Justia Banking Opinion Summaries

Articles Posted in US Court of Appeals for the Eighth Circuit
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Dr. Igor DeCastro, a neurosurgeon, worked at the Hot Springs Neurosurgery Clinic for seven years. He claimed that after his initial 18-month salary period, he was supposed to receive compensation based on the net proceeds of his production, less 33% of the clinic's overhead. However, he alleged that he never received more than his base salary because Dr. James Arthur, the clinic's owner, diverted the funds into a "secret account." DeCastro also sued Bank OZK, where the account was held, leading the bank to request the court to determine the rightful owner of the funds.The United States District Court for the Western District of Arkansas dismissed DeCastro's amended complaint for failing to include essential facts, such as specific amounts received, production details, and overhead costs. The court also disbursed the funds to Arthur and denied DeCastro's motions for reconsideration, discovery, and leave to file a second amended complaint. DeCastro's subsequent attempts to revive the case, including a counterclaim in an unrelated contribution action, were dismissed based on res judicata.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that DeCastro's amended complaint lacked sufficient factual matter to state a plausible claim for relief. The court noted that the complaint was filled with legal conclusions rather than specific facts about the alleged breach. Additionally, the court found no abuse of discretion in the district court's denial of DeCastro's post-dismissal motions, as the employment agreement he later produced did not support his original claims. The court also upheld the dismissal of DeCastro's counterclaim based on res judicata, as it was identical to the previously adjudicated claims. View "DeCastro v. Arthur" on Justia Law

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In this case, UMB Bank, N.A. (UMB) filed a complaint against Jessie Benton and her children, alleging that they violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by committing acts of mail, wire, and bank fraud. The dispute arose from the management of a family trust, which included works of art, real estate, and personal effects. The beneficiaries of the trust accused UMB of mismanagement and sued UMB in a separate Missouri state court case. UMB then filed this federal case, arguing that the beneficiaries and their attorney engaged in fraudulent activities to force UMB to increase trust distributions or resign as trustee.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision to dismiss UMB's complaint for failure to state a civil RICO claim. The court agreed that UMB failed to sufficiently allege a pattern of racketeering activity. Although UMB might be able to prove that three communications to media outlets qualify as predicate acts of mail, wire, or bank fraud, these acts did not show a pattern of racketeering activity because they occurred within a few days and targeted a single victim (UMB). The court also affirmed the district court's denial of UMB's post-judgment motions for leave to amend the complaint, as the proposed amendment was both untimely and futile. View "UMB Bank v. Guerin" on Justia Law

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After the bankruptcy court allowed Chapter 12 debtors – several years in a row – to modify their confirmed plan over the objection of their primary secured creditor, that creditor appealed. The issues are whether the bankruptcy court abused its discretion by confirming the debtors’ fourth modified plan under 11 U.S.C. Section 1229 without requiring the debtors to show an “unanticipated and substantial change in circumstances” and whether, under whatever standard applicable to plan modifications, the court’s factual findings were clearly erroneous.   The Eighth Circuit affirmed. The court held that, at a minimum, a substantial change in circumstances is required to justify modification of a plan under Section 1229. The bankruptcy court’s alternate ruling that the debtors met their burden of showing an unanticipated, substantial change in circumstances is not clearly erroneous, nor is the bankruptcy court’s finding that the fourth modified plan was feasible and confirmable. View "Farm Credit Services v. Steven L. Swackhammer" on Justia Law

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Defendant and her then-husband bought a condo for $525,000 with the intention of making it their primary residence. To finance the purchase, the couple took out a mortgage with the Plaintiff bank. Defendant did not sign the note but consented to her husband doing so. The mortgage contained a "future advances" clause, which granted Plaintiff a security interest in the Mortgage covering future funds Defendant's husband might borrow.Four years later, Defendant's husband borrowed additional funds from Plaintiff to keep his business afloat. Defendant did not sign the note. A few months later, Defendant's husband filed for Chapter 7 bankruptcy and the condo was sold for $650,000, approximately $250,000 of which was deposited in escrow. The couple divorced and Defendant moved out of the state.In Defendant's husband's bankruptcy case, the court held a portion of the escrowed sale proceeds must pay down his business notes pursuant to the mortgage’s future advances clause and that he could not claim a homestead exemption. Plaintiff was granted summary judgment on its claims that Defendant's proceeds were also subject to the future advances clause and that Plaintiff could apply those proceeds to Defendant's husband's business note.Defendant appealed on several grounds, including unconscionability, contract formation, and public policy, all of which the court rejected, affirming the district court's granting of summary judgment to Plaintiff. View "Sanborn Savings Bank v. Connie Freed" on Justia Law

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Plaintiff filed suit against the Bank of the West in state court, seeking to set aside the trustee's sale of his property. After the claim was dismissed, plaintiff filed an amended complaint adding U.S. Bank as a defendant. The case was removed to federal district court where it was ultimately dismissed.The Eighth Circuit affirmed the district court's dismissal orders, concluding that the federal law violations as alleged in the second amended complaint all occurred prior to the institution and maintenance of any foreclosure activity. Therefore, they were not defects in the trustee's sale under Nebraska law. The court also concluded that the district court did not abuse its discretion in denying defendant's motion for leave to file a third amended complaint where the motion was procedurally defaulted and granting leave would be futile. View "Anderson v. Bank of the West" on Justia Law

