Justia Banking Opinion Summaries

Articles Posted in Trusts & Estates
by
The Supreme Court reversed the opinion of the circuit court affirming the district court's order liquidating a trust's assets, holding that the order was arbitrary, unreasonable, unfair, and unsupported by sound legal principles.J.P. Morgan Chase Bank, N.A., obtained a Jefferson District Court Court order that improperly directed the Bank to liquidate certain trust assets and pay them into the Jefferson Registry of Court. The circuit court affirmed the district court's action. The Supreme Court reversed, holding (1) the Bank violated its statutory and fiduciary duties by liquidating the trust's assets when the legislature has provided an adequate mechanism and remedy for the settlement and distribution of trust assets; and (2) as a remedy, the district court is to order an accounting and appropriate damages. View "Estate of Worrall v. J.P. Morgan Bank, N.A." on Justia Law

by
Plaintiff filed suit against PNC Bank and PNC Investments for mishandling an investment account that belonged to plaintiff and her deceased mother. The district court sua sponte ordered briefing on the probate exception to federal diversity jurisdiction, concluded that plaintiff was "attempting to circumvent the normal probate process by bringing an individual claim against PNC Bank," and dismissed the case. The district court also held that plaintiff had no standing to sue.The Eleventh Circuit reversed, concluding that neither the probate exception nor standing doctrine divests the district court of jurisdiction over this lawsuit. The court concluded that the district court erred in dismissing the case under the probate exception because it can adjudicate her claims for damages against PNC without probating her mother's will, administering the estate, or disposing of the estate's property. The court also concluded that plaintiff is the real party in interest and has standing to bring her claims. The court remanded for further proceedings. View "Fisher v. PNC Bank, N.A." on Justia Law

by
Six Delaware statutory Trusts acquired student loans, issued notes for the acquisitions, and pledged the student loans as collateral for the notes. This “securitization” works well when the students do not default. The Trusts initially did not provide for servicing delinquent loans; under a subsequent “Special Servicing Agreement,” U.S. Bank became the Indenture Trustee and the “Special Servicer” but allegedly failed to collect hundreds of millions of dollars in delinquent loans. The holders of the Trusts’ equity ownership interests hired an additional loan servicer, Odyssey, and submitted invoices from Odyssey for payment from the trust estate.The district court held that the Trust documents were not violated by hiring Odyssey and Odyssey’s invoices were payable. The Third Circuit reversed in part. Several provisions of the Odyssey Agreement violate the Trust documents by impermissibly transferring to the Owners of the Trusts rights reserved for the Indenture Trustee. The Odyssey Agreement supplements and modifies several provisions of the Trust documents, requiring consent not obtained from the Indenture Trustee. The court remanded for a determination of whether the Odyssey invoices are nonetheless payable, which may include reconsideration os a self-dealing issue. View "In re: National Collegiate Student Loan Trusts" on Justia Law

by
The administrator brought separate actions against Regions and Fidelity, alleging claims arising from the decedent's transfer of his entire retirement savings account to his sister before his death.The Eleventh Circuit held that the district court properly granted Fidelity's Rule 12(b)(6) motion regarding the Count III breach of contract and Count IV breach of fiduciary duty claims; vacated the district court's Rule 12(b)(1) dismissals of the Count II Georgia UCC claims in both complaints because those rulings were incapable of meaningful review; and affirmed the district court's dismissal of the Count I common law conversion and Count II common law negligence claims because they were preempted by Georgia Code 11-3-420. View "Estate of David Bass v. Regions Bank, Inc." on Justia Law

by
Winget created the Trust, retaining the right to revoke the Trust at any time and to receive income generated by the trust property during his lifetime. He also served as the trustee with broad powers. Venture (a company owned by Winget) sought a loan from Chase. Winget guaranteed the loan both in his individual capacity and as a representative of the Trust. Venture defaulted on the loan, Chase sued. During one of six previous appeals, the Sixth Circuit held that the guarantee agreement limited Winget’s personal liability to $50 million but did not limit the Trust’s liability. Winget paid Chase $50 million; the Trust has not satisfied its obligation and now owes $750 million. The Sixth Circuit affirmed that Chase could recover that money from the Trust property. Under Michigan law trusts can enter into contracts and satisfy their contractual obligations through the trust property. Creditors can sue to recover from the trust property, just like with any other contract. Under Michigan law and the trust agreement, Winget had the power to enter into contracts on behalf of the Trust. The court rejected Winget’s argument that he “owns” the trust property because he can revoke the Trust and pays taxes on the trust property and that Chase cannot take the property to satisfy the Trust’s obligation. The trust property would not be used to satisfy Winget’s personal liability but would be used to satisfy the Trust’s liability. View "JPMorgan Chase Bank, N.A. v. Winget" on Justia Law

