Justia Banking Opinion Summaries

Miller and his pastor Wellons wanted to buy investment land for $790,000. Miller formed Fellowship, with eight investment units valued at $112,500 each, to purchase the land and recruited investors. Miller and Wellons did not purchase units, but Miller obtained a 19.5% interest as Fellowship’s manager and Wellons obtained a 4.5% interest as secretary. Miller secured $675,000 in investments before closing and obtained a loan from First Bank, representing that DEMCO, one of Miller’s development companies, needed a $337,500 loan that would be paid within six months. Because DEMCO pledged Fellowship’s property, First Bank required a written resolution. The resolution contained false statements that all Fellowship members were present at a meeting, and that, at this nonexistent meeting, they unanimously voted to pledge the property as collateral. Fellowship’s members, other than Miller and Wellons, believed that the property was being purchased free of encumbrances. After the closing, $146,956.75 remained in Fellowship’s account. Miller then exchanged his ownership in Fellowship for satisfactions of debts. Despite having no ownership interest, Miller modified and renewed the loan. Later Miller told Fellowship members the truth. Miller was convicted of two counts of making false statements to a bank, 18 U.S.C. 1014, and two counts of aggravated identity theft, 18 U.S.C. 1028A. The Sixth Circuit affirmed conviction on one count of false statements, but vacated and remanded the other convictions. View "United States v. Miller" on Justia Law

In 2009, Tyler had accumulated $1,041 of debt on his Chase credit card. DHC, assignee of the debt, filed suit in Kentucky, seeking collection of the debt, plus 21% interest, and attorney’s fees. The complaint had not been served when Tyler filed for Chapter 7 bankruptcy, three months after the suit was filed. Tyler did not list this suit as debt or his potential Fair Debt Collection Practices Act counterclaims as assets on the bankruptcy schedules. Tyler did list a debt owed on a Chase credit card, of “Unknown” amount. Chase did not participate and Tyler was granted a discharge. Eight days later, DHC served process on Tyler. DHC filed a voluntary Notice of Dismissal without prejudice after it learned of Tyler’s bankruptcy, but Tyler filed a purported federal class action, alleging violations of the FDCPA and Kentucky’s usury laws. The district court dismissed, finding that Tyler “elected to forego filing compulsory counterclaims” and that Tyler’s claims were “rooted in the allegations in DHC’s state court complaint” and thus part of the bankruptcy estate. The Sixth Circuit affirmed. While the claim was not barred under res judicata principles, the claim was based on a pre-petition violation and, thus, property of the bankruptcy estate.View "Tyler v. DH Capital Mgmt., Inc." on Justia Law

Buffets filed suit against U.S. Bank and BMO Harris Bank alleging, among other things, violations of the Uniform Fiduciaries Act (UFA), Minn. Stat. 520.01 et seq. The district court asserted jurisdiction on the ground that the action was related to a Title 11 bankruptcy proceeding, 28 U.S.C. 1334(b), and that abstention in favor of state-court litigation was not required under 28 U.S.C. 1334(c)(2). The court concluded that, although the question of "related to bankruptcy" jurisdiction was difficult and close, the answer ultimately did not affect the court's jurisdiction. Even if the district court lacked "related to" bankruptcy jurisdiction - because the banks could not pursue indemnification claims against LGI - the court had jurisdiction over the appeal under the rationale of Caterpillar Inc. v. Lewis. On the merits, the court concluded that Buffets has not established a genuine dispute as to whether either bank was indifferent to LGI's suspicious activity, such that its actions amounted to bad faith. Accordingly, the court affirmed the the district court's grant of summary judgment to the banks. View "Buffets, Inc., et al. v. BMO Harris Bank, et al." on Justia Law

Plaintiff faced foreclosure on her home mortgage after having fallen behind on her payments. The notice of foreclosure that Plaintiff received did not come from her lending institution but from a bank that had purchased her mortgage through a series of assignments facilitated by the Mortgage Electronic Recording System (MERS). Plaintiff brought this complaint against the receiving institution that sought foreclosure, (1) contending that MERS could not validly assign her mortgage, and therefore asserting that the receiving institution had no legal interest upon which to foreclose; and (2) bringing state law claims for fraud and unfair business practices. The district court dismissed Plaintiff's complaint. The First Circuit Court of Appeals affirmed, holding that Plaintiff's claims did not present legally cognizable claims for relief. View "Woods v. Wells Fargo Bank, N.A." on Justia Law

Serna defaulted on a loan he obtained through the Internet that was subsequently purchased by Samara. Attorney Onwuteaka, who owns Samara, obtained a default judgment and attempted to collect. Serna then filed suit in federal court, alleging that because he neither resided nor entered the loan agreement in Harris County where the judgment entered, the suit violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, venue requirement. A magistrate found Serna’s suit was untimely under the FDCPA’s one-year limitations period because he filed his complaint more than one year after Onwuteaka filed his petition in the underlying debt-collection action. The Fifth Circuit reversed, that the alleged FDCPA violation arose only after Serna received notice of the underlying debt collection action. The FDCPA provides that a debtor may bring an action “within one year from the date on which the violation occurs.” A violation of does not occur until the debt-collection suit is filed and the alleged debtor is notified of the suit.View "Serna v. Law Office of Joseph Onwuteaka" on Justia Law

