Justia Banking Opinion Summaries

In 2002, the Defendant-appellee Carmela Hill (Hill) pursued counterclaims against U.S. Bank and its mortgage servicer Nationstar following bank's dismissal of its foreclosure action against Hill. A jury returned a verdict against bank on borrower's wrongful foreclosure claim and a verdict against the mortgage servicer on multiple claims including violations of the Oklahoma Consumer Protection Act (OCPA) and the Fair Debt Collection Practices Act (FDCPA). The trial court awarded attorney's fees and costs to Hill. The Bank and mortgage servicer appealed and Hill counter-appealed. The Oklahoma Court of Civil Appeals dismissed in part borrower's appeal and found neither the OCPA or the FDCPA was applicable. It reversed the attorney's fee award and reduced the amount of awarded costs. In addition, it reversed the wrongful foreclosure judgment against bank and affirmed the remainder of the judgment which concerned breach of contract and tort claims against the mortgage servicer. The Oklahoma Supreme Court dismissed that portion of Hill's appeal seeking review of the trial court's Category II punitive damages ruling; reversed Hill's wrongful foreclosure judgment against U.S. Bank; reversed the OCPA portion of the judgment against Nationstar; affirmed the FDCPA portion of the judgment against Nationstar, including the $1,000.00 award under the FDCPA; reversed the award of attorney's fees and remanded the matter to the trial court to determine a reasonable attorney's fee consistent with the Court's opinion; and reversed $1,223.39 of the costs awarded to Hill. The remainder of the judgment was affirmed. View "U.S. Bank National Assoc. v. Hill" on Justia Law

This action concerns loans issued by Plaintiff, EMA Financial, LLC, to a group of companies that were controlled by Defendants. The loan agreements contained so-called “floating-price conversion option” provisions, which gave EMA the right to exercise an option to receive company stock in lieu of cash repayment on the loans. When EMA initially sought partial repayment of the loans through the stock repayment option in 2017, the companies delivered the shares to EMA at the agreed-upon discount rate. EMA sought to exercise the conversion option again. This time, the companies failed to deliver the stock. EMA then brought suit, claiming breach of contract and breach of guaranty as to the loan agreements, and fraudulent conveyance and fraudulent inducement. Defendants asserted as an affirmative defense that the loan agreements were void because the conversion option provisions rendered the agreements criminally usurious under New York law. The district court dismissed this defense and entered judgment in favor of EMA for some of its claims and in favor of Defendants for other. Two Defendants appealed, arguing that the district court’s dismissal of the usury defense at summary judgment should be vacated in light of an intervening change in New York law.   The Second Circuit vacated. The court reasoned that it is also clear that Adar Bays II materially altered the Defendants’ rights by providing them with a newly viable avenue by which they could seek to void the Notes and avoid liability for breaching them. Therefore, even assuming the other necessary conditions for collateral estoppel are met, the Defendants are not precluded from raising a usury defense notwithstanding the Corporate Defendants’ default. View "EMA Financial, LLC v. Chancis" on Justia Law

The Law Firm of Fox and Fox (Law Firm) appealed from a judgment entered after the trial court granted summary judgment in favor of Chase Bank, N.A. The Law Firm filed this action against Chase, alleging negligence in the disbursement of funds from a blocked account containing estate funds to the sole signatory on the account (as administrator of the estate), Jazzmen Brumfield (Brumfield). The trial court granted Chase’s motion for summary judgment. On appeal, the Law Firm contends it raised triable issues of fact with respect to whether Chase owed a duty to the Law Firm, whether Chase breached any such duty, and whether Chase’s conduct in distributing the funds to Brumfield (who absconded with the funds) was the proximate cause of the Law Firm’s damages.   The Second Appellate District reversed. The court concluded Chase owed the Law Firm a duty of care based on the special relationship it had with the Law Firm as an intended beneficiary of the probate court’s order directing that the estate funds be deposited into a blocked account from which withdrawals could only be made “on court order” and Chase’s acceptance of that order by executing the “receipt and acknowledgment of order for the deposit of money into blocked account.” The court explained that although banks do not generally have a duty to police customer accounts for suspicious activity, Chase owed the Law Firm, as an intended beneficiary of the blocked account order and acknowledgment, a duty to act with reasonable care in limiting distributions from the blocked account to those authorized by court order. View "The Law Firm of Fox and Fox v. Chase Bank" on Justia Law

