Justia Banking Opinion Summaries

As the Ninth Circuit Court of Appeals said, "This case lends credence to the old adage that bad things comes in threes." Plaintiff was a cancer survivor who required experimental leukemia treatment. During his treatment, Plaintiff's identity was stolen by a hospital worker. When Plaintiff attempted to remedy the identity theft, the banks and credit rating agencies were allegedly uncooperative and continued to report the fraudulently opened accounts. In the case of Chase Bank (Chase), the thief's address was tagged as Plaintiff's. The district court granted summary judgment in favor of Chase on Plaintiff's false-reporting claims under the Fair Credit Reporting Act (FCRA). The Ninth Circuit Court of Appeals (1) reversed the judgment as to Chase's alleged violations of the FCRA, as issues of material fact remained on this issue; (2) reversed the district court's dismissal of similar claims against FIA Card Services on statute of limitations grounds; and (3) affirmed the denial of Plaintiff's motion to amend to reinstate his claims under California law. View "Drew v. Equifax Info. Servs., LLC" on Justia Law

A bank customer sued her bank to recover for unauthorized withdrawals from her checking account, made using her check card and personal identification number (PIN). Federal law requires a bank to investigate such disputed transactions, to notify the customer if it has verified the transactions as authorized, and to recredit the account if the withdrawals were unauthorized; failure to do so renders the bank liable to the customer for up to treble damages. The bank investigated the withdrawals at issue in this case, found that they were the product of a scheme to defraud the bank, and denied liability for the withdrawals. The customer, represented by counsel, brought suit. By the time the case was tried to the district court, the customer was pro se. After a two-day bench trial, the District Court rejected the customer's EFTA claims and entered judgment for the bank. Specifically, the District Court found that the transactions were authorized because they were part of a scheme to defraud the bank. The customer appealed pro se. Although the briefs were "inartfully" drawn, she challenged the District Court's finding as clearly erroneous. After thorough review, the Eleventh Circuit found no error and therefore affirmed. View "Merisier v. Bank of America, N.A." on Justia Law

In 2007, while Plaintiffs-Appellants Scott and Lisa Sanders were attempting to refinance their home, they discovered Salt Lake City Credit Union had “reported twelve new maxed-out accounts on the Sanders[es]’ credit [reports].” They say this “destroyed [their] credit and made it impossible to refinance.” Afterward, the credit union “apologized for the misreporting” and “offered to make amends by providing [them] with a ‘free’ refinance.” They accepted this conciliatory offer and closed on the refinancing loan in July 2007. Salt Lake City Credit Union later merged with appellee Mountain America. In March 2009, the Sanderses applied to Mountain America to again refinance their loan. They completed the application by phone, but Mountain America denied their application at the end of the call. Pertinent to this appeal, the Sanderses’ complaint alleged: (1) they had not been provided with the disclosures required under the Truth-in-Lending Act (TILA) thereby entitling them to invoke statutory rescission; (2) Mountain America violated the Equal Credit Opportunity Act (ECOA) when it failed to provide a notice of adverse action after denying their application for refinancing; and (3) Mountain America’s inaccurate credit reporting violated the Fair Credit Report Act (FCRA). The district court dismissed these claims on the pleadings. Although the Tenth Circuit had not addressed the issue, several circuits allow district courts to equitably condition the creditor’s duty on the borrower’s ability to repay the loan proceeds. In this case, however, the district court went further by concluding a borrower seeking to compel rescission must plead ability to repay. The court invoked this rule to dismiss the TILA rescission claim of the Sanderses. It also dismissed their claims under the Equal Credit Opportunity Act and Fair Credit Reporting Act. Upon review, the Tenth Circuit affirmed in part, reversed in part, and remanded for further proceedings: the Court affirmed with respect to the FCRA claim and reversed with respect to the TILA rescission and ECOA claims. View "Sanders v. Ethington" on Justia Law

Security Financial Fund, LLC, ("Security Financial") extended to Byron and Marilynn Thomason ("the Thomasons") a series of loans evidenced by five promissory notes, which were secured by three deeds of trust and two mortgages on real property. As a result of the Thomasons' non-payment on two prornissory notes secured by the mortgages, Security Financial foreclosed on those notes. While the foreclosure was still pending, the Thomasons filed a separate action against Security Financial and others, addressing all the promissory notes executed in favor of Security Financial by the Thomasons. That action sought recovery for breach of contract and fraud, among other theories. Both actions were consolidated. On appeal from the district court's decision to grant Security Financial's Motion for Summary Judgment with regard to the claims that the Thomasons asserted in their fraud case, the Thomasons contended, among other things, that the district court lacked subject matter and personal jurisdiction to foreclose on the secured property and abused its discretion. The Supreme Court concluded that all of the Thomasons' claims were waived or frivolous, and accordingly affirmed the Final Judgment in favor of Security Financial. View "Security Financial Fund v. Thomason" on Justia Law

