Justia Banking Opinion Summaries

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

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

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

Plaintiff filed suit against the Bank of the West in state court, seeking to set aside the trustee's sale of his property. After the claim was dismissed, plaintiff filed an amended complaint adding U.S. Bank as a defendant. The case was removed to federal district court where it was ultimately dismissed.The Eighth Circuit affirmed the district court's dismissal orders, concluding that the federal law violations as alleged in the second amended complaint all occurred prior to the institution and maintenance of any foreclosure activity. Therefore, they were not defects in the trustee's sale under Nebraska law. The court also concluded that the district court did not abuse its discretion in denying defendant's motion for leave to file a third amended complaint where the motion was procedurally defaulted and granting leave would be futile. View "Anderson v. Bank of the West" on Justia Law

The dispute underlying this appeal began with the failure of Camille Village, LLC, the owner of an apartment complex, to deposit additional money in escrow for repairs after it was demanded by Lenders Federal National Mortgage Association and Barings Multifamily Capital, LLC. The Lenders held Camille Village to be in default, lengthy settlement negotiations failed, and the amount demanded for repairs increased dramatically after additional inspections. After a trial, the chancery court concluded that Camille Village was in default and had failed to prove the Lenders had acted in bad faith. Finding no reversible error, the Mississippi Supreme Court affirmed the trial court. View "Camille Village, LLC v. Federal National Mortgage Ass'n, et al." on Justia Law

In 2011, PNC filed a foreclosure complaint against Kusmierz. PNC retained Metro to serve the summons. Magida, a Metro employee, attempted to serve Kusmierz at the subject Lombard address but the property was a vacant lot. Magida served Kusmierz in Palatine. Days later, PNC obtained the appointment of Metro as a special process server. PNC then filed affidavits of service. Kusmierz failed to appear. On February 28, 2012, the court entered an order of default and a judgment of foreclosure and sale. PNC complied with all statutory notice requirements, and the property was sold at a judicial sale back to PNC. The court confirmed the judicial sale. Notices of the proceedings were mailed to the Palatine address. In 2013, third parties purchased the property from PNC for $24,000 and constructed a home on the property with mortgage loans totaling $292,650.In 2018, more than seven years after being served with the foreclosure complaint and summons, Kusmierz sought relief from void judgments under 735 ILCS 5/2-1401(f), alleging improper service because the process server was not appointed by the court at the time of service, in violation of section 2-202(a). The appellate court and Illinois Supreme Court affirmed the dismissal of the complaint, applying both laches and the bona fide purchaser protections in section 2-1401(e) of the Code of Civil Procedure. View "PNC Bank, National Association v. Kusmierz" on Justia Law

Defendants William Grommesh and Jon Pansch appealed the grant of summary judgment in favor of American Federal Bank in its action to enforce four guaranties. The defendants argued the district court erred in granting summary judgment because the court misinterpreted the guaranties, and genuine issues of material fact exist regarding the defendants’ defenses. Finding no reversible error, the North Dakota Supreme Court affirmed. View "American Federal Bank v. Grommesh, et al." on Justia Law

In 2013, Nike and its subsidiary, Converse, brought a trademark infringement action under the Lanham Act against hundreds of participants in Chinese counterfeiting networks. The district court entered five prejudgment orders, a default judgment, and one postjudgment order against defendants, who never appeared in court. Each order enjoined defendants and all persons acting in concert or in participation with any of them from transferring, withdrawing or disposing of any money or other assets into or out of defendants' accounts regardless of whether such money or assets are held in the U.S. or abroad. In 2019, Nike's successor-in-interest, Next, moved to hold appellees—six nonparty Chinese banks—in contempt for failure to implement the asset restraints and for failure to produce certain documents sought in discovery.The Second Circuit affirmed the district court's judgment, holding that the district court did not abuse its discretion in denying Next's motion for contempt sanctions against the Banks because (1) until the contempt motion, Nike and Next never sought to enforce the asset restraints against the Banks; (2) there is a fair ground of doubt as to whether, in light of New York's separate entity rule and principles of international comity, the orders could reach assets held at foreign bank branches; (3) there is a fair ground of doubt as to whether the Banks' activities amounted to "active concert or participation" in defendants' violation of the asset restraints that could be enjoined under Federal Rule of Civil Procedure 65(d); and (4) Next failed to provide clear and convincing proof of a discovery violation. View "Next Investments, LLC v. Bank of China" on Justia Law

Over the course of a few years, an employee of Severin Mobile Towing Inc. (Severin) took about $157,000 in checks made payable to Severin’s d/b/a, endorsed them with what appears to be his own name or initials, and deposited them into his personal account at JPMorgan Chase Bank N.A. (Chase). Because the employee deposited all the checks at automated teller machines (ATM’s), and because each check was under $1,500, Chase accepted each check without “human review.” When Severin eventually discovered the embezzlement, it sued Chase for negligence and conversion under California’s version of the Uniform Commercial Code (UCC), and for violating the unfair competition law. Severin moved for summary judgment on its conversion cause of action, and Chase moved for summary judgment of all of Severin’s claims, asserting affirmative defenses under the UCC, and that claims as to 34 of the 211 stolen checks were time- barred. The trial court granted Chase’s motion on statute of limitations and California Uniform Commercial Law section 3405 grounds; the court did not reach UCL section 3406. The court denied Severin’s motion as moot, and entered judgment for Chase. On appeal, Severin argued only that the court erred in granting summary judgment to Chase on Severin’s conversion cause of action (and, by extension, the derivative UCL cause of action). Specifically, Severin argued the court erroneously granted summary judgment under section 3405 because Chase failed to meet its burden of establishing that Severin’s employee fraudulently indorsed the stolen checks in a manner “purporting to be that of [his] employer.” Severin further argued factual disputes about its reasonableness in supervising its employee precluded summary judgment under section 3406. The Court of Appeal agreed with Severin in both respects, and therefore did not reach the merits of Chase’s claim that its automated deposit procedures satisfied the applicable ordinary care standard. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Severin Mobile Towing, Inc. v. JPMorgan Chase etc." on Justia Law

Plaintiffs Charles Best Jr. and Robbie Johnson Best alleged that defendants (collectively the Bank), attempted to collect a debt secured by the Bests’ home, despite having no legal right to do so. They alleged that, in the process, the Bank engaged in unlawful, unfair, and fraudulent debt collection practices. Based on these allegations, they raised six causes of action, including one under the Rosenthal Fair Debt Collection Practices Act. The trial court sustained the Bank’s demurrer to the entire complaint on the ground of res judicata; it ruled that the Bests were asserting the same cause(s) of action as in a prior federal action that they brought, unsuccessfully, against the Bank. In the nonpublished portion of its opinion, the Court of Appeal held that, as to three of the Best’s causes of action (including their Rosenthal Act cause of action) the trial court erred by sustaining the demurrer based on res judicata. As to the other three, the Court found the Bests did not articulate any reason why res judicata does not apply; thus, they have forfeited any such contention. In the published portion of its opinion, the Court held that the Rosenthal Act could apply to a nonjudicial foreclosure; the lower federal court opinions on which the Bank relied were superseded by controlling decisions of the United States Supreme Court, the Ninth Circuit, and the California Courts of Appeal. View "Best v. Ocwen Loan Servicing, LLC" on Justia Law