Justia Banking Opinion Summaries

A South Carolina resident brought a lawsuit in federal court against a Michigan-based bank, alleging that the bank engaged in three improper practices related to overdraft and ATM fees. Specifically, the plaintiff claimed the bank assessed overdraft fees even when accounts had sufficient funds, charged multiple insufficient-funds fees for a single transaction, and imposed two out-of-network fees for a single ATM withdrawal. The plaintiff sought to certify nationwide classes for each alleged wrongful fee practice.The United States District Court for the District of South Carolina denied the plaintiff’s motion for class certification. The court relied on South Carolina’s “Door Closing Statute” (S.C. Code Ann. § 15-5-150), as interpreted by the Supreme Court of South Carolina in Farmer v. Monsanto Corp., to conclude that nonresidents whose claims did not arise in South Carolina could not be included in the class. As a result, the court found that the plaintiff could not satisfy the numerosity requirement of Federal Rule of Civil Procedure 23 and denied class certification. The plaintiff appealed this decision under Rule 23(f), and the United States Court of Appeals for the Fourth Circuit granted review.The United States Court of Appeals for the Fourth Circuit held that Federal Rule of Civil Procedure 23, as interpreted by the Supreme Court in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., directly conflicts with the Door Closing Statute’s additional requirements for class actions. The Fourth Circuit concluded that Rule 23 alone governs the certification of class actions in federal court and that the Door Closing Statute cannot limit class membership in this context. The court reversed the district court’s denial of class certification and remanded the case for further proceedings. View "Grice v. Independent Bank" on Justia Law

Studco Building Systems US, LLC, a metal fabricator, regularly purchased steel from Olympic Steel, Inc. and paid invoices via ACH payments. In October 2018, Studco received a fraudulent email, purportedly from Olympic, instructing it to redirect payments to a new account at 1st Advantage Federal Credit Union. Studco complied, transferring over $550,000 to the scammers' account. The scammers were never identified, and Studco bore the loss.The United States District Court for the Eastern District of Virginia held a bench trial and ruled in favor of Studco, awarding it $558,868.71 plus attorney fees and costs. The court found 1st Advantage liable under Virginia Code § 8.4A-207 for failing to act in a commercially reasonable manner and for breach of bailment. The court concluded that 1st Advantage should have detected the misdescription of the account name and number.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court reversed the district court's judgment on the misdescription claim, holding that under Virginia Code § 8.4A-207, a bank is not liable for depositing funds into an account based on the account number provided, unless it has actual knowledge of a misdescription. The court found no evidence that 1st Advantage had actual knowledge of the misdescription. The court also reversed the judgment on the bailment claim, stating that a general deposit in a bank does not create a bailment under Virginia law. The court affirmed the district court's denial of punitive damages to Studco.The Fourth Circuit's main holding was that 1st Advantage was not liable under § 8.4A-207 because it lacked actual knowledge of the misdescription, and no bailment was created by the ACH deposits. The case was remanded with instructions to enter judgment in favor of 1st Advantage. View "Studco Building Systems US, LLC v. 1st Advantage Federal Credit Union" on Justia Law

Banorte, a group of five associated entities of the Mexican bank Grupo Financiero Banorte, sued Cartograf S.A. de C.V. (Cartograf Mexico) in the Fourth Civil Court of Mexico City in 2021. Banorte alleged that Cartograf Mexico and its sole administrator, José Páramo Riestra, defaulted on loans and concealed assets. Banorte filed an ex parte application in the Eastern District of Virginia to conduct discovery on Cartograf Mexico’s American subsidiary, Cartograf USA, Inc., under 28 U.S.C. § 1782. The district court granted the application, allowing Banorte to serve Cartograf USA with a subpoena. Cartograf USA moved to quash the subpoena, but the district court denied the motion.The United States District Court for the Eastern District of Virginia granted Banorte’s application for discovery under 28 U.S.C. § 1782, finding that the statutory requirements and discretionary factors set out in Intel Corp. v. Advanced Micro Devices, Inc. weighed in Banorte’s favor. The court allowed Banorte to serve subpoenas on Cartograf USA, seeking documents and deposition testimony related to Cartograf USA’s relationship with Cartograf Mexico and Páramo. Cartograf USA argued that the discovery was not for use in a foreign proceeding and that Banorte’s requests were made in bad faith, but the district court rejected these arguments.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decision. The Fourth Circuit held that Banorte satisfied the statutory requirements of § 1782, including the “for use” requirement, as the requested discovery had a reasonable possibility of being useful in the Mexican civil proceedings. The court also found that the district court did not abuse its discretion in analyzing the Intel factors, including the receptivity of the foreign tribunal and whether the request was an attempt to circumvent foreign proof-gathering restrictions. The Fourth Circuit concluded that the district court’s careful consideration of the factors and its decision to grant the application and deny the motion to quash were appropriate. View "Banco Mercantil Del Norte, S.A v. Cartograf USA, Inc." on Justia Law

Plaintiffs challenged the dismissal of their pro se complaint that, inter alia, sought a declaration that Chase and U.S. Bank could not foreclose on their home. The district court dismissed certain counts based on lack of subject matter jurisdiction under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1821, and other counts for failure to state a claim. The court affirmed, concluding that the district court lacked subject matter jurisdiction over most of the counts (Counts 1, 2, 5-9, and 16-19) that plaintiffs appeal because they failed to exhaust their claims with the FDIC. The court further concluded that the other relevant counts for constructive fraud (Count 14) and negligence (Count 15) failed to state a claim. Finally, the district court did not abuse its discretion by not providing a reason for denying plaintiffs' requests to amend their complaint. View "Willner v. Dimon" on Justia Law

Plaintiff filed suit for damages in connection with a $66,500 loan secured by a deed of trust on her house. Plaintiff alleged that, in the administration of and collection efforts on the loan, defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq.; the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq.; and the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et seq. The district court dismissed plaintiff's FDCPA and TILA claims and, following discovery, granted Wells Fargo’s motion for summary judgment on her RESPA claim. The court concluded that plaintiff adequately alleged that the White Firm and the Substitute Trustees were “debt collectors,” as that term is used in the FDCPA. Therefore, the court reversed the order of dismissal of her FDCPA claims against them and remanded for further proceedings, without suggesting whether or not those defendants violated the FDCPA. The court affirmed as to the TILA claims. View "McCray v. Federal Home Loan Mortgage Corp." on Justia Law

Plaintiff filed suit against Wells Fargo, alleging that his mortgage agreement, providing him with a loan far in excess of his home’s actual value, was an “unconscionable contract” under the West Virginia Consumer Credit and Protection Act, W. Va. Code 46A–1–101 et seq. The court agreed with the district court that the amount of a mortgage loan, by itself, cannot show substantive unconscionability under West Virginia law, and that plaintiff has not otherwise made that showing. The court concluded, however, that the Act allows for claims of “unconscionable inducement” even when the substantive terms of a contract are not themselves unfair. Accordingly, the court remanded so that the district court may consider this issue in the first instance. View "McFarland v. Wells Fargo Bank" on Justia Law