Justia Banking Opinion Summaries

The case involves plaintiffs Ronnie and Sharon Llanes and Michael and Lauren Codie (collectively, Borrowers) who purchased homes with mortgages from Bank of America, N.A. (Lender). After the Borrowers defaulted on their mortgages, the properties were foreclosed upon and sold in nonjudicial foreclosure sales. The Borrowers then sued the Lender for wrongful foreclosure, alleging that the Lender's foreclosures did not comply with Hawai‘i Revised Statutes (HRS) § 667-5 (2008) (since repealed).The case was initially heard in the Circuit Court of the Third Circuit, where the Lender moved for summary judgment, arguing that the Borrowers did not prove damages. The circuit court denied the motion due to factual disputes and lack of clarity in existing law. However, after the Supreme Court of Hawai‘i issued its decision in Lima v. Deutsche Bank Nat’l Tr. Co., the Lender renewed its summary judgment motion, arguing that under Lima, the Borrowers’ claims failed as a matter of law because they did not provide evidence of damages that accounted for their pre-foreclosure mortgage debts. The circuit court granted the Lender's renewed motion for summary judgment, concluding that the Borrowers had not proven their damages after accounting for their debts under Lima.On appeal to the Supreme Court of the State of Hawai‘i, the Borrowers argued that the circuit court erred by concluding that they bore the burden of proving their damages and did not meet that burden. The Supreme Court affirmed the circuit court's decision, holding that outstanding debt may not be counted as damages in wrongful foreclosure cases. The court concluded that the Borrowers did not prove the damages element of their wrongful foreclosure claims, and therefore, the circuit court properly granted summary judgment to the Lender. View "Llanes v. Bank of America, N.A." on Justia Law

In this case, a Delaware statutory trust, NB Taylor Bend, DST (Taylor Bend), borrowed $13 million from Prudential Mortgage Capital Company, LLC (Prudential) to acquire property in Lafayette County, Mississippi. Patrick and Brian Nelson, who were guarantors of the loan, signed an Indemnity and Guaranty Agreement (the Guaranty) in December 2014, personally guaranteeing the loan. After the loan documents were executed, Prudential assigned the loan to Liberty Island Group I, LLC (Liberty), which in turn assigned the loan to North American Savings Bank, FSB (NASB). By May 2020, Taylor Bend struggled to find tenants for the property due to the COVID-19 pandemic and informed NASB of their financial problems. In May 2021, NASB declared Taylor Bend to be in default after the borrower continually failed to make timely loan payments. NASB then filed an action against the Nelsons in the United States District Court for the Northern District of Mississippi, asserting claims for breach of the Guaranty, for recovery of the loan balance, and for declaratory judgment.The district court entered partial summary judgment for NASB, holding the Nelsons “breached the [G]uaranty and thus owe[d] to [NASB] the amount remaining due on the subject loan.” The court determined that the Guaranty was “freely assignable” and that Prudential adequately assigned all of its rights and interests to Liberty, which in turn assigned all of its rights and interests to NASB, including those conferred by the Guaranty. The court also concluded that the defenses raised by the Nelsons were “unavailable given the borrower’s absence from this litigation.” The court also granted Brian’s motion for summary judgment against Patrick, ruling that the indemnity agreement between the brothers was valid and binding and that Patrick was contractually required to indemnify Brian for “any and all obligations arising out of or relating to this litigation.”The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The court held that the Guaranty was properly assigned from Prudential to Liberty and from Liberty to NASB. NASB could therefore properly bring its claims for breach of guaranty and declaratory judgment against the Nelsons to recover the loan deficiency. Moreover, under Mississippi law, Patrick may not interpose equitable defenses that were available only to Taylor Bend to defeat his liability under the Guaranty. The court also held that the deficiency judgment awarded to NASB pursuant to the Guaranty need not be reduced by the third-party sale of the Apartments to Kirkland. NASB had no duty to mitigate its damages under either Mississippi law or the terms of the Guaranty. View "North American Savings Bank v. Nelson" on Justia Law

In 2000, Betty J. Brown took title to a property in Charlotte, North Carolina. She obtained a loan from First Horizon Home Loan Corporation in 2004, secured by a deed of trust. In 2010, a judgment was entered against Brown in South Carolina, which was domesticated and recorded in North Carolina in 2014. In 2016, Brown refinanced the First Horizon loan with Nationstar Mortgage LLC, which paid off the remainder of the First Horizon loan. The deed of trust for the Nationstar loan was recorded after the 2010 judgment. MidFirst Bank is Nationstar’s successor in interest for the 2016 loan. In 2019, enforcement proceedings began against Brown to collect the 2010 judgment. The property was seized and sold at an execution sale, with Brown's daughter, Michelle Anderson, placing the successful bid.The trial court granted summary judgment to MidFirst Bank, asserting that the Nationstar deed of trust still encumbered the property even after the execution sale. The court also held that the doctrine of equitable subrogation applied, allowing Nationstar to assume the rights and priorities of the First Horizon deed of trust. The Court of Appeals reversed this decision, holding that the Nationstar lien was extinguished by the execution sale and that the doctrine of equitable subrogation was not available to MidFirst Bank because it was not "excusably ignorant" of the publicly recorded judgment.The Supreme Court of North Carolina reversed the decision of the Court of Appeals, holding that it erred by applying the incorrect standard regarding equitable subrogation. The court held that the doctrine of equitable subrogation applies when money is expressly advanced to extinguish a prior encumbrance and is used for this purpose. The court remanded the case to the Court of Appeals to be remanded to the trial court for reassessment under the correct legal standard. View "MidFirst Bank v. Brown" on Justia Law

