Justia Banking Opinion Summaries

Defendant appealed the order of the bankruptcy court granting a motion for summary judgment filed by the trustee of debtor's bankruptcy estate. The trustee sought, and the bankruptcy court entered, an order determining that defendant did not have a security interest in certain of debtor's personal property. The court held that the record supported the bankruptcy court's determination that Wells Fargo had the authority to terminate defendant's successor in interest's (NSB) financing statements. The court also affirmed on the basis that termination of the financing statements was unnecessary because NSB's security interest in the property was extinguished when Loan No. 7 was paid in full in September 2007.

Plaintiff brought a class action against the Bank, alleging that the Bank breached its contract by charging interest in excess of the rate specified in the promissory note. The court affirmed the district court's grant of the Bank's motion to dismiss where the district court correctly concluded that the relevant provisions were clear, did not conflict with one another, and adequately disclosed the interest to be charged.

Plaintiffs sued Countrywide Home Loans, Inc. under the Missouri Second Mortgage Loan Act (MSMLA), Mo. Rev. State. 408.231-.241, alleging, for a putative class, that Countrywide charged them unauthorized interest and fees in violation of section 408.233.1. The district court granted summary judgment for Countrywide and plaintiffs appealed. The court held that because interest accrued for the two days before plaintiffs receive the loan discount and settlement/closing fee as a result of the alleged MSMLA violations, plaintiffs have raised a material issue of fact as to whether the alleged violations caused their loss. The court also held that because the document processing/delivery fee was not included in section 408.233's exclusive list of authorized charges, it violated the MSMLA. The court further held that because the document processing/delivery fee violated the MSMLA, the prepaid interest Countrywide collected on plaintiffs' loan was an additional violation of the statute. Accordingly, the court reversed and remanded for further proceedings.

This case involved a fallout of a $3.65 billion Ponzi scheme perpetrated by Minnesota businessman Thomas J. Petters. Appellants, investment funds (collectively, Ritchie), incurred substantial losses as a result of participating in Petters' investment scheme. Ritchie subsequently sued two officers of Petters' companies, alleging that they assisted Petters in getting Ritchie to loan over $100 million to Petters' company. Ritchie's five-count complaint alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(a), (c)-(d), common law fraud, and tortious inference with the contract. The court held that the district court erred in concluding that Ritchie's action was barred by a Receivership Order. The court also rejected arguments challenging the sufficiency of Ritchie's pleadings in the common law fraud count and did not to address other arguments related to abstention, lack of causation, and absolute privilege. Accordingly, the court reversed the judgment of the district court and remanded for further proceedings.

Synoran and e-Pin (appellants) appealed from the district court's confirmation of an arbitration award in favor of Wells Fargo, which had prevailed on its claims for breach of contract and for misappropriation of trade secrets. Appellants maintained that the district court lacked jurisdiction to confirm the award, erred in confirming the award, and abused its discretion in denying their motion to amend or terminate a permanent injunction issued as part of the award. The court rejected appellants' claim that Wells Fargo was a citizen of both South Dakota and California and concluded that the district court did not err in determining that it had subject-matter jurisdiction over the action. The court also held that the district court did not err in determining that appellants had waived their right to challenge the award of injunctive relief; in declining to vacate the award on the grounds that the arbitration panel exceeded the scope of its arbitral mandate; and in confirming the award of attorneys' fees against e-Pin. The court further held that the district court did not abuse its discretion in denying the motion to terminate or amend the permanent injunction. Accordingly, the judgment was affirmed.

The Educational Credit Management Corporation (ECMC) appealed from the judgment of the bankruptcy court, later affirmed by the Bankruptcy Appellate Panel (BAP), which discharged the student loan debt of debtor under the "undue hardship" provision of 11 U.S.C. 523(a)(8). The court held that it was not clear error to consider debtor's financial condition from the date of discharge to the date debtor sought undue hardship relief. The court also held that there was no clear error in not calculating debtor's husband's part time income where debtor and her husband stipulated their adjusted gross income in 2007. Even when the payroll deductions were excluded, the expenses of the debtor and her dependents outstripped her available resources. Therefore, the court held that, in light of the overall circumstances, excepting debtor's student loan debt from discharge would impose an undue hardship on her.

Plaintiffs sued Chambers Bank of North Arkansas for fraudulent concealment, claiming that the Bank failed to disclose to plaintiffs certain information regarding a real estate development. At issue was whether the district court erred in granting summary judgment in favor of the bank on their fraudulent concealment claim. The court held that the district court properly found there to be insufficient evidence of special circumstances that obligated the bank to make disclosures to plaintiffs regarding their investment in the development. Therefore, the court affirmed the district court's grant of summary judgment in favor of the bank.

Plaintiff filed suit against, inter alia, U.S. Bank, N.A. (U.S. Bank) seeking to invalidate the foreclosure and sale of his home. Plaintiff alleged that the mortgage that the lender relied upon in foreclosing on his home was defective and therefore could not provide a valid basis for foreclosure under Minnesota law and that the lender violated the Truth in Lending Act (TILA), 15 U.S.C. 1601, et seq., by failing to provide required notice to plaintiff of his ability to cancel the transaction and by refusing to cancel the mortgage when plaintiff exercised his right to rescind the mortgage on those grounds. The court declined to reach plaintiff's Minnesota Statute 523.23 argument where plaintiff conceded he never cited to this provision to the district court at trial nor in his motion for new trial or amended verdict. The court also held that plaintiff's wife was authorized to receive the Notice of Right to Cancel on plaintiff's behalf; plaintiff cited to no evidence or legal authority that the second Notice of Right to Cancel was required under TILA; plaintiff had no standing to challenge the lender's failure to send the second notice to his former wife; and plaintiff had not overcome the rebuttable presumption of delivery of the required notice to him. Accordingly, the judgment of the district court was affirmed.

This case stemmed from the replevin actions filed by Klein Bank against debtors. Klein Bank appealed from the Orders of the Bankruptcy Court denying its motions to remand its replevin actions which had been removed from the state court to the bankruptcy court. In denying the motions, the Bankruptcy Court concluded that replevin actions were core proceedings. While this appeal was pending, the United States Supreme Court clarified that core proceedings were limited to those "arising under or arising in" a bankruptcy case. Based on that, the court now concluded that the matters involved in the replevin actions were not core proceedings. Accordingly, the court reversed and remanded to the Bankruptcy Court for further findings on the question of whether the court was required to abstain under 28 U.S.C. 1334(c)(2).

After appellant defaulted on her mortgage, Countrywide Home Loans (Countrywide) foreclosed on the property. Appellant filed suit, alleging that Countrywide violated Minnesota's Farmer-Lender Mediation Act (FMLA), Minnesota Statues 583.20-583.32, by failing to engage in mediation before foreclosure. At issue was whether the district court properly granted summary judgment in favor of Countrywide. The court affirmed the judgment and held that the record failed to create a genuine issue of material fact that the 6.21 acre parcel was "principally used for farming," as defined in the FMLA. The court also held that appellant failed to plead with particularity the circumstances constituting fraud, as required by Federal Rule of Civil Procedure 9(b) and thus, summary judgment in favor of Countrywide was appropriate.