Justia Banking Opinion Summaries

The Disputed Instruments, prepaid financial instruments used to transfer funds to a named payee, are sold by banks on behalf of MoneyGram and others. When these instruments are not presented for payment within a certain period of time, they are deemed abandoned. MoneyGram applies the common-law escheatment practices outlined in 1965 by the Supreme Court: The proceeds of abandoned financial products should escheat to the state of the creditor’s last known address, or where such records are not kept, to the state in which the company holding the funds is incorporated. MoneyGram does not keep records of creditor addresses but transmits the abandoned proceeds to its state of incorporation. States invoked the Supreme Court’s original jurisdiction to determine whether the abandoned proceeds of the Disputed Instruments are governed by the Disposition of Abandoned Money Orders and Traveler’s Checks Act (FDA), which provides that a money order or “similar written instrument (other than a third-party bank check)” should generally escheat to the state in which the instrument was purchased, 12 U.S.C. 2503.The Court held that the Disputed Instruments are sufficiently similar to money orders to fall within the FDA’s “similar written instrument” category. Being prepaid makes them likely to escheat. The FDA was passed to abrogate common law because, for instruments like money orders, the entities selling such products often did not keep records of creditor addresses, resulting in a “windfall” to the state of incorporation. Bank liability is not a trigger for exclusion, given that banks can be liable on money orders, which are expressly covered. Whatever the intended meaning of “third-party bank check,” it cannot be read broadly to exclude prepaid instruments that escheat inequitably due to the business practices of the company holding the funds. View "Delaware v. Pennsylvania" on Justia Law

The Bank Secrecy Act requires U.S. persons with financial interests in foreign accounts to file an “FBAR” annual Report of Foreign Bank and Financial Accounts; 31 U.S.C. 5314 delineates legal duties while section 5321 outlines the penalties, with a maximum $10,000 penalty for non-willful violations. Bittner—a dual citizen of Romania and the U.S.—learned of his reporting obligations in 2011 and subsequently submitted reports covering 2007-2011. The government deemed Bittner’s late reports deficient because they did not address all accounts as to which Bittner had either signatory authority or a qualifying interest. Bittner filed corrected FBARs providing information for 61 accounts in 2007, 51 in 2008, 53 in 2009 and 2010, and 54 in 2011. The government asserted that non-willful penalties apply to each account not accurately or timely reported. Bittner’s reports collectively involved 272 accounts; the government calculated a $2.72 million penalty. The Fifth Circuit affirmed.The Supreme Court reversed. The $10,000 maximum penalty for non-willful failure to file a compliant report accrues on a per-report, not a per-account, basis. Section 5314 does not address accounts or their number. An individual files a compliant report or does not. For cases involving willful violations, the statute tailors penalties to accounts. When one section of a statute includes language omitted from a neighboring section, the difference normally conveys a different meaning. The Act's implementing regulations require individuals with fewer than 25 accounts to provide details about each account while individuals with 25 or more accounts do not need to list each account or provide account-specific details unless requested by the Secretary. View "Bittner v. United States" on Justia Law

In March 2021, Riverside County, California District Attorney sued Credit One Bank in Riverside County Superior Court. The lawsuit (the “state action”) alleged that Credit One, a national bank, violated California law by employing a vendor to make extensive harassing debt collection phone calls to California residents. In a related federal case (the “federal action”), Credit One requested that the United States District Court for the Central District of California enjoin the state action on the ground that it was an unlawful exercise of “visitorial powers,” which the National Bank Act (“NBA”) and its associated regulations grant exclusively to the Office of the Comptroller of the Currency (“OCC”). The district court ultimately decided to abstain under Younger v. Harris, 401 U.S. 37 (1971), in favor of the state action and dismissed the federal action. Credit One appealed that dismissal.   The Ninth Circuit affirmed. The panel held that the district court correctly abstained because all four Younger factors were met. First, the state action qualified as an “ongoing” judicial proceeding because no proceedings of substance on the merits had taken place in the federal action. Second, the state court action implicated the important state interest of protecting consumers from predatory business practices. The panel held that the state court action was not an exercise of “visitorial powers,” and nothing in federal law prevents a district attorney from vindicating a state interest in consumer protection by suing a national bank. Third, Credit One had the ability to raise a federal defense under the National Bank Act. And fourth, the injunction Credit One sought would interfere with the state court proceeding. View "CREDIT ONE BANK, N.A. V. MICHAEL HESTRIN" on Justia Law

