Justia Banking Opinion Summaries

Plaintiff filed a putative class action against M&T Bank, alleging that it improperly charged its checking account customers overdraft fees. The district court denied M&T Bank's renewed motion to compel arbitration, finding that plaintiff's claims were not within the scope of the parties' arbitration agreement. The court held that, under the delegation provision, the decision of whether plaintiff's claims were within the scope of the arbitration agreement was a decision for an arbitrator, and the district court erred in making the decision itself. Further, the court believed that it was prudent for the district court to reconsider its unconscionability determination in light of AT&T Mobility LLC v. Conception, so the court did not reach whether the arbitration agreement was unconscionable. Accordingly, the court vacated and remanded. View "Given v. M&T Bank Corp, et al." on Justia Law

Plaintiffs brought this putative class action against KeyBank, alleging violations of California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200, in connection with private student loans that KeyBank extended to plaintiffs. The court concluded that (1) the Federal Arbitration Act (FAA) 9 U.S.C. 1 et seq., preempted the Broughton-Cruz rule and (2) the arbitration clause in the parties' contracts must be enforced because it was not unconscionable. Therefore, the court did not reach the question, presented in Appeal No. 10-15934, whether the NBA and the regulations of the OCC preempted plaintiffs' UCL claims. Accordingly, in Interlocutory Appeal No. 09-16703, the court reversed the district court's denial of KeyBank's motion to compel arbitration, vacated the judgment, and remanded to the district court with instructions to enter an order staying the case and compelling arbitration. Because the disposition of that appeal rendered the district court's subsequent dismissal order a nullity, the court dismissed Appeal No. 10-15934 as moot. View "Kilgore, et al. v. Keybank, et al." on Justia Law

In 2009, lender issued plaintiff a four-month trial loan modification, under which it agreed to permanently modify the loan if she qualified under Home Affordable Mortgage Program guidelines, implemented by the Department of the Treasury to help homeowners avoid foreclosure during the decline in the housing market. Plaintiff filed a putative class action, claiming that she did qualify and that lender refused to grant her a permanent modification. She alleged violations of Illinois law under common-law contract and tort theories and under the Illinois Consumer Fraud and Deceptive Business Practices Act. The district court dismissed, finding that HAMP does not confer a private federal right of enforcement action on borrowers. The Seventh Circuit affirmed in part and reversed in part. Plaintiff stated viable claims under Illinois law for breach of contract or promissory estoppel, fraud, and unfair or deceptive business practices. Claims of negligent misrepresentation or concealment were not viable. HAMP and its enabling statute (12 U.S.C. 5219(a)) do not contain a federal right of action, but neither do they preempt otherwise viable state claims. View "Wigod v. Wells Fargo Bank, N.A." on Justia Law

The Army and Air Force Exchange Service issues credit cards to military personnel to purchase uniforms and other merchandise from post-exchange stores on military bases. During the relevant period balances for uniforms were interest-free. Plaintiff opened an account in 1997 and became delinquent in 2000. In 2009 He filed suit claiming that the interest rate on delinquent debt exceed that specified in the agreement. The Exchange the conducted an audit and adjusted the accounts of 46,851 individuals, including plaintiff, who received a refund. A second audit resulted in adjustments to accounts of an additional 103,320 individuals. The district court dismissed plaintiff's claim as moot and denied class certification. The Federal Circuit vacated. While plaintiff's individual claim was moot, it is unclear whether the claims of all class members were satisfied.

Plaintiff brought a class action against the Bank, alleging that the Bank breached its contract by charging interest in excess of the rate specified in the promissory note. The court affirmed the district court's grant of the Bank's motion to dismiss where the district court correctly concluded that the relevant provisions were clear, did not conflict with one another, and adequately disclosed the interest to be charged.