The plaintiff, PennyMac Loan Services, LLC, a mortgage company, held a mortgage interest in a property in Coventry, Rhode Island. The mortgagor, Domenico Companatico, failed to pay 2018 fire district taxes, leading to a tax sale auction where the property was sold to Roosevelt Associates, RIGP. Roosevelt later filed a petition to foreclose any right of redemption, and the Superior Court clerk issued a citation notifying interested parties. The citation did not include a street address for the property. Despite receiving the citation, PennyMac failed to respond and was defaulted. A Superior Court justice entered a final decree foreclosing the right of redemption, and Roosevelt sold the property to Coventry Fire District 5-19, RIGP, which later sold it to Clarke Road Associates, RIGP.PennyMac filed an action to challenge the foreclosure decree, arguing that the citation failed to provide adequate notice, thus denying PennyMac its right to procedural due process. The parties filed cross-motions for summary judgment, and a second trial justice concluded that PennyMac had received adequate notice of the petition to foreclose all rights of redemption. The justice also found that the fire district taxes constituted a superior lien on the property and that PennyMac is statutorily barred from asserting a violation of the Uniform Voidable Transactions Act.The Supreme Court of Rhode Island affirmed the amended judgment of the Superior Court. The court found that the citation, despite lacking a street address, did not constitute a denial of due process. The court also concluded that PennyMac's claim under the Uniform Voidable Transactions Act was barred due to its failure to raise any objection during the foreclosure proceeding. Finally, the court determined that the recent U.S. Supreme Court decision in Tyler v. Hennepin County, Minnesota did not alter the outcome of this case. View "PennyMac Loan Services, LLC v. Roosevelt Associates, RIGP" on Justia Law

In this case, Michael Bordick and Monica Bordick defaulted on a loan from Franklin Savings Bank, which was secured with a hunting cabin they owned on property they leased. The Bank filed a complaint for recovery of the cabin, and the Business and Consumer Docket ruled in favor of the Bank. The Bordicks appealed, arguing that the Bank did not make disclosures required by the Federal Truth in Lending Act (TILA). The Bank argued that the credit transaction was not subject to TILA.The Maine Supreme Judicial Court held that a credit transaction secured by real property in the form of a lease is not exempt from TILA under 15 U.S.C.A. § 1603(3). However, the court also found that the lower court applied an incorrect test to determine whether the loan was for commercial purposes and therefore exempt under § 1603(1). The court vacated the judgment in favor of the Bank and remanded the case for the lower court to determine the nature of the loan, looking at the totality of the circumstances.The court also clarified that although the leased land where the cabin was located was not the Bordicks' principal dwelling, the credit transaction is not exempt from TILA under § 1603(3) because it was secured with real property. View "Franklin Savings Bank v. Bordick" on Justia Law

The Supreme Court of Texas examined whether a lender could rescind a loan acceleration and reaccelerate the loan simultaneously, thereby resetting the foreclosure statute of limitations under the Texas Civil Practice and Remedies Code Section 16.038. The plaintiffs, Linda and Thomas Moore, defaulted on their home loan, leading to an acceleration of the loan by the lenders, Wells Fargo Bank and PHH Mortgage Corporation. The lenders subsequently issued notices rescinding the acceleration and then reaccelerating the loan. The Moores sued, arguing that the foreclosure statute of limitations had run out because the lenders' rescission notices also included notices of reacceleration. The federal district court ruled against the Moores, leading to their appeal and the subsequent certification of questions to the Supreme Court of Texas by the Fifth Circuit. The key question was whether simultaneous rescission and reacceleration could reset the limitations period under Section 16.038.The Supreme Court of Texas held that a rescission that complies with the statute resets the limitations period, even if it is combined with a notice of reacceleration. The court reasoned that the statute doesn't require the rescission notice to be separate from other notices, nor does it impose a waiting period between rescission and reacceleration. The court's ruling means that lenders can rescind and reaccelerate a loan simultaneously, thereby resetting the foreclosure statute of limitations. View "MOORE v. WELLS FARGO BANK, N.A." on Justia Law

