Justia Banking Opinion Summaries

Plaintiff-appellant National Credit Union Administration Board ("NCUA") appealed the district court's order dismissing as untimely its complaint against defendants-appellees Barclays Capital Inc., BCAP LLC, and Securitized Asset Backed Receivables LLC. This case arose from the failure of two of the nation's largest federally insured credit unions: U.S. Central Federal Credit Union and Western Corporate Federal Credit Union. The NCUA was appointed conservator and later as their liquidating agent. The NCUA determined that the Credit Unions had failed because they had invested in residential mortgage-backed securities ("RMBS") sold with offering documents that misrepresented the quality of their underlying mortgage loans. The NCUA set out to pursue recoveries on behalf of the Credit Unions from the issuers and underwriters of the suspect RMBS, including Barclays, and began settlement negotiations with Barclays and other potential defendants. As these negotiations dragged on through 2011 and 2012, the NCUA and Barclays entered into a series of tolling agreements that purported to exclude all time that passed during the settlement negotiations when "calculating any statute of limitations, period of repose or any defense related to those periods or dates that might be applicable to any Potential Claim that the NCUA may have against Barclays." Significantly, Barclays also expressly made a separate promise in the tolling agreements that it would not "argue or assert" in any future litigation a statute of limitations defense that included the time passed in the settlement negotiations. After negotiations with Barclays broke down, the NCUA filed suit, more than five years after the RMBS were sold, and more than three years after the NCUA was appointed conservator of the Credit Unions. Barclays moved to dismiss for failure to state a claim on several grounds, including untimeliness. Barclays initially honored the tolling agreements but argued that the NCUA's federal claims were nevertheless untimely under the Securities Act's three-year statute of repose, which was not waivable. While Barclays's motion to dismiss was pending, the district court in a separate case involving different defendant Credit Suisse, granted Credit Suisse's motion to dismiss a similar NCUA complaint on the grounds that contractual tolling was not authorized under the Extender Statute. Barclays amended its motion to dismiss asserting a similar Extender Statute argument. The district court dismissed the NCUA's complaint, incorporating by reference its opinion in Credit Suisse. The NCUA appealed, arguing that its suit was timely under the Extender Statute. The Tenth Circuit reversed and remanded: "while it is true that the NCUA's claims are outside the statutory period and therefore untimely, that argument is unavailable to Barclays because the NCUA reasonably relied on Barclays's express promise not to assert that defense." View "National Credit Union v. Barclays Capital" on Justia Law

Highland Bank made a loan to FPC, an equipment lease finance company, based on an assignment of leases. The underlying leases, guaranteed by individuals, were ultimately discovered to be a Ponzi scheme. A guarantor claimed her signature was a forgery. Highland lost more than a million dollars. BancInsure denied Highland’s claim under a Financial Institution Bond that covered “Loss resulting directly from the Insured having . . . acquired, sold or delivered, given value, extended credit or assumed liability on the faith of any original . . . personal Guarantee . . . which bears a signature of any . . . guarantor . . . which is a Forgery.” BancInsure sought a declaratory judgment that Highland's claim was not covered. The district court granted summary judgment to BancInsure, finding that the loss did not “result directly from” a forged personal guaranty because the guaranty was worthless to the bank when it entered into the transactions. While appeal was pending, BancInsure was placed into receivership with the Oklahoma Insurance Commissioner as Receiver under a final order of liquidation. The Eighth Circuit affirmed. Highland failed to show the “direct relation between the injury asserted and the injurious conduct alleged” that the doctrine of proximate cause demands. View "BancInsure, Inc. v. Highland Bank" on Justia Law

In 2007, Amy Chartier executed a promissory note, and as security, Amy and her husband, Ronald, executed a mortgage encumbering their residential property. The note and mortgage were eventually assigned to CitiMortgage, Inc. In 2010, CitiMortgage filed a complaint alleging that Amy was in default and seeking foreclosure of the mortgage. In their answer, the Chartiers alleged that CitiMortgage failed to provide a notice of default and right to cure as required by the mortgage. After a non-jury trial, the district court entered a judgment of foreclosure for CitiMortgage, concluding that the notice of default complied with the terms of the mortgage. The Supreme Judicial Court vacated the judgment, holding that the district court erred in entering judgment against the Chartiers because the notice of default provided by CitiMortgage did not comply with the conditions in the mortgage instrument. View "CitiMortgage, Inc. v. Chartier" on Justia Law

For about three years ending in 2009, five schemers bilked unsuspecting investors of an estimated $190 million in a Minnesota Ponzi scheme. They took more than $79 million of the investors’ funds with the help of Associated Bank. After the scheme was exposed, the district judge in a related case appointed a receiver to take custody of funds owned by the schemers’ estates and by organizations under their control (receiver entities). The receiver filed suit on behalf of the receiver entities, alleging Associated Bank aided and abetted the scheme. The district court granted Associated Bank’s motion to dismiss. The Eighth Circuit reversed and remanded, stating that, while it could not predict whether a jury will find Associated Bank either had actual knowledge of or substantially assisted in the asserted torts, the facts alleged in the complaint give the receiver’s claims “facial plausibility.” The receiver pled “factual content that allows the court [and a jury] to draw the reasonable inference that the defendant is liable for the misconduct alleged.” View "Zayed v. Associated Bank, N.A." on Justia Law

