Justia Banking Opinion Summaries

Plaintiffs sued Defendants in a New York state court for concealing ill-gotten money from a scheme orchestrated by three of Plaintiff’s employees. Defendants moved to dismiss the complaint for lack of personal jurisdiction. Supreme Court granted the motion to dismiss for lack of jurisdiction. The Appellate Division affirmed, concluding that Defendants did not purposefully avail themselves of the privilege of conducting activities in New York. Plaintiffs appealed, alleging that the defendant-bank’s repeated use of New York correspondent accounts to receive and transfer millions of dollars in illicit funds constituted the transaction of business substantially related to their claims against Defendants sufficient to confer personal jurisdiction. Defendants argued in response that personal jurisdiction cannot depend on third party conduct and requires purposeful availment by Defendants that was lacking in this case. The Court of Appeals reversed, holding that Defendants’ use of the correspondent bank accounts was purposeful, that there was an articulable nexus between the business transaction and the claim asserted, and that the maintenance of suit in New York does not offend traditional notions of fair play and substantial justice. View "Rushaid v. Pictet & Cie" on Justia Law

Plaintiff appeals the district court’s denial of his motion for reconsideration of its earlier order denying on futility grounds plaintiff's motion for leave to amend his complaint. Plaintiff asserted in his motion that he had developed facts in discovery which showed that (1) a Bank employee knew that Charles Gordon, the chief executive officer of OPT Title and Escrow, Inc., had assisted Gordon in opening a bank account called an “escrow account” into which funds were to be wired by third parties with the expectation that the funds would be held in escrow by OPT Title; (2) the Bank employee knew that Gordon was stealing from the account; (3) the Bank employee assisted Gordon in committing the fraud; and (4) the Bank received at least a short-term financial benefit from allowing Gordon to use OPT Title’s account as a vehicle for his fraud. The court held that the district court erred in denying plaintiff's motion for reconsideration on the basis that even considering his new allegations set forth in his motion for reconsideration, he failed to state claims for relief. Accordingly, the court reversed and remanded for further proceedings. View "Hsi Chang v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiff-school opened a bank account for its operating fund with Defendant-bank. One of Plaintiff’s employees later opened a bank account with Defendant that Plaintiff had not authorized and deposited into that account several hundred checks originating from, or intended to be deposited into, Plaintiff’s bank account with Defendant. Over the course of approximately four years, the employee deposited $832,776 into this bank account and withdrew funds just short of that amount. Defendant refused Plaintiff’s demand to return the funds that the employee had funneled through this account to himself. Thereafter, Plaintiff commenced this action, alleging breach of contract, violations of the Uniform Commercial Code (UCC), negligence, and common law conversion. The trial court rendered judgment in favor of Plaintiff on each of the counts and awarded $832,776 in total compensatory damages. The Supreme Court affirmed in all respects with the exception of the damages award, holding that some of Plaintiff’s claims under the UCC were time barred and that the trial court did not otherwise err in its judgment. Remanded with direction to reduce the award by $5,156 and to proportionately reduce prejudgment interest, .View "Saint Bernard Sch. of Montville, Inc. v. Bank of Am. " on Justia Law

In 2007 Rufini purchased his Sonoma residence with a $600,000 loan. Rufini and his fiancée lived in the home until they separated. In June 2009, CitiMortgage approved Rufini for a loan modification and told him he would receive a permanent modification after making timely trial payments of $2787.93 in July, August and September. Rufini timely made the payments at the modified rate through December. In January, 2010, CitiMortgage informed him that his permanent loan modification agreement would be ready in three days. Three months later, with still no written agreement, he rented out his house to offset expenses In August Rufini learned that Citibank was denying his loan modification, because the home was not owner-occupied. He attempted to make timely mortgage payments at the modified level, but CitiMortgage returned his checks. Rufini received a notice of default in September 2010, followed by a notice of trustee’s sale scheduled for January 2011. He contacted CitiMortgage and obtained its agreement to delay the foreclosure. CitiMortgage assigned Semien to Rufini’s account, but Rufini was unable to contact him on the phone for three and a half weeks. On April 11 Rufini was informed his modification was “in final state of completion.” On May 4, his house was sold at auction. The trial court dismissed Rufini’s complaint alleging “breach of contract—promissory estoppel,” breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, unfair business practices, negligence, and negligent misrepresentation. The appeals court reversed and remanded the claims of negligent representation and under Business and Professions Code section 17200, the unfair competition law. View "Rufini v. CitiMortgage" on Justia Law