Plaintiffs purchased a residence and obtained a $1 million loan, memorialized by a note secured by a deed of trust. Years later, the property was sold through a nonjudicial foreclosure. Plaintiffs, after two prior federal suits were dismissed without prejudice, filed this state lawsuit for wrongful foreclosure, against the Buyers, and Lenders. Lenders successfully argued the action was barred by res judicata (claim preclusion), based on those dismissals; under Federal Rule 41(a)(1)(B), the “two dismissal rule,” the dismissal of the second federal suit was “an adjudication on the merits.”The court of appeal concluded the voluntary dismissal of the second federal lawsuit was not a final “adjudication on the merits” that barred the filing of this case in state court. The two-dismissal rule of Rule 41(a)(1)(B) applies when there is a voluntary dismissal in state or federal court, a second voluntary dismissal in federal court, and the subsequent filing of an action in the same federal court where the second suit was dismissed. Under California law, a plaintiff’s voluntary dismissal without prejudice of a prior action is not a final judgment on the merits that bars a subsequent suit. California does not prohibit a plaintiff from filing dismissals without prejudice in successive actions. The rule is inapplicable to this state court lawsuit alleging only state-law claims. The court nonetheless affirmed, concluding that the challenges to the foreclosure lack merit. View "Gray v. La Salle Bank" on Justia Law

Defendant appealed the district court’s judgment awarding damages to Plaintiff to recover funds Defendant received as the result of various alleged fraudulent transfers. The district court entered a default against Defendant as a sanction under Federal Rule of Civil Procedure 37(b) for her repeated failure to comply with discovery orders and ultimately entered a default judgment against Defendant for fraudulent transfers, awarding Plaintiff damages calculated based on three checks Defendant drew from bank accounts she held jointly with her debtor husband.   The Second Circuit affirmed. The court concluded that the district court did not abuse its discretion in determining that Defendant’s noncompliance during discovery warranted a default. The court explained that Defendant failed to respond to interrogatories and produce the documents Plaintiff requested, in violation of the district court’s many orders. This record supports the district court’s determination that Defendant acted willfully, that lesser sanctions would have been inadequate given Defendant’s continued noncompliance after multiple explicit warnings about the consequences of further noncompliance, that Defendant was given ample notice that her continued noncompliance would result in sanctions, including the entry of default judgment, and that her noncompliance spanned more than six months. The court also concluded that Defendant’s withdrawals from accounts she held jointly with her husband constitute fraudulent transfers under Connecticut law. View "Mirlis v. Greer" on Justia Law

The Supreme Court affirmed the judgment of the district court determining that a deed of trust on real property continued to encumber the property, holding that there was no error.LV Debt Collect, which acquired title to the subject property in 2013, filed this quiet title action in 2016 seeking a declaration that a home homeowners' association's foreclosure sale extinguished Bank of New York Mellon's (BNYM) deed of trust and that LV Debt Collect held an unencumbered ownership interest in the property. The district court granted summary judgment for BNYM, determining that the deed of trust continued to encumber the property. The Supreme Court affirmed, holding that a loan secured by real property does not become "wholly due" for purposes of Nev. Rev. Stat. 106.240 when a notice of default is recorded as to the secured loan. View "LV Debt Collect, LLC v. Bank of N.Y. Mellon" on Justia Law

The plaintiffs in this case are American service members who were wounded, and the relatives of service members who were killed or wounded, in terrorist attacks carried out in Iraq from 2004 to 2011 by proxies of the Lebanese militant group Hezbollah. In 2019, victims 20 and their family members sued several Lebanese banks, alleging that the banks aided and abetted the attacks by laundering money for Hezbollah. After Plaintiffs filed suit, the United States Department of the Treasury labelled one of those banks, Jammal Trust Bank (JTB), a Specially Designated Global Terrorist. That designation prompted the Banque du Liban, Lebanon’s central bank, to liquidate JTB and acquire its assets. JTB then moved to dismiss the case against it, on the ground that it was now entitled to sovereign immunity as an instrumentality of Lebanon. The district court denied the motion, holding that a defendant is entitled to foreign sovereign immunity only if it possesses such immunity at the time suit is filed. JTB appealed.    The Second Circuit vacated. The court held that immunity under the Foreign Sovereign Immunities Act, 28 U.S.C. Section 1604, may attach when a defendant becomes an instrumentality of a foreign sovereign after a suit is filed. Further, the court explained that it was the U.S. designation of JTB as a terrorist organization, not any attempt by Lebanon to avoid this lawsuit, that forced the bank into liquidation and public receivership. View "Bartlett v. Baasiri" on Justia Law

