Justia Banking Opinion Summaries

Deutsche Bank appealed the dismissal of its claims against the FDIC. At issue was whether Deutsche Bank's claims were general unsecured claims under 12 U.S.C. 1821(d)(11) and thereby prudentially moot because of the lack of sufficient funds in the estate to pay unsecured claims. The court concluded that, because Deutsche Bank was a quintessential creditor, its claims were third-tier general unsecured liabilities under section 1821(d)(11)(A)(iii), and the district court properly held that Deutsche Bank's claims were prudentially moot, as there were insufficient funds to satisfy general unsecured liabilities. Accordingly, the court affirmed the judgment of the district court. View "Deutsche Bank Nat'l Trust Co. v. FDIC" on Justia Law

Plaintiffs granted a mortgage on their property in Massachusetts to Ameriquest Mortgage Company, which assigned its interest in the mortgage to Mortgage Electronic Registration System, Inc. (MERS). MERS later purported to assign Plaintiffs’ interest to HSBC Mortgage Services, Inc. (HSBC). HSBC subsequently began foreclosure proceedings on Plaintiffs’ property. Plaintiffs filed an eight-count complaint against HSBC, claiming the assignment was void, and therefore, HSBC never acquired the mortgage to their property and had no right to initiate foreclosure proceedings. The district court dismissed Plaintiffs’ complaint for failure to state a claim, concluding that Plaintiffs did not have standing to challenge the assignment because they were not a party to the assignment, nor were they third-party beneficiaries of the assignment. The First Circuit Court of Appeals affirmed, holding (1) under Massachusetts law, homeowners in Plaintiffs’ position have standing to challenge a prior assignment of their mortgage on the grounds that the assignment was void, but because Plaintiffs did not set forth a colorable claim that the mortgage assignment in question was void, Plaintiffs lacked standing to raise certain claims; and (2) Plaintiffs failed to state a claim for promissory estoppel with respect to a loan modification. View "Wilson v. HSBC Mortgage Servs., Inc." on Justia Law

This litigation arose out of the failure of WaMu and the assumption of WaMu's assets and liabilities by Chase from the FDIC, acting in its capacity as WaMu's receiver. On appeal, the FDIC and Chase challenged the district court's grant of summary judgment in favor of Hillside. The district court concluded that Hillside, which owned premises leased by WaMu before the financial crisis, had third-party standing to enforce the alleged assignment of WaMu's real estate lease to Chase under a purchase agreement between the FDIC and Chase, even though the FDIC validly repudiated the lease under section 212(e) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. 1821(e), and the parties to the purchase agreement asserted that it did not in fact assign the lease. The court held that Hillside lacked prudential standing to litigate whether WaMu's liabilities were assigned to Chase under the agreement because it was neither a contracting party nor a third-party beneficiary under the agreement. Accordingly, the court vacated and remanded with instructions to dismiss the complaint. View "Hillside Metro Associates, LLC v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiffs, a class of cardholders who paid credit card penalty fees, challenged those fees on constitutional grounds. Plaintiffs argued that the fees are analogous to punitive damages imposed in the tort context and are subject to substantive due process limits described in BMW of North America, Inc. v. Gore. The court concluded that the due process analysis developed in the context of jury-awarded punitive damages was not applicable to contractual penalty clauses. Further, there was no derivative liability under the Unfair Competition Law. Accordingly, the district court did not err in dismissing the complaint where constitutional due process jurisprudence did not prevent enforcement of excessive penalty clauses in private contracts and the fees were permissible under the National Bank Act, 12 U.S.C. 85-86, and the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 12 U.S.C. 1831d(a). View "In re: Late Fee & Over-Limit Fee Litigation" on Justia Law

The City of Springfield enacted two local ordinances that imposed new legal duties on (1) property owners to maintain property during the foreclosure process and provide a $10,000 cash bond per foreclosure to the City, and (2) mortgagees to attempt a settlement through negotiations before foreclosing. In dispute was the definition of "owner" in the first ordinance, which included mortgagees who were not in possession and had begun the foreclosure process. The ordinance imposed the duties on the mortgagees whether the mortgagors were still in possession. Six banks sued in state court, seeking to have the ordinances invalidated as inconsistent with and preempted by comprehensive state laws governing foreclosure and property maintenance and as inconsistent with state and federal constitutional guarantees. The case was removed to federal district court, which concluded that the ordinances were valid. The banks appealed. The First Circuit Court of Appeals certified dispositive state law questions to the Massachusetts Supreme Judicial Court because the outcome of the case depended on unresolved questions of Massachusetts law and raised significant policy concerns better suited for resolution by that state court. View "Easthampton Savings Bank v. City of Springfield" on Justia Law

