Justia Banking Opinion Summaries

Articles Posted in US Court of Appeals for the Second Circuit
by
The Second Circuit affirmed the district court's order denying the Bank's motion for judgment on the pleadings. The court held that state legislatures may create legally protected interests whose violation supports Article III standing, subject to certain federal limitations. The court also decided that the New York law violations alleged here constitute a concrete and particularized harm to plaintiffs in the form of both reputational injury and limitations in borrowing capacity over the nearly ten-month period during which their mortgage discharge was unlawfully not recorded and in which the Bank allowed the public record to reflect, falsely, that plaintiffs had an outstanding debt of over $50,000.The court further concluded that the Bank's failure to record plaintiffs' mortgage discharge created a material risk of concrete and particularized harm to plaintiffs by providing a basis for an unfavorable credit rating and reduced borrowing capacity. The court explained that these risks and interests, in addition to that of clouded title, which an ordinary mortgagor would have suffered (but plaintiffs did not), are similar to those protected by traditional actions at law. Therefore, plaintiffs have Article III standing and they may pursue their claims for the statutory penalties imposed by the New York Legislature, as well as other relief. Accordingly, the court affirmed and remanded. View "Maddox v. Bank of New York Mellon Trust Co." on Justia Law

by
The Second Circuit affirmed the district court's dismissal of the operative amended complaints in two actions seeking to hold defendant bank liable under the Antiterrorism Act of 1990 (ATA), for providing banking services to a charitable organization with alleged ties to Hamas, a designated Foreign Terrorist Organization (FTO) alleged to have committed a series of terrorist attacks in Israel in 2001-2004. The actions also seek to deny leave to amend the complaints to allege aiding-and-abetting claims under the Justice Against Sponsors of Terrorism Act (JASTA).The court concluded that 18 U.S.C. 2333(a) principles announced in Linde v. Arab Bank, PLC, 882 F.3d 314 (2d Cir. 2018), were properly applied here. The court explained that, in order to establish NatWest's liability under the ATA as a principal, plaintiffs were required to present evidence sufficient to support all of section 2331(1)'s definitional requirements for an act of international terrorism. The court saw no error in the district court's conclusion that plaintiffs failed to proffer such evidence and thus NatWest was entitled to summary judgment dismissing those claims. The court also concluded that the district court appropriately assessed plaintiffs' request to add JASTA claims, given the undisputed evidence adduced, in connection with the summary judgment motions, as to the state of NatWest's knowledge. Therefore, based on the record, the district court did not err in denying leave to amend the complaints as futile on the ground that plaintiffs could not show that NatWest was knowingly providing substantial assistance to Hamas, or that NatWest was generally aware that it was playing a role in Hamas's acts of terrorism. The court dismissed the cross-appeal as moot. View "Weiss v. National Westminster Bank PLC" on Justia Law

by
The Second Circuit affirmed the district court's judgment affirming the bankruptcy court's grant of defendants' motion to dismiss in an action arising out of the Chapter 11 bankruptcy of Lehman Brothers Holdings Inc. The bankruptcy court held that, in the context of synthetic collateralized debt obligations, certain "Priority Provisions" that subordinated LBSF's payment priority to claims of the Noteholder defendants are enforceable by virtue of section 560 of the Bankruptcy Code, which exempts "swap agreements" from the Code's prohibition of "ipso facto clauses."Like the district court, the court held that, even if the Priority Provisions were ipso facto clauses, their enforcement was nevertheless permissible under the section 560 safe harbor. The court explained that the Priority Provisions are incorporated by reference into the swap agreements and thus, for the purposes of section 560, are considered to be part of a swap agreement; the contractual right to liquidate included distributions made pursuant to Noteholder priority; the Trustees exercised a contractual right to effect liquidation when they distributed the proceeds of the sold Collateral; and, in doing so, the Trustees exercised the rights of a swap participant. Because the Priority of Payments clauses are enforceable under the Code, the court held that LBSF's state-law claims also fail. Finally, the district court and bankruptcy court correctly concluded that LBSF is not entitled to declaratory relief. View "Lehman Brothers Special Financing Inc. v. Bank of America N.A." on Justia Law

by
The Second Circuit affirmed the district court's multiple orders granting summary judgment in favor of plaintiff and holding Defendant March liable for interest at a default rate of 24 percent per annum dating back to February 1, 2008. In this case, the court affirmed the district court's grant of summary judgment in favor of Madison Street; the district court's order confirming the interest calculations of the court-appointed referee; and the district court's denial of reconsideration or to adjust its award of per diem interest to Madison Street based on the delayed "entry of judgment." The court considered defendant's remaining arguments and concluded that they were either forfeited or without merit. View "1077 Madison Street, LLC v. March" on Justia Law

