Justia Banking Opinion Summaries

Karla Brown brought a lawsuit against Deutsche Bank and others seeking rescission of a note and first mortgage securing that note, alleging that she was the victim of a predatory lending scheme. The mortgage was originated by Deutsche Bank's predecessor in interest in connection with the purchase of Brown's home. Deutsche Bank requested that First American Title Insurance Company defend Deutsche Bank's mortgage interest pursuant to the terms of its title insurance policy. First American refused coverage, claiming the lawsuit did not trigger its duty to defend because Brown was claiming she was misinformed as to the terms of the note rather than challenging that she granted the mortgage. Deutsche Bank subsequently brought this action seeking a judgment declaring First American had a duty to defend it in Brown's lawsuit. The superior court granted summary judgment in favor of First American. The Supreme Court affirmed, holding that the allegations in Brown's complaint did not trigger First American's duty to defend because the complaint's claims were not specifically envisioned by the terms of the title insurance policy. View "Deutsche Bank Nat'l Ass'n v. First Am. Title Ins. Co." on Justia Law

In this case, the circuit court entered a final summary judgment of foreclosure against Borrowers regarding their shared residence. One month before the scheduled judicial foreclosure sale, Chase Home Finance, Borrowers' mortgagee, offered Borrowers an opportunity for the reinstatement of their mortgage and dismissal of the foreclosure action conditioned on Borrowers making a lump-sum payment no later than May 6. Borrowers sent a cashier's check for the full reinstatement amount to Chase's counsel, who received the cashier's check on May 4. However, Chase's counsel failed to arrange for the cancellation of the foreclosure sale, and the sale took place as scheduled. Borrowers filed a motion to vacate the sale. The third-party purchaser (Purchaser) intervened. The trial court granted Borrowers' motion and ordered all funds paid by Purchaser to be returned. The final judgment of foreclosure was also vacated and the foreclosure case dismissed. Purchaser appealed, and the court of appeal affirmed. The Supreme Court affirmed, holding (1) Borrowers alleged and proved adequate equitable grounds for the trial court to set aside the judicial foreclosure sale and dismiss the foreclosure action; and (2) proof of an inadequate bid price is not a necessary requirement to set aside a judicial foreclosure sale. View "Arsali v. Chase Home Fin., LLC" on Justia Law

Signature Properties executed a promissory note payable to JPMorgan Chase Bank. The loan was secured by a mortgage and security interest on Signature's commercial property. The loan was guaranteed by Signature's members (guarantors). JPMorgan later assigned Signature's note and mortgage to LaSalle Bank National Association. A pooling agreement established a mortgage back security wherein LaSalle was identified as trustee and paying agent and J.E. Robert Company as loan servicer for Signature's mortgage loans. After Signature ceased to make payments on the loan, J.E. Robert brought a foreclosure action against Signature. LaSalle subsequently assigned the note to Shaw's New London, and Shaw's was substituted as the plaintiff. The guarantors were then added as defendants. The trial court ordered strict foreclosure of Signature's property and a deficient judgment against the defendants. The Supreme Court affirmed, holding that the trial court properly determined that, under the facts of this case, J.E. Robert had standing to institute this foreclosure action in its own name. The Court rejected the remainder of the defendants' claims. View "J.E. Robert Co. v. Signature Props., LLC" on Justia Law

The Palomars filed for bankruptcy under Chapter 7. The trustee reported that the estate contained nothing that could be sold to obtain money for unsecured creditors. A discharge of dischargeable debts was entered and the bankruptcy case was closed. The day before the trustee issued his report, the Palomars had filed an adversary action against the bank that held a second mortgage on their home. The balance on their first mortgage, but the house was valued at $165,000. The Palomars argued that the second mortgage should be dissolved under 11 U.S.C. 506(a). Deciding that the adversary action was meritless, the judge refused to reopen the bankruptcy proceeding. The district court and Seventh Circuit affirmed, noting that the only debts normally extinguished are those for which a claim was rejected. The bank made no claim; this was a no-asset bankruptcy. Failing to extinguish the lien only deprives the debtors of the chance to make money should the value of their home ever exceed the balance on the first mortgage. View "Palomar v. First Am. Bank" on Justia Law

In each of these consolidated cases, JPMorgan attempted to use the Arkansas Statutory Foreclosure Act (SFA), Ark. Code Ann. 18-50-101 - 18-50-117, to foreclose on the borrower's home. At issue was whether a national banking association chartered by the Office of the Comptroller of the Currency but not registered to do business with the Arkansas Secretary of State or the Arkansas Bank Department could use the non-judicial foreclosure procedure provided by the SFA. The court concluded that an entity could be authorized to do business in Arkansas for SFA purposes pursuant to either state or federal law. In JPMorgan's case, federal law provided such authorization. Therefore, the district court correctly concluded that JPMorgan was authorized to do business in Arkansas and could avail itself of the benefit of the SFA. Accordingly, the court affirmed the judgment. View "JPMorgan Chase Bank v. Johnson, et al." on Justia Law

