Justia Banking Opinion Summaries

Merchants Bank appealed a Circuit Court judgment in favor of Elizabeth Head on Merchants Bank's claim against her alleging breach of a promissory note. After the 2008 promissory note at issue was executed, Merchants Bank wired the $400,000 to Elizabeth's husband, David Head's, personal account. David testified that he then wrote a check distributing the funds to his real-estate-development company, Head Companies, LLC. The Heads renewed the 2008 promissory note in March 2009 and again in March 2010, in August 2010, in February 2011, and, finally, in July 2011. With the exception of the July 2011 renewal, each renewal was signed on page three by both David and Elizabeth. A box on page two was left blank. On the initial version of the July 2011 renewal of the note, however, Elizabeth signed in both the box on page two, indicating that she intended to "give [Merchants Bank] a security interest" in the Heads' personal residence, and at the end of the document on page three. signature on page two of the initial July 2011 note was "a mistake in the nature of a scrivener's error and [Merchants] Bank subsequently had the Heads execute a corrected note, which they did knowingly and voluntarily." Elizabeth presented no evidence to the contrary. The "corrected note" bore the same date as the initial July 2011 note and, like all the previous renewals, was signed by both David and Elizabeth on page three of the document only. The box on page two of the corrected July 2011 note was left blank. The Heads defaulted on the promissory note in April 2012. In September 2012, Merchants Bank sued the Heads, alleging breach of the promissory note and attaching to the complaint the initial July 2011 note as evidence of the debt. David did not answer the complaint, and Merchants Bank obtained a default judgment against him in the amount of $415,142.57 plus interest on the judgment. Elizabeth did answer the complaint, arguing that the note was unenforceable against her because she had signed the initial July 2011 note only to give a security interest in her and David's residence not "for the purpose of agreeing to pay the debt evidenced thereby" and because she had not received consideration for her signature on the note. Merchants Bank moved for a summary judgment against Elizabeth. That motion was denied. After a bench trial in March 2013, the circuit court entered a final judgment in favor of Elizabeth. Upon review, the Supreme Court held that Elizabeth renewed her obligations under the 2008 promissory note in the capacity of a maker in July 2011, and that her obligations under the 2008 promissory note were supported by valid consideration. It was undisputed that she and David defaulted on their obligations under the corrected July 2011 note. Thus, Elizabeth was liable to Merchants Bank on its claim of breach of promissory note, and the circuit court erred in entering a judgment in her favor.View "Merchants Bank v. Head " on Justia Law

Plaintiffs filed suit against Regions alleging that Regions settled a check presented by them at less than par in violation of Florida Statute 655.85 (Counts I and II). Plaintiffs also claimed that Regions was unjustly enriched when it settled their check at less than par (Counts III and IV). Under section 655.85, a financial institution may not settle any check drawn on it otherwise than at par. The court concluded that, because federal law preempted section 655.85 with respect to national banks, by operation of 12 U.S.C. 1831(a)(j)(1), so too does it preempt section 655.85 with respect to Regions, an out-of-state bank. And because plaintiffs have premised their unjust enrichment claims on the same facts as they lay out in Counts I and II, Counts III and IV are similarly preempted.View "Pereira, et al. v. Regions Bank" on Justia Law

Corporation obtained a loan from Lenders to help pay for real property that was secured by a deed of trust on the property. Appellant, the principal and sole owner of Corporation, signed a personal guaranty of the loan, which included a waiver of his right to receive notice of any default on the loan. Corporation defaulted on the loan, and Lender purchased the property at a trustee’s sale. Lender then filed a complaint seeking a deficiency judgment from Appellant as guarantor. The district court awarded a deficiency judgment in favor of Lender, concluding (1) Appellant’s waiver of his right to receive a notice of default was invalid pursuant to Nev. Rev. Stat. 40.453; but (2) Lender substantially complied with Nev. Rev. Stat. 107.095’s notice requirement. The Supreme Court affirmed, holding (1) the Legislature intended for section 40.453 to invalidate a guarantor’s purported waiver of the right to be mailed a notice of default; and (2) substantial compliance can satisfy section 107.095’s notice requirements.View "Schleining v. Cap One, Inc." on Justia Law

