Justia Banking Opinion Summaries

In the recent decision in Bates v. Cohn, the Court of Appeals reiterated that a borrower challenging a foreclosure action must ordinarily assert known and ripe defenses to the conduct of the foreclosure sale in advance of the sale. After the sale, the borrower is ordinarily limited to raising procedural irregulatories in the conduct of the sale, although the Court left open the possibility that a borrower could assert a post-sale exception that the deed of trust was itself the product of fraud. This case arose out of the foreclosure of a deed of trust for the residence of Darnella and Charles Thomas by Jeffrey Nadel and others. In apparent hope of fitting their post-sale exceptions within the question left open in Bates, the Thomases alleged certain defects in the chain of title of the note evidencing their debt and characterized them as a "fraud on the judicial system." The Court of Appeals affirmed, holding that the alleged defects did not establish that the Thomases' deed of trust was the product of fraud. View "Thomas v. Nadel" on Justia Law

Regions Bank, in its fiduciary capacity as trustee or cotrustee of various trusts, Delores Ancell, and David Puckett filed two permissive appeals, pursuant to Rule 5, Ala. R. App. P., to challenge the Jefferson Circuit Court's orders denying the trustees' motions to dismiss in part Ernest Kramer's and Kenyon R. Kirkland's complaints filed against the trustees. In his complaint, Kramer alleged that the trustees' management of the assets held by the Kramer revocable trust constituted a breach of fiduciary duty, negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of the Alabama Securities Act. Finding that the trustees failed to support their argument with relevant legal authority, the Supreme Court affirmed the trial court's orders. View "Regions Bank v. Ernest Kramer " on Justia Law

As part of a retention package, the bank purchased a split dollar life policy for plaintiff's trust with cash value of more than $662,000. The bank paid part of the premiums and had a senior interest in the policy to the extent of those premiums. To safeguard this interest, the trust assigned the policy to the bank as collateral. The bank paid $421,890 of the premiums. The trust interest was about $240,000. In 2009, the bank failed and was placed under FDIC receivership. The Insurer surrendered the entire cash value of the policy to the FDIC. The trustee demanded return of the value of the policy; the insurer refused. The trustee first contacted the FDIC receiver after expiration of the 90-day period for claims under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(13)(D), although he received notice 12 days before expiration of the period. The district court dismissed for lack of jurisdiction. The Seventh Circuit affirmed. It would be possible for a claim to arise so close to the bar date as to deprive a claimant of due process, but this case did not present that situation. View "Campbell v. Fed. Deposit Ins. Corp." on Justia Law

Husband obtained a purchase-money mortgage from Bank to invest in commercial real estate. Wife's signature was forged in executing the purchase-money mortgage. After Husband's death, Bank attempted to foreclose its mortgage, but Husband's Estate and Wife asserted Wife's fraudulent signature voided the mortgage. The district court (1) granted Bank summary judgment, concluding its purchase-money mortgage was superior to Wife's statutory dower interest and the Estate's other debts and charges; and (2) ordered any excess sale proceeds to be paid to the Estate. The court of appeals (1) affirmed the award of summary judgment; but (2) reversed the district court's determination that the foreclosure sale surplus be paid to the Estate, instead holding that Wife's statutory dower interest took priority over the Estate's other debts and charges. The Supreme Court affirmed the court of appeals, holding that a surviving spouse's dower interest, codified in Iowa Code 633.211 as to nonhomestead real property, was not subject to the debts and charges of the Estate of the spouse who died intestate.

Appellants Eleanor and Robert Reed, Diane Martin and Meredith Farmer petitioned the Supreme Court to challenge the Court of Civil Appeals' decision which upheld the trial court's determination regarding Appellee-Trustee JP Morgan Chase Bank's previously-adjudicated ability to draw on the trusts's principal. The trust in question named Appellant Eleanor Reed as beneficiary, and authorized payments of up to half of its income payable quarterly, for her support and well-being. In 1998, Reed filed a Petition for Instructions in district court in Tulsa County, requesting the court determine what distributions were permitted under the Trust. Specifically, Reed sought instructions for the co-trustee, Bank One Trust Company, N.A., to pay certain of Reed's expenses from the Trust's principal. In 2007, Reed and three of her four children, Robert Reed, Diane Martin and Meredith Farmer, filed suit to modify the terms of the trust to allow Appellee JP Morgan Chase to make payments from the remaining half of the trust's principal. Appellants stated that Reed was "an incapacitated person afflicted with Alzheimer's disease, and her condition constitutes an emergency condition which will necessitate her being housed in a nursing home. She is wheel-chair bound, 84 years old, and in precarious health." Appellants maintained that Testator would have wanted Reed, his only child, to have the use of the remaining Trust funds to provide for her well-being. Appellees objected to the suit, arguing that the Testator's intent regarding the payment from principal had been determined in a 1998 Order and, as such, the claims asserted in the Amended Petition are barred by the doctrine of res judicata and collateral estoppel. Upon review, the Supreme Court saw no connection between the 1998 Order and the issue presented to it on appeal: "[w]hile we agree that the subject matter, the parties, and the capacity of the parties remain the same, we cannot agree that the cause of the action is the same as that in the 1998 matter. The focus of the 1998 lawsuit was to provide instructions to the trustee to make payments from half of the Trust corpus on behalf of Reed. This payment was expressly provided for in the Trust instrument. In the present action, Appellants [sought] due to an unforeseen medical emergency, to modify the express terms of the Trust and to show that Testator would have intended Reed's present needs be cared for even if it meant invading the remaining half of the Trust corpus." The Court vacated the appellate court's opinion in this matter and remanded the case back to the trial court for determination of whether modification should be allowed under the terms of the trust.

