Justia Banking Opinion Summaries

Articles Posted in Civil Procedure
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Plaintiffs appealed a district court judgment dismissing their action against Defendants-Appellees BLC Bank, S.A.L. (“BLC”), Credit Libanais, S.A.L. (“CL”), AlMawarid Bank, S.A.L. (“AM”), and Banque du Liban (“BDL”) for want of subject-matter jurisdiction, for want of personal jurisdiction, and for forum non conveniens based on binding forum selection clauses in agreements Plaintiffs entered into with AM and BLC. Plaintiffs alleged that Defendants- (together, “the Banks”) engaged in a scheme to cheat them out of millions of U.S. dollars (“USD”) by inducing them to deposit those dollars in Lebanese bank accounts with the promise that they would be able to withdraw that money in the United States, only to renege on that promise and keep the money trapped in Lebanon. The district court dismissed the claims against AM and BLC because the Daous’ agreements with those banks included valid, enforceable forum selection clauses specifying Beirut as the proper forum; those against CL because it lacked personal jurisdiction over that bank, and those against BDL because that bank is an agency or instrumentality of the Lebanese state and no exception applied under the Foreign Sovereign Immunities Act (“FSIA”).   The Second Circuit held that the district court lacked personal jurisdiction over AM, BLC, and CL (together, “the Commercial Banks”) under the relevant provision of New York’s long-arm statute, N.Y. C.P.L.R. Section 302(a)(1), because there was insufficient connection between Plaintiffs’ claims against the Commercial Banks and those banks’ business transactions in New York. The court further held that BDL, an agency or instrumentality of a foreign sovereign is entitled to sovereign immunity. View "Daou v. BLC Bank, S.A.L." on Justia Law

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Plaintiffs brought a suit under the Commodity Exchange Act (CEA), alleging that the Defendants engaged in fraudulent trading tactics – to Plaintiffs’ detriment – in markets for precious metals. The district court granted Defendants’ motion to dismiss under Rule 12(b)(6) for failure to state a claim, concluding that Plaintiffs’ claims are time-barred and that Plaintiffs did not adequately plead that they were injured by Defendants’ fraudulent trading activity. On appeal, Plaintiffs contend that their claims took years to accrue, and were therefore timely because they were not on notice of their injury. They separately argued that they have adequately pleaded that Defendants’ fraud injured them.   The Second Circuit affirmed the dismissal for failure to plead an injury. The court concluded that neither of Plaintiffs’ theories, alone or in combination, adequately alleges that Defendants’ trading activities injured them. The court explained that the CEA does not deputize traders to rove the commodities markets hunting for bad behavior. Rather, it makes fraudsters liable for actual damages.   Here, Plaintiff has not plausibly alleged that it was damaged. Instead, it theorizes that its regular participation in the relevant commodities markets supports an inference that it was injured by Defendants’ spoofing at least once. But this argument is so broad that endorsing it would permit any regular market participant to proceed to discovery any time a significant market player has repeatedly committed fraud – contravening both the statute and case law. Further, Plaintiffs’ allegations do not support an inference of damages. View "Gamma Traders - I LLC v. Merrill Lynch Commodities, Inc." on Justia Law

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Plaintiff, a court-appointed receiver, appealed the district court’s dismissal of his aiding and abetting claims on behalf of the companies in receivership (the Receivership Entities) against PNC Bank. The district court granted PNC’s Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction because it found that Plaintiff lacked standing to bring those claims. The district court relied on our decision in Isaiah v. JPMorgan Chase Bank, 960 F.3d 1296, 1308 (11th Cir. 2020).   On appeal, Plaintiff argued that he has standing because he was appointed pursuant to Section 501.207(3) of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The Eleventh Circuit affirmed the district court’s orders granting PNC’s Rule 12(b)(1) motion for lack of subject matter jurisdiction and denying Plaintiff’s motions for reconsideration and leave to amend. The court held that even assuming that Section 501.207(3) applies, it does not rectify the standing issue in Isaiah because it does not expressly address the imputation of wrongful acts between the Receivership Entities themselves and their insiders. View "Jonathan E. Perlman v. PNC Bank, N.A." on Justia Law

