Justia Banking Opinion Summaries

Plaintiff sued Defendants for fraud and deceptive trade practices in connection with a real estate purchase and loan arrangement. The jury found in favor of Plaintiff and awarded him compensatory damages consisting of actual damages and emotional distress damages, as well as punitive damages. The Supreme Court reversed the judgment as to consequential damages and remanded for a redetermination of punitive damages. On remand, the district court instructed the jury that it was to decide “what amount, if any, [Plaintiff] was entitled to for punitive damages.” After punitive damages were awarded, Defendants appealed. The Supreme Court reversed the district court’s punitive damages award and remanded for a new trial, holding (1) Nev. Rev. Stat. 42.005(3) requires a second jury on remand to reassess whether punitive damages are warranted before that jury may determine the amount of punitive damages to be awarded; and (2) because the jury instruction did not require the jury to make the threshold determination of whether punitive damages could be awarded, the case must be remanded for a new trial on punitive damages. View "D.R. Horton, Inc. v. Betsinger" on Justia Law

The Wiggintons receive Social Security disability benefits. They applied to Bank of America for a mortgage to be repaid using those benefits. The Bank asked for information from their physicians, or the SSA, showing that the benefits would last for at least three years. When no such information was forthcoming, the Bank declined to make the loan. An administrative complaint and negotiations followed; the seller pulled out of the transaction. The Wiggintons sued, alleging violations of the Fair Housing Act, the Americans with Disabilities Act, and the Rehabilitation Act. The district court dismissed the suit on the pleadings, noting that the Equal Credit Opportunity Act, 15 U.S.C. 1691(b)(2), provides that it does not constitute discrimination (for purposes of that statute) for a bank to collect information about “whether the applicant’s income derives from any public assistance program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness.” The Seventh Circuit affirmed. The complaint did not allege that the Wiggintons were treated worse than other applicants. The court noted that the Bank has since settled a suit by the Department of Justice and promised not to ask for the sort of information it sought from the Wiggintons. View "Wigginton v. Bank of America Corp." on Justia Law

Plaintiff filed a quiet title complaint against Guild and others, alleging that the loans secured by the real property at issue were securitized, resulting in defendants' interest in the real property being extinguished, relinquished or discharged. On appeal, plaintiff argued that he can state a valid cause of action for quiet title based on allegations that the attempt to transfer the first deed of trust to the mortgage-backed "investment" trust (CWALT) did not comply with the trust's servicing and pooling agreement and was therefore void. The court concluded that plaintiff's argument was addressed in Jenkins v. JPMorgan Chase Bank, N.A., and the court agreed with Jenkins that, in this case, such allegations do not give rise to a viable preemptive action that overrides California's nonjudicial foreclosure rules. Accordingly, the court affirmed the judgment and concluded that Guild's demurrer was properly sustained. View "Kan v. Guild Mortgage" on Justia Law

Bank of America, N.A. filed a complaint in foreclosure against George and Bridget Kuchta, claiming to be the holder of a promissory note and assignee of the mortgage. The trial court granted summary judgment to the bank and entered a decree of foreclosure in its favor. The Kuchtas moved to vacate the summary judgment and decree of foreclosure, arguing that the bank lacked standing to commence the action because it did not prove ownership of the note and because the mortgage assignment was fatally flawed. The trial court denied the motion. The court of appeals reversed, holding that standing is a jurisdictional matter and that Bank of America’s alleged lack of standing would warrant relief from judgment. The Supreme Court reversed, holding that a lack of standing cannot support a motion for relief from judgment, and lack of standing does not render a judgment void for lack of subject matter jurisdiction. View "Bank of Am., N.A. v. Kuchta" on Justia Law

In 2004, Charles Adams conveyed a portion of his parcel of property to himself and his sister, Dorothy Adams, as joint tenants. Dorothy subsequently executed a promissory note to American Bankers Conduit and conveyed a mortgage on her interest in the property as security on the note. Dorothy defaulted on the loan in 2008. In 2012, U.S. Bank sought to place an equitable lien on Charles’s interest in the property. After a trial, the superior court entered a judgment on the merits in favor of Charles. The Supreme Court vacated the judgment and remanded for entry of dismissal, holding that because the complaint was not timely filed the action should have been dismissed pursuant to 14 Me. Rev. Stat. 752. Remanded. View "U.S. Bank Nat’l Ass’n as Trustee v. Adams" on Justia Law

