Justia Banking Opinion Summaries

Petitioner Monica Ware appealed a summary judgment in favor of Respondent Deutsche Bank National Trust Company, the trustee for HSI Asset Securitization Corporation. The Bank foreclosed on Petitioner and published notice of the foreclosure in a local Birmingham newspaper. The court entered summary judgment against her. Petitioner then filed a motion to amend or vacate the judgment and requested a hearing. The trial court refused to rule on Petitioner’s motion or hold a hearing. The motion was deemed denied by operation of law. On appeal to the Supreme Court, Petitioner challenged the timing and propriety of the summary judgment and its refusal to rule on her motion to amend or vacate. In affirming the trial court’s judgment, the Supreme Court "searched [Petitioner’s] briefs in vain for the argument that she actually made in the trial court, namely, that the foreclosure was "null and void. . . .[A] remand . . . would serve no purpose other than to afford her a 'second bite at the apple.'" The Court affirmed the lower court’s decision.

Plaintiffs filed a purported class action as an adversary proceeding before the bankruptcy court alleging that their mortgage lender, Wells Fargo Bank N.A. ("Wells Fargo"), violated various provisions of the Bankruptcy Code and Bankruptcy Rules by failing to disclose certain fees on the proof of claim it filed in plaintiffs' Chapter 13 bankruptcy case. At issue was whether the district court erred in affirming the bankruptcy court's grant of summary judgment in favor of Wells Fargo on plaintiffs' claims that Wells Fargo violated the automatic stay provisions in 11 U.S.C. 362; their claims that Wells Fargo violated 11 U.S.C 506(b) and Bankruptcy Rule 2016 by failing to disclose the fees; and their objection to the proof of claim. The court considered each of plaintiffs' automatic stay violations under section 362 and held that Wells Fargo was entitled to summary judgment on each claim. The court concluded that bankruptcy courts have not uniformly reached a conclusion supporting the proposition that pursuant to section 506(b), Rule 2016, or both of these provisions, a secured creditor must disclose and obtain court approval of post-petition legal expenses. Therefore, the court held that these provisions were not violated when a creditor merely recorded costs it had incurred in association with a mortgagee's bankruptcy for internal bookkeeping purposes and made no attempt to collect the fees or otherwise add them to the debtor's balance. Accordingly, to the extent plaintiffs' disclosure claims relied on events that have occurred during the course of their Chapter 13 case, the district court did not err in affirming the bankruptcy court's order granting summary judgment. The court further held that Wells Fargo's failure to include the proof of claim fees on the proof of claim did not provide a valid basis for an objection; and as to this amount, plaintiffs have identified no reason why such amount was unenforceable. Therefore, Wells Fargo was entitled to summary judgment on this claim.

Homeowners fell behind on their mortgage and the bank initiated foreclosure. The homeowners filed a Chapter 13 bankruptcy. The judge denied their motion for rescission of the mortgage and for damages, based on noncompliance with state laws. The district court and First Circuit affirmed. The homeowners signed right-to-cancel forms required under the Massachusetts Consumer Credit Cost Disclosure Act, modeled after the federal Truth in Lending Act (15 U.S.C. 1635); technical flaws in the form cannot serve as a basis for invalidating a transaction five years later. Similarly, a slight delay in receipt of a required high-cost loan disclosure did not justify rescission five years later.