In 1990, Roy Sharpe executed an inter vivos trust and a will containing a testamentary trust. According to both trusts, Sharpe preferred his attorney, Charles Brown, to be employed to provide legal advice regarding trust administration and to choose a successor trustee if the need arose. Bank of America eventually served as trustee of both trusts. In 2009, Brown filed a petition to change trustees, asserting that in violation of the terms of the trusts, Bank of America intended to manage the trusts from a location outside the boundaries of Little Rock. The circuit court granted the motion. The Supreme Court reversed, holding that Brown lacked standing to bring the petition. Because the trusts did not provide a means for removing a trustee, Brown obtained no authority from the trusts to bring an action to change the trustees and had no interest in the trusts that granted him standing and permitted him to enforce the terms of the trusts. Remanded with directions to dismiss the case.

As part of the distribution of property following the dissolution of Kenneth Treiger and J’Amy Lyn Owens’ marriage, a home belonging to them (the Maplewood property) was sold, and, pursuant to a trust agreement, the proceeds were deposited in a trust account. Bank of America NA (the Bank), which had obtained a writ of attachment on the Maplewood property, filed a declaratory judgment action to determine each party’s rights to the proceeds. This presented two issues for the Supreme Court's review: (1) to determine whether the “Supplemental Decree of Dissolution” (Supplemental Decree) established a lien on the Maplewood property in favor of Treiger; and (2) to determine whether various documents were valid judgments. Upon review, the Court concluded that the Supplemental Decree established an equitable lien on the Maplewood property in favor of Treiger in the amount of one-half of the proceeds of the court-ordered sale of the property. Furthermore, Documents "1375" and "13761" were valid judgments entitling Treiger to further awards but that Document "1370" was properly not given separate effect. Accordingly, the Court affirm in part and reversed in part the decision of the Court of Appeals.

Hastings State Bank sought to enforce a commercial guaranty against Miriam Misle in her capacity as trustee of the Julius Misle Revocable Trust. The bank claimed that Julius had signed a guaranty in favor of the Bank, which guaranteed debt owed by a limited liability company. The district court determined that Julius' trust was liable for up to $500,000 in principal on the commercial guaranty and granted partial summary judgment in favor of the bank. After a trial, the district court found in favor of the bank and entered judgment in the amount of $500,000. On appeal, the Supreme Court affirmed, holding (1) the district court did not err when it granted partial summary judgment in the bank's favor and denied Miriam's motion for summary judgment; and (2) the district court's factual determination that the trust was liable for the full amount of the guaranty, $500,000, was supported by the evidence and was not clearly wrong.

Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.

Appellee First Community Bank loaned $175,000 to Catherine Warbington and two Warbington family trusts, listing the property in the trusts as security. After Catherine died, the bank later filed a foreclosure complaint, asserting that payments were not being made on the loan and naming as defendants the unknown heirs of Catherine, the trusts, the trustee of the trusts, and others. Later, a foreclosure judgment was entered finding that the parties before the court had consented to the judgment and were indebted to the bank for the principal amount. The heirs and trusts then filed a motion to vacate the foreclosure, asserting (1) that the judgment was void by operation of law because Bert Warbington had not been personally served as trustee, and (2) Bert was not named individually in the complaint though he was a known heir and as such Ark. R. Civ. P 4 and due process required the bank name him as a party. The circuit court denied the motion. On appeal, the Supreme Court found (1) the circuit court did not clearly err in finding from the evidence that there was personal service and (2) that the circuit court did not err in finding that Bert was an unknown heir. Affirmed.