Defendants executed guaranty contracts in order to secure financing to run their business operations. Bank subsequently commenced foreclosure proceedings on the business. Afterwards, Bank commenced an action against Defendants seeking payment under the guaranty contracts. Defendants, in response, alleged several counterclaims and affirmative defenses. Bank filed a motion for summary judgment, arguing that Defendants' counterclaims and affirmative defenses were derivative of the corporation, and therefore Defendants lacked standing to raise them. Bank also asserted that Defendants' affirmative defenses were barred because they were subject to claim preclusion. The circuit court ultimately granted summary judgment to Bank. The court of appeals affirmed, concluding that Defendants' counterclaims and affirmative defenses were derivative and that they lacked standing to raise them in this action. The Supreme Court affirmed, holding (1) Bank was entitled to summary judgment dismissing all of Defendants' counterclaims, as each of the counterclaims was derivative; (2) Defendants' affirmative defenses did not defeat Bank's demand under the guaranties for payment; and (3) the circuit court correctly granted summary judgment to Bank because Defendants failed to raise any genuine issue of material fact showing payment was not due. View "Park Bank v. Westburg" on Justia Law

Petitioners executed a promissory note secured on a mortgage on their residence from a California corporation. The mortgage stated that Respondent, Mortgage Electronic Registration Systems, listed as mortgagee and nominee, held legal title to the interests granted by Petitioners in the mortgage. After Petitioners failed to make payments pursuant to the terms of the note, Respondent, acting as nominee, filed a complaint against Petitioners seeking foreclosure of the mortgage and sale of the property. The circuit court granted Respondent's motion for summary judgment and entered a foreclosure judgment. Petitioners' property was then sold to Respondent. The circuit court confirmed the sale despite Petitioners' assertion that Respondent lacked standing to bring the foreclosure action. The intermediate court of appeals affirmed. The Supreme Court affirmed, holding that Petitioners were precluded from raising the issue of Respondent's standing where (1) a standing objection is not unique to a confirmation of sale proceeding from which Petitioners appealed; and (2) Petitioners' failure to appeal the foreclosure judgment barred challenges to Respondent's standing under the doctrine of res judicata. View "Mortgage Elec. Registration Sys., Inc. v. Wise" on Justia Law

Appellant Alstep, Inc. obtained a multimillion dollar loan from Appellee State Bank and Trust Company (SB&T) for the purchase of a sandwich shop, gas station and liquor store. Alstep fell behind on loan payments, and the Bank conducted a non-judicial foreclosure. SB&T was the highest bidder at the sale, and applied the proceeds of that sale to Alstep's loan balance. There was still a deficit. The Bank demanded immediate possession of the property, but Alstep refused. Despite receiving notice of a temporary restraining order, Alstep continued to operate the gas station and otherwise make use of the property. SB&T filed and served Alstep with an emergency motion for appointment of a receiver. SB&T cited three grounds in support of its motion: (1) that Alstep converted rent from the property's tenant (the sandwich shop) that should have gone to SB&T; (2) that Alstep was depleting the property that served as collateral for its debt; and (3) that SB&T needed to take control of the property to guard against its potential liability under state and federal environmental regulations as the owner of the gas station. Appellant never filed a response to the motion, but ultimately challenged the trial court's appointment of a receiver. The Supreme Court held that the trial court had broad discretion in deciding whether to appoint a receiver, and found no abuse of that discretion. View "Alstep, Inc. v. State Bank & Trust Co." on Justia Law

Plaintiffs, who stopped paying their mortgage in April 2010, filed this try title action challenging the authority of Defendant U.S. National Bank Association to foreclose on their home pursuant to a March 2011 assignment of the mortgage loan on Plaintiffs' home. U.S. Bank moved to dismiss the complaint for failure to state a claim under the Massachusetts try title statute. The federal district court granted the motion, holding (1) a petitioner must allege that an adverse claim clouds his record title to state a claim under the try title statute; and (2) U.S. Bank's efforts to foreclose on Plaintiffs' home did not amount to an adverse claim under Massachusetts law. The First Circuit Court of Appeals affirmed, holding (1) Petitioners were required to allege an adverse claim to withstand U.S. Bank's motion to dismiss; and (2) the allegations in the petition did not satisfy the Fed. R. Civ. P. 12(b)(6) standard. View "Lemelson v. U.S. Bank Nat'l Ass'n" on Justia Law

Plaintiffs appealed the district court's dismissal of their first amended complaint and the district court's denial of leave to further amend their complaint. Plaintiffs claimed that defendants improperly initiated non-judicial foreclosure proceedings after plaintiffs failed to comply with the mortgage obligations financing their residence. Because the provisions of the deed of trust foreclosed the pleading of a plausible "show me the note" claim by plaintiffs, the district court appropriately dismissed this claim; the district court properly dismissed plaintiffs' claims premised on the unauthorized appointment of a successor trustee and/or the lack of proof of ownership of the note where these claims lacked legal and factual plausibility; because Arizona law countenances the trustee sale as conducted, plaintiffs failed to allege any plausible claims premised on the PEB Report or the UCC; plaintiffs' constitutional challenges of A.R.S. 33-811(b) were rejected by the court; plaintiffs' fraud and misrepresentation claims were barred by A.R.S. 12-543(3); and denial of leave to amend was within the district court's discretion. Accordingly, the court affirmed the judgment. View "Zadrozny, et al. v. Bank of New York Mellon, et al." on Justia Law