Justia Banking Opinion Summaries

Plaintiff and other checking account customers filed suit against the Bank for allegedly charging excessive overdraft fees in breach of their account agreement. The district court denied the Bank's renewed motion to compel arbitration. The court concluded that state law applied when courts determined whether a valid arbitration agreement is in effect, and the Federal Arbitration Act's, 9 U.S.C. 1 et seq., presumption did not; under North Carolina law, the Bank Agreement was entirely superseded, and the arbitration agreement in that agreement therefore became ineffective; the district court properly looked to the PNC Agreement to determine whether the parties agreed to arbitrate their disputes; under North Carolina law, the PNC Agreement's silence was insufficient to form such an agreement; based on the terms of the agreement, the PNC Agreement applied retroactively; and because the agreement governing the dispute at hand did not permit the Bank to compel arbitration, the district court properly denied the motion. Accordingly, the court affirmed the judgment of the district court. View "Dasher v. RBC Bank (USA)" on Justia Law

Plaintiff filed suit against her mortgage lender, Wells Fargo, alleging that Wells Fargo breached the mortgage-loan contract and violated extracontractual duties by requiring her to have more flood insurance than the amount set by federal law. At issue was whether a covenant included in all contracts for home mortgage loans guaranteed by the FHA unambiguously permitted mortgage lenders to require their borrowers to obtain flood insurance beyond the amount the agency required. The court concluded that the covenant unambiguously made the federally required flood-insurance amount the minimum, not the maximum, the borrower must have. Accordingly, plaintiff could not prevail on her claims against Wells Fargo and the court affirmed the district court's dismissal of the complaint for failure to state a claim. View "Feaz v. Wells Fargo Bank, N.A., et al." 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

IMCC loaned Harbins $60 million to buy Georgia land to construct a shopping center. In addition to a mortgage, IMCC obtained a guaranty from Chivas, providing that if IMCC “forecloses … the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.” Harbins defaulted; IMCC foreclosed in a nonjudicial proceeding, involving a public auction conducted by the sheriff after public notice. IMCC successfully bid $7 million and filed a petition to confirm the auction. Unless such a petition is granted, a mortgagee who obtains property in a nonjudicial foreclosure cannot obtain a deficiency judgment if the property is worth less than the mortgage balance owed. A Georgia court denied confirmation. Chivas refused to honor the guaranty. A district court in Chicago awarded IMCC $17 million. The Seventh Circuit affirmed, noting that the Georgia statute “is odd by modern standards,” but does not prevent a suit against a guarantor. The agreement guaranteed IMCC the difference between what it paid for the land and the unpaid balance of the loan, even if the land is worth more than what IMCC paid for it. The agreement is lawful under Georgia and Illinois law. View "Inland Mortg. Capital Corp v. Chivas Retail Partners, LLC" on Justia Law

This dispute arose out of a complicated bankruptcy proceeding. On appeal, Lender challenged the district court's judgment which, in relevant part, disallowed Lender's claim for a contractual prepayment consideration. Applying Colorado law, a lender was not entitled to a prepayment penalty when the lender chooses to accelerate the note. Absent a clear contractual provision to the contrary or evidence of the borrower's bad faith in defaulting to avoid a penalty, a lender's decision to accelerate acts as a waiver of a prepayment penalty. In this instance, the plain language of the contract plainly provided that no Prepayment Consideration was owed unless there was an actual prepayment, whether voluntary or involuntary. Accordingly, the acceleration of the Note due to GCMM's default by nonpayment under Article 4 did not trigger the obligation to pay the Prepayment Consideration under Article 6. View "Bank of New York Mellon v. GC Merchandise Mart, L.L.C., et al." on Justia Law

Plaintiff filed suit against Wells Fargo in state court, raising claims related to Wells Fargo's foreclosure and Freddie Mac's attempts to evict plaintiff. Wells Fargo then removed the case to federal court where the district court dismissed all of plaintiff's claims. At issue on appeal was whether Wells Fargo could move for attorney's fees pursuant to Federal Rules of Civil Procedure 54(d)(2). Here, the deed of trust at issue provided for attorney's fees to compensate Wells Fargo, inter alia, for the prosecution or defense of a claim. The language of the contract and the nature of the claim were the dispositive factors concerning whether the fees were an element of damages or collateral litigation costs. In this instance the court concluded that the motions for attorney's fees provided by contract were permissible under Rule 54(d)(2). Accordingly, the court reversed and remanded. View "Richardson v. Wells Fargo Bank, N.A., et al." 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

Acting as receiver, the FDIC conveyed substantially all of WaMU's assets and liabilities to JPMorgan Chase, including certain long-term real-estate leases. At issue was whether the owners of the leased tracts could enforce the leases against Chase by virtue of the FDIC's conveyance. The court held that, in the interest of maintaining uniformity in the construction and enforcement of federal contracts, the landlords did not qualify as third-party beneficiaries. The court concluded, however, that the landlords have "standing" to prove the content of the Agreement and that the Agreement, properly construed, was a complete "assignment" sufficient to create privity of estate under Texas law. Accordingly, the court affirmed the judgment of the district court. View "Excel Willowbrook, L.L.C., et al. v. JPMorgan Chase Bank, N.A., et al." on Justia Law

Plaintiffs, property owners, filed an action against Defendant, a bank, alleging eleven counts of state law violations for Defendant’s decision to deny Plaintiffs’ application for a loan modification under the Home Affordable Modification Program and to foreclose on Plaintiffs’ home. The district court granted Defendant’s motion to dismiss. The First Circuit Court of Appeals affirmed the district court’s dismissal of Plaintiffs’ amended complaint, holding that the district court properly dismissed Plaintiffs’ claims for breach of the implied obligation of good faith and fair dealing, violation of the Massachusetts Consumer Credit Cost Disclosure Act, rescission, negligence, and promissory estoppel. View "MacKenzie v. Flagstar Bank, FSB" on Justia Law

Plaintiff appealed the district court's grant of summary judgment for defendants on plaintiff's claims arising out of the threatened foreclosure on two residential investment properties he owned. The court concluded that the district court correctly determined that Deutsche Bank was a mortgagee and could proceed with the foreclosure action; as a non-party mortgagor, and without any evidence showing plaintiff to be an intended third-party beneficiary, the court concluded that plaintiff lacked the requisite standing to bring suit to enforce the terms of the Pooling & Services Agreement that governed the assignment of the mortgagor's notes; and the requirement in Tex. Prop. Code 51.0001(3) that the current mortgagee provide the notice required the court also to consider defendants' argument that quasi-estoppel under Texas law precluded plaintiff from challenging GMAC's status as mortgage servicer. The court affirmed the judgment of the district court. View "Farkas v. GMAC Mortgage, L.L.C., et al." on Justia Law