Justia Banking Opinion Summaries

The plaintiffs invested $3 million in a multi‐use real‐estate project in Caseyville, Illinois, called Forest Lake, having previously worked with the developers. Their agreement with the developers promised a first‐priority mortgage, but they received only a junior mortgage. Meridian Bank had acquired a mortgage on Forest Lakes ($20 million) in 2005. When the bank foreclosed in 2009, the plaintiffs lost everything. They sued Belco, which had been created to carry out title work for the Forest Lakes transactions, including the Meridian mortgage. None of the plaintiffs’ $3 million were ever escrowed with Belco, but went directly to the developer. Belco never contacted the plaintiffs, before, during, or after the closing. After the development failed, the plaintiffs alleged Illinois state‐law claims of breach of fiduciary duty against Belco, claiming that as the “closing agent” for the transaction, Belco owed a duty to disclose that they were not receiving the first‐priority mortgage. The magistrate judge granted summary judgment for Belco, finding that Belco was the plaintiffs’ agent for the purposes of the escrow and closing, but, under Illinois law, owed only the very limited duty “to act only according to the terms of the escrow instructions.” Belco complied with the terms of the escrow agreement in that the funds were disbursed according to the agreement. The Seventh Circuit affirmed. View "Edelman v. Belco Title & Escrow, L.L.C." on Justia Law

After debtors filed for Chapter 7 bankruptcy protection, GMAC filed this adversary proceeding claiming that it was entitled to a first-priority lien on a home and surrounding twenty-two acres of land by operation of the Arkansas doctrine of equitable subrogation, or to reformation correcting the mutual mistake in its mortgage. The court concluded that, at the time Summit and Southern State made their new loans, knowledge that GMAC made a mistake by describing the wrong property on its earlier mortgage was not knowledge that GMAC had or even claimed to have a superior unrecorded interest, because GMAC had for many months made no attempt to correct the known error, or to reform its mortgage; the principle of Killam v. Tex. Oil & Gas Corp. did not apply to mortgage priority disputes; and the blame for the uncertainty regarding GMAC's lien position lies with GMAC. Had GMAC taken timely action, it would have held the senior recorded lien. Accordingly, the court affirmed the district court's denial of relief for GMAC. View "Owcen Loan Servicing, LLC v. Summit Bank, et al." on Justia Law

Plaintiffs filed suit against defendants, alleging, inter alia, that Barclays knowingly misrepresented its cost of borrowing funds by submitting false information for the purpose of calculating the London Interbank Offered Rate (LIBOR), in violation of section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The court held that the district court erred in concluding, prior to any discovery, that plaintiffs failed to plead loss causation where plaintiffs' allegations that the June 28, 2012 decline in Barclay's stock price resulted from the revelation of Barclay's misrepresentations of its 2007-2008 LIBOR rates and defendant Diamond's conference call misrepresentation of Barclays's borrowing costs presented a plausible claim. The court also held that the district court correctly concluded that Barclays's statements in its SEC filings relating to the company's internal control requirements were not materially false. Accordingly, the court vacated in part, affirmed in part, and remanded. View "Carpenters Pension Trust v. Barclays PLC, et al." on Justia Law

Patriot was authorized to issue title policies underwritten by First American in Michigan. In 2007, Patriot closed a transaction and provided title insurance and a closing protection letter (CPL) when which WaMu loaned $4,543,593.07 to Truong for the purchase of property in Grosse Ile. In the CPL, First American agreed to indemnify WaMu for actual losses arising from Patriot’s fraud or dishonesty in connection with the closing. In 2008, First American discovered that the Truong transaction was a sham, orchestrated by Patriot’s owner, and obtained title to the property. During negotiations concerning sale of the property, federal regulators closed WaMu. The FDIC became its receiver and sold most of WaMu’s assets to Chase, including the title insurance commitment issued in connection with the Truong transaction. Attempting to resolve the claim, First American tendered a quitclaim deed. Chase refused to accept that deed. First American sought a declaration that First American had fulfilled its obligations under the commitment by tendering a deed to the property. Chase sought a declaration that the deed was void and requested money damages. The FDIC intervened, alleging breach of contract against First American based on the CPL. After the property was sold, First American and Chase stipulated to dismissal of Chase’s claims against First American and First American’s claims against Chase. Chase and the FDIC entered into a stipulation that Chase did not acquire the CPL claim that the FDIC was pursuing. A jury awarded the FDIC $2,263,510.78. The Sixth Circuit affirmed.View "JP Morgan Chase Bank NA v. First Am. Title Ins. Corp." on Justia Law

