Justia Banking Opinion Summaries

Parke Bancorp (“Parke”) made a loan to 659 Chestnut LLC (“659 Chestnut”) in 2016 to finance the construction of an office building in Newark, Delaware. 659 Chestnut pleaded a claim in the Superior Court for money damages in the amount of a 1% prepayment penalty it had paid under protest when it paid off the loan. The basis of 659 Chestnut’s claim was that the parties were mutually mistaken as to the prepayment penalty provisions of the relevant loan documents. Parke counterclaimed for money damages in the amount of a 5% prepayment penalty, which it claimed was provided for in the agreement. After a bench trial, the Superior Court agreed with 659 Chestnut and entered judgment in its favor. After review, the Delaware Supreme Court reversed and directed entry of judgment in Parke’s favor on 659 Chestnut’s claim. Although Parke loan officer Timothy Cole negotiated on behalf of Parke and represented to 659 Chestnut during negotiations that there was a no-penalty window, the parties stipulated that: (1) everyone knew that Cole did not have authority to bind Parke to loan terms; and (2) everyone also knew that any terms proposed by Cole required both final documentation and approval by Parke’s loan committee. It was evident to the Supreme Court that 659 Chestnut did not offer clear and convincing evidence that Parke’s loan committee agreed to something other than the terms in the final loan documents. Accordingly, it Directed entry of judgment for Parke. View "Parke Bancorp Inc., et al. v. 659 Chestnut LLC" on Justia Law

Plaintiff filed suit against LGE, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Electronic Fund Transfer Act (EFTA). The district court dismissed plaintiff's claims under Federal Rule of Civil Procedure 12(b)(6) and held that the two parties' agreements unambiguously permitted LGE to assess overdraft fees using the available balance calculation method.The Eleventh Circuit reversed and held that the agreements were ambiguous as to whether LGE could rely on an account's available balance, rather than its ledger balance, to assess overdraft fees. Therefore, the court held that plaintiff properly pleaded a claim for breach of contract, and breach of the implied covenant of good faith and fair dealing. The court also held that plaintiff alleged a claim under the EFTA because the Opt-In Agreement could describe either the available or the ledger balance calculation method for unsettled debts; plaintiff had no reasonable opportunity to affirmatively consent to LGE's overdraft services; and LGE was not protected from liability by the safe harbor. Accordingly, the court remanded for further proceedings. View "Tims v. LGE Community Credit Union" on Justia Law

The Fifth Circuit certified the following question of law to the Supreme Court of Texas: Is a lender entitled to equitable subrogation, where it failed to correct a curable constitutional defect in the loan documents under section 50 of the Texas Constitution?The court also held that a secondary lender is not entitled to contractual subrogation without a valid contract. In this case, without a signature, Freddie Mac has no ability to enforce the contract itself or its subrogation provision. Therefore, the court affirmed the district court's denial of Freddie Mac's contractual subrogation claim. View "Zepeda v. Federal Home Loan Mortgage Corp." on Justia Law

Plaintiff-borrowers Thaddeus Potocki and Kelly Davenport sued Wells Fargo Bank, N.A. and several other defendants (collectively, “Wells Fargo”) arising out of plaintiffs’ attempts to get a loan modification. The trial court sustained Wells Fargo’s demurrer to the third amended complaint without leave to amend. On appeal, plaintiffs argued: (1) a forbearance agreement obligated Wells Fargo to modify their loan; (2) the trial court erred in finding Wells Fargo owed no duty of care; (3) Wells Fargo’s denial of a loan modification was not sufficiently detailed to satisfy Civil Code section 2923.61; and (4) a claim of intentional infliction of emotional distress was sufficiently pled. The Court of Appeal determined plaintiffs’ third contention had merit, and reversed judgment of dismissal, vacated the order sustaining the demurrer insofar as it dismissed the claim for a violation of section 2923.6, and remanded for further proceedings. View "Potocki v. Wells Fargo Bank, N.A." on Justia Law

The Federal Reserve Act of 1913 established a system that includes the Federal Reserve Board of Governors and 12 regional Reserve Banks. The Board exercises broad regulatory supervision over the Reserve Banks, which serve as banks to the U.S. government and to commercial banks who are members of the Federal Reserve System. The Act set the statutory rate for dividend payments on Federal Reserve Bank stock at six percent per year, which remained in effect until 2016, when an amendment (12 U.S.C. 289(a)(1)) effectively reduced the dividend rate for certain stockholder banks to a lower variable rate. Plaintiffs argued that banks that subscribed to Reserve Bank stock before the amendment are entitled to dividends at the six percent rate and that, by paying dividends at the amended rate, the government breached a contractual duty or effected a Fifth Amendment taking. The Federal Circuit affirmed the dismissal of the suit. There is no “clear indication” of the government’s intent to contract in either the language of the Federal Reserve Act or the circumstances of its passage. Plaintiffs did not allege a legally cognizable property interest arising from its “statutory rights” and the requirement that member banks subscribe to reserve bank stock under the Act does not constitute a regulatory taking. View "American Bankers Association v. United States" on Justia Law

Plaintiff filed suit against Wells Fargo in tort for negligent mortgage modification and other claims. The trial court sustained Wells Fargo's demurrer, partly because Wells Fargo did not owe plaintiff a duty in tort during contract negotiation.The Court of Appeal held that no tort duty exists during contract negotiations for mortgage modification. Therefore, the court affirmed the trial court's judgment, finding that the majority of other states are against it, and the most recent Restatement counsels against this extension because other bodies of law—breach of contract, negligent misrepresentation, promissory estoppel, fraud, and so forth—are better suited to handle contract negotiation issues. View "Sheen v. Wells Fargo Bank, N.A." on Justia Law

