Justia Banking Opinion Summaries

Borrowers applied from a home mortgage loan from Lender. During the transaction, a loan officer made an incorrect statement about lien priority. Borrowers later filed breach of fiduciary and negligent misrepresentation claims against Lender, alleging that the junior status of Lender’s lien decreased the marketability and value of their home and exposed them to increased liability. The trial court granted Lender’s motion for summary judgment on all claims. The Court of Appeals concluded that material issues of fact barred summary judgment on Borrowers’ breach of fiduciary duty claim, reasoning that Lender’s assurance of a first priority lien on Borrowers’ new mortgage loan was an act beyond the scope of a normal debtor-creditor relationship. The Supreme Court reversed, holding that the trial court correctly granted summary judgment for Lender on both claims where no fiduciary duty existed and where Plaintiffs did not forecast evidence that they made a reasonable inquiry into the validity of the loan officer’s statements.View "Dallaire v. Bank of Am., N.A." on Justia Law

In 2005, Starr’s husband, Bernard, invested millions in Atlanta-area residential developments. Following the 2008 financial crisis, the investments were $10 million in debt. Bernard sought to refinance and approached Bryan, a BB&T Bank loan officer. BB&T concluded that Bernard and his company were not independently creditworthy to refinance both loans. To refinance one loan, Bernard agreed to pledge 40,000 shares of BB&T stock and a corporate debenture. Starr agreed to pledge her independently-owned BB&T shares, for a total of $8.8 million of collateral. Bernard executed a personal guaranty. Bryan asserts that he suggested that Bernard’s daughters provide collateral or a guaranty and that Bernard suggested that Starr act as guarantor. Bernard insists that Bryan demanded that Starr provide a guaranty. BB&T’s summary of its requirements reads: “[Starr] will be required to co-sign the notes.” Starr never spoke with anyone from BB&T; Bernard told her that BB&T required her signature. Starr claims she felt tremendous pressure to sign. The loan for $6.4 million, plus interest, closed with each executing a guaranty. As of the 2010 due date, they had paid less than $2 million of the principal. BB&T’s successor sued, including a claim of breach of guaranty against Starr. Starr asserted that her guaranty was unenforceable as violating the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 and Regulation B’s prohibition on requiring spouses to guarantee loans. The district court held that Starr could not raise violations of ECOA and Regulation B as an affirmative defense. The Sixth Circuit vacated, holding that the violations can be asserted as an affirmative defense of recoupment.View "RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC" on Justia Law

GE Plaintiffs filed suit against Worthington under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Comm. Code 24.009(a), seeking to void transfers that Worthington received from the GE Plaintiffs' predecessor-in-interest, allegedly with notice of the transfers' fraudulent nature. The jury found in favor of the GE Plaintiffs and the district court entered judgment for the amount of the transfers. The court concluded that the factual commonality in this case did not suffice to count the contractual dispute settlement against TUFTA's limit on recovery for a single avoidance "claim," or to render Citibank a joint tortfeasor for one-satisfaction rule purposes. Accordingly, the district court did not err in denying Worthington a settlement credit for the settlement proceeds that the GE Plaintiffs received from Citibank. The court rejected Worthington's argument that the district court erred as a matter of law in interpreting TUFTA's good faith defense as an objective standard. Accordingly, the court affirmed the judgment of the district court.View "GE Capital Commercial, Inc., et al. v. Wright & Wright, Inc." on Justia Law

Choice filed suit against BancorpSouth for lost funds and BancorpSouth counterclaimed for attorney's fees. The court concluded that the loss of funds from Choice's account falls on Choice because there was no genuine dispute of fact as to whether BanCorpSouth's security procedures - which included password protection, daily transfer limits, device authentication, and dual control - were commercially reasonable; BancorpSouth met its burden of establishing that it accepted the payment order at issue in good faith; and BanCorpSouth complied with procedures or Choice's instructions. The court also concluded that the portion of the indemnification provision relating to attorney's fees was not inconsistent with Article 4A of the UCC and that BancorpSouth may seek attorney's fees from Choice under this provision. Accordingly, the court affirmed the district court's grant of summary judgment to BancorpSouth, reversed the district court's dismissal of BancorpSouth's counterclaim on the pleadings, and remanded for further proceedings.View "Choice Escrow and Land Title v. BancorpSouth Bank" on Justia Law

The United States and others filed suit against several mortgage servicers, including Wells Fargo, alleging claims under the False Claims Act, 31 U.S.C. 3729 et seq., and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), 12 U.S.C. 1833(a), based on Wells Fargo's alleged misconduct in issuing home mortgage loans insured by the FHA. The parties agreed on a settlement where the United States agreed to release certain claims. On appeal, Wells Fargo challenged the district court's order denying its motion to enforce the consent judgment. The court concluded that the Release's plain text forecloses Wells Fargo's interpretation. View "United States, et al. v. Bank of America Corp., et al." on Justia Law