Based on a real estate financing fraud scheme during the housing bubble, Brunt, Farano, Murphy, and Scullark were charged with mail and wire fraud; Brunt and Scullark with money laundering and Farano with theft of federal government funds, 18 U.S.C. 641, 1341, 1343, 1957(a). The scheme involved buying HUD-owned properties at a discount by using a “front” nonprofit corporation that received kickbacks. The properties were resold, with false promises that the defendants would rehabilitate the properties and find tenants. The defendants obtained the mortgages for buyers by submitting false information regarding the conditions of the properties and buyers’ assets, income, employment, and intentions to occupy the properties. A loan officer and appraisers were bribed. The judge refused to severe the trials. A jury convicted the defendants, and the judge sentenced Brunt to 151 months in prison, Farano to 108, Murphy to 72, and Scullark to 78. He ordered them all to pay restitution. The Seventh Circuit affirmed except regarding an order of restitution to refinancing lenders, which it vacated for consideration of whether the refinancing banks that are seeking restitution had based their refinancing decisions on fraudulent representations by the defendants. The court expressed concern about how long the case has taken.View "United States v. Scullark" on Justia Law

In August 2007, C.W. Mining, an entity operating a coal mine in Utah, deposited $362,000 with the Bank of Utah; in turn, the Bank issued a certificate of deposit to C.W. Mining for that same amount. In January 2008, creditors filed an involuntary Chapter 11 bankruptcy petition against C.W. Mining. The Chapter 11 proceeding was converted to a Chapter 7. The Bank liquidated the certificate of deposit, which then had a value of $383,099. Utilizing its common-law right of offset, it applied the proceeds to the balance owing on two of three promissory notes executed by C.W. Mining in favor of the Bank in 2005, 2006, and 2007. Although the Bank knew of the bankruptcy proceeding when it liquidated the certificate of deposit, it did not inform the Trustee. The Trustee became aware of the transfer after the Bank assigned its remaining secured interest in the promissory notes and loan agreements to a third party and the third party sought payment from the Estate. The Trustee then commenced an adversary proceeding seeking to recover $383,099 from the Bank. The parties filed cross-motions for summary judgment. In his motion, the Trustee argued the transfer should be avoided under 11 U.S.C. 549 as an unauthorized post-petition transfer and he should have been permitted to recover the $383,099 pursuant to 11 U.S.C. 550. In the alternative, he sought a declaration the transfer was void as a violation of the automatic stay under 11 U.S.C. 362(a) and an order for turnover pursuant to 11 U.S.C. 542. After considering all of these arguments, the bankruptcy court entered summary judgment in favor of the Bank. Finding no reversible error, the Tenth Circuit affirmed the grant of summary judgment to the Bank. View "C.W. Mining Company, et al v. Bank of Utah, et al" on Justia Law

