Justia Banking Opinion Summaries

Holocaust survivors and heirs of other Holocaust victims sued, alleging that defendant banks participated in expropriating property from Hungarian Jews during the Holocaust. Invoking subject-matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. 1330(a), the Alien Tort Statute, 28 U.S.C.1350, and federal question jurisdiction, 28 U.S.C. § 1331, they alleged: genocide, aiding and abetting genocide, bailment, conversion, constructive trust, and accounting. Plaintiffs sought certification as a class action and asked that each bank be held jointly and severally responsible for damages of approximately $75 billion. This case and a parallel case against the Hungarian national railway have produced nine appeals and mandamus petitions. The district court declined to dismiss for lack of personal jurisdiction. The Seventh Circuit, noting that such a decision would ordinarily not be reviewable, stated that: “This is the rare case, however, in which it is appropriate for this court to exercise its discretion to issue a writ of mandamus to confine the district court to the exercise of its lawful jurisdiction” The court cited the extraordinary scale of the litigation, the inherent involvement with U.S. foreign policy, and the “crystal clarity” of the lack of foundation for exercising general personal jurisdiction over the banks. View "Abelesz v. OTP Bank" on Justia Law

The Republic of Argentina appealed from an order of the district court granting NML Capital's motion to compel non-parties Bank of America and Banco de la Nacion Argentina to comply with subpoenas duces tecum and denying Argentina's motion to quash the subpoena issued to Bank of America. Argentina argued that the banks' compliance with the subpoenas would infringe on its sovereign immunity. The court concluded, however, that because the district court ordered only discovery, not the attachment of sovereign property, and because that discovery was directed at third-party banks, Argentina's sovereign immunity was not affected. Accordingly, the court affirmed the district court's order. View "NML Capital, Ltd. v. Republic of Argentina" on Justia Law

Dean and Stacey Norcutt bought a home for cash and satisfied the existing first mortgage held by Zions National Bank. They later discovered the home was also subject to a judgment lien obtained by Sourcecorp, Inc. that far exceeded the property's value. Sourcecorp subsequently initiated a sheriff's sale to foreclose on its judgment lien, and the Norcutts sued to enjoin the sale. The trial court granted relief to the Norcutts, and the court of appeals reversed. On remand, the trial court entered summary judgment for Sourcecorp. The Court of appeals reversed, holding that the Norcutts were equitably subrogated to the position of Zions Bank in priority over Sourcecorp. The Supreme Court affirmed, holding that the Norcutts were equitably subrogated to the mortgage lien's priority for the amount they paid to satisfy the mortgage. Remanded. View "Sourcecorp, Inc. v. Norcutt" on Justia Law

This case arose when plaintiffs acquired on the secondary market hundreds of millions of dollars of non-performing bonds issued by the Republic of Argentina. In due course, plaintiffs began to bring suit in the United States courts to collect the debt. In these eleven consolidated appeals, they moved to attach a New York bank account owned by ANPCT. The court held that the district court correctly held that the funds in the ANPCT account were subject to attachment pursuant to 28 U.S.C. 1610 because they were "used for a commercial activity in the United States." View "NML Capital, Ltd. v. Republic of Argentina" on Justia Law

Defendant appealed from a judgment convicting him of (1) conspiracy to violate the Iranian Transaction Regulations (ITR) and operate an unlicensed money-transmitting business; (2) violating the ITR; (3) operating an unlicensed money-transmitting business; and (4) two counts of making false statements in response to government subpoenas. On appeal, defendant argued that the district court erred in several respects when instructing the jury on the conspiracy, ITR, and money-transmitting counts; defendant was entitled to a new trial on the false statement counts because the government constructively amended the indictment; the government committed misconduct in its rebuttal summation, which he claimed necessitated a new trial on all counts; and defendant should be resentenced because the district court miscalculated the applicable offense level. The court reversed Count One to the extent it alleged a violation of the ITR as an overt act and vacated and remanded to the extent it was based on the money-transmission violation as an overt act; reversed Count Two; vacated and remanded Count Three; and affirmed Counts Four and Five.

