Justia Banking Opinion SummariesArticles Posted in Kentucky Supreme Court
Community Financial Services Bank v. Stamper
The Supreme Court affirmed the decision of the court of appeals concluding that a promissory note executed by Ronny Stamper in April 1997 qualified as a negotiable instrument and, consequently, applying the six-year statute of limitations under Article 3 of Kentucky's Uniform Commercial Code, holding that the court of appeals properly considered Ky. Rev. Stat. 355.3-118 and that the note was a negotiable instrument under Ky. Rev. Stat. 355.3-104.Community Financial Services Bank brought this suit in January 2016 to enforce the promissory note at issue. Stamper argued that the action was untimely under the fifteen-year statute of limitations for written contracts. The trial court granted summary judgment for the Bank, concluding that the fifteen-year statute of limitations had not yet expired based on the maturity date listed on the promissory note. The court of appeals reversed, holding that the applicable statute of limitations was section 355.3-118 and, therefore, the action was time-barred. The Supreme Court affirmed, holding that the Bank's attempt to enforce the promissory note was untimely under section 355.3-118. View "Community Financial Services Bank v. Stamper" on Justia Law
Furlong Development Co. v. Georgetown-Scott County Planning & Zoning Commission
Developer intended to develop real property into single-family residential lots and secured financing through Bank. Insurer provided a surety bond to the Planning and Zoning Commission. Insurer executed three Bond Agreements as surety for Developer. Developer later defaulted in its loan. In lieu of foreclosure, Developer deed the property to Bank’s property management company. Bank transferred the property to another internal holding company. The Commission subsequently complied with Bank’s request for the Commission to call Developer’s bonds and place the proceeds in escrow for the purpose of reimbursing Bank for completion of the necessary infrastructure projects required by Developer’s approved plat. Developer filed a declaratory judgment action alleging that the bonds were not callable and that payment on the bonds would result in Bank receiving an unjust enrichment. The trial court granted summary judgment for Defendants. The Supreme Court affirmed, holding (1) Developer was liable under the bond; and (2) Developer’s claims of error during discovery were unavailing. View "Furlong Development Co. v. Georgetown-Scott County Planning & Zoning Commission" on Justia Law
Hall v. Mortgage Elec. Registration Sys., Inc.
This case required the Supreme Court to determine whether Appellee, Mortgage Electronic Registration Systems, Inc. (MERS) had "good cause" for failing to timely release a satisfied real estate lien it held on Gary and Sharon Hall's property. The circuit court concluded that the Halls were not entitled to statutory damages because, although MERS filed a release referencing the wrong mortgage, the Halls provided insufficient notice to MERS of the release's actual deficiency. Thus, the court found MERS had "good cause" not to file a new release once it checked and found it had already filed one. The court of appeals affirmed. The Supreme Court affirmed, holding that MERS satisfied the "good cause" requirement under these particular circumstances. View "Hall v. Mortgage Elec. Registration Sys., Inc." on Justia Law
Mortgage Elec. Registration Sys., Inc. v. Roberts
This case presented the question of whether the doctrine of equitable subrogation may be used to reorder the priority of a mortgage lien where the mortgage holder had constructive but not actual knowledge of a pre-existing lien when it paid off an earlier mortgage as part of a refinancing deal and there was no fraud or other misconduct that would have prevented the discovery of the lien. The trial court applied the doctrine to reorder the priority of liens. The court of appeals reversed, finding that the doctrine did not apply under the facts of this case. The Supreme Court affirmed, holding that because equitable subrogation is not available to a lienholder who has actual or constructive knowledge of a preexisting lien, the court of appeals was correct in concluding that the remedy was not available to the mortgage holder. View "Mortgage Elec. Registration Sys., Inc. v. Roberts" on Justia Law
Wells Fargo Bank v. Commonwealth
This case arose from a consolidated appeal. In the underlying cases, the respective property owners failed to satisfy their debt obligations to professional lending institutions, which precipitated the foreclosure proceedings. In both cases, the professional lenders asserted that their respective mortgages were superior to the general tax liens filed pursuant to Ky. Rev. Stat. 134.420(2). The circuit court entered a judgment granting the professional lenders' liens priority over the other liens. The court of appeals determined that the circuit court had erred in reordering the priorities and reversed the judgment. The Supreme Court affirmed the court of appeals, holding (1) the prior-recorded section 134.420(2) tax liens enjoyed priority pursuant to the long established first-to-file doctrine; and (2) the doctrine of equitable subrogation does not act to relieve a professional lender of a negligent title examination.