Justia Banking Opinion Summaries

The case involves 21 U.S. citizens and the family of a deceased U.S. citizen who were victims of rocket attacks by the Hizbollah terrorist organization in Israel in 2006. The plaintiffs allege that the Lebanese Canadian Bank (LCB) provided financial services to Hizbollah, including facilitating millions of dollars in wire transfers through a New York-based correspondent bank. In 2011, LCB and Société Générale de Banque au Liban SAL (SGBL), a private company incorporated in Lebanon, executed a purchase agreement where SGBL acquired all of LCB's assets and liabilities. In 2019, the plaintiffs brought similar claims against SGBL, as LCB's successor, in the Eastern District of New York for damages stemming from the 2006 attacks.The federal district court dismissed the action for lack of personal jurisdiction over SGBL. The court interpreted several Appellate Division and federal decisions to allow imputation of jurisdictional status only in the event of a merger, not an acquisition of all assets and liabilities. On appeal, the Second Circuit certified two questions to the New York Court of Appeals, asking whether an entity that acquires all of another entity's liabilities and assets, but does not merge with that entity, inherits the acquired entity's status for purposes of specific personal jurisdiction, and under what circumstances the acquiring entity would be subject to specific personal jurisdiction in New York.The New York Court of Appeals answered the first question affirmatively, stating that where an entity acquires all of another entity's liabilities and assets, but does not merge with that entity, it inherits the acquired entity's status for purposes of specific personal jurisdiction. The court declined to answer the second question as unnecessary. The court reasoned that allowing a successor to acquire all assets and liabilities, but escape jurisdiction in a forum where its predecessor would have been answerable for those liabilities, would allow those assets to be shielded from direct claims for those liabilities in that forum. View "Lelchook v Société Générale de Banque au Liban SAL" on Justia Law

The case involves a group of plaintiffs who claimed that the defendant, Bank of America, fraudulently denied them mortgage modifications under the Home Affordable Modification Program (HAMP) and then foreclosed on their homes. The plaintiffs filed their complaint in May 2018 and their amended complaint in March 2019, alleging claims based on common law fraud, fraudulent concealment, intentional misrepresentation, promissory estoppel, conversion, unjust enrichment, unfair and deceptive trade practices, and, in the alternative, negligence.However, the Supreme Court of North Carolina found that the plaintiffs' claims were time-barred by the applicable statutes of limitations. The court held that the statutes of limitations for all of plaintiffs’ claims, except for their unfair and deceptive trade practices claim, started to run at the latest by the date that each plaintiff lost his or her home. Each plaintiff lost his or her home sometime between April 2011 and January 2014. Thus, the latest point in time any plaintiff could have filed a complaint was January 2017, or in the case of an unfair and deceptive trade practices claim, January 2018. Plaintiffs did not file their original complaint until May 2018. Therefore, their claims are time-barred.The court also rejected the plaintiffs' argument that the discovery rule tolled the statute of limitations for their fraud claims beyond the dates of their foreclosures. The court found that the plaintiffs were on notice of the defendant's alleged fraud by the time they lost their homes, and they should have investigated further. The court therefore reversed the decision of the Court of Appeals and affirmed the trial court's dismissal of the plaintiffs' complaint. View "Taylor v. Bank of America, N.A" on Justia Law

In the case before the Supreme Court of the State of Alaska, MJ Corporation, the owner of an automated teller machine (ATM), sued Societe Financial, LLC, an ATM processor, and its owner, James Dainis, for breach of contract, conversion, and for piercing the corporate veil. MJ Corp. alleged that it had not been receiving its full share of transaction fees and reimbursement for vault cash dispensed by the ATM as per their agreement.The court reversed summary judgment on the breach of contract claim and piercing the corporate veil, as the processor presented genuine issues of material fact pertaining to those claims. The court held that while MJ Corp. presented admissible evidence of an implied contract and breach of the same, Dainis's affidavit raised a genuine dispute of material fact regarding the damages, thus barring summary judgment on the breach of contract claim.The court affirmed the superior court’s decision to grant summary judgment on the conversion claim. It found that MJ Corp. satisfied its prima facie burden for summary judgment, and Societe's evidence was too conclusory to present a genuine dispute of material fact regarding conversion.Regarding the claim to pierce the corporate veil, the court found that there was insufficient evidence on summary judgment to hold Dainis personally liable or to pierce the corporate veils of Societe's subsidiary company and another company owned by Dainis. The case was remanded for further proceedings in line with the court's opinion. View "Societe Financial, LLC v. MJ Corporation" on Justia Law

A group of 18 pension and retirement funds and other investors alleged that 10 large banks conspired to rig U.S. Treasury auctions and boycott the emergence of direct, "all-to-all" trading between buy-side investors on the secondary market for Treasuries. The alleged conspiracies violated Section 1 of the Sherman Act. The investors failed to demonstrate that the banks formed an anticompetitive agreement, which is necessary to plead their antitrust claims. The allegations of wrongful information-sharing amounted to inconsequential market chatter and their statistical analyses were not sufficiently focused on the defendant banks. The United States Court of Appeals for the Second Circuit affirmed the district court's dismissal of the lawsuit, agreeing that the investors failed to plausibly allege that the banks engaged in a conspiracy to rig Treasury auctions or to conduct a boycott on the secondary market. View "In re Treasury Securities Auction Antitrust Litigation" on Justia Law