Petitioner personally guaranteed a commercial real estate loan that Bank purchased. The borrowers defaulted on the loan, and Bank sought recovery of the loan’s balance from Petitioner. While the case against Petitioner was pending, Bank foreclosed and took ownership of the property securing the underlying loan at a trustee’s sale. Bank subsequently moved for summary judgment regarding Petitioner’s liability for his breach of the loan guaranty. Petitioner also moved for summary judgment, arguing that Nev. Rev. Stat. 40.455 precluded Bank from obtaining a judgment for the deficiency on the loan balance after the trustee’s sale. The district court granted summary judgment for Bank. The Supreme Court subsequently issued a writ of mandamus compelling the district court to dismiss the guaranty action against Petitioner, concluding that Bank was barred from recovery under the guaranty because it failed to apply for a deficiency judgment under section 40.455 within six months after the property’s sale. The Supreme Court denied Bank's petition for rehearing because it considered and resolved Bank’s arguments in its order granting mandamus relief and did not misread or misapply the pertinent law.View "Lavi v. Eighth Judicial Dist. Court" on Justia Law

In 2006 Iroanyah obtained first and second mortgage loans of $192,000 and $36,000. The Disclosure Statement for each displayed the repayment schedule, including the number of payments, the amount due for each, and the due dates for the first and last payments. Neither disclosure included the dates on which each payment was due, nor did they include the frequency with which payment should be made. The Iroanyahs admitted that they understood that payments were to be made monthly. They stopped making payments in 2008. In response to foreclosure proceedings in state court, the Iroanyahs sent a rescission notice for the first loan, citing deficient disclosure statements in violation of the Truth in Lending Act. The lender denied violation, but agreed to rescind the loan upon payment of $169,015.30. The Iroanyahs sent rescission notices for the second loan, to which there was no response They filed suit. The court agreed that the disclosures violated TILA, which extended the right of rescission to three years; statutory damages were denied under a one year limitation period. The court held that failure to respond to the rescission notices violated TILA, triggering an award of statutory damages for failure to respond and actual damages for attorneys’ fees. The Iroanyahs sought awards of $38,812 and $33,849. The district court awarded fees and costs in the amount of $16,433 against one lender and $13,433 against the other. The Seventh Circuit affirmed.View "Iroanyah v. Bank of America, N.A." on Justia Law

Bryant Bank appealed the grant of partial summary judgment in favor of defendants Talmage Kirkland & Company, Inc., d/b/a Kirkland & Company ("TKC"), and Quentin Ball and Jason Stoutamire, appraisers for TKC. This case arose out of an appraisal of real property conducted by TKC for Bryant Bank in the course of Bryant Bank's consideration of a loan application submitted by Wallace Seafood Traders, Inc. ("WST"), in September 2007 for the purchase of the property, which WST was renting and out of which it was operating its business. The Bryant Bank employees responsible for approving WST's loan application suspected that the value of the property might have been overstated in TKC's appraisal. However, Bryant Bank approved WST's loan application and issued the loan to WST. Ultimately, WST defaulted on the loan. Bryant Bank obtained another appraisal of the property from a different appraisal firm; this new appraisal indicated that the property had a value that differed drastically from that which TKC had appraised. Bryant Bank sued the defendants, alleging breach of contract and negligent misrepresentation arising from its reliance on TKC's appraisal report in issuing the loan to WST. In their partial-summary-judgment motion, the defendants argued that Ball and Stoutamire were entitled to a summary judgment as to the breach-of-contract claim because they were acting as agents of a disclosed principal, Bryant Bank. As to the negligent misrepresentation claim, the defendants argued that they were entitled to a summary judgment in their favor because: (1) the opinion of value expressed in TKC's appraisal report could not serve as the basis of a negligent-misrepresentation claim; (2) Bryant Bank had not relied upon TKC's valuation; and (3) the claim was barred by the statute of limitations. The Supreme Court concluded the Bank presented substantial evidence that it relied on TKC's appraisal of the property, and that each of the arguments defendants raised in their partial-summary-judgment motion did not warrant the entry of a summary judgment in their favor with respect to the Bank's negligent misrepresentation claim. Therefore, Court reversed the trial court's order and remanded the case for further proceedings. View "Bryant Bank v. Talmage Kirkland & Company, Inc." on Justia Law

