Justia Banking Opinion Summaries

Plaintiff filed suit against Wells Fargo and Freddie Mac, asserting several deficiencies with the foreclosure of his home and seeking to quiet title to the property in himself. The district court granted defendants' motion for summary judgment. The court found that Wells Fargo was holder of the note and, thus, was entitled to appoint a successor trustee to the deed of trust; the court rejected plaintiff's argument that Missouri law required Wells Fargo to produce the original note at the time of the foreclosure proceeding; and plaintiff failed to provide clear and satisfactory evidence that the foreclosure sale was conducted improperly, more particularly that the statutory notice requirements were not met. Having determined that plaintiff's wrongful foreclosure action failed, plaintiff cannot show that he has superior title to the property, and therefore, could not succeed on his quiet title action. Accordingly, the court affirmed the district court's grant of summary judgment. View "Lackey, Jr. v. Wells Fargo Bank, N.A., et al." on Justia Law

Plaintiffs filed suit against the Bank seeking to void a mortgage foreclosure sale of their home. Plaintiffs alleged that the Bank represented orally that it would postpone the foreclosure sale, but then proceeded to foreclose anyway. The court concluded that plaintiffs' claim of negligent misrepresentation was barred by the Minnesota Credit Agreement Status, Minn. Stat. 513.33, where any party asserting the existence of a credit agreement must comply with the writing and signature requirements of section 513.33. The court concluded that the complaint alleged a claim of promissory estoppel, rather than equitable estoppel, and was barred by the Minnesota Credit Agreement Statute. Accordingly, the court affirmed the district court's grant of the Bank's motion to dismiss. View "Bracewell, et al. v. U.S. Bank Nat'l Assoc." on Justia Law

The Bank sought to vacate an arbitration award in favor of 21st Century. The court concluded that the district court did not clearly err in determining that the Bank had actual or constructive notice of the arbitration; the record contained several communications showing that various bank organizers knew of the forthcoming proceedings; and because the Bank had actual or constructive notice and Bernstein Seawell & Kove v. Bosarge requires no more, the court did not need to decide whether 21st Century failed to comply with section 15.2 of the Agreement. The court also concluded that the contract did not expressly require senior management to engage in negotiations; even if senior management were required to engage in a second round of negotiations, the Agreement did not expressly condition the ability to arbitrate a dispute on failed senior management negotiations; and the record supported the district court's finding regarding good-faith negotiations on the operational level. Accordingly, the court affirmed the judgment of the district court. View "21st Century Financial Services v. Manchester Financial Bank" on Justia Law

After Westernbank of Puerto Rico was ordered closed in the late 2000s and the Federal Deposit Insurance Corporation (“FDIC”) was appointed receiver, the FDIC discovered that certain bank directors and officers had breached their fiduciary duty by jeopardizing the bank’s financial soundness, causing over $176 million in damages to the bank. The directors and officers asked their insurer, Chartis Insurance Company, to confirm coverage under a directors’ and officers’ liability-insurance policy issued by Chartis to Westerbank’s owner, W Holding Company, Inc. Chartis denied coverage. The directors and officers and the FDIC sued Chartis. In this “procedurally complicated” case, a district judge eventually issued an order requiring Chartis to advance defense costs to the directors and officers. The First Circuit Court of Appeals affirmed, holding (1) the Court had jurisdiction to hear the parties; and (2) the district judge did not err in making its cost-advancement ruling. View "W Holding Co., Inc. v. AIG Ins. Co. - P.R." on Justia Law

Plaintiff refinanced his residential home mortgage, taking out a loan secured by his home. The mortgage listed Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee of record. MERS subsequently transferred the mortgage. Wells Fargo Bank, N.A. as Trustee for RMAC Pass-Through Trust, eventually obtained the mortgage. After Wells Fargo sold Serra’s property at foreclosure, Serra brought suit in Massachusetts state court asserting, among other claims, claims for wrongful foreclosure and unfair or deceptive business practices based on his theory that MERS lacked the authority to transfer his mortgage. Serra’s suit was removed on the basis of diversity, and summary judgment as to all claims was entered against Serra. The First Circuit Court of Appeals affirmed, holding (1) under Massachusetts law, MERS may validly possess and transfer a legal interest in a mortgage; (2) subsequent mortgage assignees cannot incur liability for the allegedly predatory practices of their predecessor-in-interest; and (3) Plaintiff’s argument that his right to rescission was improperly cut short by the sale of his property was without merit. View "Serra v. Quantum Servicing Corp." on Justia Law

