Justia Banking Opinion Summaries

BBX filed suit challenging the FDIC's determination that the severance payments BBX sought to make to five former executives of the Bank were golden parachute payments and that it would approve payments of only twelve months of salary to each executive. The FDIC also concluded that BBT was required to seek and receive approval before making the reimbursement payments to BBX. The FRB subsequently approved the same payment amounts but took no action with respect to approving any payments over 12 months of salary because the FDIC had already prohibited any additional payments.The Fifth Circuit affirmed the district court's dismissal of BBX's action against FRB for lack of standing because BBX has not shown any injury it has sustained is fairly traceable to an FRB action or inaction. The court also held that the FDIC's decision to classify the proposed payments as golden parachute payments was not arbitrary or capricious, because the golden parachute statute, 12 U.S.C. 1828(k), covers the stock purchase agreement (SPA) and the proposed payments included therein. Furthermore, earlier agreements, such as severance contracts, are irrelevant because the proposed payments are being made under the SPA. The court held that the FDIC's denial of any payments in excess of 12 months' salary for each executive was not arbitrary and capricious where the explanations the FDIC offered for denying additional payments were reasonable and did not run counter to the evidence. Finally, the court rejected BBX's argument that the FDIC's requirement that BBT seek approval before reimbursing BBX was arbitrary and capricious. View "BBX Capital v. Federal Deposit Insurance Corp." on Justia Law

In 1987, Whitaker opened commodity futures trading accounts that eventually were assigned to Wedbush. Whitaker did not enter into a new customer or security agreement with Wedbush. Wedbush held Whitaker’s funds in customer segregated accounts at BMO Harris, which provided an online portal for Wedbush to process its customers' wire transfers. In December 2014, Wedbush received emailed wire transfer requests purporting to be from Whitaker but actually sent by a hacker. Wedbush completed transfers to a bank in Poland totaling $374,960. Each time, Wedbush sent an acknowledgment to Whitaker’s e-mail account; the hacker apparently intercepted all email communications. Whitaker contacted Wedbush after receiving an account statement containing an incorrect balance. After Wedbush refused Whitaker’s demand for the return of the transferred funds, Whitaker filed suit seeking a refund under the UCC (810 ILCS 5/4A-101). The circuit court rejected the UCC counts, stating that Wedbush had not operated as a “bank” under the UCC definition. The appellate court affirmed.The Illinois Supreme Court reversed, rejecting an argument that an entity may not qualify as a bank if it does not offer checking services. Courts construe the term “bank” in article 4A liberally to promote the purposes and policies of the UCC. The term “includes some institutions that are not commercial banks” and that “[t]he definition reflects the fact that many financial institutions now perform functions previously restricted to commercial banks, including acting on behalf of customers in funds transfers.” View "Whitaker v. Wedbush Securities, Inc." on Justia Law

Parke Bancorp (“Parke”) made a loan to 659 Chestnut LLC (“659 Chestnut”) in 2016 to finance the construction of an office building in Newark, Delaware. 659 Chestnut pleaded a claim in the Superior Court for money damages in the amount of a 1% prepayment penalty it had paid under protest when it paid off the loan. The basis of 659 Chestnut’s claim was that the parties were mutually mistaken as to the prepayment penalty provisions of the relevant loan documents. Parke counterclaimed for money damages in the amount of a 5% prepayment penalty, which it claimed was provided for in the agreement. After a bench trial, the Superior Court agreed with 659 Chestnut and entered judgment in its favor. After review, the Delaware Supreme Court reversed and directed entry of judgment in Parke’s favor on 659 Chestnut’s claim. Although Parke loan officer Timothy Cole negotiated on behalf of Parke and represented to 659 Chestnut during negotiations that there was a no-penalty window, the parties stipulated that: (1) everyone knew that Cole did not have authority to bind Parke to loan terms; and (2) everyone also knew that any terms proposed by Cole required both final documentation and approval by Parke’s loan committee. It was evident to the Supreme Court that 659 Chestnut did not offer clear and convincing evidence that Parke’s loan committee agreed to something other than the terms in the final loan documents. Accordingly, it Directed entry of judgment for Parke. View "Parke Bancorp Inc., et al. v. 659 Chestnut LLC" on Justia Law

