Justia Banking Opinion Summaries

Karen Anthony, a Nebraskan citizen, filed in federal district court an action against The Cattle National Bank & Trust Company (the Bank), a national bank headquartered in Nebraska, alleging fraud. Anthony asserted subject matter jurisdiction under 12 U.S.C. 24(4), 12 U.S.C. 1831n(a)(2)(A), and 28 U.S.C. 1331. The district court dismissed the complaint for lack of subject matter jurisdiction, concluding (1) there was no diversity jurisdiction, and (2) federal-question jurisdiction did not exist. The Eighth Circuit Court of Appeals affirmed, holding (1) diversity jurisdiction did not exist; (2) section 1831n did not create a private right of action; and (3) Anthony's remaining arguments were meritless or improperly raised for the first time on appeal. View "Anthony v. Cattle Nat'l Bank" on Justia Law

Defendant-Appellant Branch Banking & Trust Company (BB&T) appealed the denial of its motion to compel arbitration of a putative class action brought by Plaintiff-Appellee Lacy Baras, a customer of BB&T. Barras alleged in her complaint on behalf of herself and the class she sought to represent that BB&T charged her and others overdraft fees for payments from checking accounts even when the account contained sufficient funds to cover the payments. She also alleged that BB&T supplied inaccurate and misleading information about account balances, and failed to notify customers about changes to BB&T's policies for processing checking account transactions, thereby increasing overdraft charges assessed against customers. Barras asserted claims under the state Unfair Trade Practices Act for unfair and deceptive trade practices, breach of contract, breach of the covenant of good faith and fair dealing and unconscionability, and sought to certify a class of BB&T account holders who were likewise charged allegedly inflated overdraft fees. BB&T moved to compel arbitration of all of Barras's claims pursuant to a provision in its "Bank Services Agreement" (BSA). The district court denied BB&T's motion, holding that the arbitration agreement was unconscionable under state law, and could not be enforced. Before the Eleventh Circuit decided BB&T's appeal to that order, the Supreme Court decided "AT&T Mobility, LLC v. Concepcion" (131 S.Ct. 1740 (2011). The Eleventh Circuit remanded the case to the district court for reconsideration in light of that decision. On remand, BB&T renewed its motion to compel arbitration, and again the district court denied it. BB&T appealed that ruling, arguing that: (1) the question of whether the arbitration provision was enforceable must be resolved by an arbitrator; (2) the cost-and-fee shifting provision in the agreement that the district court held unconscionable did not apply to the arbitration provision; (3) "Concepcion" prohibited application of the state unconscionability doctrine to the arbitration provision; (4) the cost-and-fee shifting provision is not unconscionable; and (5) the cost-and-fee shifting privision was severable from the arbitration process. Taking each argument in turn, the Eleventh Circuit reversed the district court's decision and remanded the case with instructions to compel arbitration. View "Barras v. Branch Banking & Trust Co." on Justia Law

The United States Bankruptcy Appellate Panel of the Court of Appeals for the Ninth Circuit ("the BAP") certified a question to the Alabama Supreme Court: "In Alabama, is a 'default' judgment premised upon discovery sanctions or other post-answer conduct of the defendant sufficient to support the application of issue preclusion in a later proceeding?" Debtor-Defendant Anthony Malfatti was one of three principals of TA Financial Group ('TAF') purportedly designed to assist credit card holders in arbitration of disputes with the card issuers. The arbitration providers were selected by the card holders from a list provided by TAF. Among the arbitration providers was Arbitration Forum of America, Inc. ('AFOA'). AFOA was not conducting legitimate arbitrations; every arbitration resulted in an award in favor of the card holder, which was then reduced to judgment. Malfatti claims he was unaware that AFOA's practices and the judgments stemming therefrom were illegitimate. At some time after the banks involved learned of the judgments, they filed cross-complaints against the card holders to set aside the judgments as fraudulently obtained. In September 2005, the banks, including Bank of America, N.A. (USA) filed Amended Third Party Complaints against, among others, Malfatti and TAF, alleging tortious interference with contract, abuse of process, wantonness, and civil conspiracy, and sought an injunction against further arbitrations. The Banks moved for default judgments against Malfatti and TAF for failing to comply with discovery orders, repeated failures to appear for depositions, and failure to respond to written discovery. Malfatti and TAF filed a motion to set aside the defaults. The court found Malfatti and TAF to be jointly and severally liable for compensatory damages, awarded punitive damages against Malfatti, and found Malfatti to be liable for punitive damages awarded against TAF under the alter ego doctrine. Malfatti filed for Chapter 7 bankruptcy the Banks filed an adversary proceeding alleging the debt owed to them by Malfatti was nondischargeable. Upon review, the Alabama Supreme Court answered the certified question in the negative: "[f]or purposes of determining whether an issue is precluded by the doctrine of collateral estoppel, Alabama law makes no distinction between a simple default and a penalty default." View "Malfatti v. Bank of America, N.A." on Justia Law