In 2006, Michael and Connie Jo Zimmerman obtained two separate commercial loans from Eagle National Bank, the predecessor in interest to Customers Bank. The Zimmermans later defaulted on these loans and entered into a forbearance agreement. In addition to the Forbearance Agreement, the Zimmermans each executed a Disclosure for the Confession of Judgment acknowledging that a Confession of Judgment provision in the Forbearance Agreement had been called to their attention, that they understood that the provision permitted Customers Bank to enter judgment against them without notice or opportunity for a hearing, and that the waiver of the right to notice and a hearing was knowing, intelligent, and voluntary. The Forbearance Agreement also provided that all notices, requests, demands, and other communications were to be sent to the Zimmermans at an address in Dover, Delaware with a copy sent to their attorney. Based on the Warrant of Attorney to Confess Judgment in the Forbearance Agreement, Customers Bank filed a complaint seeking the entry of a judgment by confession against the Zimmermans. The Zimmermans opposed the entry of a judgment by confession and a hearing was held where the Zimmermans argued, among other things, that at the time the Forbearance Agreement was executed they were residents of Florida and that Customers Bank had not complied with the requirements for entry of judgment by confession against a non-resident under Rule 58.1. The Zimmermans also argued that they did not knowingly, intelligently, and voluntarily waive their right to notice and a hearing before judgment could be entered against them. After deliberation, the superior court found the Zimmermans’ waiver of their right to notice and a hearing had been knowing, intelligent, and voluntary, and entered judgment by confession against the Zimmermans. The Zimmermans appealed. Finding no reversible error, the Supreme Court affirmed.View "Crothall, et al. v. Zimmerman, et al." on Justia Law

Plaintiff signed an adjustable-rate note evidencing a loan from Bank of America and executed a mortgage on property that secured the loan. Bank of America was designated as the Lender and the mortgagee. After Plaintiff defaulted on his loan, a foreclosure auction was held at which Celtic Roman Group placed a successful bid. Before Celtic could close on the property, Plaintiff filed a notice of lis pendens in the land evidence records. Plaintiff subsequently filed a complaint challenging Bank of America’s authority to foreclose on the property. The superior court granted summary judgment for Defendants. The Supreme Court affirmed, holding (1) there was no genuine issue of fact as to whether Plaintiff defaulted on his loan; (2) the foreclosure sale was lawfully noticed; and (3) Bank of America was the holder of the note at the time of foreclosure.View "McGovern v. Bank of Am., N.A." on Justia Law

Makowka owns a home in a Pike County, Pennsylvania, planned community and, in 2005, fell behind on her homeowners’ association dues. In 2008, the Association obtained a default judgment of $2,436. As additional dues went unpaid, the Association sued again in 2010 and obtained another default judgment, worth $3,599.08. A writ of execution and attachment issued. A sheriff’s sale of Makowka’s property was scheduled for September 2011. Days before the sale, Makowka filed a Chapter 13 petition. In her proposed bankruptcy plan, Makowka moved to avoid the Association’s claims under 11 U.S.C. 522(f), which releases a debtor from obligations imposed by judicial liens and non-possessory, non-purchase money security interests. Although Makowka acknowledged that the Uniform Planned Community Act granted the Association a self-executing statutory lien on her residence for unpaid dues, she claimed that part of that lien had been extinguished because the Association failed to foreclose within the statutory period of three years. To the extent the claims represented fees due before September 2008, Makowka contended, it had obtained dischargeable money judgments. The Bankruptcy Court denied Makowka’s motion. The district court affirmed. The Third Circuit vacated, concluding that the district court relied on the wrong state precedent and that the Association did not enforce its statutory lien on Makowka’s residence when it pursued actions in debt.View "In re: Makowka" on Justia Law

Plaintiffs filed suit against Sam's club, alleging that Sam's Club willfully violated a provision of the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. 1681c(g)(1), which prohibits accepting credit or debit cards for a consumer transaction from printing more than the last five digits of the card number upon any receipt provided to the cardholder. The court concluded that plaintiffs have standing under Article III; the court agreed with the district court that Sam's Club violated FACTA but that the violation was not willful; and the district court acted properly in denying plaintiffs' motion to recuse. Accordingly, the court affirmed the district court's grant of summary judgment to Sam's Club.View "Hammer, et al. v. Sam's East, Inc., et al." on Justia Law

Plaintiff executed a promissory note in favor of EquiFirst, secured by a mortgage on real estate. The mortgage designated EquiFirst as the Lender and named Mortgage Electronic Registration Systems (MERS) as the mortgagee and the Lender’s nominee. MERS, as EquiFirst’s nominee, assigned the mortgage to Sutton Funding, which assigned the mortgage to Bank of New York Mellon Trust Company (Bank of New York). Bank of New York subsequently initiated a foreclosure sale, at which it prevailed as the highest bidder. Plaintiff filed suit in the superior court challenging the validity of the two mortgage assignments. The hearing justice dismissed Plaintiff’s complaint under Sup. Ct. R. Civ. P. 12(b)(6), concluding that the assignments were valid, and additionally dismissed Plaintiff’s complaint under Rule 12(b)(7) for failing to join an indispensible party, Bank of New York. The Supreme Court affirmed the dismissal on the basis of Rule 12(b)(7), holding that hearing justice’s dismissal on Rule 12(b)(7) grounds was appropriate where Plaintiff failed to join Bank of New York to the action. View "Rosano v. Mortgage Elec. Registration Sys., Inc." on Justia Law