Justia Banking Opinion Summaries

The California Supreme Court's narrow ruling on a borrower's standing to challenge the validity of the chain of assignments involved in the securitization of her loans in "Yvanova v. New Century Mortgage Corp." (62 Cal.4th 919 (2016)) clarified what was the dispositive issue in this appeal, but expressly did not decide how to resolve it. In "Yvanova," the Court held a borrower had standing to allege that an assignment of the promissory note and deed of trust to the foreclosing party is void, not voidable; yet it did not decide whether a post-closing date transfer into a New York securitized trust is void or voidable. New York law, as interpreted by an overwhelming majority of New York, California, and federal courts, however, provided that defects in the securitization of loans can be ratified by the beneficiaries of the trusts established to hold the mortgage-backed securities and, as a result, the assignments are voidable. Following this precedent, the Court of Appeal concluded plaintiff Maria Mendoza did not have standing to challenge the alleged irregularities in the securitization of her loan. Therefore, the trial court's dismissal of the second amended complaint for wrongful foreclosure, declaratory relief, and quiet title was affirmed. View "Mendoza v. JPMorgan Chase Bank" on Justia Law

Plaintiffs sued Defendants in a New York state court for concealing ill-gotten money from a scheme orchestrated by three of Plaintiff’s employees. Defendants moved to dismiss the complaint for lack of personal jurisdiction. Supreme Court granted the motion to dismiss for lack of jurisdiction. The Appellate Division affirmed, concluding that Defendants did not purposefully avail themselves of the privilege of conducting activities in New York. Plaintiffs appealed, alleging that the defendant-bank’s repeated use of New York correspondent accounts to receive and transfer millions of dollars in illicit funds constituted the transaction of business substantially related to their claims against Defendants sufficient to confer personal jurisdiction. Defendants argued in response that personal jurisdiction cannot depend on third party conduct and requires purposeful availment by Defendants that was lacking in this case. The Court of Appeals reversed, holding that Defendants’ use of the correspondent bank accounts was purposeful, that there was an articulable nexus between the business transaction and the claim asserted, and that the maintenance of suit in New York does not offend traditional notions of fair play and substantial justice. View "Rushaid v. Pictet & Cie" on Justia Law

An employee of a nonprofit serving disabled adult clients used her position to embezzle more than half a million dollars held by the nonprofit for its clients. After the embezzlement was discovered, Travelers Casualty & Surety Company, the nonprofit's insurance company, made the nonprofit whole. Travelers then sought contribution from the bank in federal court. By submitting certified questions of Washington law, that court has asked the Washington Supreme Court to decide, among other things, whether a nonpayee's signature on the back of a check was an indorsement. Furthermore, the Court was also asked whether claims based on unauthorized indorsements that are not discovered and reported to a bank within one year of being made available to the customer are time barred. The Supreme Court answered yes to both questions. View "Travelers Cas. & Sur. Co. v. Wash. Trust Bank" on Justia Law

Petitioner loaned Debtors, including Darren Badger, approximately $10,000,000. Debtors defaulted on the loan. A California court issued a judgment against Debtors in the amount of $2,497,568. Pacific Western later domesticated the judgment in Nevada. In order to collect on the judgment, Petitioner served Wells Fargo Advisors (WFA), a company that administered three financial accounts under 26 U.S.C. 529 (529 accounts) on behalf of Badger, with a writ of execution and garnishment. Badger claimed that the 529 accounts were outside of the Nevada district court’s jurisdiction because they were located in New Mexico and that the funds held in the 529 accounts were completely exempt under New Mexico law. The district court quashed the writs of execution and garnishment served upon WFA, ruling that Petitioner must attempt to execute upon Badger’s 529 accounts in New Mexico. The Supreme Court entertained Petitioner’s petition for a writ of mandamus and granted the petition in part, holding (1) funds contained in 529 accounts are a debt, not a chattel; and (2) accordingly, the district court had the power to garnish the debt through device of a writ of garnishment upon WFA. View "Pacific Western Bank v. Eighth Judicial District Court" on Justia Law

Bank brought this foreclosure action against Mortgagor. Mortgagor filed a motion for summary judgment, arguing that Bank’s notices of right to cure were deficient because they did not satisfy the requirements of Me. Rev. Stat. 14, 6111(1-A). The court concluded that the notice of right to cure did not comply with statutory requirements and dismissed the complaint without prejudice so that Bank could send notice in compliance with section 6111. The Supreme Judicial Court affirmed the dismissal of the complaint but remanded with instructions to correct the order so that it provides for a dismissal with prejudice, holding that the court erred by stating that the dismissal was without prejudice because the dismissal was an adjudication on the merits, and therefore, it was with prejudice. View "U.S. Bank Trust, N.A. v. Mackenzie" on Justia Law