In this appeal from the court of appeals' decision affirming a default judgment in a foreclosure case the Supreme Court held that, when a defendant is known to be represented by a lawyer, a plaintiff must send a copy of the notice of intent to the defendant in addition to the defendant's lawyer.Plaintiff in this case served a foreclosure lawsuit on an attorney that Plaintiff argued held himself out as Defendant's lawyer in the foreclosure suit. The attorney filed an acceptance of notice on Defendant's behalf, but no one filed any response to the petition. The district court entered a default judgment against Defendant. The Supreme Court reversed and remanded the case, holding (1) Iowa R. Civ. P. 1.972(3) required Plaintiff in this case to mail notice of intent to both Defendant and Defendant's lawyer; and (2) Plaintiff's failure to comply with the rule's notice provisions left the district court without authority to enter the underlying default judgment against Defendant. View "Lincoln Savings Bank v. Emmert" on Justia Law

Philip and Jennie Bowling purchased their house via a promissory note in 1986. The loan was secured by a mortgage, which was eventually assigned to U.S. Bank National Association ("U.S. Bank"). A little over a decade later, the Bowlings began missing loan payments. Litton Loan Servicing, LP ("Litton"), the original servicer for the loan, sent the Bowlings several notices of default between July 1999 and June 2011, before eventually transferring service of the loan to another entity, Ocwen Loan Servicing, LLC ("Ocwen"). In September 2011, Ocwen allegedly notified the Bowlings that they were in default. Ocwen then scheduled a foreclosure sale, which took place in October 2012. A company called WGB, LLC ("WGB"), purchased the Bowlings' house at the foreclosure sale, but the Bowlings refused to vacate the property. A few weeks later, WGB filed an ejectment action against them. The Bowlings answered by asserting that they had not defaulted on the loan and that the foreclosure sale was invalid. The Bowlings also named as third-party defendants U.S. Bank, Ocwen, and Litton (collectively, "the banks"), alleging that the banks had mishandled the loan, the foreclosure sale, and related matters. In total, the Bowlings asserted 15 third-party claims against the banks. Rule 54(b) of the Alabama Rules of Civil Procedure gives a trial court discretion to certify a partial judgment as final, and thus immediately appealable, even though some piece of the case remains pending in the trial court. This appeal stemmed from a Rule 54(b) certification. After review, the Alabama Supreme Court concluded the Jefferson Circuit Court exceeded its discretion in certifying its partial judgment as immediately appealable. Because an improper Rule 54(b) certification cannot support an appeal on the merits of the underlying judgment, the Supreme Court dismissed this appeal for lack of jurisdiction. View "Bowling v. U.S. Bank National Association, et al." on Justia Law

Congress passed the American Recovery and Reinvestment Act ARRA) to stabilize the U.S. economy following the 2008 financial crisis, 123 Stat. 115, creating two types of government-subsidized Build America Bonds (BABs). “Direct Payment BABs,” entitled bond issuers to a tax refund from the Treasury Department equal to 35 percent of the interest paid on their BABs. Treasury pays issuers of BABs annually. The payments are funded by the permanent, indefinite appropriation for refunds of internal revenue collections. 31 U.S.C. 1324. Local power agencies (Appellants) collectively issued over four billion dollars in qualifying Direct Payment BABs before 2011. Through 2012, Treasury paid the full 35 percent.In 2011 and 2013, Congress passed legislation reviving sequestration: “[T]he cancellation of budgetary resources provided by discretionary appropriations or direct spending law,” 2 U.S.C. 900(c)(2), 901(a). Treasury stopped making payments to Appellants at 35 percent. Since 2013, Appellants have been paid reduced rates as determined by the Office of Management and Budget’s calculations; for example, 2013 payments were reduced to 8.7 percent.Appellants sued, arguing a statutory theory that the government violates ARRA section 1531 by not making the full 35 percent payments and that the government breached a contract that arises out of section 1531. The Federal Circuit affirmed the Claims Court’s dismissal of the suit. No statutory claim existed because sequestration applied to these payments. No contractual claim existed because the ARRA did not create a contract between the government and Appellants. View "Indiana Municipal Power Agency v. United States" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the circuit court granting summary judgment concluding that Plains Commerce Bank could not foreclose on certain trust real estate, that the trustee's mortgage on trust real estate was void and unenforceable, and that Plaintiff was entitled to attorney fees, holding that the attorney fee award was an abuse of discretion.Garry and Betty Beck treated an irrevocable spendthrift trust naming their three children as secondary beneficiaries. Their child Matthew Beck took out a substantial personal loan with Plains Commerce and granted a mortgage to the bank on trust real estate as partial collateral. When Matthew defaulted on the loan, Plains Commerce brought a foreclosure action against Matthew in his capacity as trustee. Jamie Moeckly intervened on behalf of the trust. The circuit court granted summary judgment for Jamie and further granted her motion for attorney fees. The Supreme Court reversed in part, holding (1) the circuit court erred in awarding attorney fees to Jamie as intervenor for the trust; and (2) because there was no mortgage foreclosure the statutory provision in S.D. Codified Laws 15-17-38 authorizing attorney fees "on foreclosure" did not apply. View "Plains Commerce Bank, Inc. v. Beck" on Justia Law

