Justia Banking Opinion Summaries

Plaintiff (the customer) filed suit against State Street (the custodian bank), alleging in essence that it had a duty to notify him that the securities in his account were worthless. The district court granted State Street's motion to dismiss the contract claims on the ground that State Street had a merely administrative role in managing plaintiff's accounts and thus owed him no duty to guard against his investment advisor's misconduct. The district court concluded that plaintiff's negligence claims were barred by Florida's economic loss rule and plaintiff had not sufficiently alleged knowledge on the part of State Street in regards to the aiding and abetting claims. The court affirmed, holding that, under these facts, the custodian bank breached no duty, contractual or otherwise, by accepting on behalf of its customer securities that later turn out to be fraudulent and listing those securities on monthly account statements issued to the customer. Plaintiff's allegations failed to state claims for breach of contract; plaintiff failed to establish that State Street owed him an independent duty to monitor the investments in his account, verify their market value, or ensure they were in valid form; therefore, he failed to state valid negligence claims; plaintiff's allegations were insufficient to state a claim for aiding and abetting; and plaintiff's claims for breach of fiduciary duty and negligent misrepresentation also failed. View "Lamm v. State Street Bank and Trust" on Justia Law

Plaintiff and other checking account customers filed suit against the Bank for allegedly charging excessive overdraft fees in breach of their account agreement. The district court denied the Bank's renewed motion to compel arbitration. The court concluded that state law applied when courts determined whether a valid arbitration agreement is in effect, and the Federal Arbitration Act's, 9 U.S.C. 1 et seq., presumption did not; under North Carolina law, the Bank Agreement was entirely superseded, and the arbitration agreement in that agreement therefore became ineffective; the district court properly looked to the PNC Agreement to determine whether the parties agreed to arbitrate their disputes; under North Carolina law, the PNC Agreement's silence was insufficient to form such an agreement; based on the terms of the agreement, the PNC Agreement applied retroactively; and because the agreement governing the dispute at hand did not permit the Bank to compel arbitration, the district court properly denied the motion. Accordingly, the court affirmed the judgment of the district court. View "Dasher v. RBC Bank (USA)" on Justia Law

Plaintiff filed suit against her mortgage lender, Wells Fargo, alleging that Wells Fargo breached the mortgage-loan contract and violated extracontractual duties by requiring her to have more flood insurance than the amount set by federal law. At issue was whether a covenant included in all contracts for home mortgage loans guaranteed by the FHA unambiguously permitted mortgage lenders to require their borrowers to obtain flood insurance beyond the amount the agency required. The court concluded that the covenant unambiguously made the federally required flood-insurance amount the minimum, not the maximum, the borrower must have. Accordingly, plaintiff could not prevail on her claims against Wells Fargo and the court affirmed the district court's dismissal of the complaint for failure to state a claim. View "Feaz v. Wells Fargo Bank, N.A., et al." on Justia Law

This interlocutory appeal arose from an action filed by the FDIC, as receiver for Integrity Bank, against former Bank directors and corporate officers (defendants). The FDIC sought to recover losses that the Bank suffered as a result of defendants' alleged negligent conduct. The court certified questions of state law regarding the standard of care established in O.C.G.A. 7-1-490 and Georgia's business judgment rule to the Supreme Court of Georgia. Because the FDIC has failed to demonstrate the existence of an established and long-standing common law rule barring defendants' affirmative defenses, and because the court must decline to create a barring rule, the FDIC was unentitled to partial summary judgment. Accordingly, the court affirmed in part and certified questions in part. View "FDIC v. Skow, et al." on Justia Law

The FDIC, as receiver for the Bank, challenged the judgment of the lower courts that the tax sharing agreement between NetBank, the parent company, and its subsidiary, Bank, established a debtor-creditor relationship between the parties and awarding the tax refund to the bankruptcy estate of NetBank. The court reversed and remanded with instructions to enter judgment in favor of the FDIC, concluding that the parties to the tax sharing agreement in this case intended to create an agency relationship rather than a debtor-creditor relationship with respect to IRS refunds attributable to the Bank. View "FDIC v. Zucker" on Justia Law