Arvest Bank petitioned for mandamus relief, seeking to have the Autauga Circuit Court to vacate its order denying Arvest's motion to quash a writ of execution obtained by Iberiabank f/k/a Capitalsouth Bank ("Iberia") against real property owned by Evelyn Niland ("Evelyn"). Thomas Karrh, II transferred the property Iberia wanted to sell to Evelyn and her husband Raymond Niland as joint tenants with right of survivorship. The Nilands quitclaimed the property to Evelyn, removing Raymond from the title. Raymond stopped paying an existing debt to Iberia. Iberia obtained a judgment against Raymond for close to $125,000. Iberia filed a lien against all of Raymond's property. Evelyn transferred the property back to herself and Raymond, attempting to create a joint tenancy with the right of survivorship. At the same time Evelyn tried this transfer, she and her husband executed a mortgage to Arvest Bank. Iberia secured a writ of execution against the property; Arvest intervened to try to quash a sheriff's sale of the property. Raymond died shortly thereafter. The trial court granted the intervention and stayed the sale proceedings, but after Iberia opposed these actions, the sheriff's sale was permitted to proceed. Finding that Evelyn indeed did create a joint tenancy with the right of survivorship, the Supreme Court found that Iberia's interest was extinguished with Raymond's death, and that Iberia could not attach its writ to the property. The order denying Arvest's motion to quash the writ of execution was reversed and the case remanded for the trial court to grant Arvest's request. View "Ex parte Arvest Bank." on Justia Law

In 2005, Connor Libby and Elena Chapa (collectively, Defendants) signed credit card agreements with Federated Capital Corporation’s predecessor-in-interest, a Utah corporation with its principal place of business in Pennsylvania. The agreements contained a forum selection clause and choice of law provision that adopted Utah substantive and procedural law to govern any dispute under the contract. The agreements required Defendants to make monthly payments to the address specific on their billings statements, and each billing statement required Defendants to send their payments to an address in Philadelphia, Pennsylvania. Defendants defaulted in 2006. In 2012, Federated filed separate claims in separate proceedings against Defendants. In each proceeding, the district court granted summary judgment in favor of Defendants, ruling that Utah’s borrowing statute required the court to apply Pennsylvania’s four-year statute of limitations, thereby barring Federated’s claims. Federated appealed, arguing that the agreement’s forum selection clause precluded the application of Utah’s borrowing statute. The Supreme Court affirmed, holding that the borrowing statute applied to and barred Federated’s causes of action. View "Federated Capital Corp. v. Libby" on Justia Law

The lender Cenlar FSB appealed a judgment in favor of the borrowers Laurie and Joseph Malenfant, Jr. in the lender’s second action for a judgment on the note and foreclosure, after the first was dismissed with prejudice. The lender argued that the first dismissal could not be interpreted as vacating the judgment on the note and for foreclosure that the trial court had previously issued in that case. Alternatively, the lender contended that its notice of default in the initial foreclosure action was sufficient to satisfy its notice obligation in connection with its second foreclosure action. After review, the Supreme Court concluded that the trial court’s dismissal with prejudice of the first action on the promissory note and complaint for foreclosure did effectively vacate that court’s prior judgment for lender on the note and for foreclosure. Furthermore, the lender was not, on this record, entitled to pursue a second action because it had not taken any steps to reinstate borrower’s monthly payment obligations after lender had accelerated the note. Accordingly, the Supreme Court affirmed the trial court's judgment. View "Cenlar FSB v. Malenfant, Jr." on Justia Law

Richard George, Steven Leavitt, Sandra Leavitt, and Darrell Dalton appealed the district court’s dismissal of their putative class action against Urban Settlement Services, d/b/a Urban Lending Solutions (Urban) and Bank of America, N.A. (BOA). Plaintiffs asserted a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO) against BOA and Urban. Plaintiffs also brought a promissory estoppel claim against BOA. Both claims arose from the defendants’ allegedly fraudulent administration of the Home Affordable Modification Program (HAMP). The district court granted the defendants’ Fed. R. Civ. P. 12(b)(6) motions to dismiss both claims, denied the plaintiffs’ request for leave to amend their first amended complaint, and dismissed the case. After review, the Tenth Circuit concluded that plaintiffs’ first amended complaint stated a facially plausible RICO claim against BOA and Urban and a facially plausible promissory estoppel claim against BOA. As such, the Court reversed and remanded for further proceedings. This reversal mooted plaintiffs’ challenge to the district court’s denial of their request to further amend the complaint. View "George v. Urban Settlement Services" on Justia Law

This case concerns a dispute between the parties over who has priority ownership of property located in Las Vegas. Nevada has a statute that gives a homeowners’ association lien priority over “all other liens and encumbrances” (subject to some limited exceptions) for up to nine months of unpaid HOA fees. NEV. REV. STAT. 116.3116(2)–(3). After the HOA foreclosed on property that Ashley Spencer bought, Weeping Hollow purchased the property at the foreclosure sale. Just over two months after the HOA foreclosure sale, Wells Fargo attempted to foreclose on the property under its 2008 deed of trust. Weeping Hollow filed suit in state court against Spencer, Wells Fargo, and a title insurance company. Wells Fargo removed to federal court. The district court then granted Wells Fargo’s motion to dismiss Weeping Hollow’s complaint. After the district court issued its ruling, the Nevada Supreme Court issued an opinion that expressly abrogates the district court’s interpretation of the HOA statute. Under the Nevada Supreme Court’s holding, a foreclosure on an HOA lien extinguishes an earlier-recorded security interest even though the HOA lien was recorded later. The court held that the district court erred in applying the fraudulent-joinder doctrine to this case. Because Spencer was not shown to be fraudulently joined, her presence in the action divests the district court of diversity jurisdiction and the district court must remand the case to state court. Since this case should never have made it into federal court, the court has no reason to address Wells Fargo’s constitutional and state-law arguments. View "Weeping Hollow Ave. Trust v. Spencer" on Justia Law