Justia Banking Opinion Summaries

Construction Company contracted with Subcontractor for construction of elements of an HVAC system. As partial collateral for a revolving line of credit, Subcontractor assigned to Bank its right to receive payment under the contract with Construction Company. Construction Company instead made twelve payments to Subcontractor. Subcontractor subsequently ceased business operations, leaving an outstanding debt to Bank on its line of credit. Bank filed an action against Construction Company for breach of contract and violation of the UCC. A jury found (1) Construction Company liable on both counts for ten of the twelve checks that it had delivered to Subcontractor, and (2) Bank was estopped from recovering with respect to the final two checks. The judge entered judgment on the statutory claim in the amount of $3,015,000, the full face value of the ten checks. The Supreme Court affirmed in part and reversed in part, holding that the trial judge (1) properly entered judgment on Bank's statutory claim in the amount of the wrongfully midirected payments; but (2) erred in denying the bank's motion for partial judgment notwithstanding the verdict with respect to the final two checks, as there was insufficient evidence to support Construction Company's defense of estoppel. View "Reading Coop. Bank v. Constr. Co." on Justia Law

Defendant bought a custom-made yacht with the help of a loan from Barclays Bank. When Defendant stopped making payments on the loan, Barclays repossessed the yacht and sold it pursuant to the Florida UCC. Barclays got less than what Defendant owed on the yacht, and therefore, Barclays sued Defendant for the deficiency. Defendant moved for summary judgment, arguing that Barclays was barred from recovering the deficiency because, in violation of the mortgage's terms, it did not provide Defendant with proper notice of the sale. The district court denied Defendant's motion and sua sponte granted summary judgment in favor of Barclays. The First Circuit Court of Appeals affirmed, holding that the notice Barclays provided to Defendant was sufficient. View "Barclays Bank PLC v. Poynter" on Justia Law

Between 1982 and 1997, Alfes took out student loans funded by FFELP. Alfes consolidated his student-loan debt; SunTrust was the lender and obligee on the consolidated note and the Pennsylvania Higher Education Assistance Agency was the guarantor. Alfes sought relief under Chapter 7 of the Bankruptcy Code. The bankruptcy court entered a general discharge in 2005. Subsequently, Alfes sought a declaration that the debt under the consolidated note had been discharged, arguing that the consolidated note no longer constituted an “educational loan” under 11 U.S.C. 523(a)(8)(A) and had been discharged with his ordinary debt. The bankruptcy court initially entered a default judgment against the defendants. Following a series of transfers, reopening, and various motions, the bankruptcy court ultimately held that a holder of consolidated student loans is an educational lender and that the consolidated loan was, therefore, not dischargeable absent a showing of undue hardship. The district court and Sixth Circuit affirmed. View "Alfes v. Educ. Credit Mgmt. Corp." on Justia Law

In 1996, Terri Cole and her husband financed the purchase of a home through a loan secured by a deed of trust on the home and the underlying property. In 2005, Vanderbilt Mortgage and Finance, Inc. became the servicer of the loan. Code defaulted on her loan in 2010. Vanderbilt foreclosed and purchased the home and real property at a trustee's sale. Thereafter, Cole refused to vacate the home. Vanderbilt filed an unlawful detainer action. Cole counterclaimed, alleging that Vanderbilt had violated the West Virginia Consumer Credit and Protection Act (WVCCPA). Regarding the unlawful detainer claim, the circuit court found in favor of Vanderbilt. As to the remaining issues, the jury found Vanderbilt engaged in several violations of the WVCCPA. The circuit court subsequently awarded civil penalties to Cole totaling $32,125, and, some weeks later, granted Cole's motion for attorney fees and costs. The Supreme Court affirmed the circuit court's civil penalties order and award of attorney fees, holding that the circuit court did not commit error with regard to either the civil penalties order or the attorney fees order. View "Vanderbilt Mortgage & Fin., Inc. v. Cole" on Justia Law

In 2005, Tonya Bass executed an adjustable rate promissory note with Mortgage Lenders Network USA. The Note was then transferred several times: from Mortgage Lenders to Emax Financial Group, from Emax to Residential Funding Corporation, and from Residential Funding to U.S. Bank. The Note evidenced these transfers by three stamped imprints. In 2009, U.S. Bank filed this foreclosure action after Bass failed to make timely payments. The trial court dismissed the foreclosure action, concluding that because the Note was not properly indorsed and conveyed to Emax or Residential Funding, U.S. Bank was not the rightful holder of the Note. The court based its ruling that the first stamp was "unsigned" and failed to establish negotiation from Mortgage Lenders to Emax. The Supreme Court reversed, holding (1) the indorsements on the Note unambiguously indicated the intent to transfer the Note from each preceding lender and finally to U.S. Bank; and (2) therefore, U.S. Bank was the holder of the Note and had the authority to bring this foreclosure action against Bass. View "In re Foreclosure of Bass" on Justia Law

