Justia Banking Opinion Summaries

In 2005, Lyons opened a Home Equity Line of Credit (HELOC) with PNC’s predecessor, signing an agreement with no arbitration provision. In 2010, Lyons opened deposit accounts at PNC and signed a document that stated he was bound by the terms of PNC’s Account Agreement, including a provision authorizing PNC to set off funds from the account to pay any indebtedness owed by the account holder to PNC. PNC could amend the Account Agreement. In 2013, PNC added an arbitration clause to the Account Agreement. Customers had 45 days to opt out. Lyons opened another deposit account with PNC in 2014 and agreed to be bound by the 2014 Account Agreement, including the arbitration clause. Lyons again did not opt out. Lyons’s HELOC ended in February 2015. PNC began applying setoffs from Lyons’s 2010 and 2014 Accounts.Lyons sued under the Truth in Lending Act (TILA). PNC moved to compel arbitration. The court found that the Dodd-Frank Act amendments to TILA barred arbitration of Lyons’s claims related to the 2014 Account but did not apply retroactively to bar arbitration of his claims related to the 2010 account. The Fourth Circuit reversed in part. The Dodd-Frank Act 15 U.S.C. 1639c(e) precludes pre-dispute agreements requiring the arbitration of claims related to residential mortgage loans; the relevant arbitration agreement was not formed until after the amendment's effective date. PNC may not compel arbitration of Lyons’s claims as to either account. View "Lyons v. PNC Bank" on Justia Law

Ewing and Webster disputed debts they allegedly owed to debt‐collection companies. Under the Fair Debt Collection Practices Act, debt‐collection companies must report such disputes to credit reporting agencies, 15 U.S.C. 1692e(8), but the companies failed to do so. The plaintiffs sued separately, seeking damages. The companies prevailed at summary judgment. Both district courts determined that the companies’ mistakes were bona fide errors.In consolidated appeals, the Seventh Circuit first held that the plaintiffs suffered intangible, reputational injuries, sufficiently concrete for purposes of Article III standing; they have shown that their injury is related closely to the harm caused by defamation. The court affirmed as to Ewing and reversed as to Webster. In Ewing’s case, a receptionist accidentally forwarded Ewing’s faxed dispute letter to the wrong department. The company had reasonably adapted procedures; if its step‐by‐step fax procedures had been followed, the error would have been avoided. Unlike the one‐time misstep in Ewing, a lack of procedures invited the Webster error. Until debtors and their attorneys knew that the collection company no longer accepted disputes by fax, it was entirely foreseeable that it would continue receiving faxed disputes. There were no procedures to avoid the error that occurred. View "Webster v. Receivables Performance Management, LLC" on Justia Law

TitleMax provides vehicle loans at interest rates as high as 180%. The entire process occurs at a TitleMax brick-and-mortar location. The borrower receives “a check drawn on a bank outside of Pennsylvania,” The borrower grants TitleMax a security interest in the vehicle. TitleMax records its lien with the appropriate state authority. Borrowers can make payments from their home states. TitleMax does not have any offices, employees, agents, or brick-and-mortar stores and is not licensed as a lender in Pennsylvania. TitleMax claims that it never solicited Pennsylvania business and does not run television ads within Pennsylvania.Pursuant to the Consumer Discount Company Act and the Loan Interest and Protection Law, Pennsylvania’s Department of Banking and Securities issued a subpoena requesting documents regarding TitleMax’s interactions with Pennsylvania residents. TitleMax then stopped making loans to Pennsylvania residents and asserts that it has lost revenue.The district court held that Younger abstention did not apply and that the Department’s subpoena’s effect was to apply Pennsylvania’s usury laws extraterritorially in violation of the Commerce Clause.The Third Circuit reversed. Applying the Pennsylvania statutes to TitleMax does not violate the extraterritoriality principle. TitleMax receives payments from within Pennsylvania and maintains an actionable security interest in vehicles located in Pennsylvania; its conduct is not “wholly outside” of Pennsylvania. The laws do not discriminate between in-staters and out-of-staters. Pennsylvania has a strong interest in prohibiting usury. Applying Pennsylvania’s usury laws to TitleMax’s loans furthers that interest and any resulting burden on interstate commerce is, at most, incidental. View "TitleMax of Delaware Inc v. Weissmann" on Justia Law

The district court dismissed a class action, alleging that Carrington violated the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA) by charging $5 convenience fees to borrowers who paid monthly mortgage bills online or by phone. The district court held that in charging the convenience fees, Carrington was not a “collector” for either MCDCA claim, that Carrington was not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. 1692f(1)), that plaintiffs’ choice to use the online payment option was “permitted by law,” that Carrington’s convenience fees were not “incidental” to plaintiffs’ mortgage debt, and that Carrington had the “right” to collect the convenience fees since none of the mortgage documents expressly prohibited the fees and plaintiffs voluntarily chose to make payments online.The Fourth Circuit reversed in part. Carrington need not be a debt collector under federal standards for plaintiffs’ state claim to proceed. Carrington violated the MCDCA by engaging in conduct violating the FDCPA, so the derivative MCPA claim can also proceed. The FDCPA prohibits “[t]he collection of any amount . . . unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” View "Alexander v. Carrington Mortgage Services" on Justia Law

