Justia Banking Opinion Summaries

Synergy4 Enterprises, Inc. brought an action against Pinnacle Bank on claims of promissory estoppel, negligent misrepresentation, and fraud, alleging that Pinnacle Bank caused damages by orally assuring Synergy4 that Pinnacle would provide a $1 million credit line and then only providing $400,000 provided for in a commitment letter. The district court sustained Pinnacle’s motion for summary judgment, concluding that Synergy4’s claims were barred by Nebraska’s credit agreement statute of frauds. The Supreme Court affirmed, holding that because Synergy4’s claims were based on a credit agreement that was not in writing, they were barred by Nebraska’s credit agreement statute of frauds. View "Synergy4 Enters., Inc. v. Pinnacle Bank" on Justia Law

This case stemmed from the largely fraudulent lending operations of First United Funding, LLC (First United). After First United collapsed, a court-appointed Receiver commenced this action under Minnesota’s Uniform Fraudulent Transfer Act (MUFTA) against several financial institutions, including Alliance Bank and certain Respondent Banks, that had participated in First United’s loan-participation scheme. The district court (1) dismissed the claims against the Respondent Banks for failure to bring the action in a timely fashion, and (2) allowed the claim against Alliance Bank, concluding that that the Receiver had pleaded legally sufficient claims based on a “Ponzi-scheme presumption.” The district court then entered judgment against Alliance Bank. The Receiver and Alliance Bank appealed. The court of appeals (1) divided the Ponzi-scheme presumption into three separate components and concluded that the third component was unfounded in the case of Alliance Bank; and (2) concluded that the district court erred when it dismissed the Receiver’s actual-fraud claims against the Respondent Banks. The Supreme Court affirmed as modified, holding (1) all three components of the Ponzi-scheme presumption lack support in MUFTA; and (2) the Receiver failed to adequately plead constructive fraud, but the district court erred when it dismissed the Receiver’s actual fraud claims. Remanded. View "Finn v. Alliance Bank" on Justia Law

Oliver was manager and part-owner of PSC. Oliver and PSC sought to refinance property on Lake Superior. Meecorp required additional collateral. Oliver identified 14 other income-producing properties and his interest in each. The sum of the “Oliver values” was more than $1 million. Gandolf, owned by Oliver and PSC, supplied: cash-flow projections, the value of Oliver’s interests, member-control agreements, certificates of good standing, and Schedule K-1s for Gandolf-owned LLCs associated with each property. Gandolf did not supply the deeds of ownership. Meecorp concluded that Oliver, individually, could not pledge adequate collateral for a loan of $1.32 million, having no direct interest in the properties. Meecorp requested that Gandolf, as owner of the remaining governance rights and the 100% owner of the financial rights, pledge its interests in the LLCs. Oliver, as Gandolf’s representative, signed the pledge. Meecorp delivered the funds. Oliver and PSC defaulted. Meecorp learned that neither Oliver nor Gandolf’s LLCs owned the pledged properties; Gandolf’s LLCs were general partners in undisclosed limited partnerships that owned each property. Undisclosed limited partners owned up to 99.99% of the equity in the properties; limited-partnership organizational documents prohibited the general partners (LLCs) from pledging their interests without consent. Meecorp sued. The district court granted Meecorp summary judgment on its breach-of-the-note claim against PSC and its breach-of-guaranty claim against Oliver, awarding $2,366,191.88, and entered judgment against Gandolf for breach-of-the-guaranty and against Gandolf, Oliver, and PSC for fraud. The Eighth Circuit affirmed. View "Meecorp Capital Mkts., LLC v. Oliver" on Justia Law