by
The Supreme Court reversed the decision of the court of appeals affirming the district court's dismissal of Appellants' complaint against U.S. Bank on statute of limitations grounds, holding that Appellants' breach of fiduciary duty claim was timely.On January 24, 2017, Appellants filed their lawsuit, alleging breach of fiduciary duty and unjust enrichment. U.S. Bank moved to dismiss the claim, arguing that Appellants failed to satisfy the applicable six-year statute of limitations. In response, Appellants asserted that they had suffered no damages earlier than August 2012. The district court granted the motion to dismiss, concluding that Appellants could have raised their claims in April 2010. The court of appeals affirmed, concluding that "some damage" occurred on April 27, 2010. The Supreme Court reversed, holding that U.S. Bank failed to establish - based on the pleadings - that Appellants suffered "some damage" in the form of financial harm before August 2012, and therefore, the district court erred by granting the motion to dismiss. View "Hansen v. U.S. Bank National Ass'n" on Justia Law

by
Intervenors, financial institutions that held junior notes issued by trust defendant Soloso, appealed the district court's grant of summary judgment in favor of plaintiff, the senior noteholder of Lansuppe. Intervenors also appealed the district court's denial of their cross-motion for summary judgment and the dismissal of their cross-claims.The Second Circuit held that the district court erred in finding that section 47(b) of the Investment Company Act of 1940 does not provide a private right of action. However, the court agreed with the district court that Lansuppe has demonstrated that it is entitled to summary judgment ordering distribution of Soloso's assets according to the terms of the indenture and that Intervenors' cross‐claims failed. Accordingly, the court affirmed the district court's order distributing the assets of the trust according to the terms of the trust's governing indenture. View "Oxford University Bank v. Lansuppe Feeder, Inc." on Justia Law

by
The issue this case presented for the Mississippi Supreme Court's review centered on whether Appellant Marilyn Newsome's claims could survive summary judgment against Appellees, People’s Bank and Chris Dunn. The claims addressed the issuance of cashier’s checks by People’s Bank and Chris Dunn without Newsome's signature or approval, the conservatorship account holder. Victoria Newsome had settled a medical malpractice case, but she was unable to manage her affairs. The trial court appointed Newsome, Victoria's mother, as conservator. A trial court denied a request to purchase a home for Victoria, and instead, ordered that a house be built for her. In the interim, the trial court ordered a mobile home to be purchased. With the help of Dunn, a Bank employee, Newsome opened a checking account for the conservatorship with the Bank. When Newsome opened the conservatorship account, she signed a Deposit Agreement as the sole authorized signor on the account. Newsome testified that she did not have any discussions with the Bank about who would be authorized to sign on the account. The Deposit Agreement also provided that Newsome had thirty days to review her statements for errors or unauthorized activity. The estate attorneys prepared court orders for release of funds to pay for construction of the house; the trial court would in turn approve the orders, and the attorney would deliver the orders to the Bank for release of funds. The Orders did not provide any guidance, particularly whether cashier's checks could be issued to disburse the money. Despite frequent visits to the bank herself, Newsome allegedly never sought monthly accounting of the conservator account. Newsome filed suit, alleging the Bank and Dunn were liable for failing to require Newsome's signature on any checks negotiated on the conservatorship account. The Mississippi Supreme Court determined Newsome's case could indeed survive summary judgment, reversed the trial court in part, affirmed in part, and remanded for further proceedings. View "Newsome v. Peoples Bancshares" on Justia Law

by
The Trusts initiated before FINRA an arbitration proceeding against the eight individuals who had owned Banque Pictet as partners and others, including Pictet Overseas, seeking to recover losses from custodial accounts with Banque Pictet. Pictet Overseas and the Partners then filed an action in federal district court, seeking to enjoin the arbitration, contending that, even if Rule 12200 of the FINRA Code of Arbitration Procedure for Customer Disputes required Pictet Overseas to arbitrate certain claims before FINRA, it did not require Pictet Overseas or the Partners to arbitrate the Trusts' claims.The Eleventh Circuit affirmed the district court's ruling that the Trusts' claims were non-arbitrable and held that FINRA Rule 12200 did not require arbitration. In this case, the Trusts' claims did not arise in connection with Pictet Overseas' or the Partners' business activities. Therefore, the court affirmed the district court's order permanently enjoining the Trusts from arbitrating in a FINRA forum their claims against Pictet Overseas and the Partners. View "Pictet Overseas Inc. v. Helvetia Trust" on Justia Law

by
The SBA guaranteed a loan between a private bank and Michael Bensal's company, BCI. The private bank filed suit against BCI as the borrower and Bensal as a personal guarantor after BCI defaulted on the loan. The private bank recovered a default judgment and assigned that judgment to the SBA. Bensal later received an inheritance from his father's trust that he did not accept and, instead, disclaimed. Bensal's disclaimer of the inheritance legally passed his trust share to his two children and prevented creditors from accessing his trust share under California law. The SBA filed suit seeking to satisfy the default judgment. The court held that the Fair Debt Collection Practices Act (FDCPA), 28 U.S.C. 3301-3308, displaces California's disclaimer law. In this case, the court concluded that Bensal's disclaimer constitutes a transfer of property under the FDCPA, and California disclaimer law did not operate to prevent the SBA from reaching Bensal's trust share. The court also concluded that the portion of the default judgment based on the second loan, which was guaranteed by the SBA, was a debt within the meaning of the FDCPA. Accordingly, the court affirmed the judgment. View "SBA v. Bensal" on Justia Law