The Second Circuit reversed the district court's dismissal of plaintiff's claims under the Real Estate Settlement Procedures Act (RESPA), alleging that Ocwen's failure to record her mortgage instruments and its actions in losing key mortgage documents constituted covered errors under the catch-all provision of Regulation X (RESPA's implementing regulation). In this case, plaintiff alleged that the errors committed by Ocwen in handling her loan modification documents were errors relating to servicing of a mortgage loan, and, consequently, were subject to the provisions of RESPA and Regulation X. The court concluded that plaintiffs' asserted errors are covered by the catch-all provision of Regulation X, which includes the terms "any other errors" and "relating to." Accordingly, the court remanded for further proceedings. View "Naimoli v. Ocwen Loan Servicing, LLC" on Justia Law

Plaintiff filed suit under the Electronic Fund Transfer Act (EFTA) against JPMorgan Chase Bank, alleging that she was the victim of unauthorized electronic fund transfers from her checking account at Chase. Chase reimbursed plaintiff for some of those losses, but refused to repay $300,000 of the funds stolen from her account. The district court dismissed plaintiff's complaint at the pleading stage on the ground that her lengthy delay in reporting the unauthorized withdrawals to Chase barred her claims as a matter of law.The Ninth Circuit concluded that the district court misinterpreted the relevant provision of the EFTA and reversed the dismissal of plaintiff's EFTA claim. The panel concluded that, under 15 U.S.C. 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers "would not have occurred but for the failure of the consumer" to timely report the earlier unauthorized transfer reflected on her bank statement. In this case, plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. The panel affirmed the district court's dismissal of plaintiff's state law claims, concluding that plaintiff's claim for breach of contract failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. Furthermore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts. View "Widjaja v. JPMorgan Chase Bank, N.A." on Justia Law

The Supreme Court reversed in part the judgment of the trial court sustaining Plaintiffs' administrative appeal and remanding this case to the Commissioner of Banking for further proceedings as to Plaintiffs' entitlement to tribal sovereign immunity in administrative proceedings, holding that the trial court erred in part.At issue was whether a business entity shared sovereign immunity with Otoe-Missouria Tribe of Indians, a federally-recognized tribe. On appeal, Plaintiffs - Clear Creek Lending, Great Plains Lending, LLC, and John Shotton, chairman of the Tribe - claimed that the trial court improperly allocated the burden of proving entitlement to tribal sovereign immunity to Plaintiffs, improperly required proof of a functioning relationship between the entities and the tribe, and improperly failed to find Shotton immune in further administrative proceedings. The Supreme Court reversed in part, holding (1) the entity claiming arm of the tribe status bears the burden of proving its entitlement to that status; (2) Great Plains was an arm of the tribe and Shotton was entitled to tribal sovereign immunity but not injunctive relief; and (3) there was insufficient evidence that Clear Creek was an arm of the tribe as a matter of law. View "Great Plains Lending, LLC v. Department of Banking" on Justia Law

Cadence Bank, N.A. ("Cadence"), sued Steven Dodd Robertson and Mary Garling-Robertson, seeking to recover a debt the Robertsons allegedly owed Cadence. The circuit court ruled that Cadence's claim was barred by the statute of limitations and, thus, granted the Robertsons' motion for a summary judgment. The Alabama Supreme Court reversed, finding the Robertsons' summary-judgment motion did not establish that Cadence sought to recover only pursuant to an open-account theory subject to a three-year limitations period. The Robertsons did not assert any basis in support of their summary-judgment motion other than the statute of limitations. The matter was remanded for further proceedings. View "Cadence Bank, N.A. v. Robertson" on Justia Law

In 2018, the State of Mississippi filed a complaint against Navient Corporation and Navient Solutions, LLC (together, “Navient”), alleging that Navient’s origination of high-cost, subprime loans and predatory practices while servicing student-loan borrowers in Mississippi violated the Mississippi Consumer Protections Act. Navient moved to dismiss on two grounds: failure to state a claim and lack of venue. In 2019, the chancery court denied Navient’s motion; Navient timely petitioned the Mississippi Supreme Court for an interlocutory appeal, arguing that federal law preempted the State’s servicing claims and that injunctive relief under the Act did not apply because the alleged loan-origination misconduct ceased and could not recur. To this the Supreme Court disagreed and affirmed the trial court. View "Navient Corporation v. Mississippi ex rel. Fitch, Attorney General" on Justia Law

Plaintiffs filed suit alleging that pressure tactics used by Quicken Loans and TSI to influence home appraisers to raise appraisal values to obtain higher loan values on their homes constituted a breach of contract and unconscionable inducement under the West Virginia Consumer Credit and Protection Act. The district court granted summary judgment to plaintiffs.The Fourth Circuit concluded that class certification is appropriate and that plaintiffs are entitled to summary judgment on their claims for conspiracy and unconscionable inducement. However, the court concluded that the district court erred in its analysis of the breach-of-contract claim. The court explained that the district court will need to address defendants' contention that there were no damages suffered by those class members whose appraisals would have been the same whether or not the appraisers were aware of the borrowers' estimates of value—which one might expect, for example, if a borrower's estimate of value was accurate. The court agreed with plaintiffs that the covenant of good faith and fair dealing applies to the parties' contract, but concluded that it cannot by itself sustain the district court's decision at this stage. The district court may consider the implied covenant of good faith and fair dealing to the extent that it is relevant for evaluating Quicken Loans' performance of the contracts. Accordingly, the court affirmed in part and vacated and remanded in part. View "Alig v. Quicken Loans Inc." on Justia Law