w]hile the [Department] may have jurisdiction over Frost because he is now a loan originator, it [could] take no action against him based on the September 2008 or the March 2009 transactions." Further, the trial court concluded that since the Department "may not impose any penalties on Frost," it did not need to consider the issue of the retrospective nature of the sanctions. Upon review, the Supreme Court agreed that the Department lacked subject matter jurisdiction over the matter and affirmed the superior court's judgment. View "Frost v. New Hampshire Banking Dept. " on Justia Law