Justia Banking Opinion Summaries

Plaintiff Dennis Shaw and First Horizon Home Loan Corporation challenged an appellate court's ruling that "constructive fraud" was sufficient to void a request for release of a deed of trust, arguing that actual fraud is required under CRS 38-39-102(8). The Supreme Court reversed, concluding that the statute creates a narrow exception that voids the public trustee’s release of a deed of trust only when proof of actual fraud is demonstrated by a preponderance of the evidence. View "Shaw v. 17 West Mill St." on Justia Law

Newman Park, LLC was formed for the sole purpose of developing a piece of property. In 2004, it took out a loan to purchase the property at issue in this suit. In 2008, without knowledge of the other owners in Newman Park, one member went to Columbia Community Bank and requested a loan for his 95%-owned company, Trinity. Trinity had nothing to do with Newman Park, but the Bank's loan to Trinity was secured by a second deed of trust on the Newman Park property. The issue before the Supreme Court in this case was whether the Bank, who was tricked into refinancing the property that the borrower lacked authority to pledge as security, could benefit from equitable subrogation when that Bank had no preexisting interest in the property. The property-owner/debtor argued that the Bank's lack of the preexisting interest barred it from equitable subrogation because of the "volunteer rule" which would characterize it as an intermeddler. The Court rejected the volunteer rule as a bar to equitable subrogation. The Court affirmed the appellate court which held that the defrauded Bank was entitled to be equitably subrogated as first priority lienholder. View "Columbia Cmty. Bank v. Newman Park, LLC" on Justia Law

Trustee sued on behalf of victims in the Ponzi scheme worked by Bernard Madoff under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa, alleging that, when defendants were confronted with evidence of Madoff's illegitimate scheme, their banking fees gave incentive to look away, or at least caused a failure to perform due diligence that would have revealed the fraud. The court concluded that the doctrine of in pari delicto barred the Trustee from asserting claims directly against defendants on behalf of the estate for wrongdoing in which Madoff participated; SIPA provided no right to contribution; and the Trustee did not have standing to pursue common law claims on behalf of Madoff's customers. Accordingly, the court affirmed the district court's dismissal of the Trustee's claims. View "In Re: Bernard L. Madoff Investment Securities" on Justia Law

The FDIC, acting receiver for the Bank, filed an action to recover the deficiency owed on a promissory note executed by defendant and payable to the bank. On appeal, defendant challenged the district court's judgment in favor of the FDIC. The court concluded that the district court did not err in determining that no genuine issue of material fact existed as to the FDIC's status as holder of the Note; the district court did not abuse its discretion in granting the motion to strike defendant's surreply and an affidavit; the court concluded that filing a Form 1099-C was a creditor's required means of satisfying a reporting obligation to the IRS, not a means of accomplishing an actual discharge of debt, nor is it required only where an actual discharge had already occurred; and, in this case, the district court did not err in granting the FDIC's motion for summary judgment because defendant had not come forward with evidence that created a genuine issue of material as to whether the Note had been cancelled or assigned. Accordingly, the court affirmed the judgment. View "FDIC v. Cashion, III" on Justia Law

Petitioners' properties were in danger of foreclosure. Prior to any foreclosure action, Petitioners obtained loan modifications from their respective lenders to extend their loans' maturity dates and receive additional time to pay. Petitioners were unable to keep up with payments under the modification, and sought to prevent foreclosure arguing that the lenders engaged in the unauthorized practice of law by modifying the loans without an attorney. The Supreme Court disagreed, finding that modifying the loans without attorneys was not the unauthorized practice of law. View "Crawford v. Central Mortgage" on Justia Law

Respondent refinanced the mortgage on his home with a loan he obtained from Petitioner. Because Respondent failed to make his monthly loan payments in accordance with the parties' agreement, Petitioner invoked its right to initiate a foreclosure sale of the house. After the foreclosure sale, the property was sold to Petitioner. Because Respondent refused to vacate the house, Petitioner filed an unlawful detainer action. In response, Respondent asserted various counterclaims against Petitioner alleging violations of the West Virginia Consumer Credit and Protection Act. The circuit court conditionally granted Petitioner's motion to dismiss Respondent's counterclaims and additionally certified two questions for the Supreme Court's consideration regarding whether Respondent timely asserted his counterclaims. The Supreme Court concluded that the counterclaims were not timely. View "Tribeca Lending Corp. v. McCormick" on Justia Law

