Justia Banking Opinion Summaries

Plaintiffs obtained loans from Defendant, a bank. Plaintiffs later, on behalf of themselves and all those similarly situated, filed a complaint alleging that Defendant's loan transactions violated North Carolina's unfair and deceptive practices statute. Specifically, Plaintiffs alleged that they paid loan discount fees but did not receive discounted loans and that the fees they were charged in connection with origination of their loans were unnecessary and unreasonable. The trial court granted partial summary judgment for Plaintiffs on their loan discount claims and excessive pricing claims under N.C. Gen. Stat. 75-1.1. The court of appeals affirmed entry of summary judgment on Plaintiffs' loan discount claims but reversed the grant of summary judgment on the excessive fees claims. The Supreme Court reversed, holding (1) issues of material fact existed in regards to Plaintiffs' loan discount claims; and (2) Plaintiffs' excessive pricing claims were not recognized by section 75-1.1. Remanded. View "Bumpers v. Cmty. Bank of N. Va." on Justia Law

Mark Hilde hired Big Lake Lumber (Big Lake), Wruck Excavating (Wruck), and J. DesMarais Construction (DesMarais) to help him build a "spec home." 21st Century Bank (Bank) recorded a mortgage against the property to finance the purchase of the property and the home construction. After the Bank foreclosed on its mortgage, Big Lake commenced this mechanic's lien foreclosure action. The district court found that the mechanic's liens of Big Lake and DesMarais related back to the date Wruck commenced work on the improvement project, and thus, the mechanic's liens of Big Lake and DesMarais had priority over the mortgage of the Bank. The court of appeals reversed. The Supreme Court reversed, holding (1) the court of appeals erred by adopting and then applying a new "integrated analysis" to find the Bank's mortgage superior to the liens; and (2) the district court did not clearly err when it found that Wruck, Big Lake, and DesMarais contributed to the same project of improvement, and accordingly, under the relation-back doctrine, the mechanic's liens of Big Lake and DesMarais had priority over the Bank's mortgage. View "Big Lake Lumber, Inc. v. Sec. Prop. Invs., Inc." on Justia Law

Defendant executed a promissory note secured by a mortgage deed. Plaintiff subsequently sought to foreclose on the mortgage, claiming it was the holder of the note and mortgage. The trial court rendered a judgment of foreclosure by sale. Defendant filed an objection to the foreclosure, alleging that because he was no longer in default, Plaintiff did not have standing to foreclose the mortgage. Defendant also requested that the court direct Plaintiff to produce the original note to prove Plaintiff had standing to institute the foreclosure action. The court determined Plaintiff had standing and rendered judgment of strict foreclosure. The appellate court reversed, concluding that the trial court erred by failing to conduct an evidentiary hearing to determine whether Plaintiff had standing to bring this action after Defendant challenged Plaintiff's standing. The Supreme Court reversed, holding that, under the circumstances, Defendant failed to demonstrate that he was entitled to a full evidentiary hearing on the issue of Plaintiff's standing where the trial court's determination that Plaintiff had standing to commence this action was not in error. Remanded. View "Equity One, Inc. v. Shivers" on Justia Law

The National Credit Union Administration (NCUA) placed two credit unions, U.S. Central Federal Credit Union and Western Corporate Federal Credit Union (WesCorp), into conservatorship. Then, as liquidating agent, NCUA sued 11 defendants on behalf of U.S. Central, alleging federal and state securities violations.In a separate matter, NCUA sued one defendant on behalf of U.S. Central and WesCorp, alleging similar federal and state securities violations. The United States District Court for the District of Kansas consolidated the cases. All defendants moved for dismissal, arguing that NCUA’s claims were time-barred. The district court denied the motion, concluding that the "Extender Statute" applied to NCUA’s claims. Defendants moved for an interlocutory appeal for the Tenth Circuit to determine whether the Extender Statute applied to NCUA's claims. Finding that it did, the Tenth Circuit affirmed. View "National Credit Union Admin. v. Nomura Home Equity Loan, et al" on Justia Law

Before its 2007 bankruptcy, Sentinel was an investment manager. Its customers were not typical investors; most were futures commission merchants (FCMs), which operate in the commodity industry like to the securities industry’s broker‐dealers. Through Sentinel, FCMs’ client money could, in compliance with industry regulations, earn a decent return while maintaining the liquidity FCMs need. To accept capital from FCM customers, Sentinel had to register as an FCM, but it did not solicit or accept orders for futures contracts; it received a no‐action letter from the Commodity Futures Trading Commission (CFTC) exempting it from certain requirements applicable to FCMs. Sentinel represented that it would maintain customer funds in segregated accounts as required under the Commodity Exchange Act, 7 U.S.C. 1. In reality, Sentinel pledged hundreds of millions of dollars in customer assets to secure an overnight loan at the Bank of New York. Sentinel’s bankruptcy trustee claimed fraudulent transfer, equitable subordination, and illegal contract, in an effort to dislodge the Bank’s secured position. The district court rejected all of the claims. The Seventh Circuit reversed, rejecting a finding that Sentinel’s failure to keep client funds properly segregated was insufficient to show actual intent to hinder, delay, or defraud. View "In re Sentinel Mgmt. Grp., Inc." on Justia Law