Dragon Systems, Inc. (Dragon), a voice recognition software company that faced a deteriorating financial situation, hired Goldman Sachs (Goldman) to provide financial advice and assistance in connection with a possible merger. In 2000, Lernout & Hauspie Speech Products N.V. (Lernout & Hauspie) acquired Dragon. When it was discovered that Lernout & Hauspie had fraudulently overstated its earnings, the merged company filed for bankruptcy, and the Dragon name and technology were sold from the estate. Plaintiffs, two groups of Dragon shareholders, filed suit against Goldman, alleging negligent and intentional misrepresentation, negligence, gross negligence, breach of fiduciary duty, and violations of Mass. Gen. Laws ch. 93A. A jury found in favor of Goldman on Plaintiffs’ common law claims, and district court found that Goldman had not violated chapter 93A. The First Circuit affirmed, holding (1) the district court correctly articulated the legal standard applicable to Plaintiffs’ chapter 93A claims and correctly applied that standard to its factual findings; and (2) Plaintiffs’ arguments that they were entitled to a new trial on their common law claims because of evidentiary errors and erroneous jury instructions were without merit. View "Baker v. Goldman, Sachs & Co." on Justia Law

This case arose when an investment advisor committed fraud by opening a doing-business-as ("d/b/a") bank account using the name of his employer when he did not have the employer's authority to do so. The employer's insurance company subsequently filed suit against the bank, alleging that the bank negligently failed to inquire into whether the former advisor had authority to open the d/b/a account. The court affirmed the district court's dismissal of the suit because the bank owed no recognized duty to the employer.View "National Union Fire Ins. Co. v. Hometown Bank, N.A., et al." on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law

Debtors contracted with Builder to finish construction on a house. After Debtors defaulted on progress payments, Builder sued Debtors and Bank, claiming that Defendants falsely represented or concealed material information about whether Debtors could pay for the work. The district court sustained Defendants’ motions for summary judgment on Builder’s fraud and conspiracy claims. Debtors then confessed judgment on Builder’s breach of contract claim. After a bench trial, the district court ruled for Defendants on Builder’s equitable and promissory estoppel claims. The Supreme Court affirmed in part and reversed in part, holding (1) the court erred in granting summary judgment to Debtors on Builder’s fraud claim and to Debtors and Bank on Builder’s civil conspiracy claim; and (2) during trial, the court did not err in finding that Builder had failed to prove by clear and convincing evidence that Bank promised to fund Builder’s work that was definite enough to induce Builder’s foreseeable reliance on the statement, but these factual findings did not preclude Builder’s proof of the same facts for its fraud claims. Remanded. View "deNourie & Youst Homes, LLC v. Frost" on Justia Law

Plaintiff (the customer) filed suit against State Street (the custodian bank), alleging in essence that it had a duty to notify him that the securities in his account were worthless. The district court granted State Street's motion to dismiss the contract claims on the ground that State Street had a merely administrative role in managing plaintiff's accounts and thus owed him no duty to guard against his investment advisor's misconduct. The district court concluded that plaintiff's negligence claims were barred by Florida's economic loss rule and plaintiff had not sufficiently alleged knowledge on the part of State Street in regards to the aiding and abetting claims. The court affirmed, holding that, under these facts, the custodian bank breached no duty, contractual or otherwise, by accepting on behalf of its customer securities that later turn out to be fraudulent and listing those securities on monthly account statements issued to the customer. Plaintiff's allegations failed to state claims for breach of contract; plaintiff failed to establish that State Street owed him an independent duty to monitor the investments in his account, verify their market value, or ensure they were in valid form; therefore, he failed to state valid negligence claims; plaintiff's allegations were insufficient to state a claim for aiding and abetting; and plaintiff's claims for breach of fiduciary duty and negligent misrepresentation also failed. View "Lamm v. State Street Bank and Trust" on Justia Law

Plaintiff filed suit alleging that the Citibank defendants engaged in tortious conduct and breached contractual obligations owed to him in connection with private equity investments in Brazil. On appeal, plaintiff challenged the district court's dismissal of the complaint. The court held that the district court had jurisdiction to hear the case under the Edge Act, 12 U.S.C. 632, because plaintiff's claims arose out of a foreign financial operation. The court also concluded that the district court properly dismissed plaintiff's tort and contract claims against the Citibank defendants under Rule 12(b)(6). Accordingly, the court affirmed the judgment of the district court. View "Wilson v. Dantas" on Justia Law