Justia Banking Opinion Summaries

Plaintiff bought a used pickup truck in 2011 for $28,000 and financed the purchase with a six-year installment contract at an interest rate of 23.9 percent. The dealer assigned the contract to AmeriCredit. After making the first installment the plaintiff sent AmeriCredit a copy of the installment contract that he had stamped “accepted for value and returned for value for settlement and closure,” and told AmeriCredit to collect the balance under the contract from the U.S. Treasury. AmeriCredit repossessed the truck, sold it, and billed the plaintiff $11,322.28 to cover the difference. The plaintiff sued AmeriCredit and its officers for $34 million in compensatory damages and $2.2 billion in punitive damages. The district judge could not make sense of the pro se complaint and dismissed it as frivolous. The Seventh Circuit vacated and remanded with directions that the judge either dismiss without prejudice or dismiss with prejudice, as a sanction; vacate the default judgment in favor of AmeriCredit on its counterclaim; and dismiss the counterclaim without prejudice. The court noted the earmarks of the “Sovereign Citizens” movement. View "Baba-Dainja El v. AmeriCredit Fin. Servs., Inc." on Justia Law

FHFA, the regulator and conservator of Freddie Mac and Fannie Mae (the Enterprises), issued a "directive" preventing the Enterprises from buying mortgages on properties encumbered by liens made under so-called property-assessed clean energy (PACE) programs. Plaintiffs contended that FHFA was acting as a regulator, and not a conservator. As a regulator, plaintiffs contended that FHFA must issue a regulation to effectuate its order. The court concluded that FHFA's decision to cease purchasing mortgages on PACE-encumbered properties was a lawful exercise of its statutory authority as conservator of the Enterprises. Because the courts have no jurisdiction to review such actions, the court vacated the district court's order and dismissed the case. View "County of Sonoma, et al v. FHFA, et al" on Justia Law

In 1999 the Sellers conveyed businesses to CT Acquisition Corp. The price was to be paid over time. The Sellers insisted on a surety bond (put up by Frontier Insurance) and personal guarantees by the principals of CT Acquisition. The Guarantors also promised to indemnify Frontier and promised to post collateral on Frontier’s demand. CT Acquisition did not pay, the Guarantors failed to keep their promise, and the Sellers turned to Frontier, which did not pay because it was in financial distress. Frontier demanded that the Guarantors post collateral. The district court read the agreement to require collateral only after Frontier’s obligation to the Sellers had been satisfied, or at least quantified. The suit was dismissed as unripe. Meanwhile the Sellers had sued Frontier and obtained judgment of $1.5 million. Frontier then filed another suit against the Guarantors. The district court concluded that, Frontier’s obligation having been quantified, the Guarantors must post collateral and, following remand, ordered the Guarantors to deposit with the Clerk $1,559,256.78, The Seventh Circuit affirmed, rejecting the Guarantors’ argument that they need not post collateral until Frontier has paid the Sellers. View "Frontier Ins. Co. v. Hitchcock" on Justia Law

Belmont did not pay subcontractors and suppliers on some projects. Gad, its CEO, disappeared. West Bend Mutual paid more than $2 million to satisfy Belmont’s obligations and has a judgment against Belmont, Gad, and Gizynski, who signed checks for more than $100,000 on Belmont’s account at U.S. Bank, payable to Banco Popular. Gizynski told Banco to apply the funds to his outstanding loan secured by commercial real estate. Banco had a mortgage and an assignment of rents and knew that Belmont was among Gizynski’s tenants; it did not become suspicious and did not ask Belmont how the funds were to be applied. Illinois law requires banks named as payees to ask the drawer how funds are to be applied. The district judge directed the parties to present evidence about how Belmont would have replied to a query from the Bank. Gizynski testified that Gad, as CEO, would have told the Bank to do whatever Gizynski wanted. The judge found Gizynski not credible, but that West Bend, as plaintiff, had the burden of production and the risk of non-persuasion. The Seventh Circuit affirmed, rejecting an argument based on fiduciary duty, but reversed an order requiring Banco to pay West Bend’s legal fees View "W. Bend Mut. Ins. Co v. Belmont St. Corp." on Justia Law

Plaintiffs granted Eastern Savings Bank, FSB (Eastern) a mortgage on property as security for a loan. Plaintiffs defaulted on the loan, and Eastern filed an action to foreclose the mortgage. The circuit court foreclosed on the mortgage, and a public auction was held to sell the property. Eastern purchased the property and filed a motion for confirmation of sale. Plaintiffs subsequently filed a complaint in the U.S. district court seeking a declaratory judgment that the promissory note and mortgage had been timely cancelled pursuant to the federal Trust-in-Lending Act (TILA). The circuit court took judicial notice of Plaintiffs' pending federal case but declined to stay confirmation of the foreclosure sale in the meantime. Thereafter, the circuit court concluded Plaintiffs' pending TILA case did not bar confirmation of the sale of the property, confirmed the sale of the property to Eastern, and entered a deficiency judgment against Plaintiffs. The Supreme Court affirmed, holding that res judicata principles prohibit a debtor from asserting TILA rescission rights after a foreclosure judgment has become final, despite the rescission attempt being held within the time limit provided by TILA. View "E. Savings Bank, FSB v. Esteban" on Justia Law

First Commercial Bank of Huntsville appealed the grant of summary judgment in favor of various defendants on claims alleged by the Bank against those defendants. Because the summary judgment did not resolve all claims against all parties and because no part of the summary judgment was certified as final pursuant to Rule 54(b), Ala. R. Civ. P., the Supreme Court dismissed the appeal as being from a nonfinal judgment. View "First Commercial Bank of Huntsville v. Nowlin, III." on Justia Law

The underlying action was brought in California state court by plaintiff, who sued the Bank, a federally-insured, FDIC-supervised bank, for wrongful termination stemming from her complaints about the Bank's lending practices. At issue on appeal was the construction of 12 U.S.C. 1819(b)(2)(B), a statute that gave the FDIC the right to remove actions from state court to federal court. Here, in the underlying case in state court, the FDIC had neither been sued nor was it a party. The court concluded that Congress granted the FDIC far broader access to the federal courts than was available to ordinary litigants, but that access was not unlimited. Whether the FDIC's access should be broader was a question for Congress, not the court. As drafted, the statute did not authorize removal by the FDIC where it was not a party to the state court action and its role in the litigation was limited to a prospective, would-be intervenor. Accordingly, the court affirmed the district court's order remanding the case to state court. View "Allen v. One United Bank" on Justia Law

Homeowners challenged the validity of the foreclosure of their home mortgages. The district court dismissed the suit under Rule 12(b)(6). The court affirmed the district court's dismissal of the law firm as fraudulently joined and concluded that the court had subject matter jurisdiction over the appeal because the doctrine of prior exclusive jurisdiction was inapplicable. The court concluded that Homeowners' pleadings mirrored those in Karnatcheva v. JPMorgan Chase Bank, N.A. and affirmed the district court's dismissal. Homeowners have failed to plead factual content that permitted the court to infer more than the mere possibility of misconduct where the pleadings contained nothing but naked assertions that one or more of the named defendants suspected that Wells Fargo lacked legal title to the mortgages yet chose to publish statements to the contrary. The district court was well within its discretion to file sanctions. Accordingly, the court affirmed the district court's judgment. View "Dunbar, et al v. Wells Fargo Bank, N.A., et al" on Justia Law

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