Justia Banking Opinion Summaries

Markert, President of Pinehurst Bank, approved nominee loans to friends and family of bank customer Wintz. The loan proceeds were used to cover Wintz’s $1.9 million overdraft at the Bank. A jury convicted Markert of willful misapplication of bank funds by a bank officer, 18 U.S.C. 656. At sentencing, applying U.S.S.G. 2B1.1(b)(1), the district court found that Markert’s offense caused an actual loss equal to the amount of the loans, resulting in a 16-level enhancement and a guidelines range of 87 to 108 months in prison. The court sentenced Markert to 42 months. The Eighth Circuit remanded for resentencing. After considering arguments, but without an evidentiary hearing, the court reduced its prior finding by $60,000, to reflect repayments prior to detection and re-imposed the same 42-month term. The Eighth Circuit again remanded, holding that the government failed to sustain its burden to prove actual loss. While “the loss here cannot be zero,” the court declined to give the government a third chance to present evidence and ordered that, on remand, actual loss for sentencing purposes is zero, reducing the guidelines range to 12-18 months. Markert has already served more than 18 months; the court directed that he be immediately released. View "United States v. Markert" on Justia Law

In 1994, C. Barr and Joann Schuler subdivided their property, thereby creating the Woodlawn Springs Subdivision. Each phase of development was subject to a Declaration of Covenants, Conditions, and Restrictions (Declarations). The Schulers also incorporated the Woodlawn Springs Homeowners Association, Inc. (Association). The Schulers borrowed money from Your Community Bank, Inc. (Bank) to finance the construction. After the Schulers died, First Bankers Trust Company (First Trust) executed a deed in lieu of foreclosure conveying fifty subdivision lots to the Bank and a written Assignment and Assumption of Developer Rights (Assignment) in favor of the Bank. In 2011, the Association demanded that the Bank pay $15,000 in Association fees on the subdivision lots it acquired. The Bank refused to pay the fees and filed a declaration of rights action. The circuit court granted summary judgment for the Bank. The court of appeals reversed. The Supreme Court reversed, holding that, pursuant to the deed in lieu of foreclosure and the Assignment, the Bank had succeeded to all of the Developer’s rights under the Declarations, and therefore, was exempt from paying the Association fees. View "Your Cmty. Bank, Inc. v. Woodlawn Springs Homeowners Ass’n, Inc." on Justia Law

Borrowers executed the Note in favor of GACC in the amount of $62,000,000, with a maturity date of August 2016. Borrowers, as trustors, executed in favor of Chicago Title Company, as trustee, a “Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing” for the benefit of GACC with respect to the real property security—the Trust Property—which included real property in Los Angeles County. The individual defendants executed a Guaranty of “all obligations, requirements, and indemnities of Borrowers under the Loan Documents.” Through various assignments and a merger, plaintiff became the holder of the Loan Documents. In 2011, plaintiffs claimed default by failure to make various required payments and purported to accelerate the loan and claim interest at the default rate. Borrowers apparently filed a voluntary bankruptcy petition under Chapter 11. The trial court granted plaintiff summary judgment of $81,850,619.33, which included a “Yield Maintenance Amount”—i.e. a prepayment fee—of $14,007,811.30. The court of appeal reversed, holding that even though the legal issue was not raised before the trial court, the documents should be interpreted so that the prepayment obligation only accrues upon payment and not on acceleration of the Note. View "U.S. Bank Nat'l Ass'n v. Yashouafar" on Justia Law

In 2010 the Georgia Department of Banking and Finance closed Community Bank & Trust. St. Paul, which provided liability coverage to the Bank’s officers and directors, sought a declaratory judgment in response to a separate lawsuit (underlying action) brought by the Federal Deposit Insurance Corporation (FDIC), as receiver for the Bank, against Miller and Fricks, former Bank officers. In that action, the FDIC alleged gross negligence and breaches of fiduciary duty related to the Bank’s Home Funding Loan Program and claimed more than $15 million in damages. Finding the policy’s an “insured-versus-insured” exclusion unambiguous, the district court held that there was no coverage. The exclusion precludes coverage only for actions brought “by or on behalf of any Insured or Company in any capacity.” Neither the exclusion nor the defined terms make any reference to the FDIC, regulators, or any liquidating entity. St. Paul argued that the FDIC “steps into the shoes” of the bank, as a receiver. The Eleventh Circuit reversed, finding the provision ambiguous. View "St. Paul Mercury Ins. Co. v. Fed. Deposit Ins. Corp." on Justia Law