Respondent obtained a home mortgage loan from Lender. Lender obtained a mortgage lender bond from Petitioner and later filed for bankruptcy under Chapter 11 of the United States Code. Respondent subsequently filed a complaint naming Petitioner as defendant solely as surety for Lender. At the time this suit was filed, Lender was bankrupt and judgment proof. Petitioner filed a motion to dismiss, arguing that the bond conditions had not been satisfied because Respondent had not obtained a judgment against the bond principal, Lender. The circuit court certified a question of law to the Supreme Court, which answered that the bond at issue was a judgment bond and that the unambiguous bond language requires an aggrieved party to obtain a judgment against the principal before maintaining an action against the surety of the bond. View "Fidelity & Deposit Co. of Md. v. James" on Justia Law

Between 2009 and 2012, Sunshine and Purdy, a Kentucky dairy farmer, entered into “Dairy Cow Leases.” Purdy received 435 cows to milk, and, in exchange, paid monthly rent to Sunshine. Purdy’s business faltered in 2012, and he sought bankruptcy protection. Sunshine moved to retake possession of the cattle. Citizens First Bank had a perfected purchase money security interest in Purdy’s equipment, farm products, and livestock, and claimed that its perfected security interest gave Citizens First priority over Sunshine with regard to the cattle. Citizens argued that the “leases” were disguised security agreements, that Purdy actually owned the cattle, and that the subsequently-acquired livestock were covered by the bank’s security interest. The bankruptcy court ruled in favor of Citizens, finding that the leases were per se security agreements. The Sixth Circuit reversed, noting that the terms of the agreements expressly preserve Sunshine’s ability to recover the cattle. Whether the parties strictly adhered to the terms of these leases is irrelevant to determining whether the agreements were true leases or disguised security agreements. Neither the bankruptcy court nor the parties sufficiently explained the legal import of Purdy’s culling practices or put forward any evidence that the parties altered the terms of the leases making them anything but leases.View "In re: Purdy" on Justia Law

Irwin, a holding company, entered bankruptcy when its two subsidiary banks failed. The FDIC closed both in 2009. Their asset portfolios were dominated by mortgage loans, whose value plunged in 2007-2008. Irwin’s trustee in bankruptcy sued its directors and officers (Managers). The FDIC intervened because whatever Irwin collects will be unavailable to satisfy FDIC claims. Under 12 U.S.C. 821(d)(2)(A)(i), when taking over a bank, the FDIC acquires “all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution.” The claims assert that the Managers violated fiduciary duties to Irwin by not implementing additional financial controls; allowing the banks to specialize in kinds of mortgages that were especially hard-hit; allowing Irwin to pay dividends (or repurchase stock) so that it was short of capital; “capitulating” to the FDIC and so that Irwin contributed millions of dollars in new capital to the banks. The district judge concluded that all claims belong to the FDIC and dismissed. The Seventh Circuit affirmed in part, but vacated with respect to claims that concern only what the Managers did at Irwin: supporting the financial distributions, informing Irwin about the banks’ loan portfolios, and causing Irwin to invest more money in the banks after they had failed. View "Levin v. Miller" on Justia Law

Thomas and Chapman were part of a scheme to fleece real estate lenders by concocting multiple false sales of the same homes and using the loan proceeds from the later transactions to pay off the earlier lenders. They were convicted of multiple counts of wire fraud. Thomas was also convicted of aggravated identity theft for using an investor’s identity without permission to craft a phony sale of a home that the victim never owned. The Seventh Circuit affirmed, rejecting: challenges to the sufficiency of the evidence; a claim by Thomas that there was no proof that he created or used the falsified documents at issue; Chapman’s claim that there was no evidence that he was the Lamar Chapman identified by the evidence, because no courtroom witness testified to that effect; Chapman’s claim that his due process rights were violated when the government dropped a co-defendant from the indictment; and a claim that the government failed to turn over unspecified exculpatory evidence. The court noted testimony from several victims, an FBI investigator, an auditor, and an indicted co-defendant who had already pleaded guilty. View "United States v. Chapman" on Justia Law

This case arose when an investment advisor committed fraud by opening a doing-business-as ("d/b/a") bank account using the name of his employer when he did not have the employer's authority to do so. The employer's insurance company subsequently filed suit against the bank, alleging that the bank negligently failed to inquire into whether the former advisor had authority to open the d/b/a account. The court affirmed the district court's dismissal of the suit because the bank owed no recognized duty to the employer.View "National Union Fire Ins. Co. v. Hometown Bank, N.A., et al." on Justia Law