A Law Firm had an escrow account with a Bank and authorized an employee to sign checks on the account by herself. The employee began embezzling money from the Firm’s various escrow accounts by engaging in a scheme called “check-kiting,” which involved the employee writing and depositing checks between the Bank account and the Law Firm’s account at another bank. More than three years after the last activity on the Bank account the Law Firm sued the Bank, raising four claims, including violations of the Uniform Commercial Code and common-law causes of action. The court of appeals concluded that the claims were barred by the one-year repose period of Ky. Rev. Stat. 355.4-406. The Supreme Court affirmed on other grounds, holding that the claims were barred by the three-year statute of limitations under Ky. Rev. Stat. 355.4-111.View "Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co." on Justia Law

Abraham and Betty Jean Morrow filed a request for a modification of their home loan, serviced by Bank of America, through the federal Home Affordable Modification Program. Bank of America denied the modification and scheduled a trustee’s sale of the property. The Morrows subsequently filed a complaint against Bank of America based on the bank’s alleged breach of an oral contract for modification of their loan. The district court granted summary judgment to Bank of America, concluding (1) the Morrows’ claims for breach of contract, fraud, and violation of the Montana Consumer Protection Act (MCPA) were barred by the Statute of Frauds; and (2) the Morrows could not succeed on their claims of negligence, negligent misrepresentation, and tortious breach of the covenant of good faith and fair dealing because Bank of America owed no duty to the Morrows. The Supreme Court reversed as to the negligence, negligent misrepresentation, fraud, and violations of MCPA claims, holding that Bank of America owed a duty to the Morrows, genuine issues of material fact existed as to some claims, and the Statute of Frauds did not preclude the remainder of the Morrows’ claims. View "Morrow v. Bank of Am., N.A." on Justia Law

At issue in this appeal was Eaton v. Fed. Nat’l Mortgage Ass’n, which held that a foreclosure by power of sale is invalid unless a foreclosing party holds the mortgage and also holds either the underlying mortgage note or acts on behalf of the note holder. In the instant case, Plaintiffs defaulted on their mortgage payments, and Mortgage Electronic Registration Systems (MERS) sought to foreclose on the property. Plaintiffs filed a complaint against MERS claiming that MERS did not have standing to initiate foreclosure proceedings because it was not the holder of the promissory note or an authorized agent of any note holder. The superior court dismissed the complaint. Before Plaintiffs’ appeal was heard, the Supreme Court decided Eaton. The Supreme Court subsequently vacated the dismissal of Plaintiffs’ claim alleging a lack of authority to foreclose, holding (1) Eaton applies to cases, such as the instant case, that preserved the issue presented in Eaton and that were pending on appeal as of June 22, 2012; and (2) therefore, Plaintiffs’ complaint should not have been dismissed for failure to state a claim on the grounds that MERS lacked the authority to foreclose. Remanded.View "Galiastro v. Mortgage Elec. Registration Sys., Inc." on Justia Law

Defendant was assigned the serving rights to Plaintiff's mortgage on a piece of property. Plaintiff sued Defendant, claiming that Defendant attempted to collect more than was due on the loan. The parties settled. Plaintiff then filed this action against Defendant, alleging breach of the settlement agreement, defamation, and violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. An order of default was later entered against Defendant. Defendant subsequently filed a motion for a new trial or to alter or amend the judgment, requesting that the default judgments be set aside because Plaintiff's claims were legally deficient. The trial court denied the motion. The court of special appeals affirmed. The Court of Appeals affirmed, holding that a defaulting party who does not file a motion to vacate the order of default after a default judgment has been entered cannot file a Maryland Rule 2-534 motion to alter or amend a judgment to contest liability, and the defaulting party cannot appeal that judgment in order to contest liability.View "Franklin Credit Mgmt. Corp. v. Nefflen" on Justia Law