Glacier Kitchens, Inc., CR Weaver Trust, and the Estate of Grace Weaver (collectively "Defendants") appealed the denial of their motion to set aside the default judgments issued against them in district court. Weaver filed a complaint against Plaintiff Mountain West Bank (MWB) alleging breach of contract, unfair trade practices, and a violation of the implied covenant of good faith and fair dealing. MWB filed its answer and counterclaim for judicial foreclosure. MWB attempted to serve the Defendants at the residence of Weaver by personally serving Weaver’s daughter Elizabeth Weaver (Elizabeth). Elizabeth bore no relationship to the Defendants, other than she is Weaver’s daughter. Weaver filed a pro se answer to MWB’s counterclaim as it related to him. The Defendants failed to file an answer or otherwise appear. As a result, MWB applied for entries of default against them. Weaver filed a pro se motion to set aside the judgments against Defendants. In his motion, Weaver noted that Elizabeth was not legally qualified to accept service on behalf of the Defendants. MWB objected and argued that Weaver had failed to explain why Elizabeth was not authorized to accept service on behalf of the Defendants. MWB additionally contended that Weaver, as a non-attorney, could not appear on behalf of the Defendants. The Supreme Court dismissed Weaver's appeal without prejudice due to the fact that as a pro se appellant, Weaver was unable to bring an appeal on behalf of the Defendants. Defendants through counsel made a motion to set aside the default judgments arguing MWB's alleged faulty service. The Defendants' motion to set aside the default judgments was deemed denied pursuant to M. R. Civ. P. 60(c) (2009) when the District Court failed to rule on them within 60 days. It is from that denial that the Defendants appealed. Upon review, the Supreme Court concluded that the district court erred when it failed to set aside the default judgments issued against Defendants due to the problem with service. Accordingly, the Court reversed the district court and remanded the case for further proceedings. View "Mtn. West v. Glacier Kitchens, Inc." on Justia Law

Defendant MBNA America Bank issued a credit card to Plaintiff Allan Parks. As part of its service to cardholders, MBNA extended credit to Plaintiff by sending him convenience checks that did not include disclosures required by Cal. Civ. Code 1748.9. Plaintiff later sued MBNA on behalf of himself and similarly situated MBNA customers, alleging that the bank engaged in unfair competition by failing to make the disclosures mandated by section 1748.9. MBNA argued that the National Bank Act of 1864 (NBA) preempted the state disclosure law. The trial court granted judgment on the pleadings on MBNA's motion, concluding that the bank's failure to attach the statutorily mandated disclosures to its convenience checks was not unlawful. The court of appeal reversed. The Supreme Court reversed the court of appeal, holding that NBA preempts section 1748.9 because the state law standards act as an obstacle to the broad grant of power given by the NBA to national banks to conduct the business of banking. Remanded. View "Parks v. MBNA Am. Bank, N.A." on Justia Law

Plaintiffs are the sole shareholder and Chairman of Miami Valley Bank and also own stock in a mortgage lender with which the bank had loan agreements. In 2007, the FDIC began investigating the loan agreements. State and federal regulators closed the bank and appointed the FDIC as a receiver. The FDIC purportedly halted its investigation when an accounting expert confirmed that the loans were legal. The mortgage company then petitioned the receiver for $10 million that the bank owed the mortgage lender. In retaliation for the $10 million request, FDIC investigator Stevens allegedly prompted the FDIC to resume the investigation of the bank. The plaintiffs then sued Stevens, alleging that the retaliatory investigation violated the First Amendment, a “Bivens” action. Stevens died after the lawsuit began. The plaintiffs argued that their Bivens action survived his death, regardless of whether their claim would survive under state law. The district court held that state law controls the survivability of Bivens actions, subject to one inapplicable exception. The court applied Ohio law, under which the death of Stevens extinguished the claims against him. The Sixth Circuit affirmed. View "Haggard v. Steven" on Justia Law

Before the 2008 financial crisis, six AIG subsidiaries sold Sharia-compliant financing products. Sharia refers to Islamic law; an SCF product uses a portion of product reserves to fulfill the Islamic duty of charitable giving and does not invest premiums in industries dealing with pork, alcohol, interest, gambling, or pornography. The subsidiaries are consolidated in AIG financial statements and received part of the funds AIG received in 2008, when the Federal Reserve Bank of New York lent AIG $85 billion in exchange for AIG shares. The Treasury Department also took an ownership stake in AIG by committing $40 billion pursuant to the Troubled Asset Relief Program, established under the Emergency Economic Stabilization Act, 12 U.S.C. 5201–61. Treasury committed $ 30 billion to AIG in 2009, in exchange for more stock. Plaintiff challenged EESA, arguing that it violated the Establishment Clause for the government to allow a portion of the capital given to AIG to support the marketing of SCF products. Plaintiff is a Michigan resident, a veteran of Operation Iraqi Freedom, a Catholic, and a taxpayer. His status as a federal taxpayer is his sole basis for asserting standing. The district court entered summary judgment for defendants. The Sixth Circuit affirmed. View "Murray v. U.S. Dep't of Treasury" on Justia Law