In 2011, Schriener obtained a residential mortgage from Quicken Loans that was secured by a deed of trust. Quicken Loans acquired the deed of trust that the parties used from Wolters Kluwer Financial Services, Inc. for a fee. Quicken Loans assisted Wolters Kluwer in preparing the deed of trust by providing necessary information. The deed of trust, however, was not written or reviewed by an attorney licensed to practice law in Missouri. In connection with Schriener’s residential mortgage, Quicken Loans charged him an “origination charge” of $575.00 and “adjusted origination charges” of $1,705.63. These charges are reflected on the parties’ HUD-1 settlement statement. The HUD-1 did not list a fee for the preparation of the deed of trust. Schriener filed a putative class action, alleging that Quicken Loans improperly engaged in law business under Mo. Rev. Stat. 484.020; violated the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.010; and was unjustly enriched. The district court dismissed for failure to state a claim. The Eighth Circuit affirmed, based on Shriener’s concession that Quicken did not charge him for the deed of trust. View "Schriener v. Quicken Loans, Inc." on Justia Law

Kopko ran SFS in Michigan, providing financial transaction processing and electronic funds transfers to companies engaged in e-commerce, processing those transactions through its Fifth Third account, Fifth Third discovered that FBD was processing illegal gambling funds through that account and notified SFS that it was closing SFS’s account immediately. Losing this account crippled SFS’s ability to do business. SFS went bankrupt. Kopko telephoned FBD and spoke to Bastable, FBD’s vice-president for e-commerce. According to Kopko, Bastable said FBD did not have an account in SFS’s name. Months later SFS received a grand jury subpoena related to a federal investigation of the gambling transactions done in SFS’s name. When Kopko called Bastable again to discuss the subpoena, Bastable admitted that FBD had an account in SFS’s name and that the board of directors was aware of this account. In 2012, SFS sued FBD, Bastable, and FBD’s individual directors in federal court for negligence and fraud against. The district court dismissed. The Sixth Circuit affirmed that: answering the phone calls did not establish personal jurisdiction over individual defendants; FBD owed no duty of care to SFS because SFS was not a customer; and SFS failed to adequately plead a claim of fraud. View "SFS Check, LLC v. First Bank of De." on Justia Law

After a bank acquired an apartment complex by deed in lieu of foreclosure the bank discovered substantial black mold in the units. The bank sued the builder, alleging, inter alia, that the builder breached the implied warranty of workmanlike construction. The district court granted summary judgment to the builder on the implied warranty claim. The court of appeals affirmed. The Supreme Court affirmed, holding that the bank may not recover under the implied warranty of workmanlike construction, as the implied warranty of workmanlike construction does not extend to a lender acquiring apartment buildings by a deed in lieu of foreclosure. View "Luana Savings Bank v. Pro-Build Holdings, Inc." on Justia Law

After foreclosure proceedings were instituted against Petitioners, Petitioners filed an amended class-action complaint against the Federal National Mortgage Association (Fannie Mae), the owner of their mortgage and note, arguing that Fannie Mae was not “authorized to do business” in the state, as required by the Statutory Foreclosure Act, because it had failed to obtain a certificate of authority from the Arkansas Secretary of State. A federal district court certified to the First Circuit the question of whether the Act allows authorization under federal law. The First Circuit answered that the Act does contemplate authorization under federal law and that Fannie Mae’s federal charter was sufficient to allow it to proceed under the statute. View "Dickinson v. SunTrust Nat'l Mortgage Inc." on Justia Law

Plaintiff sought to rescind a loan she entered into with the trustee of a mortgage investment trust, and the district court granted rescission, finding that the mortgaged property was plaintiff's "principal dwelling" and the trustee failed to give plaintiff adequate notice of her right to rescind. In this case, the trustee failed to comply with two requirements of the Truth in Lending Act, 15 U.S.C. 1635, and a related regulation where he instructed plaintiff to sign simultaneously the loan documents and a postdated waiver of her right to rescind the transaction and the trustee failed to give plaintiff two copies of the notice of her right to rescind. The court concluded that the record fairly supports the district court's findings of fact; plaintiff was entitled to rescission because the trustee failed to give plaintiff clear and conspicuous notice of her right to rescind; but the district court lacked the discretion to deny plaintiff statutory damages, attorney's fees, and costs. Accordingly, the court affirmed in part, reversed in part, and remanded for a determination of the amounts owed. View "Harris v. Schonbrun" on Justia Law

The Avakians purchased a house with a loan secured by a properly executed deed of trust. The property was their homestead, where they lived together. Citibank refinanced the loan. Unlike the original loan, the refinancing note only listed Norair as the debtor. Citibank required that the Avakians execute another deed of trust. Norair signed the Citibank deed of trust. The next day, Burnette signed an identical deed of trust. The deeds of trust did not mention each other, and did not refer to signature of counterpart documents. Citibank recorded them as separate instruments. The Avakians received a loan modification. Around the time of Norair’s death, Burnette received notice that Citibank was taking steps to foreclose. After Norair’s death, Burnette sought a declaratory judgment. The district court granted summary judgment to Burnette, finding that, because the two were living together when they signed the Citibank deeds of trust, the instruments were invalid. The Fifth Circuit reversed. Under Mississippi law, a deed of trust on a homestead is void if it is not signed by both spouses, but the Mississippi Supreme Court would likely hold that a valid deed of trust is created when husband and wife contemporaneously sign separate, identical instruments. View "Avakian v. Citibank, N.A." on Justia Law