Justia Banking Opinion Summaries

This appeal arose out of a bankruptcy adversary proceeding, and centered on the ownership of a federal tax refund. The tax refund was issued by the Internal Revenue Service (IRS) to United Western Bancorp, Inc. (UWBI), a thrift holding company that had, under the terms of a written “Tax Allocation Agreement,” filed consolidated returns on behalf of itself and several subsidiary corporations. The tax refund was the result, however, of net operating losses incurred by United Western Bank (the Bank), one of UWBI’s subsidiaries. Simon Rodriguez, in his capacity as the Chapter 7 Trustee for the bankruptcy estate of UWBI, initiated this adversary proceeding against the Federal Deposit Insurance Corporation (FDIC), as receiver for the Bank, alleging that the tax refund was owned by UWBI and was thus part of the bankruptcy estate. The bankruptcy court agreed and entered summary judgment in favor of the Trustee. The FDIC appealed to the district court, which reversed the decision of the bankruptcy court. The Trustee appealed the district court’s decision. The Tenth Circuit agreed with the district court that the tax refund belonged to the FDIC, as receiver for the Bank. Consequently, the Court affirmed the district court and remanded to the bankruptcy court for further proceedings. View "Rodriguez v. FDIC" on Justia Law

At issue was whether a certificate of title was entered when a deed was accepted by the Office of the Assistant Registrar of the Land Court and stamped with a new certificate of title number.Plaintiff-mortgagor brought this action against Defendant-purchaser arguing that the non-judicial foreclosure sale of certain property was not lawfully conducted. Defendant moved for summary judgment arguing that Plaintiff’s arguments to invalidate the foreclosure sale were untimely because they were not raised before the issuance of a new certificate of title. Plaintiff argued in response that a new certificate of title had not been issued, and therefore, Plaintiff was not prevented from challenging the non-judicial foreclosure. The circuit court granted summary judgment, concluding that the issuance of a new certificate of title number was sufficient to provide Defendant with statutory protection. The Supreme Court vacated the grant of summary judgment and remanded for further proceedings, holding (1) assignment of a new certificate of title number is not the statutory equivalent of an entry of a certificate of title, and therefore, the evidence in this case did not establish that a certificate of title had been entered; (2) accordingly, Plaintiff was not barred from bringing this action; and (3) an issue of material fact existed precluding summary judgment. View "Wells Fargo Bank, N.A. v. Omiya" on Justia Law

At issue was whether a certificate of title was entered when a deed was accepted by the Office of the Assistant Registrar of the Land Court and stamped with a new certificate of title number.Plaintiff-mortgagor brought this action against Defendant-purchaser arguing that the non-judicial foreclosure sale of certain property was not lawfully conducted. Defendant moved for summary judgment arguing that Plaintiff’s arguments to invalidate the foreclosure sale were untimely because they were not raised before the issuance of a new certificate of title. Plaintiff argued in response that a new certificate of title had not been issued, and therefore, Plaintiff was not prevented from challenging the non-judicial foreclosure. The circuit court granted summary judgment, concluding that the issuance of a new certificate of title number was sufficient to provide Defendant with statutory protection. The Supreme Court vacated the grant of summary judgment and remanded for further proceedings, holding (1) assignment of a new certificate of title number is not the statutory equivalent of an entry of a certificate of title, and therefore, the evidence in this case did not establish that a certificate of title had been entered; (2) accordingly, Plaintiff was not barred from bringing this action; and (3) an issue of material fact existed precluding summary judgment. View "Wells Fargo Bank, N.A. v. Omiya" on Justia Law

In 2001, McMahan and his wholly owned corporation participated in a tax shelter called “Son of BOSS” that “is a variation of a slightly older alleged tax shelter,” BOSS, an acronym for ‘bond and options sales strategy.’” BOSS “was aggressively marketed by law and accounting firms in the late 1990s and early 2000s” and involves engaging in a series of transactions to create an “artificial loss [that] may offset actual—and otherwise taxable— gains, thereby sheltering them from Uncle Sam.” The Internal Revenue Service considers the use of this shelter abusive and initiated an audit of McMahan’s 2001 tax return in 2005. In 2010, the IRS notified McMahan it was increasing his taxable income for 2001 by approximately $2 million. In 2012, McMahan filed suit against his accountant, American Express, which prepared his tax return, and Deutsche Bank, which facilitated the transactions necessary to implement the shelter. McMahan claimed these defendants harmed him by convincing him to participate in the shelter. The Seventh Circuit affirmed the rejection of all the claims by dismissal or summary judgment. McMahan’s failure to prosecute prejudiced the accountant and Amex defendants and the Deutsch Bank claim was untimely. View "McMahan v. Deutsche Bank AG" on Justia Law

The Supreme Court affirmed the order of the superior court granting the motions to dismiss filed by Defendants, Bank of America, N.A. (BOA) and EverBank Mortgage (EverBank), on Plaintiff’s complaint seeking monetary damages for breach of contract and breach of the implied covenant of good faith and fair dealing, as well as a preliminary injunction to stop a foreclosure.Plaintiff executed a mortgage on his property in favor of Mortgage Electronic Registration Systems, Inc. (MERS). The mortgage was later assigned to BOA. After the BOA informed Plaintiff that his mortgage was in foreclosure he filed a complaint alleging, inter alia, that the assignment of the mortgage was void and that Defendants had no standing to foreclose on his property. A federal court granted Defendants’ motion to dismiss. Thereafter, Plaintiff brought this complaint. Defendants filed motions to dismiss. The superior court found that res judicata warranted the granting of Defendants’ motions to dismiss. The Supreme Court affirmed, holding that res judicata applied. View "Goodrow v. Bank of America, N.A." on Justia Law