Plaintiffs Debbie and Max Walters appealed from a district court judgment that dismissed their petition for the issuance of a turnover order. In 1990, the Walters' thirteen-year-old son was killed on a hunting trip with his father when a Chinese-manufactured rifle the boy carried allegedly misfired. The Walters sued China and several entities allegedly controlled by China in the U.S. District Court on theories of products liability, negligence, and breach of warranty in connection with the manufacture of the rifle. The Walters eventually won a $10 million default judgment, and sought to enforce it by collecting China's assets in the possession of the respondent banks, Industrial and Commercial Bank of China, Ltd., Bank of China, Ltd. and China Construction Bank Corporation. Citing the Foreign Sovereign Immunities Act of 1976 (FSIA), the district court dismissed the petition with prejudice. Without filing a new petition, the Walters argued on appeal that the Banks lacked standing to assert foreign sovereign immunity on behalf of China, and that China waived any immunity by its conduct underlying the default judgment and by its failure to appear. Upon review of the submitted briefs and the applicable legal authority, the Second Circuit found Plaintiffs' arguments were without merit, and affirmed the district court's decision to dismiss their case.

This case stemmed from continuing disputes between Argentina and its various private creditors. Argentina and its Brady bondholders entered into a Continuation of Collateral Pledge Agreement that extended the security interest in the tendered bonds' collateral during its transfer and liquidation. Capital Ventures International (CVI) held certain non-Brady bonds on which Argentina also defaulted and chose to sue Argentina to collect on the defaulted bonds it held, seeking to attach Argentina's reversionary interest in the Brady collateral. At issue was whether the attachments blocked the proposed exchange and whether the district court properly modified the attachments to allow the exchange. The court held that CVI was entitled to maintain its attachments even though a quirk of the bonds' Collateral Pledge Agreement meant that the attachments would effectively block the proposed exchange between Argentina and the Brady bondholders. Therefore, the court reversed the district court's orders that modified the attachments to permit the exchange.

The Republic of Argentina and interested non-party-appellant, Banco Central de la Republica Argentina (BCRA), appealed from orders of the district court to attach funds held in BCRA's account at the Federal Reserve Bank of New York (FRBNY) on the theory that, pursuant to First National City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), those funds were attachable interests of the Republic. At issue was whether sovereign immunity for central bank property "held for its own account" pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. 1611(b)(1), depended upon a presumption of the central bank's independence under Bancec, and the proper definition of central bank property "held for its own account" under section 1611(b)(1). The court held that because BCRA's sovereign immunity over the FRBNY funds had not been waived and the FRBNY funds were property of BCRA held for its own account under section 1611(b)(1), the FRBNY funds were immune from attachment and restraint. Therefore, the court held that the district court erred in concluding that it had subject-matter jurisdiction to adjudicate a suit for attachment and restraint for the FRBNY funds. Accordingly, the court vacated and remanded for further proceedings.

Plaintiffs, companies that acquired Floating Rate Accrual Notes (FRANs), commenced numerous separate actions against Argentina seeking damages for the nation's default on the bonds and the claims were subsequently consolidated. At issue, through certified questions, was whether Argentina's obligation to make biannual interest-only payments to a bondholder continued after maturity or acceleration of the indebtedness, and if so, whether the bondholders were entitled to CPLR 5001 prejudgment interest on payments that were not made as a consequence of the nation's default. The court answered the certified questions in the affirmative and held that the FRANs certificate required the issuer to continue to make biannual interest payments post-maturity while the principal remained unpaid; having concluded that the obligation to make biannual interest payments continued after the bonds matured if principal was not promptly repaid, and that nothing in the bond documents indicated that the payments were to stop in the event of acceleration of the debt, it followed that Argentina's duty to make the payments continued after NML Capital accelerated its $32 million of the debt in February 2005; and based on the court's analysis in Spodek v. Park Prop. Dev. Assoc., the bondholders were entitled to prejudgment interest under CPLR 5001 on the unpaid biannual interest payments that were due, but were not paid, after the loads were either accelerated or matured on the due date.

After the the defendants defaulted on $39 million in loans the bank began post-judgment enforcement proceedings. Defendants were "sluggish" in responding to citations and the bank learned that they had transferred about $20 million to accounts in India. The district court ordered defendants to surrender their passports pending return of the funds. The Seventh Circuit affirmed. The district court had the power to impose a minimal seizure on the defendants until they abided by the asset production order or explained why they could not.