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Plaintiff Bainbridge Fund Ltd. is the beneficial owner of bonds issued by the Republic of Argentina. Argentina defaulted on these bonds back in 2001, but Bainbridge didn’t sue to recover them until 2016. The district court dismissed Bainbridge’s claims as untimely under New York’s six-year statute of limitations for contract actions and the Second Circuit’s nonprecedential decisions. Bainbridge appealed, asking the Second Circuit to reconsider those decisions. Specifically, Bainbridge argues that (1) the twenty-year statute of limitations for recovery on certain bonds under N.Y. C.P.L.R. 34 Section 211(a) applies to its claims against Argentina; and (2) even if the six-year limitations period for contract actions applies, it was tolled under N.Y. Gen. Oblig Law Section 17-101 because Argentina “acknowledged” this debt when it publicly listed the bonds in its quarterly financial statements (the “Quarterly Reports”).   The Second Circuit rejected Plaintiff’s arguments. First, the twenty-year statute of limitations does not apply to claims on Argentine bonds because a foreign sovereign is not a “person” under N.Y. C.P.L.R. Section 211(a). Second, tolling under N.Y. Gen. Oblig. Law Section 17-101 is inapplicable because the Quarterly Reports did not “acknowledge” the debt at issue in a way that reflected an intention to pay or seek to influence the bondholders’ behavior. To the contrary, Argentina repeatedly stated that the bonds “may remain in default indefinitely.” Bainbridge’s claims are thus time-barred. View "Bainbridge Fund Ltd. v. The Republic of Argentina" on Justia Law

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Plaintiff took out a home equity loan on a house in Texas (“Property”). Deutsche Bank National Trust Company (“Deutsche Bank”) is the trustee of the loan. Deutsche Bank sought a non-judicial foreclosure order on the Property.   Plaintiff sued Deutsche Bank in Texas state court, alleging violations of the Texas Debt Collection Act (“TDCA”), breach of the common-law duty of cooperation, fraud, and negligent misrepresentation. Despite the stipulation, Deutsche Bank removed the case to federal district court. Plaintiff then moved to remand the case back to Texas state court because, in his view, the amount in controversy could not exceed the stipulated maximum of $74,500. The district court denied Plaintiff’s motion to remand.   The Fifth Circuit reversed and concluded that the district court erred in denying Plaintiff’s motion to remand, and it lacked subject-matter jurisdiction when it entered final judgment. The court reasoned that Deutsche Bank failed to establish that the amount in controversy exceeds the jurisdictional floor of $75,000.   The court first noted that the bank points out that Plaintiff’s suit requested relief which might be read to suggest Plaintiff also sought injunctive relief. But the bank makes that argument only to establish that Plaintiff’s initial pleading seeks nonmonetary relief not to establish that the requested nonmonetary relief put the house in controversy. Whatever the merit of that latter contention might otherwise be, the court held that Deutsche Bank forfeited it. Moreover, the mere fact that Plaintiff pleaded a demand for specific damages cannot support bad faith. View "Durbois v. Deutsche Bank Ntl Trust" on Justia Law

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Plaintiffs sued the Inter-American Development Bank (the “IDB” or the “Bank”), alleging that the IDB violated its internal investigatory procedures when investigating allegations that the Plaintiffs had engaged in “Prohibited Practices”—e.g., corruption, fraud, coercion, collusion, obstruction and misappropriation—in the performance of IDB-financed contracts, an investigation that ultimately led to the imposition of severe sanctions against the Plaintiffs. The IDB moved to dismiss the suit for lack of subject matter jurisdiction, asserting immunity under the International Organizations Immunities Act (IOIA), 22 U.S.C. Sections 288–288l. Plaintiffs countered that their case fell within two exceptions to IOIA immunity: the commercial activity exception and the waiver exception. Rejecting the Plaintiffs’ arguments, the district court granted the IDB’s motion to dismiss.   The DC Circuit affirmed the district court’s ruling, holding that Plaintiffs’ cases did not fall within the IOIA immunity exceptions. The court reasoned that in the context of a multilateral bank like the IDB, the Court has generally looked to whether waiver of immunity serves to “enhance the marketability” of an international organization’s financial products “and the credibility of its activities in the lending markets. Weighing the costs and benefits here, the court saw no reason to find a waiver of immunity. It is true that the IDB is obligated to, among other things, “promote the investment of public and private capital for development purposes” and “encourage private investment,” IDB Charter art. I, Section 2(a), meaning that the Plaintiffs’ argument that judicial review would assuage commercial partners’ “fears that [the Sanctions Procedures] will be applied in bad faith,” and thereby promote investment, is, at the very least, colorable. View "Noah Rosenkrantz v. Inter-American Development Bank" on Justia Law

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Plaintiff Wells Fargo Bank filed a statutory-interpleader action after facing conflicting demands for access to the checking account of Mesh Suture, Inc. Mark Schwartz, an attorney who founded Mesh Suture with Dr. Gregory Dumanian, was named as a claimant-defendant in the interpleader complaint but was later dismissed from the case after the district court determined that he had disclaimed all interest in the checking account. The district court ultimately granted summary judgment to Dr. Dumanian as the sole remaining claimant to the bank account, thereby awarding him control over the funds that remained. Schwartz appealed, arguing: (1) the district court lacked jurisdiction over the case because (a) there was not diversity of citizenship between him and Dr. Dumanian and (b) the funds in the checking account were not deposited into the court registry; (2) he did not disclaim his fiduciary interest in the checking account, and (3) the award of funds to Dr. Dumanian violated various rights of Mesh Suture. Finding no reversible error, the Tenth Circuit affirmed the district court judgment. View "Wells Fargo Bank v. Mesh Suture, et al." on Justia Law

