Justia Banking Opinion Summaries

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

In the case before the Maine Supreme Judicial Court, the dispute involved U.S. Bank, N.A. (the Bank) and Charles D. Finch. The Bank had a mortgage on Finch's property due to a loan he had taken out. When Finch defaulted on the loan, the Bank initiated foreclosure proceedings. However, the Superior Court ruled in favor of Finch, finding that the Bank's notice of default did not comply with the requirements of the Maine foreclosure statute, specifically 14 M.R.S. § 6111. Following this, Finch asked the court to rule that the Bank's mortgage was unenforceable and to order the Bank to discharge the mortgage. The court agreed with Finch, citing the Maine Supreme Judicial Court's decision in Pushard v. Bank of America.The Bank appealed this decision, arguing that the Pushard decision should be overturned, and that even if it cannot foreclose on the property, it should not be required to discharge the mortgage.The Maine Supreme Judicial Court, revisiting its decision in Pushard, determined that a lender cannot accelerate a loan balance or commence a foreclosure action without having the statutory and contractual right to do so. This effectively overruled the holding in Pushard that a lender could accelerate the note balance by filing a foreclosure action, even if they lacked the statutory right to do so.The court found that when a lender fails to prove it has issued a valid notice of default or that the borrower breached the contract, the parties are returned to the positions they held before the filing of the action. Therefore, a subsequent foreclosure action based on a different notice of default and a different allegation of default would assert a different claim and would not be barred.The court ultimately vacated the judgment requiring the Bank to discharge the mortgage and remanded the case for entry of a judgment in the Bank's favor on Finch's complaint. The judgment dismissing the Bank's unjust enrichment counterclaim was affirmed. The court concluded that while a lender must strictly comply with the statutory notice requirements in a foreclosure action, a borrower is not automatically entitled to a "free house" if the lender makes a mistake in the notice of default. View "Finch v. U.S. Bank, N.A." on Justia Law

In this case, Eliezer and Valeria Taveras (the appellants) appealed the decision of the United States District Court for the Middle District of Florida when it abstained from exercising federal jurisdiction over their case, pending the conclusion of a related state case under the Colorado River abstention doctrine. The Taveras' case centered around a dispute concerning the validity of a mortgage and an allegedly fraudulent promissory note secured by a parcel of real property they had purchased in 2006. The appellants contended that the district court improperly abstained from exercising jurisdiction and erroneously denied their motion to amend the complaint. The United States Court of Appeals for the Eleventh Circuit affirmed the decision of the district court. The court found that the district court did not abuse its discretion in abstaining under the Colorado River doctrine as the federal and state proceedings involved substantially similar issues and parties. It also found that the district court properly denied the Taveras' motion to amend the complaint because the proposed amendments would not have changed the outcome of the abstention analysis. View "Taveras v. Bank of America" on Justia Law

Taptelis borrowed to purchase the property and executed a Deed of Trust (subsequently recorded) for the benefit of MERS. Taptelis defaulted on the loan. MERS executed an Assignment of Deed of Trust to Homeward. A Substitution of Trustee named Quality; Quality issued a Notice of Default and Election to Sell, asserting due diligence to contact Taptelis to assess his financial situation and explore options. Quality’s Notice of Trustee’s Sale, scheduled for December 4, 2020, was recorded in October.Taptelis challenged the foreclosure, alleging violation of the Homeowner Bill of Rights by filing the Notice while Taptelis had a loan modification application pending; failure to provide certain information before filing the Notice and submission of a declaration that was not based on reliable evidence; negligence; wrongful foreclosure; and violation of the Unfair Competition Law. Two days before the sale, Taptelis recorded a lis pendens.Quality’s Trustee’s Deed Upon Sale to Homeward was recorded. Homeward served notice to quit on Taptelis, who did not vacate. Homeward initiated an unlawful detainer suit. Reasoning that the unlawful detainer “can’t keep getting continued … for the other case,” the court concluded that Taptelis’s alleged loan modification application and lis pendens were irrelevant and awarded possession.The court of appeal reversed. Although recording a trustee’s deed is typically sufficient to raise a conclusive presumption of title under the sale as to a bona fide purchaser for value without notice, Homeward purchased the property subject to Taptelis’s recorded lis pendens. Taptelis was not allowed to assert his defenses in the unlawful detainer trial. View "Homeward Opportunities Fund I Trust 2019-2 v. Taptelis" on Justia Law

