Justia Banking Opinion Summaries

The district court approved a settlement agreement between representative plaintiffs and Bank of America in a class action lawsuit alleging violations of the Securities Act of 1933, 15 U.S.C. 77a et seq., and the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. The underlying litigation stemmed from Bank of America's negotiations with Merrill Lynch in 2008, which resulted in the two financial institutions merging in 2009. The court concluded that the district court did not violate the Private Securities Litigation Reform Act, 15 U.S.C. 78u-4(a)(2)(A)(vi), 78u-4(a)(4), when it awarded reimbursement costs to representative plaintiffs; the notice of the statement of average amount of damages per share was not constitutionally deficient in violation of appellants' due process rights and the district court did not exceed the bounds of its discretion in approving the notice; the award of attorneys' fees was reasonable and appellants failed to identify any specific abuse of discretion on the part of the district court; and appellants' remaining arguments are without merit. Accordingly, the court affirmed the judgment. View "In re Bank of America" on Justia Law

Plaintiff-Appellant, Security Service Federal Credit Union (“SSFCU”), appealed a district court’s summary judgment in favor of Defendants- Appellees, including First American Mortgage Funding, LLC (“FAM”) and First American Mortgage, Inc.; and Stewart Title of California, Inc., Orange Coast Title Company of Southern California, and Lawyers Title Company (together, the “Closing Agents”). In August 2003, SSFCU’s predecessor in interest, New Horizons Community Credit Union, entered into a Funding Service Agreement with FAM, under which FAM originated 26 loans to individual borrowers for the purchase and construction of residential properties in Colorado and California. The Closing Agents performed closing procedures. SSFCU maintained that the FAM Defendants and Closing Agents, through a variety of acts and omissions, wrongfully induced New Horizons to fund these loans to straw borrowers. SSFCU further contended that the loan transactions were a vehicle to misappropriate some $14 million in loan proceeds. The issue this appeal presented for the Tenth Circuit's review centered on whether SSFCU had the right to pursue those claims pursuant to a 2007 Purchase and Assumption Agreement (“PAA”) between SSFCU and the National Credit Union Administration (“NCUA”), as the liquidating agent for New Horizons. Both the NCUA and SSFCU argued that under the terms of the PAA, the NCUA transferred the “right, title and interest” in the loans and various other assets to SSFCU, including the claims at issue. As the parties to the agreement, the NCUA and SSFCU both understood that a transfer of “the right, title and interest” in the loans was intended to transfer any and all claims relating to those loans. On the other hand, the PAA also provided that “except as otherwise specifically provided” the NCUA retained the “the sole right to pursue claims . . . and to recover any and all losses incurred by the Liquidating Credit Union prior to liquidation.” According to the Defendants, absent a valid assignment from the NCUA, SSFCU could not sue on the claims contained in its Fourth Amended Complaint. The district court agreed with the Defendants. According to the district court, the NCUA retained all claims associated with New Horizons’ losses, it could rely upon the cooperation of SSFCU in pursuing those claims, and, therefore, SSFCU was not a proper party to pursue those claims. The district court did not address an affidavit from the NCUA (through its agent) that cast considerable doubt on its interpretation. The district court held that SSFCU was not a proper plaintiff to assert the claims set forth in its Fourth Amended Complaint and dismissed those claims with prejudice. The Tenth Circuit reversed, finding that the Defendants were neither parties to (or in privity with any party to) nor third-party beneficiaries of the PAA. "The PAA reflects no intent to benefit the Defendants, let alone allow them to enforce it. Essentially, the Defendants are seeking to enforce a right they contend the NCUA has—an exclusive right to the claims asserted by SSFCU3—which is contrary to the doctrine of prudential standing." View "Security Services v. First American Mortgage" on Justia Law

Construction Manager subcontracted with Subcontractor to do work on a construction project. After the project was substantially complete, Subcontractor recorded a mechanic’s lien for unpaid work on the project. Subcontractor then filed a complaint against Construction Manager as the general contractor of the project, the owner of the property (Landowner), and the bank that financed the project (Bank) to enforce its mechanic’s lien. Construction Manager did not enter an appearance in the case. The circuit court subsequently granted an application filed by Landowner and Bank and released the real estate that had been subject to Subcontractor’s mechanic’s lien. Bank filed a motion to dismiss the mechanic’s lien claim on the basis that Subcontractor failed to timely serve Construction Manager, who it alleged to be a necessary party to the mechanic’s lien enforcement action. The circuit court agreed and dismissed the mechanic’s lien claim with prejudice. The Supreme Court reversed, holding that Construction Manager, as the general contractor, was not a necessary party to Subcontractor’s mechanic’s lien enforcement action. Remanded. View "Synchronized Constr. Servs., Inc. v. Prav Lodging, LLC" on Justia Law

This case arose out of the collapse of SIV, managed by Cheyne and structured by Morgan Stanley. PSERS and Commerzbank appealed from the final order of judgment denying class certification, dismissal of Commerzbank's claim for lack of standing; and dismissal of PSERS's claim because its presence as a party would destroy complete diversity, the sole basis of subject matter jurisdiction. The court affirmed the denial of class certification and dismissal of PSERS; held that it was not a permissible exercise of discretion for the district court to limit Commerzbank's ability to establish its standing; certified to the New York Court of Appeals the question of whether a reasonable trier of fact could find that Commerzbank had acquired from a third party that had purchased securities a fraud claim against Morgan Stanley; and certified the question whether, if Commerzbank has standing, a reasonable trier of fact could hold Morgan Stanley liable for fraud based on the present record. View "Pennsylvania Public School Employees’ Retirement System v. Morgan Stanley" on Justia Law

