Justia Banking Opinion Summaries

Borrower, a hotel, obtained a loan from Bank in exchange for a promissory note and mortgage on the hotel. To further secure the obligation, Bank obtained separate commercial guaranties from individual Guarantors. Borrower subsequently defaulted on the note. Bank filed an amended complaint for foreclosure and receivership against Borrower. Borrower did not answer the complaint, and the circuit court entered a default judgment against Borrower and ordered that the mortgaged premises be sold at public auction. After obtaining the property, Bank filed a complaint against the Guarantors alleging that each Guarantor owed Bank over $3 million and other expenses associated with Bank having to run the hotel. The trial court granted the Guarantors summary judgment, concluding that Bank’s choice to bid the entire amount of Borrower’s obligation at the auction left no deficiency on Borrower’s obligation to Bank, and therefore, there was no indebtedness for the Guarantors to guarantee. The Supreme Court affirmed, holding that the guaranties were unenforceable because the Borrower’s obligation had been extinguished. View "First Dakota Nat’l Bank v. Graham" on Justia Law

After refinancing a home mortgage in 2007, Beukes, mailed a notice of rescission in 2010, which was rejected. Beukes stopped making payments. Mortgage Electronic Registration Systems (MERS), as nominee for the lender, published notices of a mortgage foreclosure sale. MERS ultimately purchased the property at a foreclosure sale. Beukes sued, seeking rescission and damages under the Truth in Lending Act, 15 U.S.C. 1635(a), claiming that the amount disclosed as the finance charge on the loan understated the amount they were actually charged by $944.31. The district court dismissed. The Eighth Circuit held an appeal pending the Supreme Court’s decision in Jesinoski v. Countrywide Home Loans, (2015), then affirmed the dismissal. Because Beukes mailed notice within three years, the right of rescission had not expired, but the finance charge disclosed in 2007 did not vary from the actual finance charge by more than one-half of one percent of the total amount financed, so it must be treated as accurate. Therefore, the right to rescind expired three business days after delivery of the disclosures. Beukes did not timely attempt to exercise any expanded right to rescind arising from section 1635(i)(2) that might have been available after the initiation of foreclosure proceedings. View "Beukes v. GMAC Mortg., LLC" on Justia Law

In 2002, BB&T, a North Carolina financial holding company, entered into a transaction with Barclays, which is headquartered in the United Kingdom. The Structured Trust Advantaged Repackaged Securities transaction (STARS) was in effect for five years. The original version of STARS was marketed to enhance investment yield for cash-rich U.S. corporations by taking advantage of differences between the U.S. and the U.K tax systems by having a U.K. trustee and paying U.K. taxes. The U.S. participant would realize an economic benefit by claiming foreign tax credits for U.K. taxes paid by the trust. Combining the STARS structure with a loan component attracted banks and was marketed as a “low cost financing” program. When the IRS reviewed BB&T’s tax treatment of STARS, it disapproved benefits that BB&T had claimed based on the transaction: foreign tax credits ($498,161,951.00); interest deductions ($74,551,947.40); and certain transaction cost deductions ($2,630,125.05). It imposed taxes on certain payments from Barclays ($84,033,228.20) and imposed $112,766,901.80 in penalties. The Claims Court denied BB&T’s claim for a refund. The Federal Circuit affirmed in part and remanded, upholding imposition accuracy-related penalties on BB&T. The amount of the penalties requires reassessment, as BB&T is entitled to deductions for interest it paid on the STARS Loan. View "Salem Fin., Inc. v. United States" on Justia Law

Plaintiff filed a complaint against Bank of America and related entities seeking to set aside and cancel, as null and void, the Bank’s mortgage interest in real property conveyed on the authority of an allegedly forged deed. The Bank moved to dismiss the complaint under N.Y. C.P.L.R. 3211(a)(5) as untimely under N.Y. C.P.L.R. 213(8). Supreme Court dismissed the complaint in its entirety as time-barred. The Appellate Division affirmed as to the Bank, concluding that Plaintiff’s forgery-based claim against the Bank was subject to the six-year statute of limitations for fraud claims set forth in N.Y. C.P.L.R. 213(8). The Court of Appeals reversed, holding that the statute of limitations in section 213(8) did not foreclose Plaintiff’s claim against Defendant because, under prior case law, a forged deed is void ab initio, and as such, any encumbrance upon real property based on a forged deed is null and void. View "Faison v. Lewis" on Justia Law

Plaintiff filed this action against Defendant seeking a declaration that it had a superior lien on funds to which Defendant also claimed an entitlement. Plaintiff brought two counts against Defendant, one requesting a declaration that Plaintiff was entitled to the immediate release and receipt of all funds at issue and the other alleging conversion. Defendant moved to dismiss for failure to state a claim, for lack of subject matter jurisdiction, and for failure to join an indispensable party. The Court of Chancery dismissed the case for lack of subject matter jurisdiction, holding (1) Plaintiff’s application for declaratory relief should be heard in superior court because that court has the power and ability to resolve a lien dispute and because Plaintiff has an adequate and complete remedy at law; and (2) Plaintiff’s second count for conversion asserts a legal right and implicates a legal remedy, and therefore, the Court of Chancery lacks subject matter jurisdiction to address it. View "The Bancorp Bank v. Cross & Simon, LLC" on Justia Law