In 2002, the Defendant-appellee Carmela Hill (Hill) pursued counterclaims against U.S. Bank and its mortgage servicer Nationstar following bank's dismissal of its foreclosure action against Hill. A jury returned a verdict against bank on borrower's wrongful foreclosure claim and a verdict against the mortgage servicer on multiple claims including violations of the Oklahoma Consumer Protection Act (OCPA) and the Fair Debt Collection Practices Act (FDCPA). The trial court awarded attorney's fees and costs to Hill. The Bank and mortgage servicer appealed and Hill counter-appealed. The Oklahoma Court of Civil Appeals dismissed in part borrower's appeal and found neither the OCPA or the FDCPA was applicable. It reversed the attorney's fee award and reduced the amount of awarded costs. In addition, it reversed the wrongful foreclosure judgment against bank and affirmed the remainder of the judgment which concerned breach of contract and tort claims against the mortgage servicer. The Oklahoma Supreme Court dismissed that portion of Hill's appeal seeking review of the trial court's Category II punitive damages ruling; reversed Hill's wrongful foreclosure judgment against U.S. Bank; reversed the OCPA portion of the judgment against Nationstar; affirmed the FDCPA portion of the judgment against Nationstar, including the $1,000.00 award under the FDCPA; reversed the award of attorney's fees and remanded the matter to the trial court to determine a reasonable attorney's fee consistent with the Court's opinion; and reversed $1,223.39 of the costs awarded to Hill. The remainder of the judgment was affirmed. View "U.S. Bank National Assoc. v. Hill" on Justia Law

Plaintiffs purchased a residence and obtained a $1 million loan, memorialized by a note secured by a deed of trust. Years later, the property was sold through a nonjudicial foreclosure. Plaintiffs, after two prior federal suits were dismissed without prejudice, filed this state lawsuit for wrongful foreclosure, against the Buyers, and Lenders. Lenders successfully argued the action was barred by res judicata (claim preclusion), based on those dismissals; under Federal Rule 41(a)(1)(B), the “two dismissal rule,” the dismissal of the second federal suit was “an adjudication on the merits.”The court of appeal concluded the voluntary dismissal of the second federal lawsuit was not a final “adjudication on the merits” that barred the filing of this case in state court. The two-dismissal rule of Rule 41(a)(1)(B) applies when there is a voluntary dismissal in state or federal court, a second voluntary dismissal in federal court, and the subsequent filing of an action in the same federal court where the second suit was dismissed. Under California law, a plaintiff’s voluntary dismissal without prejudice of a prior action is not a final judgment on the merits that bars a subsequent suit. California does not prohibit a plaintiff from filing dismissals without prejudice in successive actions. The rule is inapplicable to this state court lawsuit alleging only state-law claims. The court nonetheless affirmed, concluding that the challenges to the foreclosure lack merit. View "Gray v. La Salle Bank" on Justia Law

The Supreme Court affirmed the judgment of the district court determining that a deed of trust on real property continued to encumber the property, holding that there was no error.LV Debt Collect, which acquired title to the subject property in 2013, filed this quiet title action in 2016 seeking a declaration that a home homeowners' association's foreclosure sale extinguished Bank of New York Mellon's (BNYM) deed of trust and that LV Debt Collect held an unencumbered ownership interest in the property. The district court granted summary judgment for BNYM, determining that the deed of trust continued to encumber the property. The Supreme Court affirmed, holding that a loan secured by real property does not become "wholly due" for purposes of Nev. Rev. Stat. 106.240 when a notice of default is recorded as to the secured loan. View "LV Debt Collect, LLC v. Bank of N.Y. Mellon" on Justia Law

In a suit filed in 2014 under the Fair Housing Act, 42 U.S.C. 3601–19, Cook County claimed that the banks made credit too readily available to some borrowers, who defaulted, and then foreclosed on the loans in a way that injured the County. The County alleged the banks targeted potential minority borrowers for unchecked or improper credit approval decisions, which allowed them to receive loans they could not afford; discretionary application of surcharge of additional points, fees, and other credit and servicing costs above otherwise objective risk-based financing rates; higher cost loan products; and undisclosed inflation of appraisal values to support inflated loan amounts. When many of the borrowers could not repay, the County asserts, it had to deal with vacant properties and lost tax revenue and transfer fees.The Seventh Circuit affirmed summary judgment for the defendants. Entertaining suits to recover damages for any foreseeable result of an FHA violation would risk “massive and complex damages litigation.” Proximate cause under the FHA requires “some direct relation between the injury asserted and the injurious conduct alleged.” Cook County seeks a remedy for effects far beyond “the first step.” The directly injured parties are the borrowers, who lost both housing and money. The banks are secondary losers. The County is at best a tertiary loser; its injury derives from the injuries to the borrowers and banks. View "County of Cook v. Bank of America Corp." on Justia Law