This case arose when Meritage submitted an administrative claim to the FDIC. The FDIC disallowed Meritage's administrative claim and Meritage then filed suit. Meritage obtained a default judgment against the FDIC and the FDIC provided Meritage with a receiver's certificate in the amount of the judgment. The FDIC also filed with the district court a Satisfaction of Judgment. Meritage sought to have the district court strike the FDIC's Satisfaction of Judgment and instead direct the FDIC to pay the judgment in cash. Subsequently, on appeal, Meritage challenged the district court's judgment and challenged orders denying its motion to strike or, in the alternative, issue a summons to certain third parties to this action and denying its motion for reconsideration. The court held that the district court's denial of Meritage's request for a summons was to be reviewed for clear error. On the merits, the court held that the district court did not abuse its discretion in ruling that the receiver's certificate satisfied the judgment against the FDIC. The court also held that the district court did not commit clear error in declining to issue a summons to Rescon and Stearns. Accordingly, the court affirmed the judgment of the district court. View "Meritage Homes of Nevada v. FDIC" on Justia Law

Plaintiff (the customer) filed suit against State Street (the custodian bank), alleging in essence that it had a duty to notify him that the securities in his account were worthless. The district court granted State Street's motion to dismiss the contract claims on the ground that State Street had a merely administrative role in managing plaintiff's accounts and thus owed him no duty to guard against his investment advisor's misconduct. The district court concluded that plaintiff's negligence claims were barred by Florida's economic loss rule and plaintiff had not sufficiently alleged knowledge on the part of State Street in regards to the aiding and abetting claims. The court affirmed, holding that, under these facts, the custodian bank breached no duty, contractual or otherwise, by accepting on behalf of its customer securities that later turn out to be fraudulent and listing those securities on monthly account statements issued to the customer. Plaintiff's allegations failed to state claims for breach of contract; plaintiff failed to establish that State Street owed him an independent duty to monitor the investments in his account, verify their market value, or ensure they were in valid form; therefore, he failed to state valid negligence claims; plaintiff's allegations were insufficient to state a claim for aiding and abetting; and plaintiff's claims for breach of fiduciary duty and negligent misrepresentation also failed. View "Lamm v. State Street Bank and Trust" on Justia Law

Plaintiffs filed suit against defendants after plaintiffs failed to make the required payments on their home equity loan. On appeal, plaintiffs challenged the district court's dismissal of their claims. Determining that the court had appellate jurisdiction, the court concluded that plaintiffs failed to controvert evidence that a letter was indeed sent to them notifying them of the change to their loan servicer. Accordingly, the court affirmed the district court's grant of Bank of America's and Deutsche Banks' motion for summary judgment in part on plaintiffs' Real Estate Settlement Procedures Act (RESPA), 2 U.S.C. 2605, claim. The court concluded that plaintiffs have made no factual allegations that Morgan Stanley was involved in the alleged unlawful conduct in connection with plaintiffs' home equity loan and the district court did not err in granting Morgan Stanley's motion to dismiss. The district court also did not err in granting Barrett Daffin's motion to dismiss. Finally, the district court did not abuse its discretion in denying plaintiffs' motion for sanctions and motion to compel discovery. Accordingly, the court affirmed the judgment of the district court. View "Haase, et al. v. Countrywide Home Loans, Inc., et al." on Justia Law

Plaintiff obtained a loan secured with a promissory note and mortgage on his Massachusetts home. The mortgage document listed Mortgage Electronic Registration Systems (MERS) as mortgagee and nominee for the lender’s successors and assigns. MERS subsequently assigned Butler’s mortgage to Deutsche Bank Trust Company Americas (Deutsche Bank). Deutsche Bank foreclosed on Plaintiff’s home. Plaintiff filed suit against Deutsche Bank for wrongful foreclosure, slander of title, and unfair and deceptive business practices under Massachusetts law, alleging that Deutsche Bank lacked legal possession over both his mortgage and accompanying note, making it an improper party to foreclose. The district court dismissed Plaintiff’s complaint for failure to state a claim, concluding that the foreclosure sales were in accordance with the relevant statutory law. The First Circuit Court of Appeals affirmed the district court’s decision to dismiss Plaintiff’s complaint, holding (1) Deutsche Bank need not have possessed Plaintiff’s note, and (2) Plaintiff failed to state any other colorable claim on which relief might be granted. View "Butler v. Deutsche Bank Trust Co. Ams." on Justia Law