RICS executed a note secured by a mortgage on real estate. Meanwhile, TLA entered into a contract with RICS to provide architectural and engineering services for the project and recorded two documents related to its work on the project. Subsequently, TLA filed a petition to enforce its mechanics' lien. No claimant timely entered an appearance in TLA's mechanics' lien litigation to preserve the priority of their claims. Months later, Petra purchased the note and mortgage, which had not been recorded by the previous owner. Meanwhile, the superior court entered a consent order signed by RICS and TLS in the mechanics' lien litigation. RICS subsequently conveyed the property, and the court placed the property into receivership. Petra later filed a motion to file an answer and statement of claim out of time in the mechanics' lien proceedings. The court granted the motion, thereby restoring the mortgage's priority over TLA's mechanics' lien. The property was sold to Petra through a receivership action. The Supreme Court reversed the superior court's grant of Petra's motion, thereby restoring the priority of TLA's mechanics' lien, holding that the motion justice erred in determining that Petra's failure to file a timely statement of claim was the result of "excusable neglect." View "R.I. Constr. Servs., Inc. v. Harris Mill, LLC" on Justia Law

Delta filed suit against the Bank, under the Export-Import Bank Act, 12 U.S.C. 635(b)(1)(B), arguing that the Bank failed to consider the effects of loan guarantees given to Air India so that Air India could purchase Boeing airplanes. The district court entered judgment in favor of the Bank and Delta appealed. The court reversed, concluding that the Bank failed to reasonably explain its application of the Act in this case, as required by the Administrative Procedure Act, 5 U.S.C. 500 et seq. The court directed the district court to remand the case to the Bank for further proceedings, but the district court should not vacate any of the Bank's actions in this matter to date. View "Delta Air Lines, Inc. v. Export-Import Bank of the U.S., et al." on Justia Law

Stephen Jenkins brought a tort action against Wells Fargo Bank, N.A. alleging that a Bank teller had improperly accessed Jenkins’s confidential information and given it to her husband, allowing the husband to steal Jenkins’s identity. Jenkins claimed the Bank negligently failed to protect the information, breached a duty of confidentiality, and invaded his privacy. The trial court granted the Bank’s motion for judgment on the pleadings. The Court of Appeals reversed as to Jenkins’s negligence claim after finding that the allegations of his complaint established the elements of negligence. The Supreme Court granted certiorari to consider whether the Court of Appeals erred in holding that a violation of an alleged duty imposed the Gramm–Leach–Bliley Act gave rise to a cause of action for negligence under Georgia law. The Supreme Court concluded that the holding was in error, and reversed that portion of the judgment of the Court of Appeals. View "Wells Fargo Bank, N.A. v. Jenkins" on Justia Law

Daley opened an IRA with Merrill Lynch, rolling over $64,646 from another financial institution. He signed a contract with a "liens" provision that pledged the IRA as security for any future debts to Merrill Lynch. No such debts ever arose. Daley never withdrew money from his IRA, borrowed from it or used it as collateral. Two years later, Daley filed a Chapter 7 bankruptcy petition and sought protection for the IRAs, 11 U.S.C. 522(b)(3)(C). The trustee objected, contending that the IRA lost its exempt status when Daley signed the lien agreement. The bankruptcy court and the district court ruled in favor of the trustee. The Sixth Circuit reversed. An IRA loses its tax-exempt status if the owner "engages in any transaction prohibited by section 4975 of the tax code. There are six such transactions, including “any direct or indirect” “lending of money or other extension of credit” between the IRA and its owner, 26 U.S.C. 4975(c)(1)(B). Daley never borrowed from the IRA, and Merrill Lynch never extended credit to Daley based on the existence of the IRA. View "Daley v. Mostoller" on Justia Law