Appellants, owners and/or managers of Big Drive Cattle, LLC, appealed the district court's dismissal of their counterclaims against Farm Credit. Big Drive executed various promissory notes and loan agreements with Farm Credit. Farm Credit subsequently filed suit against appellants to enforce appellants' guarantees. Appellants filed counterclaims against Farm Credit for negligence, negligent misrepresentations, and breach of the duty of good faith and fair dealing. The court concluded that appellants could not rely on the loan agreements, the notes, the guarantees, or any other contracts for the source of the legal duty of accurate reporting they alleged Farm Credit owed to them; appellants' allegations that Farm Credit ignored an "express directive" to remove a particular employee from Big Drive's line of credit was not relevant to their amended counterclaims; and appellants failed to state a claim for negligence where appellants have not plead any plausible duty requiring Farm Credit to provide appellants with accurate reports on the loan collateral, negligent misrepresentation where appellants did not plead the element of intent, and breach of the duty of good faith and fair dealing where appellants failed to plead sufficient specific facts to establish damages arising from Farm Credit's breach. Accordingly, the court affirmed the judgment of the district court. View "Page, et al. v. Farm Credit Services, etc., et al." on Justia Law

Watson’s companies, Cyberco and Teleservices, defrauded lending institutions and other businesses that provided funding for Cyberco to purchase computer equipment from Teleservices. Cyberco never actually received any equipment, but the lending institutions forwarded funds to Teleservices based on phony invoices Watson arranged. Watson packed Cyberco’s computer room with fake servers and swapped serial numbers among those servers to deceive the victims when they attempted to audit their collateral. Teleservices “funneled” the funds back to Cyberco, which used them to make payments to allow the fraud to continue and to pay Watson and others substantial salaries. The payments were made through Huntington Bank, which also facilitated payments through its cash management services, but Cyberco owed Huntington more than $16 million. Teleservices, which had no banking relationship with Huntington, made payments so that Huntington could reduce its exposure to about $600,000 in a few months, just weeks before the FBI raided Cyberco. After that raid, creditors commenced an involuntary Chapter 7 proceeding against Cyberco. A state-appointed receiver filed a voluntary Chapter 7 bankruptcy petition for Teleservices. The bankruptcy court dismissed Huntington’s motions for substantive consolidation of the Chapter 7 petitions. The Bankruptcy Appellate Panel determined that the denials were not final appealable orders. The Sixth Circuit affirmed. View "In re: Cyberco Holdings, Inc." on Justia Law

In case no. 1111525, M & F Bank ("M & F") appealed a summary judgment entered in favor of First American Title Insurance Company ("FATIC") on negligence, breach-of-contract, and bad-faith-failure-to-pay claims M&F asserted against FATIC related to a title-insurance policy ("the title policy") FATIC issued M & F in connection with a mortgage loan made by M & F to a developer of property in Auburn. In case no. 1111568, FATIC appealed the grant of summary judgment entered in favor of M & F on FATIC's counterclaims asserting abuse of process, conspiracy, breach of contract, and negligence. Upon review of both cases, the Supreme Court affirmed both judgments. View "M & F Bank v. First American Title Insurance Company " on Justia Law

At the heart of this appeal was a mechanic's lien filed against the Black Rock North Development in Coeur d?Alene, Idaho, and an uncompleted golf course community development. American Bank (the Bank) was the lender to BRN Development, Inc. (BRN). BRN hired Wadsworth Golf Construction Company of the Southwest (Wadsworth) to construct a golf course. BRN failed to pay Wadsworth for a portion of the work it performed, and Wadsworth filed a mechanic's lien against the property. BRN defaulted on the loan, and the Bank initiated foreclosure proceedings. Wadsworth's claim of lien was subordinate to the Bank's mortgage interest in the property. In order to proceed with a foreclosure sale, the Bank posted a lien release bond in order to secure the district court's order releasing Wadsworth's lien. The Bank was the successful bidder at the foreclosure sale. The district court ruled that priority of the parties? claims against the property was irrelevant once the property was replaced by the lien release bond as security for Wadsworth's claim and the Bank (by way of the bond) was responsible for payment of Wadsworth's lien claim. The Bank appeals that decision, arguing that Wadsworth should have been prevented from recovering against the lien release bond because its interest would have been extinguished if it had attempted to foreclose its mechanic's lien and the bond merely served as substitute security in place of the property. Wadsworth cross-appealed, arguing the district court erred in holding that Wadsworth waived its right to file a lien for the unpaid retainage on the contract. Upon review, the Supreme Court reversed the district court allowing Wadsworth to recover against the lien release bond and vacated the district court's judgment in favor of Wadsworth. View "Americn Bank v. Wadsworth Golf" on Justia Law

In 2004, Plaintiffs refinanced their home by means of a loan from Downey Savings and Loan Association (Downey), a federal insured financial institution. In 2008, Plaintiffs' monthly loan payment doubled. Later that year, Downey was closed and the FDIC was appointed as its receiver. U.S. Bank subsequently assumed all of Downey's loans and mortgages. After Plaintiffs defaulted on their mortgage loan, U.S. Bank conducted a foreclosure sale and recorded a foreclosure deed. Plaintiffs, in turn, sued U.S. Bank, claiming that the loan made by Downey violated various state consumer protection laws and that the foreclosure was unlawful. U.S. Bank removed the case to federal district court, which granted summary judgment to U.S. Bank. The First Circuit Court of Appeals affirmed, holding (1) the Financial Institutions Reform, Recovery, and Enforcement Act's exhaustion requirement applied to Plaintiffs' consumer protection claims, and therefore, Plaintiffs' failure to file those claims with the FDIC divested the district court of subject-matter jurisdiction; and (2) the transfer of a mortgage, authorized by federal law, obviates the need for a specific written assignment of the mortgage that state law would otherwise require, and thus, the foreclosure sale in this case was lawful. View "Demelo v. U.S. Bank Nat'l Ass'n" on Justia Law