by
In a foreclosure action, the Second Circuit certified the following two questions to the New York Court of Appeals: (1) Where a foreclosure plaintiff seeks to establish compliance with RPAPL 1304 through proof of a standard office mailing procedure, and the defendant both denies receipt and seeks to rebut the presumption of receipt by showing that the mailing procedure was not followed, what showing must the defendant make to render inadequate the plaintiff's proof of compliance with section 1304? (2) Where there are multiple borrowers on a single loan, does RPAPL 1306 require that a lender's filing include information about all borrowers, or does section 1306 require only that a lender's filing include information about one borrower? View "CIT Bank N.A. v. Schiffman" on Justia Law

by
The Second Circuit vacated the district court's judgment granting Wells Fargo's motion to dismiss. Relators alleged that the district court erred in concluding that fraudulent loan requests knowingly presented to one or more of the Federal Reserve System's twelve Federal Reserve Banks (FRBs) are not "claims" within the meaning of the False Claims Act (FCA), and thus do not give rise to FCA liability.The court held that the FCA's definition of a "claim" is capacious. The court explained that, although FRB personnel are not officers or employees of the United States, the FRBs administered the Federal Reserve System's emergency lending facilities on behalf of the United States, using authority delegated by Congress and money provided by the Board of Governors of the Federal Reserve System. Therefore, the court concluded that the FRBs are agents of the United States within the meaning of 31 U.S.C. 3729(b)(2)(A)(i). The court also held that the money requested by defendants and other Fed borrowers is provided by the United States to advance a Government program or interest within the meaning of section 3729(b)(2)(A)(ii). View "United States v. Wells Fargo" on Justia Law

by
Intervenors, financial institutions that held junior notes issued by trust defendant Soloso, appealed the district court's grant of summary judgment in favor of plaintiff, the senior noteholder of Lansuppe. Intervenors also appealed the district court's denial of their cross-motion for summary judgment and the dismissal of their cross-claims.The Second Circuit held that the district court erred in finding that section 47(b) of the Investment Company Act of 1940 does not provide a private right of action. However, the court agreed with the district court that Lansuppe has demonstrated that it is entitled to summary judgment ordering distribution of Soloso's assets according to the terms of the indenture and that Intervenors' cross‐claims failed. Accordingly, the court affirmed the district court's order distributing the assets of the trust according to the terms of the trust's governing indenture. View "Oxford University Bank v. Lansuppe Feeder, Inc." on Justia Law

by
A Fair Debt Collection Practices Act (FDCPA) violation "occurs," for the purposes of the FDCPA's one‐year statute of limitations, when an individual is injured by the alleged unlawful conduct. The Second Circuit affirmed the district court's grant of summary judgment for defendants on plaintiff's FDCPA claim. The court held that plaintiff's claim was time-barred because plaintiff filed suit one year and one day after Citibank froze his accounts. Furthermore, even if the discovery rule applied to FDCPA claims as a general matter, plaintiff's claim was still time-barred. Finally, plaintiff was not entitled to equitable tolling because he did not diligently pursue his rights. View "Benzemann v. Houslanger & Associates, PLLC" on Justia Law

by
Plaintiffs filed suit alleging violations of Vermont and federal law when the terms of their loan agreements provided for interest rates well in excess of caps imposed by Vermont law. Plaintiffs sought an injunction against tribal officers in charge of Plain Green and an award of money damages against other defendants.The Second Circuit affirmed the district court's denial of defendants' motion to dismiss and motion to compel arbitration. The court held that tribal sovereign immunity did not bar this suit because plaintiffs may sue tribal officers under a theory analogous to Ex parte Young for prospective, injunctive relief based on violations of state and substantive federal law occurring off of tribal lands. The court also held that the arbitration clauses of the loan agreements were unenforceable and unconscionable. View "Gingras v. Think Finance, Inc." on Justia Law

by
US Bank appealed the district court's dismissal of its second amended consolidated complaint as untimely. The Second Circuit affirmed and held that ACE Secs. Corp. v. DB Structured Prods., Inc., 25 N.Y.3d 581 (2015), and Deutsche Bank Nat'l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 868 n.8 (2d Cir. 2015), governed U.S. Bank's contractual claims in this case.The court held that the district court properly granted summary judgment to GreenPoint where the first two causes of action for breach of contract were untimely under settled New York law, because they were filed over six years after the statute of limitations began running. The court also held that the district court properly dismissed the third cause of action for indemnification under section 9 of the Flow Mortgage Loan Purchase and Warranties Agreement, because U.S. Bank's claim was in reality a repackaged version of its breach of contract claims. Finally, the court held that the fourth cause of action for breach of the indemnification agreements did relate back to the original filing for claims based on any of the Trusts, and was therefore untimely asserted. View "Lehman XS Trust v. Greenpoint Mortgage Funding, Inc." on Justia Law