Justia Banking Opinion Summaries

This appeal arose from appellee Bank of America, N.A.'s attempts to enforce the terms of the promissory note and deed to secure debt executed in its favor by appellant Johnta M. Austin ("Borrower"). The Bank sued to collect the debt it claimed the Borrower owed as a result of default, including attorney fees, and the trial court awarded the Bank summary judgment. The issue came on appeal to the Georgia Supreme Court because the constitutionality of the statute at issue was called into question. The Court has long held that "all presumptions are in favor of the constitutionality of an act of the legislature and that before an [a]ct of the legislature can be declared unconstitutional, the conflict between it and the fundamental law must be clear and palpable and [the] Court must be clearly satisfied of its unconstitutionality." The Court found that the statute in this case bore a rational relation to the purpose for which the statute was intended, namely to provide debtors with the opportunity to avoid the contractual obligation to pay the creditor’s attorney fees by allowing the debtor a last chance to pay the balance of the debt and avoid litigation. Further, the Court concluded that the application of OCGA 13-1-11 to arrive at the amount of the award of attorney fees in this case was neither punitive nor violative of Borrowers’ due process rights, nor was the award contrary to the intent of the statute. View "Austin v. Bank of America N.A." on Justia Law

Peoples Bank loaned Debtors $214,044, secured by a mortgage recorded in 2004. In 2008, Debtors obtained a $296,000 construction loan from Banterra, secured with a second mortgage on the same property. Banterra was aware of the first mortgage, but did not know was that in 2007, Debtors obtained a second loan from Peoples, for $400,000, secured by another mortgage on a different piece of property. The 2004 Peoples mortgage contained a cross-collateralization provision, stating that “In addition to the Note, this Mortgage secures all obligations … of Grantor to Lender … now existing or hereafter arising,” and a provision that “At no time shall the principal amount of the Indebtedness secured by the Mortgage … exceed $214,044.26 … “Indebtedness” … includes all amounts that may be indirectly secured by the Cross-Collateralization provision.” In 2010 Debtors filed a Chapter 11 bankruptcy petition. The balance due on Peoples 2004 loan was then $115,044.26. Debtors received permission and sold the property for $388,500.00. Out of these proceeds, Peoples claimed the balance due on the 2004 loan plus partial payment of the 2007, up to the cap. The Bankruptcy Court found in favor of Peoples. The district court reversed. The Seventh Circuit reversed, upholding the “plain language” of the cross-collateralization agreement. View "Peoples Nat'l Bank v. Banterra Bank" on Justia Law

Fred and Nancy Eagerton petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to enter a judgment as a matter of law in their favor and against SE Property Holdings, LLC, consistent with the Court's mandate in "Eagerton v. Vision Bank," (99 So. 3d 299 (Ala. 2012)). SE Property Holdings, LLC, is the successor by merger to Vision Bank. The underlying suit arose from a loan that the Eagertons personally guaranteed, secured by a mortgage on property within the Rock Creek Tennis Club in Fairhope. The bank declared the original and second loans in default and accelerated balances due under both. The bank sued the primary obligor, and the Eagertons as person guarantors on one of the original loans. The primary obligor declared Chapter 11 bankruptcy. The reorganization plan consolidated the two loans. The obligor eventually defaulted on the terms of the reorganization plan. The bankruptcy was dismissed, the property foreclosed, and the money obtained in the foreclosure sale was applied to the consolidated loan. The Eagertons argued that the Chapter 11 reorganization of the debts of primary obligor (the consolidation of the original loan with the second loan), created a new indebtedness not encompassed by their guaranty contracts. The Eagertons therefore argued that the creation of this new indebtedness, without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. The bank, on the other hand, argued, among other things, that the consolidated loan was a replacement note contemplated by the guaranty contracts and that the Eagertons had waived the material-modification defense. The Supreme Court in "Eagerton v. Vision Bank" concluded that the Eagertons' guaranty contracts were unambiguous; that based on the language in the guaranty contracts the Eagertons did not intend to guarantee any indebtedness other than that indebtedness arising out of the original loan and any extensions, renewals, or replacements thereof; and that, once the Eagertons' original loan was modified pursuant to the Chapter 11 reorganization of Dotson 10s, the Eagertons were at that point discharged from any further obligations under their guaranty contracts. Because the circuit court did not follow the mandate in the Court's prior decision in "Vision Bank," the Supreme Court granted the Eagertons' petition and issued the writ. View "SE Property Holdings, LLC v. Eagerton" on Justia Law

After plaintiffs' house was sold at a non-judicial foreclosure sale, they sued the lender, the holder of the Deed of Trust at the time of the sale, and the successor trustee. The district court granted defendants' motion to dismiss. The court affirmed, concluding that plaintiffs lacked standing to challenge the Fannie Mae designation; the foreclosure sale's procedures complied with Missouri law; the district court properly ruled that plaintiffs' challenged to activities after the foreclosure sale lacked standing; the district court did not err in dismissing plaintiffs' breach-of-fiduciary-duty claim; and the district court did not err in deciding that plaintiffs had failed to plead facts that proved a duty to investigate the transaction on the part of the fiduciary trustee. View "Hallquist, et al v. United Home Loan, et al" on Justia Law