The debtor obtained a commercial loan from Bank. The agreement dated March 9, 2015, granted Bank a security interest in substantially all of the debtor’s assets, described in 26 categories of collateral, such as accounts, cash, equipment, instruments, goods, inventory, and all proceeds of any assets. Bank filed a financing statement with the Illinois Secretary of State, to cover “[a]ll Collateral described in First Amended and Restated Security Agreement dated March 9, 2015.” Two years later, the debtor defaulted and filed a voluntary Chapter 7 bankruptcy petition. Bank sought to recover $7.6 million on the loan and filed a declaration that its security interest was properly perfected and senior to the interests of all other claimants. The trustee countered that the security interest was not properly perfected because its financing statement did not independently describe the underlying collateral, but instead incorporated the list of assets by reference, and cited 11 U.S.C. 544(a), which empowers a trustee to avoid interests in the debtor’s property that are unperfected as of the petition date. The bankruptcy court ruled that ”[a] financing statement that fails to contain any description of collateral fails to give the particularized kind of notice” required by UCC Article 9. The trustee sold the assets for $1.9 million and holds the proceeds pending resolution of this dispute. The Seventh Circuit reversed, citing the plain and ordinary meaning of the Illinois UCC statute, and how courts typically treat financing statements. View "First Midwest Bank v. Reinbold" on Justia Law

This case involved three consolidated interlocutory appeals; each arose from litigation filed by Franklin Collection Service, Inc. (Franklin), against BancorpSouth Bank. Franklin and BancorpSouth had been in litigation for approximately forty months. After Franklin determined that BancorpSouth had failed to file a responsive pleading to the second amended complaint, Franklin applied for and obtained an entry of default by the clerk. Franklin also filed a motion to deem admitted the allegations of the second amended complaint. BancorpSouth filed a motion to set aside the entry of default and a motion for leave to file a responsive pleading to the second amended complaint. The trial court heard each motion and decided to deny Franklin’s motion to deem admitted the allegations of the second amended complaint; to grant BancorpSouth’s motion for leave to file a responsive pleading to the second amended complaint; and to deny BancorpSouth’s motion to set aside the entry of default. Franklin appealed and BancorpSouth cross-appealed. The Mississippi Supreme Court concluded that in light of the colorable defenses presented by BancorpSouth and the lack of prejudice to Franklin, the trial court did not abuse its discretion in allowing BancorpSouth to file an answer to Franklin’s second amended complaint. Therefore, the Court concluded the trial court properly denied Franklin's motion to deem admitted the allegations in the second amended complaint. The Court affirmed two interlocutory orders at issue in Franklin's appeal reversed the order at issue in BancorpSouth's cross-appeal, and remanded this case for further proceedings. View "Franklin Collection Service, Inc. v. BancorpSouth Bank" on Justia Law

The First Circuit affirmed the decision of the district court dismissing the complaint brought by the plan administrator of R&G Financial Corporation (Administrator) alleging that negligence and breach of fiduciary duties owed to R&G Financial (the Holding Company) caused the failure of R-G Premier Bank of Puerto Rico (the Bank) and the Holding Company's resultant loss of its investment in the Bank, holding that the complaint must be dismissed because the claims the Administrator asserted for the Holding Company were the Federal Deposit Insurance Corporation's (FDIC) under 12 U.S.C. 1821(d)(2)(A).R&G Financial entered Chapter 11 bankruptcy after the Bank, its primary subsidiary, failed. Previously, Puerto Rican regulators had closed the Bank and named the FDIC as the Bank's receiver. After the Bank failed, the Administrator filed this suit against six of the Holding Company's former directors and officers and their insurer. The FDIC intervened. The district court dismissed the complaint. The First Circuit affirmed on different grounds, holding that, under section 1821(d)(2)(A), the FDIC succeeded to the Administrator's claims. View "Zucker v. Rodriguez" on Justia Law