Plaintiffs each filed suit against Darby Bank and various real estate developers and contractors (collectively, the Drayprop Defendants) in state court alleging negligent misrepresentation, fraud, beach of contract, and breach of warranty. Subsequently, the FDIC was appointed receiver of Darby Bank. In consolidated appeals, plaintiffs challenged the denial of their motions for remand to state court after the FDIC removed to federal court, the district court's grant of summary judgment to the FDIC on federal claims, and the district court's refusal to exercise supplemental jurisdiction over remaining state law claims against other defendants. The court concluded that the district court properly granted summary judgment to the FDIC on plaintiffs' claims against Darby Bank. The court concluded, however, that the district court improperly dismissed the remaining claims against the non-FDIC defendants because 12 U.S.C. 1819(b)(2)(A) operated to create original jurisdiction over those claims. Therefore, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Lindley v. FDIC, et al." on Justia Law

This case involved the allocation of tax refunds pursuant to a Tax Sharing Agreement (TSA) between two members of a Consolidated Group, the parent corporation (the Holding Company), and one of its subsidiaries (the Bank), the principal operating entity for the Consolidated Group. At issue on appeal was whether the Bankruptcy Court erred in declaring the tax refunds an asset of the bankruptcy estate. The court concluded that the relationship between the Holding Company and the Bank is not a debtor-creditor relationship; when the Holding Company received the tax refunds it held the funds intact - as if in escrow - for the benefit of the Bank and thus the remaining members of the Consolidated Group; the parties intended that the Holding Company would promptly forward the refunds to the Bank so that the Bank could, in turn, forward them on to the Group's members; and in the Bank's hands, the tax refunds occupied the same status as they did in the Holding Company's hands - they were tax refunds for distribution in accordance with the TSA. Accordingly, the court reversed the Bankruptcy Court's judgment and directed that court to vacate it decision declaring the tax refunds the property of the bankruptcy estate and to instruct the Holding Company to forward the funds held in escrow to the FDIC, as receiver, for distribution to the members of the Group in accordance with the TSA. View "Zucker, et al. v. FDIC" on Justia Law

Plaintiffs filed suit against Chase under the Truth in Lending Act (TILA), 15 U.S.C. 1641(g), alleging that Chase did not comply with disclosure requirements when it did not inform them that it had been assigned an interest in their mortgage. The court concluded that the assignment was an "administrative convenience" within the meaning of section 1641(f) because the assignment allowed Chase to perform foreclosure, a requirement of servicing the loan. Accordingly, Chase was not subject to the disclosure requirements and the court affirmed the district court's grant of summary judgment in favor of Chase. View "Reed, Jr., et al. v. Chase Home Finance, LLC" on Justia Law

In a contract dispute related to the funding of the development of the Fountainebleau Resort in Las Vegas (the Project), Term Lenders appealed the district court's grant of summary judgment in favor of the Bank. The court concluded that under the Disbursement Agreement the Bank was permitted to rely on the Borrowers' certifications that the conditions precedent were satisfied unless it had actual knowledge to the contrary. The court also concluded that there remained genuine issues of material fact about whether the Bank had such knowledge and whether its actions amounted to gross negligence. The court affirmed the district court's denial of the Term Lenders' Motion for Partial Summary Judgment and the district court's interpretation of the Bank's obligations under the Disbursement Agreement. The court reversed, however, the district court's grant of summary judgment in favor of the Bank and the court remanded the case for further proceedings. View "Avenue CLO Fund, Ltd., et al. v. Bank of America, NA" on Justia Law

Plaintiff, as representative of her mother and the estate of her father, filed a breach of contract claim against Chase to recover the amount in her father's bank accounts plus interest and the redemption of the certificate of deposit, which her mother had assigned to her. Between 1966 and 1975, plaintiff's father had deposited money with a branch of Chase bank in Saigon and purchased a certificate of deposit payable to his wife. In anticipation of the fall of Saigon to the North Vietnamese army, Chase began evacuating its bank personnel in April 1975. Without giving notice to its depositors, Chase then closed its Saigon branch. The court held that plaintiff's claims were time-barred under New York law because the suit was not brought within six years of the bank's closure. Accordingly, the court affirmed the district court's order granting Chase's motion to dismiss the complaint for failure to state a claim. View "Nguyen v. JP Morgan Chase Bank, NA" on Justia Law