Plaintiffs sued Countrywide Home Loans, Inc. under the Missouri Second Mortgage Loan Act (MSMLA), Mo. Rev. State. 408.231-.241, alleging, for a putative class, that Countrywide charged them unauthorized interest and fees in violation of section 408.233.1. The district court granted summary judgment for Countrywide and plaintiffs appealed. The court held that because interest accrued for the two days before plaintiffs receive the loan discount and settlement/closing fee as a result of the alleged MSMLA violations, plaintiffs have raised a material issue of fact as to whether the alleged violations caused their loss. The court also held that because the document processing/delivery fee was not included in section 408.233's exclusive list of authorized charges, it violated the MSMLA. The court further held that because the document processing/delivery fee violated the MSMLA, the prepaid interest Countrywide collected on plaintiffs' loan was an additional violation of the statute. Accordingly, the court reversed and remanded for further proceedings.

This case stemmed from a putative class action challenging origination and foreclosure procedures for home loans maintained within the Mortgage Electronic Registration System (MERS). Plaintiffs appealed from the dismissal of their First Amended Complaint for failure to state a claim. The court was unpersuaded that plaintiffs' allegations were sufficient to support their claims. Although plaintiffs alleged that aspects of the MERS system were fraudulent, they could not establish that they were misinformed about the MERS system, relied on any misinformation in entering into their home loans, or were injured as a result of the misinformation. Although plaintiffs contended that they could state a claim for wrongful foreclosure, Arizona state law did not recognize this cause of action and their claim was without a basis. Plaintiffs' claim depended upon the conclusion that any home loan within the MERS system was unenforceable through a foreclosure sale, but that conclusion was unsupported by the facts and law on which they relied. Therefore, because plaintiffs failed to establish a plausible basis for relief on these and their other claims raised on appeal, the court affirmed the district court's dismissal of the complaint without leave to amend.

Plaintiffs Carol Metz and others filed a putative class action against fifty-five banks, including Fifth Third. The claims arose out of a Ponzi scheme involving bogus promissory notes. Five months later, attorney Daniel Morris filed a motion to intervene on behalf of his clients. Attached to the motion was a complaint similar to Metz's complaint except it was premised on promissory notes issued by different entities. The district court granted the motion to intervene. After the district court had dismissed Fifth Third with prejudice, Morris filed an intervenors' complaint against Fifth Third. The complaint was virtually identical to the complaint attached to the motion to intervene Morris filed earlier. The district court dismissed the claims with prejudice and granted Fifth Third's request for sanctions. The Sixth Circuit affirmed the imposition of sanctions, holding (1) the district court's imposition of sanctions under the bad faith standard was proper; (2) the record set forth sufficient evidence to support the district court's decision; (3) the district court properly sanctioned Morris under its inherent authority even though Fed. R. Civ. P. 11 also applied; (4) the district court did not deny Morris due process; and (5) the amount of fees awarded was not excessive.

Appellants appealed the district court's denial of certification of their putative class action in Mancini v. Ticketmaster; Stearns v. Ticketmaster, and Johnson v. Ticketmaster. Appellants' actions were directed against a number of entities that were said to have participated in a deceptive internet scheme, which induced numerous individuals to unwittingly sign up for a fee-based rewards program where amounts were charged to their credit cards or directly deducted from their bank accounts. The court held that Rule 23 did not give the district court broad discretion over certification of class actions and the district court erred when it based its exercise of that discretion on what turned out to be an inaccurate reading of the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200-17210. Therefore, the court reversed the district court's denial of the motions for class certification of the UCL claims in Mancini and affirmed its determination that Mancini and Sanders were not proper representatives. The court affirmed the district court's dismissal of the California's Consumers Legal Remedies Act (CLRA), Cal. Civ. Code 1750-1784, claim in Stearns; affirmed the district court's refusal to certify a class regarding the CLRA injunctive relief claims in Mancini; reversed the district court's dismissal of the Johnson action regarding the CLRA claim; and affirmed its refusal to certify a class regarding the Electronic Fund Transfer Act (EFTA), 15 U.S.C. 1693-1693r, claim in Mancini.

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d).