Plaintiffs, the recipients of a home equity loan, reached two loan modification agreements with Defendant, which reduced the interest rate and payments. Plaintiffs subsequently brought this class action against Defendant in the United States District Court, alleging that the loan modifications violated Tex. Const. art. XVI, 50, which sets forth requirements for a new home equity loan. The district court dismissed the case for failure to state a cause of action. On appeal, the Fifth Circuit Court of Appeals asked the Supreme Court whether the requirements of Article XVI, Section 50 apply to the type of loan restructuring in this case. The Supreme Court answered that, as long as the original note is not satisfied and replaced, and there is no additional extension of credit, the Constitution does not prohibit the restructuring of a home equity loan that already meets its requirements in order to avoid foreclosure. View "Sims v. Carrington Mortgage Servs., LLC" on Justia Law

Appellees filed a class-action complaint against a Bank, asserting several claims arising from the Bank’s alleged practice of manipulating customers’ checking-account debit transactions to maximize the amount of overdraft fees charged to each customer. The Bank filed a motion to dismiss, or alternatively, a motion to compel arbitration based on an arbitration provision contained in the Deposit Agreement attached to Appellees’ complaint. In response, Appellees denied the existence of a valid arbitration agreement. The circuit court denied Bank’s motion, ruling that the arbitration provision was unconscionable and, thus, unenforceable. The Supreme Court reversed, holding that because the circuit court did not find that there was a valid arbitration agreement, the case must be remanded to the circuit court to determine whether there was a valid agreement to arbitrate between the parties.View "Bank of the Ozarks, Inc. v. Walker" on Justia Law

A Bank and Re/Max Realty One signed a listing agreement granting Re/Max the exclusive right to sell a certain property. A buyer signed a purchase-and-sale agreement with the Bank and paid $86,900 in earnest money, which Re/Max held in escrow. The buyer later defaulted under the terms of the agreement. Re/Max subsequently procured a second buyer to purchase the property. After participating in mediation, the Bank and the first buyer agreed the divide the earnest money between themselves, with $49,500 going to the Bank and $37,400 to the buyer. Re/Max sent a $37,400 check to the buyer and a check for $24,750 to the Bank, retaining the remaining $24,750. The Bank sued Re/Max for breach of the listing agreement stemming from Re/Max’s retention of $24,750 of the earnest money. The superior court granted summary judgment to the Bank. The Supreme Court vacated the judgment of the superior court, holding that Re/Max was entitled to summary judgment on the Bank’s breach of contract claim because the unambiguous language of the listing agreement obligated the Bank to divide any forfeited earnest money with Re/Max, including money the Bank received pursuant to its mediated agreement with the first buyer.View "Bank of New York Mellon, N.A. v. Re/Max Realty One" on Justia Law

Corporation, which owned corporate operating accounts at Bank, took out a loan and line of credit. Corporation passed a corporate resolution providing that unless it notified Bank within fourteen days of an improperly paid item in order to recover the payment, Bank would not be held liable for any error in Corporation’s account. Corporation later discovered that its bookkeeper had been forging signatures on certain Bank documents and had embezzled approximately $386,000 over the course of two years. Corporation sued Bank to prevent Bank from forcing repayment on the loans. Bank counterclaimed to recover amounts due under the loans. Supreme Court granted summary judgment for Bank, concluding that a bank and its customer may agree to shorten from one year to fourteen days the statutory time period under N.Y. U.C.C. Law 4-406(4) within which the customer must notify its bank of an improperly paid item in order to recover the payment thereon. The Court of Appeals affirmed as modified, holding (1) a customer and bank can contractually reduce section 4-406(4)’s one-year limitations period; and (2) shortening the one-year period to fourteen days was not manifestly unreasonable under the facts of this case.View "Clemente Bros. Contracting Corp. v Hafner-Milazzo" on Justia Law