In 2011 Lehman filed suit, claiming Gateway was obliged to make good on mortgage loans that Lehman’s subsidiary purchased almost 10 years earlier from Arlington Capital. In 2007 contracts, Arlington agreed to indemnify Lehman for losses on those loans. The following year, Arlington sold its assets to Gateway. The district court held that although it was clear Arlington was liable to Lehman on three loans, it was unclear whether Gateway was liable for Arlington’s debts and a trial was necessary to determine whether a de facto merger had taken place between Gateway and Arlington. After considering the evidence, the court concluded that a de facto merger had occurred and held Gateway for $450,000 plus interest. The Third Circuit affirmed. Gateway violated FRCP 10 when it failed to include in the appellate record a transcript necessary to evaluate its principal claim, so that claim forfeited. Gateway’s other claims lacked merit. View "Lehman Bros. Holdings Inc v. Gateway Funding Diversified Mortg. Servs., LP" on Justia Law

In 2013, the Superior Court granted Branch Banking and Trust Company's ("BB&T") motion for summary judgment on its foreclosure and breach of contract claims. In 2014, the Superior Court entered a final judgment order awarding damages to BB&T. The Eids failed to file a timely notice of appeal of thatorder. Instead, a little over two months after the entry of the final judgment order, the Eids filed a motion with the Superior Court under Rule 60(b) seeking vacatur of the final judgment order, contending that their counsel never received actual notice of the final judgment order. The Superior Court granted the Eids' motion to vacate. Then trial court entered a new final judgment order from which the Eids could file a timely notice of appeal. BB&T filed an appeal from the Superior Court's grant of the Rule 60(b) motion to vacate, and the Eids filed a cross-appeal of the Superior Court's grant of summary judgment in favor of BB&T. BB&T raises three issues on appeal: (1) that pursuant to Rule 77(d), the trial court lacked authority to grant the motion to vacate the final judgment order; (2) that the trial court erred as a matter of law when it applied a vague and undefined "interest of justice" standard to the motion to vacate; and (3) that the trial court abused its discretion in granting the motion to vacate because the Eids failed to establish that they were entitled to relief under Rule 60(b)(1) or (b)(6). On cross-appeal, the Eids also raised three issues: (1) that BB&T lacked standing to institute a foreclosure; (2) that the affidavit supporting the motion for summary judgment was defective; and (3) that BB&T failed to demonstrate that there were no genuine issues of material fact. After review, the Supreme Court agreed with BB&T that the trial court improperly granted the motion to vacate the final judgment, and reversed that decision. View "Branch Banking & Trust Co. v. Eid" on Justia Law

Plaintiffs asserted six causes of action against Wells Fargo Bank, N.A. (Wells Fargo), the Federal National Mortgage Association (Fannie Mae), Erika Knapstein, Bank of the West, and Jeff T. Courtney arising out of the foreclosure and subsequently sale of Plaintiffs’ residence. As a premise for all causes of action, Plaintiffs asserted that the assignment of their mortgage was defective. The district court dismissed Bank of the West and Courtney for failure to prosecute and granted summary judgment in favor of Wells Fargo, Fannie Mae, and Knapstein. The Supreme Court affirmed, holding (1) whether the assignment of the mortgage was properly executed was not a material issue in the causes of action addressed in this appeal because Plaintiffs could not show an injury arising from the assignment, and therefore, Plaintiffs lacked standing to assert any cause of action that dependent upon the validity of the assignment; and (2) the district court correctly dismissed Courtney for failure to prosecute, but Bank of the West should have been dismissed from the action for lack of standing. View "Marcuzzo v. Bank of the West" on Justia Law

Salazar was born in Mexico in 1945. He speaks little English and cannot write English. His wife attended school through the second grade. She does not speak, read or write English. They operate a food truck. In 1992, they purchased commercial property on Brundage Lane in Bakersfield. Most of the businesses occupying the property were run by their children, who did not pay rent. They also had rent-paying tenants. In 2005, a deed of trust and assignment of rents was recorded, listing as collateral the Brundage Property and another parcel. The debt was a promissory note for $350,000. The proceeds bought the other property. Both purport to have been made by the Salazars, who claim that the signatures were forged (presumably by their son) and not made at their direction. Notice of default and election to sell under deed of trust were recorded in 2005. Their daughter, Marina, negotiated with the lender. When the son disappeared in 2009, Salazar started making payments. Marina signed her parents’ names to a forbearance agreement that identified the Salazars as “borrower” and released all claims. In 2012, the Salazars sought quiet title. The trial court granted summary judgment on the three-year limitations period, but did not address affirmative defenses, holding that the 2005 notices triggered the statute of limitations. The court of appeal reversed. Notices of default under a void deed of trust provided notice of a cloud on title, but did not dispute or disturb the possession of the property; the statute of limitations does not bar their action. View "Salazar v. Thomas" on Justia Law

Appellants borrowed money from Colonial Bank and granted the bank a security interest in their real property. The FDIC assigned Appellants’ loan to Branch Banking and Trust Company, Inc. (BB&T) after placing Colonial into receivership. After Appellants defaulted on their loan, BB&T instituted an action for a judicial foreclosure of the secured property. Two years later, Nev. Rev. Stat. 40.459(1)(c), which implements certain limitations on the amount of a deficiency judgment that can be recovered by an assignee creditor, became effective. After the property was sold at a sheriff’s sale, BB&T filed a motion seeking a deficiency judgment against Appellants for the remaining balance of the loan. The district court awarded a deficiency judgment to BB&T, finding that section 40.459(1) did not apply to BB&T’s application for a deficiency judgment. The Supreme Court affirmed on the grounds that section 40.459(1)(c) was preempted by the federal Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to the extent that section 40.459(1)(c) limits deficiency judgments that may be obtained from loans transferred by the FDIC, as section 40.459(1)(c) conflicts with FIRREA’s purpose of facilitating the transfer of the assets of failed banks to other institutions. View "Munoz v. Branch Banking & Trust Co." on Justia Law