The Bank commenced this adversary proceeding in Restivo's Chapter 11 bankruptcy case, seeking a judgment declaring that the security interest it acquired on January 4, 2005, had priority over the IRS's tax lien filed on January 10, 2005, regardless of the fact that it did not record its security interest until after the IRS had filed notice of its tax lien. The district court granted the Bank priority. The court rejected the district court's holding that Md. Code. Ann., Real Prop. 3-201 gives the Bank retroactive priority over the IRS, concluding that 26 U.S.C. 6323(h)(1)(A)'s use of the present perfect tense precludes giving effect to the Maryland statute's relation-back provision. However, the court affirmed the judgment based on the ground that under Maryland common law, the Bank acquired an equitable security interest in the two parcels of real property on January 4, regardless of recordation, because its interest became protected against a subsequent lien arising out of an unsecured obligation on that date and that therefore its security interest had priority over the IRS's tax lien under sections 6323(a) and 6323(h)(1). View "Susquehanna Bank v. United States/Internal Revenue" on Justia Law

At issue in this case was whether the Federal Deposit Insurance Corporation’s (FDIC) extender statute, 12 U.S.C. 1821(d)(14)(A), which governs the timeliness of the deficiency judgment suits that are brought by the FDIC, preempts Nev. Rev. Stat. 40.455(1)’s six-month time limitation for deficiency judgment actions. In this case, FDIC filed a claim for a deficiency judgment after section 40.455(1)’s six-month deadline but within the FDIC extender statute’s six-year time limitation. The district court dismissed the deficiency judgment claim as untimely. The Supreme Court reversed, holding (1) the FDIC extender statute expressly preempts section 40.455(1) regardless of whether the state statute is a statute of limitations or repose; and (2) because the FDIC filed its deficiency judgment action within the FDIC extender statute’s time limitation, the district court erred in dismissing the FDIC’s deficiency judgment action as time-barred. View "Fed. Deposit. Ins. Corp. v. Rhodes" on Justia Law

A 2004 judgment entered against John Zelaya was rendered in the United States District Court for the Southern District of New York and was registered in the Southern District of Florida. ZC was not party to the suit that led to the judgment and, instead, the prevailing parties assigned their interests in the judgment to ZC. ZC then sought a writ of execution against Zelaya from the Southern District of Florida. In 2010, Zelaya deposited the full amount of the judgment into the district court's registry where the district court then dissolved writs of garnishment against all of the banks at issue, granted Zelaya's motion for a satisfaction judgment, and awarded attorney fees and costs to Deutsche Bank. The court concluded that it had jurisdiction over the consolidated appeal; the district court did not err in allowing Zelaya to deposit the disputed funds into the court's registry; the district court did not err in granting Zelaya's motion for a satisfaction of the judgment; the district court did not err in its award of attorney fees and costs to Deutsche Bank; and, therefore, the court affirmed the judgment. View "Zelaya/Capital Int'l Judgment, LLC v. Zelaya, et al." on Justia Law

This appeal stemmed from the sale of dairy cattle that were subject to Appellant Farmers National Bank’s (FNB) perfected security interest and Respondent J&M Cattle Company’s (J&M) agister’s lien. The net sale proceeds received from the sale of the dairy cattle were insufficient to satisfy both FNB’s perfected security interest and J&M’s agister’s lien. J&M filed an action for declaratory relief to resolve FNB’s and J&M’s competing interests. Although FNB’s perfected security interest had a priority date that predates J&M’s lien, the district court determined that J&M’s lien had priority over FNB’s perfected security interest. The district court entered a final judgment in favor of J&M, and FNB appealed. Finding no reversible error, the Supreme Court affirmed the district court's decision. View "J&M Cattle Co v. Farmers National Bank" on Justia Law

This case stemmed from the district court’s approval of the Utah Department of Financial Institutions’ (UDFI) seizure of America West Bank Members, L.C. (Bank) and the appointment of the Federal Deposit Insurance Corporation as receiver of the Bank. The Bank filed a complaint against the State, UDFI, and the director of UDFI (collectively, the State), alleging breach of contract, breach of the covenant of good faith and fair dealing, constitutional takings, and due process violations. The district court dismissed the Bank’s claims for lack of sufficient factual allegations under Utah R. Civ. P. 12(b)(6). The Supreme Court affirmed, holding (1) the district court did not err when it dismissed the Bank’s claims; and (2) the district court did not hold the Bank to a heightened pleading standard. View "America West Bank Members, L.C. v. State" on Justia Law

After Stratton stopped making payments on her credit card, GE “charged off” Stratton’s $2,630.95 debt, as uncollectible. GE stopped charging Stratton interest. By charging off the debt and ceasing to charge interest GE could take a bad-debt tax deduction, I.R.C. 166(a)(2), and avoid the cost of sending Stratton statements. A year later, GE assigned Stratton’s charged-off debt to PRA, a “debt buyer.” Two years later, PRA filed suit in state court, alleging that Stratton owed interest during the 10 months after GE charged off her debt, before GE sold that debt, and that Stratton owed 8% interest rather than the 21.99% rate established in her contract with GE. The 8% rate is the default rate under Kentucky’s usury statute, KRS 360.010. Stratton filed a putative class action, alleging that PRA’s attempt to collect 8% interest for the 10-month period violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in that the 8% interest was not “expressly authorized by the agreement creating the debt or permitted by law,” that PRA had falsely represented the “character” of Stratton’s debt and the “amount” owed, and that PRA’s suit was a “threat” to take “action that cannot legally be taken.” The district court dismissed. The Sixth Circuit reversed. Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest; any attempt to collect statutory interest when it is “not permitted by law” violates the FDCPA. View "Stratton v. Portfolio Recovery Assocs., LLC" on Justia Law