Defendant executed a promissory note in favor of the entity that was soon to merge with First Tennessee Bank National Association. The note was secured by a deed of trust for property in California. First Tennessee later filed a complaint against Defendant, alleging that he was in default on the note and seeking damages in the amount of $274,467. The district court granted summary judgment in favor of Defendant, concluding that First Tennessee’s claim was barred by a California statute of limitations. First Tennessee appealed, arguing that the district court erred in finding that the limitations period was not tolled by either a California statute or provision of the Servicemembers Civil Relief Act (SCRA). The Supreme Court affirmed, holding (1) the California tolling statute could not be applied against Defendant, a nonresident of California, without violating the Commerce Clause; and (2) although Defendant was a member of the National Guard, he was neither on “active duty” during his membership nor had he ever been called to active service, and therefore, the SCRA provided no basis to toll the limitations period. View "First Tenn. Bank Nat’l Ass’n v. Newham" on Justia Law

Synergy4 Enterprises, Inc. brought an action against Pinnacle Bank on claims of promissory estoppel, negligent misrepresentation, and fraud, alleging that Pinnacle Bank caused damages by orally assuring Synergy4 that Pinnacle would provide a $1 million credit line and then only providing $400,000 provided for in a commitment letter. The district court sustained Pinnacle’s motion for summary judgment, concluding that Synergy4’s claims were barred by Nebraska’s credit agreement statute of frauds. The Supreme Court affirmed, holding that because Synergy4’s claims were based on a credit agreement that was not in writing, they were barred by Nebraska’s credit agreement statute of frauds. View "Synergy4 Enters., Inc. v. Pinnacle Bank" on Justia Law

When Amos Graves was anticipating losing his home to foreclosure, Michael Wayman persuaded him to enter into a transaction that would purportedly save his home. Graves executed a quitclaim deed in favor of a corporate entity under Wayman’s control, but, the next day, sent a cancellation notice to Wayman, as was his statutory right. Wayman refused to cancel the transaction. When Wayman ceased making mortgage payments, First Minnesota Bank, the eventual mortgagee of the property, foreclosed on and purchased the home. Graves sued Wayman, Wayman’s companies, and First Minnesota, alleging that First Minnesota’s mortgage was invalid because Graves did not lawfully sell his home to Wayman. The district court awarded the property to First Minnesota, concluding that the bank was a bona fide purchaser. The court of appeals reversed and awarded the property to Graves, concluding that First Minnesota did not qualify as a bona fide purchaser. The Supreme Court affirmed in part and reversed in part, holding (1) First Minnesota was not entitled to rights in the property as a bona fide purchaser; but (2) the court of appeals erred in concluding that Graves should be awarded title to the property free of any interest of First Minnesota. Remanded. View "Graves v. Wayman" on Justia Law

In 2005, Barclays Bank PLC, a major global bank based in the United Kingdom, and BDC Finance LLC, a Connecticut-based hedge fund, entered into a series of transactions that were memorialized in several forms, including a Master Agreement. In 2008, Barclays sent BDC a letter terminating the Agreement due to BDC’s alleged default. BDC filed this action for breach of contract and declaratory judgment. Barclays counterclaimed alleging corresponding causes of action. Both parties moved for summary judgment. The Appellate Division granted BDC’s motion to dismiss, concluding that Barclays breached the agreements and was not entitled to summary judgment on its counterclaims. The Supreme Court modified the judgment of the Appellate Division, holding that material issues of fact existed as to whether Barclays defaulted under the parties’ contract and, thus, neither party was entitled to summary judgment. View "BDC Finance LLC v. Barclays Bank PLC" on Justia Law

This case stemmed from the largely fraudulent lending operations of First United Funding, LLC (First United). After First United collapsed, a court-appointed Receiver commenced this action under Minnesota’s Uniform Fraudulent Transfer Act (MUFTA) against several financial institutions, including Alliance Bank and certain Respondent Banks, that had participated in First United’s loan-participation scheme. The district court (1) dismissed the claims against the Respondent Banks for failure to bring the action in a timely fashion, and (2) allowed the claim against Alliance Bank, concluding that that the Receiver had pleaded legally sufficient claims based on a “Ponzi-scheme presumption.” The district court then entered judgment against Alliance Bank. The Receiver and Alliance Bank appealed. The court of appeals (1) divided the Ponzi-scheme presumption into three separate components and concluded that the third component was unfounded in the case of Alliance Bank; and (2) concluded that the district court erred when it dismissed the Receiver’s actual-fraud claims against the Respondent Banks. The Supreme Court affirmed as modified, holding (1) all three components of the Ponzi-scheme presumption lack support in MUFTA; and (2) the Receiver failed to adequately plead constructive fraud, but the district court erred when it dismissed the Receiver’s actual fraud claims. Remanded. View "Finn v. Alliance Bank" on Justia Law

After Shirley Carson defaulted on loan payments, Bank sought a judgment of foreclosure and sale of the mortgaged premises. The circuit court entered judgment in favor of Bank of New York Mellon (“the Bank”). More than sixteen months after the judgment of foreclosure was entered, the Bank had not sold the property. Carson filed a motion to amend the judgment to include a finding that the property was abandoned and an order that the Bank bring the property to sale within five weeks from the date of entry of the amended judgment. The circuit court denied the motion, concluding that it lacked the authority to order the Bank to sell the property at a specific time under Wis. Stat. 846.102. The court of appeals reversed, concluding that the court may use its contempt authority to order a sale under these circumstances. The Supreme Court affirmed, holding (1) when the circuit court determines that a property is abandoned, section 846.102 authorizes the court to order a mortgagee to bring the property to sale after the redemption period; and (2) because the circuit court in this case did not reach the issue of whether the property had been abandoned, the case must be remanded. View "Bank of New York v. Carson" on Justia Law