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After BANA canceled the foreclosure sale of plaintiff's residence, he filed an amended complaint alleging claims of wrongful foreclosure, violation of the Missouri Merchandising Practices Act (MMPA), and negligent misrepresentation. The district court denied BANA's motion for dismissal for failure to state a claim and denied plaintiff's request for leave to file an amended complaint, entering an order dismissing the case with prejudice.The Eighth Circuit affirmed, construing plaintiff's pro se motion for a temporary restraining order as a petition initiating a civil action against BANA under Missouri law, and determining that plaintiff's conduct throughout the course of litigation amounts to an acknowledgement that his filing before the St. Louis County Circuit Court was both a motion and a petition. The court explained that when the district court dissolved the temporary restraining order, a live case and controversy remained in the form of plaintiff's claims. Therefore, this case is not moot. The court also concluded that the district court did not err in dismissing plaintiff's negligent misrepresentation claim for failure to state a claim. Finally, the court concluded that the district court did not abuse its discretion in denying plaintiff leave to again amend his complaint. View "Rivera v. Bank of America, N.A." on Justia Law

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The National Credit Union Administration Board ("NCUAB"), the self-appointed conservator of Citizens Community Credit Union ("Citizens"), repudiated a letter of credit Citizens issued to Granite Re, Inc. Granite filed a complaint for damages against the NCUAB, claiming wrongful repudiation and wrongful dishonor of a letter of credit. The NCUAB moved to dismiss with prejudice, arguing 12 U.S.C. 1787(c) authorized it to repudiate the letter of credit with no liability for damages, and section 1787(c) preempted conflicting North Dakota Law. The district court agreed and dismissed the complaint. The Eighth Circuit determined that were it to adopt the NCUAB's construction of section 1787(c), the NCUAB could "quietly appoint itself conservator and repudiate letters of credit with no liability to the injured beneficiary. Absent the ability to predict an impending conservatorship, a clean letter-of-credit beneficiary like Granite is subject to repudiation with no recourse." The Court determined NCUAB's construction was inconsistent with the language of the statue, which provided a limited remedy for damages determinable at the point of conservatorship, but did not negate recovery entirely. The Court also determined it was premature to declare section 1787(c) preempted North Dakota law. The Court reversed the trial court's judgment and remanded for further proceedings. View "Granite Re, Inc. v. Nat'l Credit Union Adm. Board" on Justia Law

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CitiMortgage filed suit against Equity, demanding that Equity repurchase 12 residential mortgage loans. CitiMortgage had notified Equity that it needed to take action under the cure-or-purchase provision in the parties' Agreement.The Eighth Circuit affirmed the magistrate judge's ruling that Equity's duty to repurchase was limited to the six loans that had not gone through foreclosure. In regard to the loans that had not gone through foreclosure, the court affirmed the district court's holding that Equity breached the Agreement. The court rejected Equity's claims that CitiMortgage's letters lacked the necessary detail to trigger its duty to perform and that CitiMortgage waited too long to exercise its rights. In regard to the six loans that had gone through foreclosure, the court affirmed the district court's holding that Equity owed nothing to CitiMortgage. In this case, CitiMortgage has not explained what, exactly, Equity was supposed to repurchase. View "CitiMortgage, Inc. v. Equity Bank, N.A." on Justia Law

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The Bankruptcy Appellate Panel reversed the bankruptcy court's grant of the Banks' motion for summary judgment challenging the validity of the other parties' liens and asserting the priority of its own lien in debtor's 2017 crops. In this case, it was difficult to determine from the record precisely what the bankruptcy court considered in reaching its conclusion that no genuine issues of material fact existed which would preclude it from granting the Bank's motion for summary judgment, or the analysis the bankruptcy court undertook. Accordingly, the panel remanded for further findings pursuant to Federal Rule of Civil Procedure 56(a)'s directive to specify the reasons for its ruling, or in the alternative, to reconsider the issue on the existence of the Solberg Farms partnership. View "Zaitz Trust, LLC v. Bremer Bank, NA" on Justia Law

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DLC filed a 42 U.SC. 1983 action against defendant, the Director of the South Dakota Division of Banking, alleging that license revocation without a pre-deprivation hearing deprived DLC of its procedural due process rights under the Fourteenth Amendment. On appeal, defendant challenged the district court's denial of absolute or qualified immunity and its decision that the quick action exception to a pre-deprivation hearing was not applicable.The Eighth Circuit reversed, holding that defendant was entitled to qualified immunity because DLC failed to show a violation of a constitutional right that was clearly established. The court held that there was no procedural due process violation where DLC was on notice that the Division was investigating the lawfulness of its new loan product, DLC was afforded an opportunity to provide additional information addressing the Division's concerns, and the revocation order had no more of an effect on DLC's business than the simultaneously issued cease and desist order. View "Dollar Loan Center of South Dakota, LLC v. Afdahl" on Justia Law