Justia Banking Opinion Summaries

This was a preference action under 11 U.S.C. 547 by the Chapter 7 trustee to recover a payoff payment to Border State Bank from proceeds of debtor's liquidation sale. The bankruptcy court denied the Bank's motion for summary judgment, holding that the perfection of the Bank's lien was within the perfection period under section 547(b) and that the floating lien defense in section 547(c)(5) did not provide a defense to a security interest that was actually perfected during the preference period. The Bankruptcy Appellate Panel (BAP) held that the bankruptcy court did not err in holding that section 547(c)(5) did not apply and in thus ruling in favor of the trustee on the Bank's motion for summary judgment; the bankruptcy court did not err in holding that liquidation as part of the cessation of debtor's business was not ordinary course; and the bankruptcy court did not err in rejecting the Bank's new value defense. The court also held that payment to the bank of funds which were held in debtor's account at the Bank at the start of the liquidation period was not a preferential transfer or an improper setoff. However, the Bank should be required to pay for the services it hired to analyze its own best strategy and the court committed clear error in giving it credit for that expenditure. View "Velde v. Border State Bank" on Justia Law

Shirley Krzycki was the sole settlor, trustee, and beneficiary of the Shirley Krzycki Trust established to hold annual payments from an insurance settlement. Upon Shirley's death, Shirley's son Greg was named successor trustee of the Trust. Greg filed suit, claiming that sums on deposit in a bank account, formerly owned by Shirley as "primary joint owner," were property of the Trust. Shirley's daughter Robin was originally named "secondary joint owner" on this account, and Robin refused to give to the Trust the sums on deposit in this account. After a bench trial, the district court held that the balance of the Wells Fargo account belonged to the Trust. The Supreme Court affirmed, but for reasons different from those of the district court, holding (1) the remaining sums on deposit in the bank account for the benefit of the Trust were trust funds belonging to the Trust; and (2) Robin converted the funds in the account for her own use by refusing to turn them over to the Trust. View "Krzycki v. Krzycki" on Justia Law

Beneva and Iberiabank became parties to the sublease at issue through a series of assignments. At issue was whether the sublease transferred by the FDIC to Iberiabank after it took over the assets of a failed bank was enforceable despite a clause purporting to terminate the sublease on sale or transfer of the failed bank. Because the court found that the FDIC acted within its power to enforce contracts under 12 U.S.C. 1821(e)(13)(A) and that the termination clause was unenforceable against Iberiabank as the FDIC's transferee, the court affirmed the district court's grant of summary judgment to Iberiabank. View "Iberiabank v. Beneva 41-I, LLC, et al" on Justia Law

In 2005, the Coyers entered into a mortgage agreement with Option One to purchase property in Linwood, Michigan. Subsequently, HSBC purchased the mortgage. After the Coyers allegedly stopped making payment to HSBC in 2010, HSBC began foreclosure proceedings pursuant to the mortgage contract’s “power of sale” clause. The Coyers filed a complaint asserting numerous allegations concerning alleged illegal conduct routinely practiced in the mortgage industry. They claimed: breach of fiduciary duty; negligence; common law fraud; breach of implied covenant of good faith and fair dealing; violation of the Truth in Lending Act, 15 U.S.C. 1601; and intentional infliction of emotional distress. The district court entered judgment on the pleadings in favor of HSBC. The Sixth Circuit affirmed. View "Coyer v. HSBC Mortg. Servs/, Inc." on Justia Law

In this appeal, the Supreme Court resolved a conflict between decisions of the Ninth District Court of Appeals and the Second District Court of Appeals concerning the effect of an individual retirement account custodian's filing of an interpleader action against competing claimants. The Court held that when the custodian of an individual retirement account filed an interpleader action against the parties claiming to be the beneficiaries of the account, the custodian waives its contractual change-of-beneficiary procedures, and a person who proves that the owner of the account clearly intended to designate him or her as the beneficiary does not also need to prove that the owner substantially complied with the change-of-beneficiary procedures in order to recover. Instead, the account owner's clearly expressed intent controls. Because this holding rejected the analysis adopted by the Second District Court of Appeals in this case and because there existed a genuine issue of fact as to the intent of the account owner, the Supreme Court reversed the court of appeals' judgment and remanded to the common pleas court for trial. View "LeBlanc v. Wells Fargo Advisors, LLC" on Justia Law