In this case, the Supreme Court of North Dakota affirmed the lower court's ruling in favor of the North Dakota Industrial Commission (NDIC), acting through the North Dakota Housing Finance Agency (NDHFA), in a dispute over a lien on a property. The property in question was part of a housing development built by the Fendee Group, and was purchased by Carinne Gould, who obtained a mortgage through Guaranteed Rate, Inc., which was later assigned to the NDIC. After Gould defaulted on her payments, both the NDIC and Fendee filed liens on the property. Fendee argued that its liens were superior to the NDHFA's mortgage, but the court ruled that since the NDHFA's lien was perfected (or legally finalized) before Fendee's liens, the NDHFA held the superior lien. The court also rejected Fendee's claim of a "super lien," which would have given it priority over all other liens, and denied Fendee's request for attorney's fees. The court found that the dispute over the super lien was a question of first impression, meaning it was the first time such a question had come before the court, and therefore the appeal was not frivolous and did not warrant attorney’s fees. View "NDIC v. Gould" on Justia Law

In this case, the United States Court of Appeals for the Seventh Circuit addressed a dispute involving the owners of two parcels of real estate in Chicago who contended that banks tried to collect notes and mortgages that belonged to different financial institutions. The state judiciary had ruled that the banks were entitled to foreclose on both parcels, but the properties had not yet been sold and no final judgments defining the debt were in place. The plaintiffs attempted to initiate federal litigation under the holding of Exxon Mobil Corp. v. Saudi Basic Industries Corp., arguing that their case was still pending. However, the district court dismissed the case, citing the Rooker-Feldman doctrine, which states that only the Supreme Court of the United States can review the judgments of state courts in civil suits.The Appeals court held that the application of the Rooker-Feldman doctrine was incorrect in this case because the foreclosure litigation in Illinois was not yet "final". According to the court, the foreclosure process in Illinois continues until the property is sold, the sale is confirmed, and the court either enters a deficiency judgment or distributes the surplus. Since these steps had not occurred, the plaintiffs had not yet "lost the war", and thus parallel state and federal litigation could be pursued as per Exxon Mobil Corp. v. Saudi Basic Industries Corp.However, by the time the district court dismissed this suit, the state litigation about one parcel was over because a sale had occurred and been confirmed, and by the time the Appeals court heard oral argument that was true for the second parcel as well. The Appeals court stated that Illinois law forbids sequential litigation about the same claim even when the plaintiff in the second case offers novel arguments. The court found that the plaintiffs could have presented their constitutional arguments in the state court system and were not free to shift what is effectively an appellate argument to a different judicial system.The court also noted that Joel Chupack, the lead defendant, was the trial judge in the state case and was not a party to either state case. He did not claim the benefit of preclusion. Judge Chupack was found to be entitled to absolute immunity from damages, as he acted in a judicial capacity.The judgment of the district court was modified to reflect a dismissal with prejudice rather than a dismissal for lack of jurisdiction, and as so modified it was affirmed. View "Bryant v. Chupack" on Justia Law

This case concerns a foreclosure proceeding related to a property in Bristol, Rhode Island. The plaintiff, Steven Serenska, obtained a mortgage from Wells Fargo Bank, N.A. and defaulted on his payments. Wells Fargo and HSBC Bank USA, National Association as Trustee, initiated foreclosure proceedings. The plaintiff filed a complaint, alleging that there was an ambiguity in the mortgage document and that he had not received proper notice before the foreclosure.The Supreme Court of Rhode Island held that there was no ambiguity in the mortgage contract. The court found that the notice of default sent to the plaintiff strictly complied with the requirements of the mortgage agreement. The court noted that the plaintiff's alleged prejudice (claiming he would have paid the sum due had he received notice of the deadline for reinstating the mortgage) was irrelevant in this context. The court also found that an issue raised by the plaintiff on appeal (concerning additional language in the notice of default) was not properly presented before the lower court and was therefore waived.The court thus affirmed the order of the Superior Court granting the defendants' motions to dismiss the plaintiff's complaint. View "Serenska v. Wells Fargo Bank, N.A." on Justia Law

In 2006, Ronald A. Gosset borrowed $275,000 against his property, which he owned as a joint tenant with his daughters, Mellissa and Verity Gosset. Both daughters signed the mortgage but not the underlying note. When Ronald Gosset passed away and the loan was in default, The Bank of New York Mellon, as the current note and mortgage holder, moved for summary judgment and for permission to conduct a foreclosure sale on the property. The defendants argued that they were not in default since they never signed the note and bore no financial obligations to the plaintiff. Moreover, they contended that the claims against their deceased father couldn't be addressed until a representative for his estate was appointed.The Supreme Court of Rhode Island held that the plaintiff presented uncontested evidence demonstrating it is the holder of the note and mortgage, and that the note is currently in default. Furthermore, under the terms of the mortgage, the mortgage itself is also in default. The defendants, who are referred to as "Borrowers" in the mortgage, failed to present evidence challenging these assertions. Consequently, the court affirmed the judgment of the Superior Court, ruling that there were no genuine issues of material fact and the plaintiff is entitled to conduct a foreclosure sale on the property securing its promissory note. The court clarified that the judgment does not provide for an award of damages against any defendant, it only authorizes the plaintiff to foreclose its mortgage. View "The Bank of New York Mellon v. Gosset" on Justia Law