Justia Banking Opinion Summaries

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

Plaintiff Berkshire Bank filed this action seeking possession of funds in an investment account owned by defendant Thomas Kelly, which defendant purportedly pledged as security for a business loan to his sister Dorothea Kelly. The civil division granted summary judgment in favor of defendant, concluding that plaintiff did not have a valid security interest in the account. After review, the Vermont Supreme Court agreed and affirmed. View "Berkshire Bank v. Kelly" on Justia Law

The case arises out of the insolvency of the Crescent Bank and Trust Company (“Crescent”) and the conduct of its customer lawyer, a manager of his law firm, Morris Hardwick Schneider, LLC (“Hardwick law firm”). In 2009, Crescent, a Georgia bank, made the lawyer a loan for $631,276.71. The lawyer, as his law firm’s manager, signed a security agreement that pledged, as collateral, his law firm’s certificate of time deposit (“CD”) for $631,276.71. When Crescent failed, the Federal Deposit Insurance Corporation (“FDIC”), as receiver, took over and sold the lawyer’s loan and CD collateral to Renasant Bank. The lawyer then made loan payments to Renasant, and Renasant held the CD collateral. Landcastle sued Renasant (as successor to the FDIC and Crescent), claiming Renasant was liable for $631,276.71, the CD amount. Landcastle’s lawsuit seeks to invalidate the Hardwick law firm’s security agreement.   The Eleventh Circuit reversed the district court’s ruling. The court explained that Landcastle’s lack-of-authority claims are barred under D’Oench because they rely on evidence that was outside Crescent’s records when the FDIC took over and sold the lawyer’s loan and CD collateral to Renasant. The court concluded that the lawyer’s acting outside the scope of his authority did not render the security agreement void but, at most, only voidable. A voidable interest is sufficient to pass the CD security agreement to the FDIC and to trigger the D’Oench shield View "Landcastle Acquisition Corp. v. Renasant Bank" on Justia Law

Jimmy and Laura Bailey mortgaged their home in October 2009 to Quicken Loans (first mortgage). A week later, the Baileys entered into an equity line of credit a month later with ArrowPointe Federal Credit Union (the LOC) to the maximum principal amount. The ArrowPointe LOC was secured by a mortgage; ArrowPointe had record notice of the first mortgage. Shortly after taking out the second mortgage, the Baileys refinanced the first mortgage with Quicken in a greater amount than the previous first mortgage. The Baileys executed a “Title Company Client Acknowledgement” at the closing of the refinanced mortgage, which stated the only outstanding lien on the subject property was the first mortgage. There was no clear explanation in the record as to whether Quicken obtained a title examination to ascertain whether there were any outstanding additional liens; Quicken did not ask ArrowPointe to sign a subordination agreement, and ArrowPointe was unaware of the refinance. The Baileys used money from the refinance to pay the first mortgage. Quicken released the first mortgage and recorded the refinance. The Baileys ultimately defaulted on the LOC, and ArrowPointe filed an action to declare its lien had priority over the refinance. US Bank, assignee to the Quicken refinance, argued it was entitled to priority under the replacement mortgage doctrine. ArrowPointe argued it was entitled to priority because Quicken had record notice of its LOC at the time of refinancing. A referee concluded South Carolina did not recognize the replacement mortgage doctrine, and because there was no subordination agreement, ArrowPointe had priority under the race-notice statute. The referee ordered foreclosure and sale of the subject property. Finding no reversible error in the referee’s order, the South Carolina Supreme Court affirmed. View "ArrowPointe Federal Credit Union v. Bailey" on Justia Law

The Supreme Court affirmed the judgment of the circuit court striking Arch Insurance Company's conversion and unjust enrichment claims, holding that the circuit court did not err in concluding that Arch was incapable of demonstrating a priority right to the disputed funds at issue in this case as a matter of law.FVCbank provided Dominion Mechanical Contractors, Inc. with a revolving line of credit. Arch, a surety company, issued contract surety bonds for some of Dominion's projects. Due to Dominion's later financial troubles, FVCbank froze Dominion's accounts. Arch and Dominion sued, claiming conversion and unjust enrichment. The circuit court granted FVCbank's motion to strike Arch's claims, finding that because FVCbank had a priority interest in Dominion's accounts, there was no legal claim for unjust enrichment or conversion. The circuit court affirmed, holding that the circuit court (1) correctly concluded that FVCbank's interest in Dominion's deposit accounts took priority over Arch's interest as a matter of law; and (2) properly dismissed the claims with prejudice. View "Arch Insurance Co. v. FVCbank" on Justia Law

The principal issue in this appeal of a 28 U.S.C. § 1782(a) discovery order is whether, in response to the ex parte order authorizing discovery by “interested parties” for use in foreign litigation, the respondents have a right to challenge the order’s validity pursuant to statutory requirements and the Supreme Court’s “Intel factors.”    The Fifth Circuit reversed and remanded, concluding that the district court here misconstrued the court’s precedent and erroneously rebuffed Respondents’ challenge on its face. The court explained that the uncontested facts suggest the possibility that (a) some of the sought discovery is accessible currently in the foreign courts; (b) Appellees’ object here is to obtain unredacted copies of that which may be protected by law in the Portuguese proceedings; and (c) therefore, the requests in many aspects pose an undue burden on the appellants. The court wrote it does not express an opinion on these points but notes that they were never thoroughly vetted in the district court because of the court’s refusal to reconsider the Intel factors and the truncated discussion of “interested parties” under Section 1728(a). Thus, by refusing to consider Appellants’ arguments and evidence challenging whether the Appellees satisfied the statutory criteria and the Intel factors to obtain Section 1782(a) discovery, the district court misapplied the law and abused its discretion. View "Banca Pueyo SA v. Lone Star Fund IX" on Justia Law

Wells Fargo Bank made a loan to Talisker Finance, Inc. Under the loan agreement, Talisker gave Wells Fargo a security interest in three parcels of land owned by Talisker’s affiliates. To ensure that Talisker’s affiliates had good title to the parcels, Wells Fargo bought title insurance from Stewart Title Guaranty Company. Talisker defaulted, but it couldn’t deliver good title to part of the land promised as collateral. The default triggered Wells Fargo’s right to compensation under the title insurance policy. Under that policy, Stewart owed Wells Fargo for the diminution in the value of the collateral. But the amount of the diminution was complicated by the presence of multiple parcels. The district court concluded that the lost parcel didn’t affect the value of the other parcels. After review, the Tenth Circuit concurred: because their values remained constant, the district court properly found that the diminution was simply the value of the collateral that Talisker’s affiliates didn’t own. View "Wells Fargo Bank v. Stewart Title Guaranty Company" on Justia Law

An arbitrator determined that a borrower and lender were liable to each other for similar amounts, each roughly two and a half million dollars. He then offset the awards against each other, resolving the disputed issue of whether a setoff was proper. A bank, however, had also lent money to the borrower. The bank was not a party to the arbitration, but believed the setoff effectively circumvented the agreement among it, the borrower, and the other lender that the bank’s loan had priority and would be paid back first. Instead of being offset against the other lender’s award, the bank believed, the borrower’s award should have gone toward satisfying the bank’s loan. It thus convinced the trial court to correct the arbitrator’s award by eliminating the setoff. The Court of Appeal held that on the facts presented, the correction affected the merits of the arbitrator’s decision. Accordingly, the correction was improper, and the Court reversed. View "E-Commerce Lighting, Inc. v. E-Commerce Trade LLC" on Justia Law