Plaintiff challenged the constitutionality of the Indiana Unclaimed Property Act, Ind. Code 32‐34‐1‐1, as authorizing confiscation of private property without compensation. The Act states that property is presumed abandoned if the apparent owner has not communicated in writing with the holder or otherwise indicated interest in the property within a specified period. When the presumption applied, the holder (here, a bank) is required to try to notify the owner and to submit, within 60-120 days after that, a report including the owner’s last known address to the state attorney general, and to simultaneously transfer the property to the attorney general. The following year, the attorney general must attempt notice by publication. Notice is also posted on an official website. The owner can reclaim the property from the state for 25 years after its delivery before it escheats to the state. An owner who files a valid claim is entitled only to principal, and not to any interest earned on it. Plaintiff’s ward had an interest‐bearing account. The presumption of abandonment applied in 2006, three years after the last communication. Because the statute does not require individualized notice if the value of the account is less than $50, plaintiff (guardian) did not learn about the account until 2011. The district court dismissed her challenge to the “taking” of interest on the account. The Seventh Circuit reversed. View "Cerajeski v. Zoeller" on Justia Law

Appellee Pamela Vukman appealed a superior court order that affirmed the Allegheny County Court of Common Pleas. That order granted appellees motion to set aside judgment and sheriff's sale, and dismissed appellant Beneficial Consumer Discount Company's praecipe without prejudice. Beneficial moved to foreclose appellee for being in default of her mortgage. The parties agreed to a settlement whereby Beneficial received judgment for the accelerated amount due on the mortgage as long as appellee made regular payments. Appellee eventually defaulted according to the terms of the settlement; Beneficial filed for a writ of execution. The property was sold at a sheriff's sale, and Beneficial was the successful bidder. Appellee then moved to set aside the sale, arguing Beneficial failed to comply with the requirements under the Homeowner's Emergency Mortgage Act. The court concluded that Beneficial did not follow the Act's requirements, and as a result, it id not have jurisdiction. Therefore the court set aside the sale and dismissed Beneficial's original complaint. Beneficial appealed; the superior court affirmed. Upon review, the Supreme Court concluded that the Act's notice requirement did not implicate subject matter jurisdiction of the trial court, it reversed and remanded the case for further proceedings. View "Beneficial Consumer Discount Company v. Vukman" on Justia Law

AmEx is the world’s largest issuer of traveler’s checks, which never expire. AmEx and third-party vendors sell the checks at face value, and AmEx profits by investing the funds until the TC is redeemed. Although most are cashed within a year, AmEx uses the remaining uncashed checks for long-term, high-yield investments. Until recently, every state’s abandoned property laws presumed abandonment of uncashed traveler’s checks 15 years after issuance. This presumption requires the issuer to transfer possession of the funds to the state. In 2008 Kentucky amended KRS 393.060(2) to change thes abandonment period from to seven years. AmEx claims violation of the Due Process Clause, the Contract Clause, and the Takings Clause. Following a remand and amendment of the complaint to add a dormant Commerce Clause argument and a claim that the legislation did not apply retroactively to checks that were issued and outstanding prior to the effective date, the district court granted the state summary judgment. The Sixth Circuit affirmed, holding that the amendment applies only prospectively and does not violate the Commerce Clause. View "Am. Express Travel Related Servs. Co., Inc. v. Hollenbach" on Justia Law

This case arose when plaintiff initiated a foreclosure action against defendant. At issue on appeal was whether the trial court had authority to open a judgment of foreclosure by sale and related supplemental judgments after title had passed to the purchaser when a series of errors by the court and the parties caused the purchaser to buy a property that, unbeknownst to him but actually known by the second mortgagee, was in fact subject to a first mortgage that was to be foreclosed shortly thereafter. The court concluded that the appellate court incorrectly determined that the purchaser lacked standing under the circumstances of the present case; defendants inadequately briefed the issue of 17 Ridge Road, LLC's standing to intervene as a defendant and, therefore, the issue was deemed abandoned; and the appellate court correctly determined that the passing of title divested the trial court of jurisdiction to open the judgment of foreclosure by sale. Accordingly, the court reversed the judgment of the appellate court insofar as that court concluded that the trial court lacked authority to open the supplemental judgments. View "Citibank, N.A. v. Lindland" on Justia Law

Plaintiffs filed a class-action lawsuit in state court, alleging that the defendants had conducted non-judicial foreclosure sales that did not comply with Utah law. After removal, the district court dismissed the complaint for failure to state a claim, concluding that whether federal law “incorporates Utah or Texas law, Recon[Trust] had not operated beyond the law by acting as a foreclosure trustee in Utah.” On the limited record presented on appeal, the Tenth Circuit concluded that the district court erred in determining it had jurisdiction to hear this case. View "Dutcher, et al v. Matheson, et al" on Justia Law