Malone owned a cattle feedlot. He cared for cattle, including some owned by GLS, and worked as an agent of GLS to buy cattle. Anderson was president of GLS, which was owned by others. GLS’s cattle were collateral for its loans. In 2008, the feedlot started losing money, jeopardizing Malone’s business and GLS’s loans. Malone and Anderson began kiting checks; one would write a check to the other, and before it was collected, the other would write a check back to the first. Malone was overdrawn by $400,000 in 2009. Malone and Anderson arranged to sell O’Hern 700 cattle. O’Hern paid $400,000, which Malone deposited to his overdrawn bank account. In reality, there were no cattle. Malone gave O’Hern $115,000. Unsatisfied, O’Hern visited the feedlot and removed cattle that did not belong to Malone; obtained liens on property owned by Malone and Anderson; and filed a state court civil suit. Malone pled guilty to bank fraud and money laundering. He urged the district judge to refrain from ordering restitution, arguing that O’Hern had already received full recovery and that the judge exercise her discretion under 18 U.S.C. 3663A(c)(3)(B), because the need to compensate O’Hern was outweighed by the burden of determining complex issues regarding his losses. The judge imposed restitution of $285,000, stating that she had no discretion under the Mandatory Victims Restitution Act, 18 U.S.C. 3663A.The Seventh Circuit affirmed the award as supported by the preponderance of the evidence regarding O’Hern’s loss and the cash returned to him, the only relevant factors. It would have been error for the judge to consider other amounts O’Hern may be adjudged to owe Malone or Anderson in the state court litigation. View "United States v. Malone" on Justia Law

As a mortgage broker, Chandler was able to falsify documents, close fraudulent loans, and judge what a house would appraise for after cosmetic work. In 2005, Causey and Rainey founded a construction company to make minimal changes to houses. They recruited real estate novices to buy houses. Chandler would fill out a mortgage application, falsifying income, down payments and other information to make the buyer a viable loan candidate. She would order appraisals, title work and pre‐approval from the lender. A “trainee” appraiser reported a greatly inflated price. Chandler gave false information to the lenders on HUD‐1 statements. Chandler made up false construction invoices for the remainder of the loan after expenses were paid. Before the participants were arrested, they had executed the mortgage scheme 25 times. Causey, the only co‐conspirator who did not plead guilty, was convicted. The Seventh Circuit affirmed, rejecting arguments that the court improperly admitted prejudicial photographs taken of the houses around the time of trial rather than at the time of the sale and evidence of a fraudulent sale that took place outside of the conspiracy. A defense witness’s testimony was properly excluded as undisclosed expert testimony. The court also upheld admission of testimony by a co-conspirator and a two‐level sentencing enhancement for being an “organizer, leader, manager, or supervisor.”View "United States v. Causey" on Justia Law

Plaintiffs filed suit against Wells Fargo, raising multiple causes of action under state and federal law pertaining to plaintiffs' home loan and deed of trust. At issue was whether, under 28 U.S.C. 1348, a national bank is a citizen of both the state in which its principal place of business is located as designated in the banks' articles of association. The court concluded that, under section 1348, a national bank is a citizen only of the state in which its main office is located. Therefore, the district court had diversity jurisdiction because there was complete diversity between plaintiffs, citizens of California, and Wells Fargo, a citizen of South Dakota. Accordingly, the court reversed the district court's judgment to the contrary and remanded for further proceedings. View "Rouse, et al. v. Wachovia Mortgage" on Justia Law

Plaintiffs filed a complaint against their bank and others, asserting a cause of action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), among other claims, asserting that Defendants engaged in an unlawful scheme to lend Plaintiffs money in violation of federal margin requirements limiting the extent to which securities can be used as collateral for funds loaned to purchase the securities. The district court (1) dismissed the complaint as to two defendants for failure of service, and (2) dismissed the remainder of the suit for failure to state a claim upon which relief could be granted, finding that the alleged misconduct was not actionable under RICO, which does not encompass private claims that would have been actionable as securities fraud. The First Circuit Court of Appeals affirmed, holding that the district court (1) correctly concluded that Plaintiffs failed to state a claim for relief under RICO; and (2) did not abuse its discretion in dismissing the complaint as to two defendants for failure of service. View "Calderon-Serra v. Banco Santander P.R." on Justia Law

Under the Fair Debt Collection Practices Act, 15 U.S.C. 1692g(a)(3) a collector must notify the individual from whom it seeks payment that it will assume the validity of the debt unless he disputes it “within thirty days after receipt of the notice.” Diversified wrote to Wallace that it would assume the validity of a debt unless he disputed it “within 30 days of receiving this notice.” Based on the letter’s use of “of” rather than “after,” as in the Act, Wallace sued Diversified. The district court granted the debt collector judgment on the pleadings. The Sixth Circuit affirmed. A collector need not parrot the Act to comply with, but only must communicate with enough clarity to convey the required information to a reasonable but unsophisticated consumer. The Act and the letter mean the same thing. View "Wallace v. Diversified Consultants, Inc." on Justia Law