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The issue this case presented for the Tenth Circuit Court of Appeals' review was one of first impression in the circuit: whether extended overdraft charges made to a checking account were “interest” charges governed by 12 C.F.R. 7.4001, or “non-interest charges and fees” for “deposit account services” governed by 12 C.F.R. 7.4002. Petitioner Berkley Walker held a checking account at the national bank BOKF, National Association, d/b/a Bank of Albuquerque, N.A. (“BOKF”). He filed a putative class action challenging BOKF’s “Extended Overdraft Fees,” claiming they were in violation of the interest rate limit set by the National Bank Act of 1864 (“NBA”). BOKF charged Walker Extended Overdraft Fees after he overdrew his checking account, BOKF elected to pay the overdraft, and then Walker failed to timely pay BOKF for covering the overdraft. Walker alleges that when he overdrew his account and BOKF paid his overdraft, BOKF was extending him credit and this extension of credit was akin to a loan. Walker argues that the Extended Overdraft Fees of $6.50 he was charged for each business day his account remained negative after a grace period constituted “interest” upon this extension of credit and were in excess of the interest rate limit set by the NBA. The district court concluded that BOKF’s Extended Overdraft Fees were fees for “deposit account services” and were not “interest” under the NBA. The district court granted BOKF’s motion to dismiss under Rule 12(b)(6) and dismissed Walker’s action for failure to state a claim. Finding no reversible error in the district court judgment, the Tenth Circuit affirmed. View "Walker v. BOKF National Assoc." on Justia Law

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This summary judgment matter arose from a petition for declaratory judgment seeking a declaration (amongst other things) that defendant First Guaranty Bank (the “Bank”) applied an incorrect interest rate and thus miscalculated the principal owed on a Promissory Note executed by borrower-petitioner Leisure Recreation & Entertainment, Inc. (“Leisure”) in favor of the Bank in December 1991 (the “Note”). The Louisiana Supreme Court granted Leisure’s writ application to determine whether the court of appeal erred in applying the “voluntary payment doctrine” to hold that Leisure was estopped from recovering payments voluntarily made, regardless of whether owed. In addition, the Court reviewed whether the court of appeal erred in determining the Note presented an alternative obligation as to the Prime Rate interest structure for years 11 through 30 of its repayment, whether it erred in imposing its own interest rate structure during that period, and whether the Bank’s prescription arguments preclude Leisure’s recovery of any interest paid and not due between 2001 and 2013. Finding the “voluntary payment doctrine” contravened the Louisiana Civil Code, the Supreme Court reversed the court of appeal insofar as it: (1) reversed the portion of the district court’s judgment denying the motion for summary judgment filed by the Bank as to the voluntary payment affirmative defense; (2) dismissed Leisure’s claim for declaratory relief as to the interest it voluntary paid the Bank between 2001 and 2013; and (3) rendered judgment ordering the Bank to repay Leisure “any overcharge of interest in excess of the prime rate that Leisure paid on the [Note] since the filing of its suit on October 7, 2013, together with interest thereon from the date of judicial demand until paid.” Finding that the Note set forth an “alternative obligation,” the Supreme Court reversed the court of appeal insofar as it: (1) reversed the district court decree that Leisure was entitled to select the Prime Rate structure pursuant to La. C.C. art. 1810; and (2) reversed the district court’s declaration that Leisure paid all indebtedness owed to the Bank on the Note as of June 28, 2015, and was owed return of all amounts paid thereafter. The case was remanded to the court of appeal for consideration of the Bank’s arguments on appeal that were pretermitted by the court of appeal opinion and were not in conflict with the Supreme Court's opinion. View "Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank" on Justia Law

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In this case involving proper service of lawsuits on financial institutions that act as fiduciaries the Supreme Court reversed the decision of the court of appeals affirming the judgment of the trial court rendering judgment that the defendant financial institution take nothing on its equitable bill of review, holding that Defendant was not properly served and that the default judgment rendered against it must be set aside.At issue was which of two Texas statutes applied in this case: Tex. Civ. Prac. & Rem. Code 17.028, which provides that citation may be served on Defendant by serving its "registered agent," or chapter 505 of the Estates Code, which provides that a foreign corporate fiduciary must appoint the Secretary of State as an "agent for service of process." Plaintiff in this case served the Secretary rather than the defendant's designated registered agent. Because it had not updated its Chapter 505 designation of the person to whom the Secretary should forward process, Defendant did not receive the citation, and default judgment was entered against it. The Supreme Court rendered summary judgment granting Defendant's bill of review, holding that Defendant was not properly served. View "U.S. Bank National Ass'n v. Moss" on Justia Law