Justia Banking Opinion SummariesArticles Posted in Supreme Court of Texas
PNC Mortgage v. Howard
The Supreme Court reversed the judgment of the court of appeals concluding that a refinancing lender's failure to timely foreclose its property lien precluded the lender from seeking recourse from the borrowers' default through equitable subrogation, holding that a lender's forfeit of its lien does not preclude the lender's equitable right to assert a preexisting lien discharged with the proceeds from its loan.After Borrowers defaulted, Lender sought foreclosure of its lien and alternatively sought a judgment declaring its right to foreclosure of the underlying liens on the property through equitable subrogation. The trial court declared that Lender's lien was unenforceable. The court of appeals affirmed, thus rejecting Lender's assertion of an equitable right to enforce the liens. After the court of appeals issued its opinion, the Supreme Court decided Fed. Home Loan Mortgage Corp. v. Zepeda, 601 S.W.3d 763 (Tex. 2020). The Supreme Court reversed the portion of the judgment declaring Lender's equitable subrogation rights unenforceable, holding that the Court's opinion in Zepeda required reversal. View "PNC Mortgage v. Howard" on Justia Law
Compass Bank v. Calleja-Ahedo
The Supreme Court held that Plaintiff, rather than his Bank, must suffer the financial consequences of the complete draining of Plaintiff’s bank account by an identity theft through a series of fraudulent transactions.At issue was Tex. Bus. & Com. Code 4.406(c), which limits the liability of a bank when the customer fails to comply with his or her duties to examine the statement of account and notify the bank of any unauthorized payment. Rather than monitor his account as contemplated by the statute, for more than a year Plaintiff failed to look for missing bank statements or inquire about the status of his account. The court of appeals rendered judgment for Plaintiff, holding that the Bank neither sent the statements to Plaintiff nor made them available to him, and therefore, his statutory duties to examine the statements and report unauthorized transactions never arose. The Supreme Court reversed, holding (1) the Bank made the statements “available” to Plaintiff for purposes of section 4.406; and (2) under the circumstances, section 4.406 precluded Plaintiff’s attempt to hold the Bank liable for the losses. View "Compass Bank v. Calleja-Ahedo" on Justia Law
DeRoeck v. DHM Ventures, LLC
The Supreme Court reversed the decision of the court of appeals holding that a cause of action for acknowledgment of a debt must be “specifically and clearly” pleaded “in plain and emphatic terms” because this holding conflicts with Tex. R. Civ. P. 47(a), which provides that a pleading is “sufficient” if it gives “fair noice of the claim involved.”A Trust sued Defendants seeking payment on a debt. Defendants moved for summary judgment arguing that the Trust’s claims were barred by the statute of limitations because the Trust had not properly pleaded acknowledgment. The trial court agreed and granted summary judgment for Defendants. The court of appeals affirmed, concluding that while the Trust had raised acknowledgment in response to Defendants’ motion for summary judgment, it had failed to plead acknowledgement as a cause of action because it had not done so “specifically and clearly” and in “plain and emphatic terms.” The Supreme Court reversed and remanded, holding that the Trust provided fair notice to Defendants of its claim on their acknowledgment and thus satisfied Rule 47, and the court of appeals erred in requiring a higher standard. View "DeRoeck v. DHM Ventures, LLC" on Justia Law
Kyle v. Strasburger
This case arose from an allegedly forged home-equity loan. Plaintiff sued the lenders, bringing several claims, including statutory fraud and violations of the Texas Finance Code and Texas Deceptive Trade Practices Act. The trial court granted summary judgment for the lenders without stating its reasons. The court of appeals affirmed. The Supreme Court affirmed in part and reversed and remanded in part, holding that the court of appeals (1) properly affirmed summary judgment on Plaintiff’s constitutional forfeiture claim; and (2) erred in holding that Plaintiff’s remaining claims were barred on statute of limitations and waiver grounds. View "Kyle v. Strasburger" on Justia Law
Wood v. HSBC Bank USA, N.A.
In 2004, the Woods obtained a $76,000 home-equity loan secured by their homestead. Nearly eight years later, the Woods notified the note holder, HSBC, and loan servicer, Ocwen that the loan did not comply with the Texas Constitution because the closing fees exceeded 3% of the loan amount. Neither of the lenders attempted to cure the alleged defects. In 2012, the Woods sued, seeking to quiet title and asserting claims for constitutional violations, breach of contract, fraud, and a declaratory judgment that the lien securing the home-equity loan is void, that all principal and interest paid must be forfeited, and that the Woods have no further obligation to pay. The trial court granted the lenders summary judgment and the court of appeals affirmed, citing the statute of limitations. The Texas Supreme Court reversed in part.“No . . . lien on the homestead shall ever be valid unless it secures a debt described by this section[.]” TEX. CONST. art. XVI, § 50(c). This language is clear, unequivocal, and binding. Liens securing constitutionally noncompliant home-equity loans are invalid until cured and thus not subject to any statute of limitations. The Woods do not, however, have a cognizable claim for forfeiture. View "Wood v. HSBC Bank USA, N.A." on Justia Law
Garofolo v. Ocwen Loan Serv., L.L.C.
Garofolo took out a $159,700 home-equity loan. She made timely payments and paid off the loan in, 2014. Ocwen had become the note’s holder. A release of lien was promptly recorded in Travis County, but Garofolo did not receive a release of lien in recordable form as required by her loan’s terms. Garofolo notified Ocwen she had not received the document. Upon passage of 60 days following that notification, and still without the release, Garofolo sued, alleging violation of the home-equity lending provisions of the Texas Constitution and breach of contract. She sought forfeiture of all principal and interest paid on the loan. The federal district court dismissed. The Fifth Circuit certified questions of law to the Texas Supreme Court, which responded that the constitution lays out the terms and conditions a home equity loan must include if the lender wishes to foreclose on a homestead following borrower default, but does not create a constitutional cause of action or remedy for a lender’s breach of those conditions. A post-origination breach of terms and conditions may give rise to a breach-of-contract claim for which forfeiture can sometimes be an appropriate remedy. When forfeiture is unavailable, the borrower must show actual damages or seek some other remedy such as specific performance. View "Garofolo v. Ocwen Loan Serv., L.L.C." on Justia Law
Bank of America, N.A. v. Eisenhauer
Lorene and Harley Walter owned a certificate of deposit account with Bank of America. The account was a survivorship account and a payable-on-death account. After Harley died and while Lorene was still alive, the Bank distributed the funds in the account to Dwight Eisenhauer and Jo Ann Day, the named beneficiaries on the account, in equal sums. The Bank violated its deposit agreement with the Walters in doing so because these payments were made before Harley’s death. Eisenhauer, using his power of attorney, deposited his check into an account in Lorene’s name, making himself beneficiary upon her death. After Lorene died, Eisenhauer, as the independent executor of Lorene’s estate, sued the Bank for breach of the deposit agreement. The jury found that the Bank had failed to comply with the agreement but that the estate suffered no damages. The trial court subsequently granted judgment for Eisenhauer notwithstanding the jury’s verdict and rendered judgment for the amount that had been distributed to Day, plus interest, costs, and attorney fees. The court of appeals affirmed. The Supreme Court reversed, holding that the trial court erred in granting judgment notwithstanding the verdict to Eisenhauer, as the evidence supported the jury’s finding that the estate suffered no damages. View "Bank of America, N.A. v. Eisenhauer" on Justia Law