Gary and Jeanette Merritt own four residential properties in Marysville, Washington. Between 2005 and 2007, the Merritts opened five home equity lines of credit (HELOCs), executing five five promissory notes (notes or HELOC agreements) in favor of USAA Federal Savings Bank. The Merritts secured these loans by executing deeds of trust on the properties with USAA as the beneficiary. In November 2012, the Merritts filed for Chapter 7 bankruptcy. The Merritts stopped making their monthly payments on the USAA loans prior to the November 2012 bankruptcy filing. USAA never accelerated any of the loans or acted to foreclose on the properties. In 2020, the Merritts filed four quiet title complaints seeking to remove USAA’s liens on each of the properties. Relying on Edmundson v. Bank of America, NA, 378 P.3d 272 (2016), the Merritts argued that the six-year statute of limitations to enforce the deeds of trust expired six years after February 12, 2013, the day before their bankruptcy discharge. In October 2020, the Merritts moved for summary judgment in each case. In November 2020, the trial court denied each of these motions. In February 2021, USAA moved for summary judgment in each case. USAA argued that the plaintiffs were not entitled to quiet title because the statute of limitations to foreclose on the deeds of trust would not begin to run until the maturity date of each loan, the earliest of which will occur in 2025. The Court of Appeals affirmed the trial court, holding that the the six-year statute of limitations had not begun to run on enforcement of the deeds of trust since none of the loans had yet matured. The issue this case presented for the Washington Supreme Court's review was whether a bankruptcy discharge triggered the statute of limitations to enforce a deed of trust. The Court affirmed the Court of Appeals and the trial court and hold that bankruptcy discharge did not trigger the statute of limitations to enforce a deed of trust. View "Merritt v. USAA Federal Savings Bank" on Justia Law

The property at issue in this case was a residential home that was purchased in 2007 by Shawn and Stephanie Kurtz. The house was located in a subdivision, which required property owners to pay homeowners association (HOA) assessments to petitioner Copper Creek (Marysville) Homeowners Association. If the assessments were not paid, then Copper Creek was entitled to foreclose on its lien. However, Copper Creek’s lien was “subordinate to any security interest perfected by a first deed of trust or mortgage granted in good faith and for fair value upon such Lot.” The Kurtzes stopped paying their HOA assessments and the home loan in varying times in 2010. The Kurtzes (in the process of divorcing) individually filed for bankruptcy. Neither returned to the house, nor did they make any further payments toward their home loan or their HOA assessments. However, there was no attempt to foreclose on the deed of trust. As a result, the house sat vacant for years and fell into disrepair. The Kurtzes remained the property owners of record and HOA assessments continued to accrue in their names. In 2018, Copper Creek recorded a notice of claim of lien for unpaid HOA assessments, fees, costs, and interest. In January 2019, Copper Creek filed a complaint against the Kurtzes seeking foreclosure on the lien and a custodial receiver for the property. The issue this case presented concerned the statute of limitations to foreclose on a deed of trust securing an installment loan after the borrower receives an order of discharge in bankruptcy. As detailed in Merritt v. USAA Federal Savings Bank, No. 100728-1 (Wash. July 20, 2023), the Washington Supreme Court held that a new foreclosure action on the deed of trust accrues with each missed installment payment, even after the borrower’s personal liability is discharged. Actions on written contracts are subject to a six-year statute of limitations. Therefore, the nonjudicial foreclosure action on the deed of trust in this case was timely commenced as to all unpaid installments within the preceding six years, regardless of the borrowers’ bankruptcy discharge orders. In addition, the Court held the trial court properly exercised its discretion to award fees as an equitable sanction for respondents’ litigation misconduct. View "Copper Creek (Marysville) Homeowners Ass'n v. Kurtz" on Justia Law