Justia Banking Opinion Summaries

In 2007, Tellado heard a Spanish-language radio advertisement for mortgage refinancing, called the number, and spoke in Spanish to arrange refinancing of an existing mortgage. Bloom, a closing agent acting as a representative of IndyMac, conducted the closing at the Tellados’ home. The loan documents, including the notice of the right to cancel, were in English. Oral communications between Bloom and the Tellados, were conducted through the Tellados’ daughter, who served as an interpreter for verbal instructions and Bloom’s explanations of the loan documents. IndyMac subsequently failed and was placed in FDIC receivership. In 2009, the Tellados sent a notice of cancellation under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 P.S. 201-7. The district court held that IndyMac had failed to provide proper notice and that the three-day cancellation period had never begun; it ordered refund to the Tellados of all payments, termination of the security interest, and payment of a $10,000 penalty. The Third Circuit reversed; the claim is precluded by the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(13)(D) because the claim is predicated upon an act or omission of IndyMac. Tellados failed to exhaust their administrative remedies under FIRREA. View "Tellado v. Indymac Mortg. Serv." on Justia Law

Bank brought an action against Defendant for foreclosure on a residential mortgage. In this case, Bank was a holder entitled to enforce the mortgage note and currently had possession of the note, which was endorsed in blank, and therefore had the power to enforce the note. After mediation, Bank moved for summary judgment. Before acting on the motion, the superior court reported a question to the Supreme Court, which the Court accepted. The question was: "What is the proof that is required for a party to prove 'ownership' of the mortgage note and mortgage for purposes of foreclosure?" The Supreme Court held that a plaintiff in a foreclosure action must identify the owner or economic beneficiary of the note and provide certain other evidence as described in 14 Me. Rev. Stat. 6321. View "Bank of Am., N.A. v. Cloutier" on Justia Law

Defendant, who had defaulted on his mortgage, sought to have a notice of voluntary dismissal of the mortgage foreclosure action struck and the case reinstated for the trial court to then dismiss the action with prejudice as a sanction to the mortgage holder for allegedly filing fraudulent documentation regarding ownership of the mortgage note. The court of appeal held that a trial court lacks the authority to set aside a plaintiff's notice of voluntary dismissal at the request of a defendant where the plaintiff has not obtained any affirmative relief before dismissing the case. The Supreme Court accepted certification to answer a question of public importance and held that when a defendant alleges fraud on the court as a basis for seeking to set aside a plaintiff's voluntary dismissal, the trial court has jurisdiction to reinstate the dismissed action only when the fraud, if proven, resulted in the plaintiff securing affirmative relief to the detriment of the defendant and, upon obtaining that relief, voluntarily dismissing the case to prevent the trial court from undoing the improperly obtained relief. View "Pino v. Bank of New York" on Justia Law

Plaintiffs, American citizens, had bank accounts in UBS, Switzerland’s largest bank, in 2008 when the UBS tax-evasion scandal broke. The accounts were large and the plaintiffs had not disclosed the existence of the accounts or the interest earned on the accounts on their federal income tax returns, as required. Pursuant to an IRS amnesty program, they disclosed the interest and paid a penalty. They brought a class action to recover from UBS the penalties, interest, and other costs, plus profits they claim UBS made from the class as a result of the fraud and other wrongful acts. The Seventh Circuit affirmed dismissal, noting that the “plaintiffs are tax cheats,” and rejecting an argument that UBS was obligated to give them accurate tax advice and failed to do so. Plaintiffs did not argue that they asked UBS to advise them on U.S. tax law or that the bank volunteered advice. The court stated that: “This is like suing one’s parents to recover tax penalties one has paid, on the ground that the parents had failed to bring one up to be an honest person who would not evade taxes.” The court noted, but did not decide, choice of law issues. View "Thomas v. UBS AG" on Justia Law

Plaintiffs-Appellants Theodore L. Hansen, Interstate Energy Corp. and Triple M, L.L.C., appealed a district court’s judgment in favor of Defendant-Appellee PT. Bank Negara Indonesia (Persero) Tbk. ("BNI"). Plaintiffs sued BNI and various other defendants based on BNI's refusal to honor certain bank guaranties and letters of credit. Eventually, the district court granted BNI's motion for summary judgment for lack of jurisdiction under the Foreign Sovereign Immunities Act of 1976. Finding no error or abuse of the district court's discretion, the Tenth Circuit affirmed. View "Hansen, et al v. PT Bank Negara Indonesia, et al" on Justia Law

