Justia Banking Opinion Summaries

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

On O’Sucha’s death, the property, in a land trust, was to be divided equally among her four children, including Lesko. In 2009, Lesko caused her mother to make her the sole beneficiary upon O’Sucha’s 2010 death and to grant her sole power of direction over the trust. Her siblings sued Lesko in state court for undue influence. While an appeal was pending, Lesko sought a loan from Howard Bank, using the property as collateral. Because of Lesko’s poor credit and the state court decision, Howard approved a loan only when Lesko transferred ownership of the property to her daughter, Amorous. Amorous later conveyed a mortgage to Howard, securing a $130,000 loan, which Howard recorded.On remand, the Illinois court entered a money judgment against Lesko and declared a constructive trust; it later conveyed all interests of Amorous and Lesko to the plaintiffs, who unsuccessfully demanded that Howard release the mortgage.Plaintiffs sued Howard in federal court, then sold the property for $700,000, and paid the mortgage balance. Howard unsuccessfully sought to dismiss the case. In an amended complaint, the plaintiffs asserted slander of title and unjust enrichment. The Seventh Circuit affirmed the dismissal of the case. Howard held a valid mortgage and did not publish a falsity by recording it. Howard was not required to release the mortgage and did not continue to publish a falsity, nor did it unjustly retain a benefit by not releasing the mortgage. View "Guerrero v. Bank" on Justia Law

The Supreme Judicial Court vacated the judgment of the district court dismissing Key Bank National Association's complaint for foreclosure because the debtor or the debtor's estate was a necessary party and was not participating in the action, holding that neither the debtor nor the debtor's estate was a necessary party to the action.The debtor borrowed money from KeyBank and executed a promissory note for the loan. After the debtor died intestate the property at issue passed by operation of law to the debtor's wife as a surviving joint tenant. After the note went into default the wife conveyed the property to a third party. Thereafter, embank filed a complaint for foreclosure of the property against the debtor's wife and estate, as well as third party. The trial court dismissed the action without prejudice, holding that either the debtor or his estate must be named as a necessary party to the foreclosure action. The Supreme Judicial Court vacated the dismissal, holding that because a foreclosure does not include a claim for a deficiency judgment and is therefore solely in rem in nature any mortgagor or successor in interest is a necessary party but a deceased debtor is not. View "KeyBank National Ass'n v. Keniston" on Justia Law

Plaintiff Niki-Alexander Shetty purchased a home that had been foreclosed upon by a homeowners association. The home, however, was still subject to a defaulted mortgage and deed of trust between the bank and the original borrower. Defendants, the bank and mortgage servicer, recorded a notice of default and scheduled a foreclosure sale. Shetty sought to cure the default and resume regular payments on the loan. Defendants, however, refused, insisting that, as a stranger to the loan, he was not entitled to reinstate it. Shetty sued for wrongful foreclosure, arguing he had the right to reinstate the loan pursuant to California Civil Code section 2924c. The trial court sustained a demurrer without leave to amend on the ground that Shetty did not have standing under the statute. The Court of Appeal disagreed with that interpretation of the statute and reversed the judgment as to all defendants except Mortgage Electronic Registration Services, Inc. (MERS), whom Shetty conceded had no liability. View "Shetty v. HSBC Bank USA, N.A." on Justia Law

The Supreme Court affirmed the conclusion of the court of appeals on remand that PNC Mortgage's foreclosure claim was time-barred, holding that there was no error.PNC, whose predecessor refinanced John and Amy Howards' original mortgage loans, did not initiate foreclosure proceedings until its claim to enforce its own lien was time-barred under the relevant statute of limitations. On appeal, the court of appeals concluded that the common-law doctrine of equitable subrogation did not provide PNC with an alternative means of disclosure. The Supreme Court reversed and remanded with instructions to address the Howards' claim that PNC's equitable subrogation claim was time-barred. On remand, the court of appeals concluded that the equitable subrogation claim was time-barred. The Supreme Court affirmed, holding that PNC's claim was time-barred. View "PNC Mortgage v. Howard" on Justia Law