Decedent created an inter vivos revocable trust. Until her death, Decedent served as the trust's sole trustee. At Decedent's request, Attorney drafted the trust documents and a pour-over will. Bank was named successor trustee of Decedent's trust. After Decedent died, the personal representative (Representative) of Decedent's estate sued Attorney and Bank. Against Attorney, the petition alleged claims of negligence and breaches of fiduciary duty and contract based on the alleged failure of Defendants to protect Decedent's assets from tax liability. The district court granted Defendants' motions of summary judgment. Specifically, the court held that Representative's tort claims for legal malpractice did not survive Decedent's death. The court of appeals affirmed the grant of summary judgment for Attorney. The Supreme Court affirmed, holding that because Representative's cause of action did not accrue until after Decedent's death, it did not qualify as a survival action under Kan. Stat. Ann. 60-1801 and was therefore barred. View "Jeanes v. Bank of Am., N.A." on Justia Law

MBIA sued as the third party beneficiary of the Pooling and Servicing Agreements (PSAs) of a failed bank. It alleged that the FDIC as conservator of the successor bank had "approved," the PSAs and then breached its "Put Back" obligations under those agreements, resulting in investor claims of MBIA-issued insurance policies. At issue was whether payments made by MBIA to investors in mortgage securitizations of a failed bank constituted "administrative expenses" entitled to priority under the Financial Institutions, Reform, Recovery, and Enforcement Act (FIRREA), 12 U.S.C. 1821(d)(11)(A). The court held that the district court properly rejected MBIA's broad interpretation of "approved" in section 1821(d)(20) and dismissed MBIA's damage claims in counts I-V and VIII as prudentially moot in light of the FDIC's No Value Determination; the district court did not err in dismissing counts VI-VII for failure to state a claim; and the court rejected MBIA's alternative theory of recovery, claiming that FDIC Corporate was obligated under 12 U.S.C. 1821(m)(13) to fund the failed bank's losses. Accordingly, the court affirmed the judgment. View "MBIA Ins. Corp. v. FDIC" on Justia Law

Plaintiffs-Appellants Bryan and JoLynne Toone executed a promissory note secured by a deed of trust on their home. The note was assigned several times. After the Toones defaulted on the Note, their home was scheduled to be sold at a trustee’s foreclosure sale. They filed suit to halt the foreclosure and to obtain damages and declaratory relief based on alleged violations of statutory and common-law duties by numerous parties who had current or prior interests in the Note and Trust Deed or were involved in the foreclosure efforts. The district court denied relief and the Toones appealed. Finding no abuse of the district court's discretion in denying the Toones relief, the Tenth Circuit affirmed the lower court's decision. View "Toone v. Wells Fargo Bank, N.A." on Justia Law

Premier Capital, LLC was in the business of debt acquisition, management, and collection. On July 3, 2007, Premier filed an action in the superior court alleging that it was the current holder of a sealed promissory note from Max Zeller Furs, Inc., executed on September 10, 1987, and that KMZ, Inc. was liable on the note as the successor in interest. The superior court granted summary judgment for KMZ on the ground that Premier's complaint was not timely filed under the six-year statute of limitations set forth in Mass. Gen. Laws ch. 106, 3-118. The Supreme Court reversed, holding (1) although the statute does apply to actions on a sealed promissory note, it only applies to causes of action accruing after its enactment in 1998; and (2) because Premier's cause of action accrued before the statute was enacted, and the note upon which Premier filed suit was executed under seal, Premier timely commenced its action against KMZ under the twenty-year statute of limitations governing actions on contracts under seal set forth in Mass. Gen. Laws ch. 260, 1. Remanded. View "Premier Capital, LLC v. KMZ, Inc." on Justia Law

The Federal Trade Commission secured a judgment of $10,204,445 against Sussman and his co-defendants and equitable relief, based on abusive debt collection activities. Sussman subsequently entered a safe deposit box and removed coins that had been “frozen” in connection with the earlier action; he was then convicted of theft of government property, 18 U.S.C. 641, and obstruction of justice, 18 U.S.C. 1503(a) and sentenced to 41 months on each count, to be served concurrently, followed by three years of supervised release. The court also imposed a $15,000 fine and a $200 special assessment. The Third Circuit affirmed, rejecting a challenge to the sufficiency of the evidence and a clam that Sussman should be afforded a new trial because a portion of the trial transcript is unavailable, apparently because a court reporter lost the transcript. The court upheld the admission into evidence of redacted documents from the FTC’s prior civil case and jury instructions on the elements of obstruction of justice and Sussman’s theory of defense. View "United States v. Sussman" on Justia Law