This case arose from a dispute between Gregory Garrabrants, the CEO of BofI Federal Bank (BofI), and Charles Matthew Erhart, a former internal auditor at BofI who acted as a whistleblower. Erhart copied, transmitted, and retained various documents he believed evidenced possible wrongdoing, some of which contained Garrabrants' personal and confidential information. Garrabrants sued Erhart for accessing, taking, and subsequently retaining his personal information. A jury awarded Garrabrants $1,502 on claims for invasion of privacy, receiving stolen property, and unauthorized access to computer data.However, the Court of Appeal, Fourth Appellate District, Division One, State of California, reversed the judgment and remanded the case. The court found that the trial court made prejudicial errors in its jury instructions. Specifically, the trial court erred in instructing the jury that bank customers have an unqualified reasonable expectation of privacy in financial documents disclosed to banks. The trial court also erred in instructing the jury that Erhart's whistleblower justification defense depended on proving at least one legally unsupported element. The instructions given for Penal Code section 496 misstated the law by defining “theft” in a manner that essentially renders receiving stolen property a strict liability offense. Furthermore, the special instruction on Penal Code section 502 erroneously removed from the jury’s consideration the foundational issue of whether Garrabrants “owned” the data about him residing in BofI’s computer systems such that he could pursue a civil action under the statute. The court concluded that, in light of the record evidence, there is a reasonable possibility a jury could have found in Erhart’s favor on each of Garrabrants’ claims absent the erroneous instructions, making them prejudicial. View "Garrabrants v. Erhart" on Justia Law

In this case, Eli Global, LLC, and Greg Lindberg appealed a summary judgment entered against them by the Mobile Circuit Court in Alabama. The dispute involved Eli Global's alleged failure to fulfill its obligations on a promissory note and Lindberg's alleged failure to fulfill his obligations on a guaranty of that promissory note. The promissory note and guaranty were part of an agreement to purchase a healthcare company. Eli Global and Lindberg also challenged the circuit court's award of attorney fees and expenses to the plaintiffs.The Supreme Court of Alabama affirmed the lower court's judgment finding Eli Global and Lindberg liable based on the promissory note and the guaranty, and its award of the principal amount plus interest due based on that liability. The court found that the promissory note was not a negotiable instrument under New York law, and even if it was, the plaintiffs were not required to prove who possessed the promissory note because Eli Global and Lindberg waived that argument in the lower court. In addition, the court found that one of the plaintiffs did not release his claims against Lindberg that were based on the guaranty.However, the court remanded the case back to the lower court to provide a more detailed explanation for the award of attorney fees and expenses. The court found that the lower court's order did not provide sufficient explanation on how it determined the award of attorney fees and expenses. The lower court was instructed to return its explanation to the Supreme Court within 42 days. View "Eli Global, LLC v. Cieutat" on Justia Law

Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into two Note Agreements and a Credit Agreement with the predecessor-in-interest to now-Plaintiff-Appellee Red Tree Investments, LLC (“Red Tree”). PDVSA became delinquent on its obligations under the contracts. Red Tree’s predecessor-in-interest accelerated the outstanding debt. Then Red Tree initiated these actions in Supreme Court, New York County, which Defendants removed to district court. PDVSA claimed that any further payment under the Agreements was impossible and should therefore be excused. The district court granted summary judgment against PDVSA on the grounds that PDVSA had failed to provide sufficient evidence that payment was impossible or in the alternative, that any impediment to payment was not reasonably foreseeable. It therefore entered judgment in favor of Red Tree and imposed post-judgment interest. On appeal, PDVSA contends that the district court erred in concluding that no reasonable trier of fact could find that payment was impossible or that U.S. sanctions were unforeseeable. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible. Further, the court concluded that the district court did not err in its calculation of post-judgment interest. The court explained that under the plain language of the Note and Credit Agreements, the outstanding principal and interest that accrued prejudgment—including both default and ordinary interest—are subject to default interest post-judgment. View "Red Tree Investments, LLC v. PDVSA, Petróleo" on Justia Law

In January 2017, Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into a Note Agreement with then-Plaintiff-Appellee Dresser-Rand Company. PDVSA made two of the twelve payments due under the Note Agreement in April and July 2017 but failed to make any subsequent payments. In February 2019, Dresser-Rand declared PDVSA to be in default, accelerated the debt, and initiated this action in Supreme Court, New York County, which Defendants removed to the district court. PDVSA claimed that any further payment was impossible and should therefore be excused. The district court concluded that PDVSA had failed to prove that repayment was impossible. It therefore entered judgment in favor of Dresser-Rand. On appeal, PDVSA contends that the district court erred in concluding that payment was not impossible. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible, and the court further concluded that PDVSA forfeited any arguments relating to post-judgment interest. The court explained that the evidence demonstrates that PDVSA never attempted payment to a different bank or in an alternative currency, nor did it investigate whether this manner of payment would have been truly impossible. Instead of the evidence shows, did nothing. PDVSA cannot benefit from the impossibility defense on speculation. View "Siemens Energy, Inc. v. PDVSA" 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