The Simons filed for Chapter 7 bankruptcy protection, identifying a nonpriority credit-card debt to FIA. FIA retained Weinstein, which sent the Simons a letter and notice through their bankruptcy counsel, stating that FIA was an adversary proceeding under 11 U.S.C. 523 to challenge dischargeability, but offering to forego the proceeding if the Simons stipulated that the debt was nondischargeable or agreed to a reduced amount. The letter stated that a Rule 2004 examination had been scheduled, but that Weinstein was open to settlement; it mentioned the possibility of rescheduling and set out information about challenging the debt. The subpoena certificate, signed by a Weinstein attorney, stated that a copy was mailed to the Simons’ home and their attorney’s office. The Simons allege that Weinstein did not actually send it to their home. Their counsel received copies. The Simons moved to quash, alleging violations of Bankruptcy Rule 9016 and Civil Rule 45 subpoena requirements, and filed an adversary proceeding asserting Fair Debt Collection Practices Act claims based on the letter. The Bankruptcy Court quashed the notices, but ruled that it lacked jurisdiction over the FDCPA claims. The Simons then sued FIA and Weinstein in the district court, which dismissed. The Third Circuit affirmed dismissal of 15 U.S.C 1692e(5) and (13) claims for allegedly failing to identify the recording method in the Rule 2004 examination and by issuing the subpoenas from a district other than where the examinations were to be held. The court also affirmed dismissal of a 1692e(11) claim because its mini-Miranda requirement conflicts with the Bankruptcy Code automatic stay. The court reversed dismissal of claims based failing to serve the subpoenas directly on the individuals and failing to include the text of Civil Rule 45(c)–(d) in the subpoenas. View "Simon v. FIA Card Servs., NA" on Justia Law

At a foreclosure mediation, Homeowners and representatives of Lender agreed that foreclosure proceedings would be halted while Homeowners were being considered for a loan modification. Several months later, Homeowners petitioned for judicial review, asserting that Lender breached the parties' agreement. The district court granted the petition, finding Lender had violated the agreement and directing Lender to participate in and pay for further mediation. The Supreme Court dismissed Lender's appeal, holding (1) to preserve and promote the interests of judicial economy and efficiency, an order remanding for further mediation generally is not final and appealable; and (2) the Court lacked jurisdiction to hear this appeal because, given the remand for additional mediation, the district court's order was not final and appealable. View " Wells Fargo Bank, N.A. v. O'Brien" on Justia Law

Plaintiff refinanced his home mortgage and entered into a refinancing loan and mortgage agreement with IndyMac Bank, which assigned the mortgage to OneWest Bank. The mortgage was serviced by IndyMac Mortgage Services (all three services are referred to as "OneWest"). After Plaintiff fell behind on his payments, Harmon Law Offices, counsel to OneWest, informed Plaintiff that his home would be foreclosed. Fannie Mae purchased Plaintiff's house at a subsequent foreclosure sale. Eleven days later, Harmon served Plaintiff with an eviction notice. Plaintiff sued OneWest, Fannie Mae, and Harmon, asserting negligence and negligent misrepresentation and seeking an injunction against the pending eviction, an order nullifying the foreclosure, and monetary damages. The district court dismissed the complaint, concluding that the economic loss doctrine barred Plaintiff's tort claims and that the tort claims failed because Defendants had not breached any duties owed to Plaintiff. The First Circuit Court of Appeals affirmed, holding that the district court did not err in dismissing Plaintiff's claims. View "Schaefer v. IndyMac Mort. Servs." on Justia Law

Todd alleges that in 2012 he received a recorded telephone message from Collecto asking him to call and help the company locate his mother, Terry. He called; a Collecto representative told him that Terry owed AT&T money for cell phone service. Todd stated that he is not Terry, but the representative continued to discuss the alleged debt without asking how to reach Terry or asking Todd to pay the bill. Todd claimed that this interaction harmed him emotionally and violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692b, which permits a debt collector to call a third party for help in locating a “consumer” but prohibits revealing the existence of the consumer’s debt to the third party. Section 1692f prohibits “unfair or unconscionable means to collect or attempt to collect any debt.” The district court concluded that Todd lacked standing under the Act. The Seventh Circuit affirmed, finding that Todd lacked standing under 1692b and failed to state a claim under 1692f. View "Todd v. Collecto, Inc." on Justia Law

Plaintiff sued the servicer of his loan (Bank) in a putative class action, asserting that the Bank's requirement that he maintain flood insurance coverage in an amount sufficient to cover the replacement value of his home breached the terms of his mortgage contract. The mortgage was insured by the Federal Housing Administration (FHA). Specifically, Defendant contended that the Bank, under a covenant of the mortgage contract, could not require more than the federally mandated minimum flood insurance. The covenant was a standard uniform covenant prescribed by the FHA pursuant to federal law. The district court dismissed the complaint for failure to state a claim. The judgment of dismissal was affirmed by an equally divided en banc First Circuit Court of Appeals, holding that Plaintiff failed to state a claim for breach of contract, as (1) the Bank's reading of the contract was correct and Plaintiff's was incorrect; (2) Plaintiff could not avoid dismissal on the grounds that his specific understanding or the actions of the parties created an ambiguity; and (3) the United States' position articulated in its amicus brief, which stated that Plaintiff's interpretation of the contract was incorrect, reinforced the Court's conclusion. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law