Defendants-Appellants John and Lisa Alexander appealed the grant of summary judgment in favor of U.S. Bank National Association as trustee for for Credit Suisse First Boston HEAT 2005-4. Defendants executed a note to MILA, Inc., DBA Mortgage Investment Lending Associates, Inc. and a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for MILA and its successors and assigns. Wells Fargo Bank, N.A. filed a foreclosure petition on in 2009, alleging Appellants defaulted on the note. The petition further states Wells Fargo was the present holder of the note and mortgage, and Wells Fargo took the note and mortgage for good and valuable consideration from the original lender. A copy of the note and part of the mortgage was attached to the original petition. The note attached to the original petition contained no indorsements. An Order Granting Motion for Substitution of Plaintiff and Modification of Caption was filed. Appellee, U.S. Bank National Association, as trustee, for Credit Suisse First Boston HEAT 2005-4 was substituted in place of Wells Fargo. The motion stated Wells Fargo had subsequently assigned all of its rights in the mortgage to Appellee. Appellee also filed its First Amended Petition which re-alleged all of the allegations of Wells Fargo's petition and identified additional defendants as parties who may have an interest in the property. Appellee attached to the amended petition, a copy of the same unindorsed note and mortgage originally executed by Appellant John W. Alexander, III, in 2005. Appellants never answered the petition and a judgment was entered against then in April 2010. A day later, Appellants' counsel made an entry of appearance and the judgment was vacated. Appellee filed a motion for summary judgment. Appellee claimed in its motion for summary judgment that it was the holder of the note and mortgage, and that Appellants had been in constant default since the July 1, 2009, installment payment was due. Appellants filed an objection to Appellee's motion for summary judgment and later filed a supplement to the objection. Appellants challenged certain comments in Wells Fargo's motion to substitute which stated Wells Fargo subsequently assigned its rights under the mortgage to Appellee after the filing of the original petition. Appellants assert the note provided by Appellee does not have an indorsement and they claim such indorsement is necessary under the Uniform Commercial Code. Upon review, the Supreme Court concluded that Appellee did not have the proper supporting ducomentation in hand when it filed its foreclosure suit. Accordingly, the Court reversed the trial court's grant of summary judgment and remanded the case for further proceedings. View "U.S. Bank, NA v. Alexander" on Justia Law

Respondents the Commissioner of the New Hampshire Banking Department and the New Hampshire Banking Department (collectively, the Department), appealed an order of the Superior Court that permanently enjoined the Department from pursuing an administrative proceeding against Petitioner Jeffrey Frost on the ground that the Department lacked subject matter jurisdiction. Petitioners Frost, Chretien/Tillinghast, LLC, and Frost Family, LLC, cross-appealed, arguing that the trial court erred by denying their request for attorney’s fees. Frost is a member and designated manager of Chretien/Tillinghast, LLC (Chretien), and a member of Frost Family, LLC (Frost Family). Chretien and Frost Family (collectively, the LLCs) are New Hampshire limited liability companies organized for the purpose of real estate acquisition, holding, and development. The underlying dispute arose as the result of two seller-financed real estate transactions, one conducted by Frost Family and the other by Chretien. After both instances of seller-financing, Petitioner submitted a loan originator license application to the Department. At the time the administrative proceedings were initiated, the Department notified Petitioner that he could request a hearing with the Department. Petitioner did not file such a request. Instead, all Petitioners initiated a declaratory judgment proceeding in superior court, which included a request for a temporary restraining order. The petitioners contended that Respondents lacked subject matter jurisdiction to proceed against Frost and violated the State Constitution's prohibition against retrospective laws by seeking to impose a $25,000 fine for each alleged violation. After a hearing, the trial court granted the preliminary injunction, concluding that "[w]hile the [Department] may have jurisdiction over Frost because he is now a loan originator, it [could] take no action against him based on the September 2008 or the March 2009 transactions." Further, the trial court concluded that since the Department "may not impose any penalties on Frost," it did not need to consider the issue of the retrospective nature of the sanctions. Upon review, the Supreme Court agreed that the Department lacked subject matter jurisdiction over the matter and affirmed the superior court's judgment. View "Frost v. New Hampshire Banking Dept. " on Justia Law

The company, which issues preprinted travelers' checks, challenged 2010 N.J. Laws Chapter 25, amending New Jersey's unclaimed property statute, N.J. Stat. 46:30B, to retroactively reduce the period after which travelers checks are presumed abandoned from 15 years to three years, after which the funds must be turned over to the state. The district court denied an injunction. The Third Circuit affirmed, rejecting arguments under the Due Process Clause, the Contract Clause, the Takings Clause, and the Commerce Clause. The law has a rational basis. It does not substantially impairment contractual relationships; while the company has the right to use and invest TC funds until the date the TC is cashed or sold, the duration of use is further subject to the lawful abandonment period set by unclaimed property laws. The company has no investment-backed expectation with respect to the longer period of investment.The law does not directly regulate sales in other states.