US Bank appealed the district court's dismissal of its second amended consolidated complaint as untimely. The Second Circuit affirmed and held that ACE Secs. Corp. v. DB Structured Prods., Inc., 25 N.Y.3d 581 (2015), and Deutsche Bank Nat'l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 868 n.8 (2d Cir. 2015), governed U.S. Bank's contractual claims in this case.The court held that the district court properly granted summary judgment to GreenPoint where the first two causes of action for breach of contract were untimely under settled New York law, because they were filed over six years after the statute of limitations began running. The court also held that the district court properly dismissed the third cause of action for indemnification under section 9 of the Flow Mortgage Loan Purchase and Warranties Agreement, because U.S. Bank's claim was in reality a repackaged version of its breach of contract claims. Finally, the court held that the fourth cause of action for breach of the indemnification agreements did relate back to the original filing for claims based on any of the Trusts, and was therefore untimely asserted. View "Lehman XS Trust v. Greenpoint Mortgage Funding, Inc." on Justia Law

The receiver filed suit against Associated Bank, which provided banking services to some of the scammers' entities, accusing the bank of aiding and abetting the Ponzi scheme. The Eighth Circuit affirmed the district court's conclusion that there was insufficient evidence to reasonably infer the bank knew about and assisted the scammers' tortious conduct. The court held that a conclusion that the bank aided and abetted the Ponzi scheme could only be reached through considerable conjecture and speculation. In this case, the receiver failed to show that the bank had actual or constructive knowledge of the fraud or that it provided substantial assistance to the tortious conduct. View "Zayed v. Associated Bank, N.A." on Justia Law

Consumer banks Hudson and M&T merged. Hudson’s shareholders claimed they violated the Exchange Act, 15 U.S.C. 78n(a), and SEC Rule 14a-9, by omitting facts concerning M&T’s regulatory compliance from their joint proxy materials: M&T’s having advertised no-fee checking accounts but later switching those accounts to fee-based accounts (consumer violations) and deficiencies in M&T’s Bank Secrecy Act/anti-money laundering compliance program. They argued that because the proxy materials did not discuss M&T’s noncompliant practices, M&T failed to disclose significant risk factors facing the merger, rendering M&T’s opinion statements regarding its adherence to regulatory requirements and the prospects of prompt approval of the merger misleading under Supreme Court precedent (Omnicare). The Third Circuit reversed, in part, the dismissal of the suit. The shareholders pleaded actionable omissions under the SEC Rule but failed to do so under Omnicare. The joint proxy had to comply with a provision that requires issuers to “provide under the caption ‘Risk Factors’ a discussion of the most significant factors that make the offering speculative or risky.” It would be reasonable to infer the consumer violations posed a risk to regulatory approval of the merger, despite cessation of the practice by the time the proxy issued. The disclosures were inadequate as a matter of law. View "Jaroslawicz v. M&T Bank Corp" on Justia Law

This mandamus proceeding arose from a dispute about a contract’s forum-selection clause. Trinity Bank loaned money to Apex, a drilling company. Michael Lachner, a part owner of Apex and the relator in this case, signed a personal guaranty of the loan. Apex defaulted on the loan, and Lachner defaulted on the guaranty. Trinity filed an action asserting separate breach of contract claims against Apex (on the loan) and Lachner (on the guaranty). Apex made no appearance, and a default judgment was entered against it. Lachner filed a motion to dismiss the action against him under ORCP 21 A(1), because the action was not filed in San Francisco as required by the forum-selection clause. Neither party disputed the meaning of the forum-selection clause, only whether it should be enforced. The trial court denied the motion, without making any findings or conclusions of law, stating that it “ha[d] discretion in [the] matter.” After review of the clause at issue, the Oregon Supreme Court concluded the clause should be enforced. The Court found none of the circumstances identified in Roberts v. TriQuint Semiconductor, Inc., 364 P3d 328 (2015) (as grounds for invalidating a contractual forum-selection clause) were present here. “Trinity’s objections amount to little more than dissatisfaction with the forum selection clause. The trial court’s factual findings indicate that Oregon might be a marginally more convenient place than California to litigate the case, but that is not the applicable legal standard. . . . As counsel for Trinity conceded at oral argument, it is not unfair or unreasonable to litigate the case in California. For that reason, the trial court did not have discretion to deny Lachner’s ORCP 21A (1) motion to dismiss based on the forum-selection clause: The law required the court to dismiss the action. It was legal error not to do so.” A peremptory writ of mandamus issued. View "Trinity v. Apex Directional Drilling LLC" on Justia Law