JPF Enterprises, LLC, appealed the grant of summary judgment awarding Baker Boyer National Bank $858,135.47 on its breach of contract claim and dismissing JPF’s counterclaim for fraud in the inducement. Baker Boyer loaned money to JPF for the purchase of thirty mobile homes from Jason Sundseth and his company, Vindans LLC, for use as rental housing in western North Dakota. In 2013, Vindans owned the homes and rented them to oil field workers through Greenflex Housing, LLC, and Greenflex’s rental manager, Badlands, LLC. Vindans purchased the homes with financing from Baker Boyer. In the summer of 2013, James Foust, managing owner of JPF, and Sundseth began negotiations for JPF to purchase the homes from Vindans, and JPF sought financing for the purchase from Baker Boyer. According to Foust, Baker Boyer’s loan officer obtained rental information from Greenflex Housing indicating the monthly rental proceeds from the thirty homes was $9,600 and would not service JPF’s anticipated monthly payments of about $15,000 for the loan. Foust also claimed Baker Boyer required JPF to contract with Greenflex Housing to rent the homes to oil field workers and informed him the arrangement would result in a return of $45,000 per month for the thirty homes. According to Foust, Vindans’ loan with Baker Boyer was near foreclosure and Baker Boyer failed to inform him that his purchase of the homes would not be profitable. In November 2015, JPF defaulted on its loan from Baker Boyer, and Baker Boyer sued JPF in North Dakota to enjoin JPF from transferring or disposing of the loan collateral, to take possession of the collateral, for appointment of a receiver, for sale of the collateral and for a money judgment. JPF answered and counterclaimed, admitting payments were not made as agreed and alleging fraud in the inducement. JPF claimed Baker Boyer acted as an intermediary for JPF’s purchase of the homes from Vindans and failed to disclose information to JPF about the physical condition of the homes, the financial condition of Vindans, and the uncertain financial viability of the home rentals. JPF sought an order requiring Baker Boyer to refund more than $600,000 that JPF paid to Baker Boyer in exchange for JPF transferring all right, title and interest in the homes to Baker Boyer. Finding no reversible error in the grant of summary judgment in favor of Baker Boyer, the North Dakota Supreme Court affirmed. View "Baker Boyer National Bank v. JPF Enterprises, LLC" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the trial court insofar as it rendered judgment in Defendant's favor on counts alleging fraudulent transfer under the Connecticut Uniform Fraudulent Transfer Act (CUFTA), Conn. Gen. Stat. 52-552a through 52-552l, and unjust enrichment, holding that the trial court erred in rejecting Plaintiff's CUFTA claim but did not err in rejecting Plaintiff's unjust enrichment claim.Defendant Stephen McGee used a power of attorney granted to him by his elderly mother, Helen McGee, to transfer to himself funds from Helen's checking account. As a consequence of the transfers, Helen had insufficient assets to pay her debt to Plaintiff Geriatrics, Inc. Plaintiff brought this action, and the trial court rendered judgment in Defendant's favor on Plaintiff's CUFTA and unjust enrichment claims. The Supreme Court reversed in part, holding (1) in rejecting the CUFTA claim the trial court improperly failed to consider and apply agency principles; and (2) in light of the unrequited evidence, the trial court did not abuse its discretion in rejecting Plaintiff's unjust enrichment claim. View "Geriatrics, Inc. v. McGee" on Justia Law

The First Circuit affirmed the judgment of the district court granting judgment to U.S. Bank Trust, N.A. in the amount of $226,458.28 on U.S. Bank's complaint against Julia Jones alleging breach of contract and breach of promissory note, holding that the district court did not err by admitting into evidence a computer printout, marked as Exhibit 8, that contained an account summary and a list of transactions related to the loan.On appeal, Jones argued that admitting Exhibit 8 violated the Federal Rules of Evidence. At issue was whether the records were "reliable enough to be admissible." The First Circuit answered in the affirmative, holding (1) the district court did not abuse its discretion in finding Exhibit 8 reliable enough to admit under Fed. R. Evid. 803(6); (2) the district court's admission of Exhibit 8 did not violate Fed. R. Evid. 901, 1001, or 1002; and (3) the district court did not err by awarding U.S. Bank approximately $23,000 in charges for escrow, title fees, and inspections that were not recoverable under the terms of the promissory note. View "U.S. Bank Trust, N.A. v. Jones" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the circuit court in this action, holding that the circuit court properly denied a motion to dismiss based on the doctrine of forum non conveniens but erred in dismissing the case based on forum selection clauses.RMBS Recovery Holdings I, LLC and others (collectively, Funds) filed suit against HSBC Bank USA, National Association (HSBC) asserting that HSBC served as an indenture trustee of three trusts in which the Funds had invested and that the trusts were filled with defective mortgage loans. Based on HSBC's failure to act to have sponsors of the trusts repurchase the deficient loans or to file suit against the sponsors, the Funds claimed breach of contract, breach of fiduciary duty, and other causes of action. The circuit court denied HSBC's motion to dismiss for forum non conveniens but granted HSBC's motion to dismiss based upon forum selection clauses in confidentiality and indemnification agreements between the parties. The Supreme Court reversed in part, holding that HSBC's delay in asserting the forum selection clauses, while actively continuing litigation, resulted in a waiver of the right to rely upon that contractual provision. View "RMBS Recovery Holdings I, LLC v. HSBC Bank USA, N.A." on Justia Law