During the savings-and-loan crisis in the 1970s and 1980s, many “thrift” institutions failed. The Federal Savings and Loan Insurance Corporation, as insurer and regulator, encouraged healthy thrifts to take over failing ones in “supervisory mergers.” FSLIC provided incentives, including allowing acquiring thrifts to operate branches in states other than their home states and “RAP” rights. Regulations mandated that each thrift maintain a minimum capital of at least 3% of its liabilities, an obstacle for healthy thrifts acquiring failing ones. RAP permitted acquiring thrifts to use Generally Accepted Accounting Principles to treat failing thrifts’ excess liabilities as “supervisory goodwill,” which could be counted toward the acquiring thrifts’ minimum regulatory capital requirement and amortized over 40 years. Home Savings entered into supervisory mergers. Branching and RAP rights are considered intangible assets for tax purposes and are generally subject to abandonment loss and amortization deductions. In 2008, Home’s successor, WMI, sought a refund for tax years 1990, 1992, and 1993 based on the amortization of RAP rights and the abandonment of Missouri branching rights, proffering valuation testimony from its expert, Grabowski, about fair market value. The Ninth Circuit found WMI did “not prove[], to a reasonable degree of certainty, Home’s cost basis in the Branching and RAP rights.” WMI also filed suit in the Claims Court, seeking a refund for tax years 1991, 1994, 1995, and 1998, based on the amortization of RAP rights and the abandonment of Florida, Illinois, New York, and Ohio branching rights, with a valuation report from Grabowski. The Federal Circuit affirmed the Claims Court's rejection of the claims; Grabowski’s assumptions about the nature of RAP rights were inconsistent with market realities and, at times, unsupported. View "WMI Holdings Corp. v. United States" on Justia Law

After defendant filed a wrongful foreclosure action against the trustee of a foreclosure sale (Placer) and the third-party buyer, Pro Value, Placer filed a complaint in interpleader and deposited the surplus proceeds from a foreclosure sale with the court. The Court of Appeal affirmed the trial court's judgment of dismissal after the trial court sustained defendant's demurrer to the interpleader complaint without leave to amend. The court held that Placer was statutorily required under Civil Code section section 2924k to disburse surplus funds to defendant, and that Placer could safely distribute the surplus funds to defendant without any risk of multiple liability. The court remanded with directions to release the interpleaded funds to defendant. View "Placer Foreclosure, Inc. v. Aflalo" on Justia Law

After defendant filed a wrongful foreclosure action against the trustee of a foreclosure sale (Placer) and the third-party buyer, Pro Value, Placer filed a complaint in interpleader and deposited the surplus proceeds from a foreclosure sale with the court. The Court of Appeal affirmed the trial court's judgment of dismissal after the trial court sustained defendant's demurrer to the interpleader complaint without leave to amend. The court held that Placer was statutorily required under Civil Code section section 2924k to disburse surplus funds to defendant, and that Placer could safely distribute the surplus funds to defendant without any risk of multiple liability. The court remanded with directions to release the interpleaded funds to defendant. View "Placer Foreclosure, Inc. v. Aflalo" on Justia Law

When a foreclosure action brought on a borrower’s default on a note has been dismissed with prejudice, and the lender has not validly accelerated payment of the amount due under the note, claim preclusion does not bar the lender from bringing a subsequent foreclosure action based upon the borrower’s continuing default on the same note.After Borrower defaulted on a note, Lender filed suit seeking to foreclose on the property securing the note. The circuit court determined that Lender failed to present sufficient evidence to prevail in its foreclosure action and dismissed the lawsuit with prejudice. Later, Bank, the entity servicing Borrower's loan, sent Borrower a notice of intent to accelerate payment of the note. Borrower did not cure his default, and Bank filed a complaint initiating the instant lawsuit. Borrower moved to dismiss, arguing that the lawsuit was barred by the doctrine of claim preclusion. The circuit court did not apply claim preclusion to any default alleged to have occurred after judgment was entered in the earlier lawsuit. The Supreme Court affirmed this conclusion, holding that claim preclusion did not bar the second lawsuit because the lawsuit alleged new facts giving rise to a new and subsequent default and a different transaction than that presented in the first foreclosure action. View "Federal National Mortgage Ass’n v. Thompson" on Justia Law

When a foreclosure action brought on a borrower’s default on a note has been dismissed with prejudice, and the lender has not validly accelerated payment of the amount due under the note, claim preclusion does not bar the lender from bringing a subsequent foreclosure action based upon the borrower’s continuing default on the same note.After Borrower defaulted on a note, Lender filed suit seeking to foreclose on the property securing the note. The circuit court determined that Lender failed to present sufficient evidence to prevail in its foreclosure action and dismissed the lawsuit with prejudice. Later, Bank, the entity servicing Borrower's loan, sent Borrower a notice of intent to accelerate payment of the note. Borrower did not cure his default, and Bank filed a complaint initiating the instant lawsuit. Borrower moved to dismiss, arguing that the lawsuit was barred by the doctrine of claim preclusion. The circuit court did not apply claim preclusion to any default alleged to have occurred after judgment was entered in the earlier lawsuit. The Supreme Court affirmed this conclusion, holding that claim preclusion did not bar the second lawsuit because the lawsuit alleged new facts giving rise to a new and subsequent default and a different transaction than that presented in the first foreclosure action. View "Federal National Mortgage Ass’n v. Thompson" on Justia Law