Justia Banking Opinion Summaries

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

The Eleventh Circuit certified the following question to the Supreme Court of Georgia: 1) Whether Georgia's apportionment statute, O.C.G.A. 51-12-33, applies to tort claims for purely pecuniary losses against bank directors and officers; 2) whether section 51-12-33 abrogated Georgia's common-law rule imposing joint and several liability on tortfeasors who act in concert; and 3) whether, in a negligence action premised upon the negligence of individual board members in their decisionmaking processes, a decision of a bank's board of directors is a "concerted action" such that the board members should be held jointly and severally liable for negligence. View "Federal Deposit Insurance Corporation v. Loudermilk" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

The New Hampshire Banking Department (Department) initiated an adjudicative proceeding against CashCall, Inc. (CashCall), WS Funding, LLC (WS Funding), and John Paul Reddam, for violations of RSA chapter 399-A (2006 & Supp. 2012) (repealed and reenacted 2015). Reddam is the president and chief executive officer of CashCall, a lending and loan services corporation headquartered and incorporated in California. Reddam owned all of CashCall’s corporate stock. Reddam was also the president of WS Funding, a wholly owned subsidiary of CashCall. WS Funding was a Delaware limited liability company with a principal place of business in California. CashCall appeared to be engaged in the business of purchasing and servicing small loans or “payday loans” in association with Western Sky Financial. Neither Reddam, CashCall, nor WS Funding was licensed under RSA chapter 399-A to issue small loans in New Hampshire. In June 2013, after analyzing and reviewing CashCall’s responses to an administrative subpoena duces tecum and reviewing the business relationships among CashCall, WS Funding, and Western Sky Financial, the Department issued a cease and desist order to CashCall, WS Funding, and Reddam. In the cease and desist order, the Department found that either CashCall, or WS Funding, was the “actual” or “de facto” lender for the payday and small loans, and that Western Sky Financial was a front for the respondents’ unlicensed activities. Reddam challenged the Department’s denial of his motion to dismiss for lack of personal jurisdiction. The New Hampshire Supreme Court determined the Department made a prima facie showings that: (1) Reddam’s contacts related to the Department’s cause of action; (2) he purposefully availed himself of the protection of New Hampshire law; and (3) it was fair and reasonable to require him to defend suit in New Hampshire. The Court therefore found no due process violation in the Department’s exercise of specific personal jurisdiction over Reddam. View "Petition of John Paul Reddam" on Justia Law

The district court erred in ruling that the coguarantors of a loan were not entitled to contribution from other guarantors of an underlying debt because the funds used to make the payments on the debt were provided to them by their respective parents.Here, the parents of the coguarantors provided funds to their children to pay part of the underlying debt. The funds were placed in accounts owned or co-owned by the coguarantors, who then paid down a debt with funds drawn from these accounts. The coguarantors sought contribution from the other guarantors of the underlying debt. The district court and court of appeals ruled against the coguarantors. The Supreme Court vacated the decision of the court of appeals and reversed the judgment of the district court, holding that the coguarantors were entitled to contribution from other guarantors on the undisputed facts of this case. View "Shcharansky v. Shapiro" on Justia Law

Citibank provided sales financing to Illinois retailers who offered customers the option of financing their purchases, including the amount of Illinois tax due on the purchases. Citibank originated or acquired consumer charge accounts and receivables from the retailers on a non-recourse basis. When a customer financed a purchase using that account, Citibank remitted to the retailer the amount the customer financed, which included some or all of the purchase price and the sales tax owed based on the selling price. The retailers then remitted the sales tax to the state. Under the agreements between Citibank and the retailers, Citibank acquired “any and all applicable contractual rights relating thereto, including the right to any and all payments from the customers and the right to claim Retailer’s Occupation Tax (ROT) refunds or credits.” Citibank filed a claim for tax refunds under 35 ILCS 120/6 for ROT taxes paid through retailers on transactions that ultimately resulted in uncollectible debt. The Department denied Citibank’s claim. The Illinois Supreme Court reinstated the denial, noting the legislature’s clearly expressed preference in the statutory framework for reporting, remission, and refund only through the retailer. Sophisticated lending institutions no doubt anticipate the eventuality of default and can order their commercial relationships accordingly. View "Citibank, N.A. v. Illinois Department of Revenue" on Justia Law