Justia Banking Opinion Summaries

Defendant sells brokerage and investment products and services, typically to registered broker-dealers and investment advisers that trade securities for clients. One of its services, NetExchange Pro, an interface for research and managing brokerage accounts via the Internet, can be used for remote access to market dynamics and customer accounts. A firm may make its clients' personal information, including social security numbers and taxpayer identification numbers, accessible to end-users in NetExchange Pro. Some of defendant's employees also have access to this information. Plaintiff, a brokerage customer with NPC, which made its customer account information accessible in NetExchange Pro, received notice of the company's policy and filed a putative class action, alleging breach of contract, breach of implied contract, negligent breach of contractual duties, and violations of Massachusetts consumer protection laws. The district court dismissed. The First Circuit affirmed. Despite "dire forebodings" about access to personal information, plaintiff failed to state any contractual claim for relief and lacks constitutional standing to assert a violation of any arguably applicable consumer protection law.

Peoples Federal, a community bank that operates exclusively in Eastern Massachusetts, was chartered in 1888 and became a federally insured savings and loan in 1937. It has used the term "Peoples" in its name and service marks since 1937 and claims to be the only continuous user of the mark for banking services in Eastern Massachusetts since that time. It owns six Massachusetts registrations for its marks. Defendant, People's United, was founded in 1842 in Connecticut, and has used the word "People" in its name for at least 80 years. After acquiring branches in Massachusetts, defendant re-opened them under the name "People's United Bank." Peoples Federal filed suit alleging trademark infringement, trademark dilution, and unfair competition under the Lanham Act, 15 U.S.C. 1125(a), and Massachusetts statutory and common law. The district court denied a preliminary injunction. The First Circuit affirmed, finding that the court properly weighed plaintiff's likelihood of success on the merits, likelihood of irreparable harm, the balance of relevant equities, and the effect of the court's action on the public interest.

Plaintiff asserted a right to rescind a mortgage loan on the ground that the disclosures made at closing did not comply with the Massachusetts Consumer Credit Cost Disclosure Act, Mass. Gen. Laws ch. 140D, 10, the equivalent of the Truth in Lending Act, 15 U.S.C. 1601. The bankruptcy court dismissed for failure to state a claim, finding that the disclosures complied with the law, and waiver of the right to rescind the transaction. The district court affirmed the judgment for failure to state a claim, but did not reach the issue of waiver. The First Circuit affirmed, holding that plaintiff knowingly and voluntarily waived his rights in exchange for a reduction in the interest rate. The court also found that the disclosures at issue were not deficient.

Hackers breached the security of the database for the grocery store where plaintiffs shop. The district court determined that plaintiffs failed to state a claim under Maine law for breach of fiduciary duty, breach of implied warranty, strict liability, and failure to notify customers. Although the court concluded that plaintiffs adequately alleged breach of implied contract, negligence, and violation of the unfair practices portion of the Maine Unfair Trade Practices Act, it dismissed those claims because alleged injuries were too unforeseeable and speculative to be cognizable under Maine law. The First Circuit affirmed in part, but reversed dismissal of the negligence and implied contract claims. Mitigation damages are available under those claims, for card replacement costs and credit insurance.

Defendant was prohibited from possessing a computer or accessing the internet while on home confinement, after being released from prison following a 2005 plea of guilty to wire, mail, and bank fraud. He nonetheless used the internet for a check-kiting scheme and, in 2010, was charged under 18 U.S.C. 1344 (bank fraud), 18 U.S.C. 1341 (mail fraud) and with escape. He was found guilty and sentenced to concurrent terms of 80 months, followed by supervised release with limits on internet and computer use. The First Circuit affirmed, first holding that a jury could reasonably infer that the banks were FDIC-insured at the time of the offenses and that defendant used the mail as part of his schemes. The special conditions imposed on release are reasonably related to the goals of supervised release. The calculation of loss, including a fraudulent $1.4 million check that did not result in any actual loss, was not clear error.

Plaintiff obtained a mortgage in 1999 and refinanced four times over six years, each time pulling out more equity. The last refinancing and a mortgage obtained for a new house, (the first house was for sale), were based on documents inaccurately describing plaintiff's income and position. Plaintiff, who claimed to be unaware of the inaccurate information, defaulted on payments. The district court rejected his suit, alleging a violation of Mass. Gen. Laws ch. 93A (unfair or deceptive practices), unjust enrichment, a violation of the implied covenant of good faith and fair dealing, negligence, and entitlement to rescission of the loan and an injunction ordering the removal of the loan from his credit history. The First Circuit affirmed dismissal of the covenant claim relating to one loan, the negligence claim, and the rescission/equitable relief claim, but vacated dismissal of the other claims. Whether plaintiff or the loan officer deliberately falsified the loan application and whether default was foreseeable are questions of fact suitable for trial.

Homeowners fell behind on their mortgage and the bank initiated foreclosure. The homeowners filed a Chapter 13 bankruptcy. The judge denied their motion for rescission of the mortgage and for damages, based on noncompliance with state laws. The district court and First Circuit affirmed. The homeowners signed right-to-cancel forms required under the Massachusetts Consumer Credit Cost Disclosure Act, modeled after the federal Truth in Lending Act (15 U.S.C. 1635); technical flaws in the form cannot serve as a basis for invalidating a transaction five years later. Similarly, a slight delay in receipt of a required high-cost loan disclosure did not justify rescission five years later.