In a suit filed in 2014 under the Fair Housing Act, 42 U.S.C. 3601–19, Cook County claimed that the banks made credit too readily available to some borrowers, who defaulted, and then foreclosed on the loans in a way that injured the County. The County alleged the banks targeted potential minority borrowers for unchecked or improper credit approval decisions, which allowed them to receive loans they could not afford; discretionary application of surcharge of additional points, fees, and other credit and servicing costs above otherwise objective risk-based financing rates; higher cost loan products; and undisclosed inflation of appraisal values to support inflated loan amounts. When many of the borrowers could not repay, the County asserts, it had to deal with vacant properties and lost tax revenue and transfer fees.The Seventh Circuit affirmed summary judgment for the defendants. Entertaining suits to recover damages for any foreseeable result of an FHA violation would risk “massive and complex damages litigation.” Proximate cause under the FHA requires “some direct relation between the injury asserted and the injurious conduct alleged.” Cook County seeks a remedy for effects far beyond “the first step.” The directly injured parties are the borrowers, who lost both housing and money. The banks are secondary losers. The County is at best a tertiary loser; its injury derives from the injuries to the borrowers and banks. View "County of Cook v. Bank of America Corp." on Justia Law

Consolidated suits claimed that many firms in the broiler-chicken business formed a cartel. Third-party discovery in that ongoing suit turned up evidence that Rabobank, a lender to several broiler-chicken producers, urged at least two of them to cut production. Some plaintiffs added Rabobank as an additional defendant.The Seventh Circuit affirmed the dismissal of those claims. The Sherman Act, 15 U.S.C. 1, bans combinations and conspiracies in restraint of trade and does not reach unilateral action. Here, all the plaintiffs allege is that Rabobank tried to protect its interests through unilateral action. The complaint does not allege that Rabobank served as a conduit for the producers’ agreement, helped them coordinate their production and catch cheaters, or even knew that the producers were coordinating among themselves. A flurry of emails among managers and other employees at Rabobank observing that lower output and higher prices in the broiler-chicken market would improve the bank’s chance of collecting its loans and a pair of emails from the head of Rabobank’s poultry-lending section, to executives at two producers indicated nothing but unilateral action. The intra-Rabobank emails could not have promoted or facilitated cooperation among producers and the two messages only reminded the producers that as long as demand curves slope downward, lower output implies higher prices. Advice differs from agreement. View "Amory Investments LLC v. Utrecht-America Holdings, Inc." on Justia Law

Gary and Jeanette Merritt own four residential properties in Marysville, Washington. Between 2005 and 2007, the Merritts opened five home equity lines of credit (HELOCs), executing five five promissory notes (notes or HELOC agreements) in favor of USAA Federal Savings Bank. The Merritts secured these loans by executing deeds of trust on the properties with USAA as the beneficiary. In November 2012, the Merritts filed for Chapter 7 bankruptcy. The Merritts stopped making their monthly payments on the USAA loans prior to the November 2012 bankruptcy filing. USAA never accelerated any of the loans or acted to foreclose on the properties. In 2020, the Merritts filed four quiet title complaints seeking to remove USAA’s liens on each of the properties. Relying on Edmundson v. Bank of America, NA, 378 P.3d 272 (2016), the Merritts argued that the six-year statute of limitations to enforce the deeds of trust expired six years after February 12, 2013, the day before their bankruptcy discharge. In October 2020, the Merritts moved for summary judgment in each case. In November 2020, the trial court denied each of these motions. In February 2021, USAA moved for summary judgment in each case. USAA argued that the plaintiffs were not entitled to quiet title because the statute of limitations to foreclose on the deeds of trust would not begin to run until the maturity date of each loan, the earliest of which will occur in 2025. The Court of Appeals affirmed the trial court, holding that the the six-year statute of limitations had not begun to run on enforcement of the deeds of trust since none of the loans had yet matured. The issue this case presented for the Washington Supreme Court's review was whether a bankruptcy discharge triggered the statute of limitations to enforce a deed of trust. The Court affirmed the Court of Appeals and the trial court and hold that bankruptcy discharge did not trigger the statute of limitations to enforce a deed of trust. View "Merritt v. USAA Federal Savings Bank" on Justia Law