Defendant in the underlying action was a "mortgage servicer" that engaged in the business of serving residential mortgages of individuals. Plaintiff in the underlying proceeding contended that mortgage servicing is a "consumer transaction" as defined in the Ohio Consumer Sales Practices Act (CSPA), Ohio Rev. Code 1345.01. Defendant countered that mortgage servicers perform services for financial institutions, not for borrowers, and therefore the transactions are commercial in nature and are not covered by the CSPA. The Supreme Court accepted certification of state-law questions from the federal district court concerning the proper interpretation of Ohio Rev. Code 1345.01(A) and (C). The Supreme Court held that the CSPA does not apply to the servicing of residential mortgage loans because mortgage servicing is not a consumer transaction under the CSPA, and an entity that services a residential mortgage loan is not a "supplier" that engages "in the business of effecting or soliciting consumer transactions" within the meaning of the CSPA. View "Anderson v. BarclayÂ's Capital Real Estate, Inc." on Justia Law

Affordable appealed the district court's grant of Fannie Mae's motion to dismiss, concluding that EFA had not acted as Fannie Mae's agent in originating the loan for a senior living complex that Affordable purchased and that the loan documents unambiguously authorized a prepayment penalty. The court affirmed the dismissal of Affordable's claims for negligent misrepresentation, breach of the covenant of good faith and fair dealing, and unjust enrichment. However, the court reversed the dismissal of Affordable's breach of contract claim where the agreement was ambiguous as to whether "condemnation award" included a sale in lieu of condemnation and remanded for further proceedings. View "Affordable Communities of MO v. Federal Nat'l. Mortgage Assoc." on Justia Law

Debtor borrowed money to finance a real estate purchase. Debtor signed a promissory note and secured the loan with a mortgage. Bank of America (BANA) became the owner of the note. After the mortgage was recorded, an assignment of the mortgage to Mortgage Electronic Registration Systems (MERS) was recorded. MERS subsequently assigned the mortgage to BAC Home Loans Servicing (BAC), which was servicing the loan on behalf of BANA. After Debtor defaulted on her home loan, she and her husband filed a Chapter 7 bankruptcy petition. The bankruptcy trustee subsequently initiated an adversary proceeding against BAC, seeking to avoid the mortgage for its failure to comply with the requirements of Wyo. Stat. Ann. 34-2-122 and -123 (the statutes), notice statutes intended to protect third parties from conflicting claims of a principal and agent. The U.S. bankruptcy court filed a certification order to the Wyoming Supreme Court requesting the Court to answer with the mortgage must comply with the requirements of the statutes. The Supreme Court held that the statutes did not apply in this case because there were no conflicting claims by a principal and an agent from which a third party needed protection. View "Barney v. BAC Home Loans Servicing, L.P." on Justia Law

Appellant purchased nonrecourse notes (Notes) in the amount of two million dollars, issued by the Puerto Rico Conservation Trust Fund (PRCTF). The Notes were not registered under the Securities Act based on an exemption from registration. The Notes later went into default, and Appellant sued Banco Popular de Puerto Rico (BPPR), trustee of the Notes, and Wilmington Trust Company (WTC), indenture trustee of the securities that the PRCTF purchased with Note proceeds. Appellant brought suit in federal district court, premising his assertion of subject matter jurisdiction on the Edge Act and the Trust Indenture Act of 1939 (TIA). The district court dismissed the amended complaint for want of subject matter jurisdiction. The First Circuit Court of Appeals affirmed, holding (1) Appellant's suit did not arise under federal law; and (2) the district court did not abuse its discretion in refusing to permit Appellant to file a delayed amended complaint asserting a new theory of liability because Appellant proffered no good reason for the delay. View "Nikitine v. Wilmington Trust Co." on Justia Law

Defendants gave a promissory note to Bank and secured a loan with a trust deed on real property. Defendants defaulted on the note, and Bank initiated foreclosure proceedings. The property was sold after a sheriff's sale. Bank subsequently filed a complaint to recover the deficiency. The district court granted Defendants' motion for summary judgment, holding that because Bank filed its complaint ninety-nine days after the sheriff's sale, the action was barred by the three-month statute of limitations in Neb. Rev. Stat. 76-1013. The Supreme Court reversed, holding (1) the special three-month statute of limitations on actions for deficiency set forth in the Nebraska Trust Deeds Act applies where a lender elects to judicially foreclose upon the real estate, but the special limitation applies only where the property has been sold by exercising the power of sale set forth in the trust deed; and (2) because the judicial foreclosure of the trust deed in this case did not result in the sale of property under a trust deed, it did not fall under the statutory language in section 76-1013, and the deficiency action was governed by the general statute of limitations for actions on written contracts. Remanded. View "First Nat'l Bank of Omaha v. Davey" on Justia Law

Plaintiffs commenced this putative class action alleging that defendants participated in a global Internet conspiracy to sell illegal prescription drugs, in violation of the laws of the United States and Virginia. At issue on appeal was whether the district court erred in dismissing the complaint against four foreign banks for lack of personal jurisdiction. The court concluded that Rule 4(k)(2) did not justify the exercise of personal jurisdiction over the banks because exercising jurisdiction over them would not, in the circumstances here, be consistent with the United States Constitution and laws. Subjecting the banks to the coercive power of the court in the United States, in the absence of minimum contacts, would constitute a violation of the Due Process Clause. Accordingly, the court affirmed the district court's orders dismissing the complaint against the banks. View "Unspam Technologies v. Chernuk" on Justia Law