The Sherzers obtained two loans secured by mortgages on their home: one for $705,000 and one for $171,000. The lender, Homestar, later assigned both to HSBC. Less than three years after the closing date the Sherzers wrote a letter to Homestar and HSBC, asserting that Homestar had failed to provide all disclosures required by Truth in Lending Act (TILA), 15 U.S.C. 1601 TILA. The letter claimed that these failures were material violations and that the Sherzers were exercising their right to rescind the loan agreements. HSBC agreed to rescind the smaller loan. The Sherzers filed suit, more than three years after their closing date, seeking a declaration of rescission. The district court dismissed the suit as untimely. The Third Circuit reversed. An obligor's right to rescind a loan pursuant to TILA "expire[s] three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first,"Hardiman 15 U.S.C. 1635(f). An obligor must send valid written notice of rescission before the three years expire; the statute says nothing about filing a suit within that three-year period. View "Sherzer v. Homestar Mortg. Servs." on Justia Law

Borrowers obtained secured loans from InBank. Their promissory notes established that InBank would calculate annual interest rates by adding a predetermined amount, usually one percent, to a variable index rate set by InBank at “its sole discretion,” which could change up to once per day. InBank stated that it would set the rate “at or around the U.S. prime rate.” Borrowers compared loan statements and found that the rate was neither consistent across customers nor close to the prime rate. After borrowers filed suit, the Illinois Department of Financial and Professional Regulation took control of InBank and appointed the Federal Deposit Insurance Corporation as receiver. MB Financial purchased InBank accounts. The borrowers filed an amended class action against MB, claiming violations of the Interest Act, 815 ILCS 205/1, and the Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1. The court granted a motion to substitute the FDIC as defendant, then dismissed. The Seventh Circuit held that dismissal was proper for failure to exhaust remedies under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(3)-(d)(13). The claims relate to InBank’s alleged acts and omissions, not MB’s, and there is no support for an assumption of liability argument.View "Farnik v. Fed. Deposit Ins. Corp" on Justia Law

Plaintiffs controlled Mutual Bank. In an effort to save the bank from insolvency, at the request of FDIC-Corporate, they raised about $30 million mostly in the form of note purchases. In 2008, FDIC-Corporate requested another $70 million, which they were unable to raise. In 2009, regulators issued warnings about the bank. The bank’s board voted to redeem the notes and create deposit accounts for plaintiffs, essentially returning their money. Before FDIC-Corporate responded to a request for required approval, 12 U.S.C. 1821(i), the bank was declared insolvent and FDIC was appointed as receiver. Mutual Bank’s branches opened as branches of United Central Bank the next day. The plaintiffs filed proofs of claim, seeking to redeem the notes and obtain depositor-level priority in post-insolvency distribution scheme. FDIC Receiver rejected the claims and the plaintiffs filed suit, alleging that they had been misled into investing in the bank and prevented from getting their money back. The district court dismissed as moot. The Seventh Circuit affirmed, characterizing the claim as an unauthorized request for “money damages,” 5 U.S.C. 702. The plaintiffs did not first seek administrative review of what was essentially a challenge to the FDIC’s regulatory decision not to act on the redemption approval request. View "Veluchamy v. Fed. Deposit Ins. Corp." on Justia Law

Prime Realty, Inc. (Prime) acted as general partner for two limited partnerships (collectively, the Partnerships). Without the Partnerships' limited partners' knowledge, Prime took out two loans from a bank (the Bank) and, by deed of trust, secured the loans with Partnerships' property. The Bank ultimately sold the collateral and applied the proceeds to the loans. The Partnerships sued the Bank for conversion, alleging that the loans were for a nonpartnership purposes and, as such, Prime lacked authority to offer the Partnerships' property as collateral without the limited partners' consent under the Partnership agreements. The district court concluded that the Bank had converted the Partnerships' property and awarded the Partnerships damages and prejudgment interest. The Supreme Court affirmed, holding (1) the Partnerships' complaint was timely; (2) the Bank converted the Partnerships' property; (3) the district court improperly awarded damages in the full amount of the proceeds applied to the loans because a portion of the first loan served a Partnership purpose; and (4) prejudgment interest was proper only in the amount the Bank applied to the second loan. View "Brook Valley Ltd. P'ship v. Mut. of Omaha Bank" on Justia Law

Plaintiffs filed a Chapter 7 bankruptcy petition and sought to surrender their home. When Plaintiffs' mortgage lenders (collectively, Beneficial) refused to foreclose or otherwise take title to the residence, Plaintiffs demanded that the mortgage lien be released. After Beneficial also refused to release the mortgage lien, Plaintiffs began an adversary proceeding claiming a discharge injunction violation. The bankruptcy court found Beneficial did not violate the discharge injunction. The bankruptcy appellate panel affirmed. Plaintiffs appealed, arguing that because the facts of this case so closely mirrored those in Pratt v. General Motors Acceptance Corp., the same result should follow. The First Circuit Court of Appeals affirmed the bankruptcy court's judgment, holding that the bankruptcy court's legal conclusions were correct and that the court did not err in its judgment. View "Canning v. Beneficial Me., Inc." on Justia Law