The Supreme Court affirmed the decision of the district court granting summary judgment in favor of Security State Bank (SSB) on Plaintiff's claims and SSB's breach of contract counterclaim, holding that there was no error.When Plaintiff defaulted on several agricultural loans she had obtained from SSB, SSB foreclosed on some of the collateral Plaintiff pledged to secure those loans. Plaintiff then brought this action, alleging, among other things, negligent lending and negligent advising. SSB counterclaimed, alleging, among other things, breach of contract. The district court granted summary judgment in favor of SSB on all claims. The Supreme Court affirmed, holding (1) this Court declines to recognize new causes of action for negligent lending or negligence advising; (2) there were no questions of material fact barring summary judgment on Plaintiff's breach of good faith and fair dealing claim; and (3) the district court did not err in finding that equitable defenses did not preclude entering summary judgment in favor of SSB on his counterclaim for breach of contract. View "Wilcox v. Security State Bank" on Justia Law

Robert Bentley (Bentley) was a broker of certificates of deposits (CDs). He operated his business through two entities: Bentley Financial Services (BFS) and Entrust Group (Entrust). Entrust had a $2 million line of credit with Main Line Federal Savings Bank (Main Line). In 1996, Main Line terminated the line of credit after the bank discovered Bentley had forged his accountant’s signature on a document. Main Line demanded repayment of the outstanding $2 million balance. In order to pay back Main Line, Bentley sold $2 million of fake CDs. Thereafter, Bentley engaged in a Ponzi scheme in which he would sell fraudulent or fictitious CDs to new investors in order to pay off previous investors. In 1997, as he continued to defraud investors, Bentley opened deposit and wire transfer accounts with a new bank, Bryn Mawr Trust Company (BMT). Bentley became one of BMT’s largest customers. In 2001, the Securities and Exchange Commission commenced an action against Bentley for his Ponzi scheme. The federal court appointed David Marion (Marion) as a receiver for BFS and Entrust. In 2004, Marion initiated this case. Marion’s complaint, amended in 2012, raised claims of breach of fiduciary duty, breach of the Uniform Fiduciaries Act (UFA), aiding and abetting fraud, and negligence. In 2014, the trial court granted summary judgment to BMT on the claim of aiding and abetting fraud. The Pennsylvania Supreme Court granted limited discretionary review to consider whether to recognize a cause of action for aiding and abetting fraud and, if so, to determine the scienter requirement for this tort. The Court held aiding and abetting fraud was a cognizable claim under Pennsylvania law, and the required state of mind was actual knowledge of the fraud. Accordingly, the Superior Court’s decision was affirmed in part and reversed in part, and the case was remanded to the trial court for a new trial. View "Marion v. Bryn Mawr Trust Co." on Justia Law

The Supreme Court reversed the judgment of the appellate court affirming the decision of the trial court to deny Defendant's motion to open the judgment and vacated the trial court's judgment of foreclosure by sale in favor of Plaintiff, The Bank of New York Mellon, holding that the appellate court erred.The trial court concluded that Defendant's motion to open constituted a collateral attack on an earlier judgment. Defendant appealed, arguing that Plaintiff lacked standing to pursue foreclosure, and thus, the trial court lacked jurisdiction over the action. The appellate court disagreed, concluding that Defendant's motion to open constituted an impermissible collateral attack on the foreclosure judgment. The Supreme Court reversed and remanded the case, holding that the appellate court (1) erroneously concluded that Defendant's motion to open was a collateral attack because, at the time Defendant filed his motion to open, the trial court had jurisdiction to open the judgment under Neb. Rev. Stat. 52-212a; and (2) this Court rejects the alternative ground that the trial court properly denied Defendant's motion to open in which he claimed that the trial court lacked subject matter jurisdiction. View "Bank of New York Mellon v. Tope" on Justia Law