The issue before the Eleventh Circuit concerned a private securities fraud class action suit brought against a bank holding company and its management. State-Boston Retirement System, a shareholder and lead plaintiff, sought to prove that the holding company had misrepresented the level of risk associated with commercial real estate loans held by its subsidiary. After the trial, the District Court submitted the case to the jury on a verdict form seeking general verdicts and answers to special interrogatories. When the jury returned a verdict partially in favor of State-Boston, the holding company moved for judgment as a matter of law. Perceiving an inconsistency between two of the jury's interrogatory answers, the District Court discarded one of them and granted the motion on the basis of the remaining findings. The Eleventh Circuit concluded that was error: "[w]hen a court considers a motion for judgment as a matter of law -even after the jury has rendered a verdict- only the sufficiency of the evidence matters. . . .The jury’s findings are irrelevant." Despite the District Court’s error, the Eleventh Circuit concluded that the evidence was insufficient to support a finding of loss causation, an element required to make out a securities fraud claim. The Court therefore affirmed. View "State-Boston Retirement System v. BankAtlantic Bancorp, Inc." on Justia Law

Washington Mutual foreclosed on property before receiving assignment and transfer of the promissory note and the delinquent home mortgage and before recording it. The homeowner brought a lawsuit for an allegedly false claim of ownership under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, against the law firm acting for the purported mortgagee. She claimed violation of the Act, the Ohio Consumer Sales Practices Act, and intentionally inflicted emotional distress. The district court dismissed, finding that she did not state a claim under the Act and declining to exercise supplemental jurisdiction. The Sixth Circuit reversed. The filing of foreclosure action by the law firm, claiming ownership of the mortgage by its client, constituted a "false, deceptive or misleading representation" under the Act because the bank had not obtained transfer of the ownership documents. The homeowner adequately alleged that the misidentification caused confusion and delay in trying to contact the proper party concerning payment and resolution of the problem. View "Wallace v. WA Mut. Bank, F.A." on Justia Law

At issue in this appeal was whether the Maryland Credit Services Businesses Act (CSBA) applies to a tax preparer who receives payment from a lending bank for facilitating a consumer's obtention of a refund anticipation loan (RAL) where the tax preparer receives no direct payment from the consumer for this service. In this case, the circuit court dismissed Consumer's CSBA claim for failure to state a claim, concluding that the General Assembly enacted the CSBA to regulate credit repair agencies and not RAL facilitators. The court of special appeals affirmed. The Supreme Court affirmed, holding (1) the plain language of the CSBA most logically is understood as reflecting the legislative intent that the "payment of money or other valuable consideration" in return for credit services flow directly from the consumer to the credit service business; and (2) therefore, under the CSBA, Tax Preparer in this case was not a "credit services business" nor a "consumer"; and (3) accordingly, the CSBA did not apply in this case. View "Gomez v. Jackson Hewitt, 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

In this purported class action on behalf of borrowers holding home mortgage loans serviced by Bayview, plaintiffs claimed that Bayview improperly added fees to borrowers' accounts in violation of the West Virginia Consumer Credit Protection Act, W. Va. Code 46A-1-101 through 46A-8-102. At issue was whether, under the statute of limitations, "the due date of the last scheduled payment of the agreement" was June 5, 2007, the loan acceleration date set by Bayview. The court concluded that the acceleration date was the operative date for purposes of applying the statute of limitations, because no further payments were scheduled after that date. Thus, the court affirmed the district court's judgment that the statute of limitations began to run from the acceleration date, and that, therefore, plaintiffs' claims were time barred. View "Delebreau v. Bayview Loan Servicing, LLC" on Justia Law

Capital One retained a collection agency, which sent plaintiff, its debtor, a dunning letter with notice of her debt validation rights. Plaintiff claims that the content as a whole over-shadowed the debt validation notice, violating the Fair Debt Collection Practices Act, 15 U.S.C. 1692g. The district court dismissed, stating that language like "act now" is only puffery and that placement of the notice on the back of the letter complies with the Act. The Seventh Circuit affirmed, upholding the district court's rejection of a request to conduct a consumer survey to prove that the letter was confusing. View "Zemeckis v. Global Credit Collection Corp." on Justia Law