This case involved an allegedly fraudulent payment order that resulted in the bank's transfer of $329,500 from plaintiff's account to someone in the Dominican Republic. Plaintiff sued the bank to recover the money and, in response, the bank asserted, inter alia, an affirmative defense premised upon Fla. Stat. 670.202(2), which relieved a bank of liability for fraudulent payment orders in certain situations. The court held that the parties' agreed-upon security procedure did not satisfy section 670.021 and consequently section 670.202(2) did not apply. Accordingly, the court reversed the district court's grant of summary judgment in favor of the bank. View "Chavez v. Mercantil Commercebank, N.A." on Justia Law

Appellant (Bank) loaned money to Appellee (LLC). LLC later filed a putative class action, alleging that Bank had breached its contract by charging interest in excess of the rate stated in the promissory note. LLC claimed Bank was charging more interest than was agreed to by LLC as expressed in the note by charging a rate calculated by a 365/360 method rather than an annual rate. Bank contended the note fixed the interest rate according to the 365/360 method. The trial court granted summary judgment to Bank. The court of appeals reversed, concluding that there was a genuine issue of material fact as to which interest rate was imposed by the note. The Supreme Court reversed and reinstated the trial court's grant of summary judgment, holding that the clause in the promissory note imposing the interest rate was not ambiguous, and fixed the interest rate according to the 365/360 method. View "JNT Props., LLC v. KeyBank Nat'l Ass'n" on Justia Law

Quicken Loans, Inc., a Michigan corporation and a large national mortgage lender doing business in West Virginia, appealed an order of the circuit court denying post-trial motions for amendment of the circuit court's findings of fact and/or conclusions of law and for offset following a verdict which found it liable for common law fraud and various claims under the West Virginia Consumer Credit and Protection Act in connection with a subprime loan made to Plaintiff. The Supreme Court affirmed in part and reversed in part the order of the circuit court, holding (1) the elements of fraud were not met with regard to Quicken's misrepresentation of loan discount points, but the other acts of fraud were proven by clear and convincing evidence; (2) the circuit court correctly found that, given the particular facts of this case, the terms of the loan and the loan product were unconscionable; (3) the circuit court incorrectly cancelled Plaintiff's obligation to repay the loan principal; and (4) because the circuit court's order in punitive damages lacked the necessary analysis and findings, the Court was unable to conduct an adequate review of the punitive damages award. Remanded. View "Quicken Loans, Inc. v. Brown" on Justia Law

Russell Sherman obtained loans for over $1,594,282 from the Whitefish Credit Union (WCU). Russell defaulted in paying the loans. WCU subsequently gave notice of default in a ten-day demand letter. Receiving no response from Russell or his wife, Joan, WCU waited an additional thirty days and then requested that the sheriff serve the Shermans. As it turned out, only Russell was served; Joan was not personally served with process. Russell failed to enter a timely appearance or answer WCU's complaint, and accordingly, the district court entered default judgment against the Shermans. Thereafter, the Shermans filed a motion to vacate and set aside the default judgment. The court denied the motion insofar as it applied to Russell but granted the motion insofar as it applied to Joan. Russell appealed. The Supreme Court affirmed, holding that the district court did not slightly abuse its discretion in denying Russell's motion to vacate and set aside the default judgment entered against him. View "Whitefish Credit Union v. Sherman" on Justia Law

Two real estate developers, a husband and wife, operated through various entities including a corporation and an LLC. In 2002, the corporation borrowed money from a lender; the developers, in their individual capacities, guaranteed this loan and all future advances. The corporation promptly repaid this loan. In 2005, the LLC twice borrowed money from the same lender. The lender originally insisted on a personal guaranty for these loans, but, in order to secure the developer's business, stated that no personal guaranty would be required. In 2006–07, the corporation again borrowed money from the lender in six separate loans. The corporation defaulted on these six loans, and, after the lender foreclosed on the real estate that served as collateral for the loans, the lender sued the developers for the deficiency. The district court granted the lender's motion for summary judgment, holding that the developers' affirmative defenses (1) were barred by the statute of frauds, (2) failed for lack of consideration, and (3) raised no genuine issues of material fact. The developers timely appealed to the Supreme Court. Upon review, the Court held that the developers' affirmative defenses were neither barred by the statute of frauds nor failed for lack of consideration. However, because none of those defenses raised a genuine issue of material fact, the Court affirmed. View "Washington Federal Savings v. Engelen" on Justia Law