Justia Banking Opinion Summaries

At issue in this case was whether a county sheriff can meet the constitutional obligation of providing notice of a sheriff's sale to a plaintiff by letter directing the plaintiff's attorney to monitor a website for a listing of the date, time, and location of sale. The court of appeals affirmed the judgment of the trial court in denying plaintiff's motion to set aside the sheriff's sale. The Supreme Court reversed, holding that constructive notice by publication to a party with a property interest in a foreclosure proceeding via a sheriff's office website is insufficient to constitute due process when that party's address is known or easily ascertainable. Remanded. View "PHH Mtge. Corp. v. Prater" on Justia Law

Mountain West Bank obtained a summary judgment against Helena Christian School and several individual defendants (HCS) following HCS’s default on loans from Mountain West. HCS appealed the decision of the Montana First Judicial District Court. The issues on appeal were: (1) whether the District Court erred by granting Mountain West’s motion for summary judgment without complying with the requirements of 71-1-222, MCA; and (2) whether the District Court erred by entering a judgment that did not comply with 25-9-203, MCA. Upon review, the Supreme Court reversed and remanded, giving the lower court the mandate to compute and state the exact judgment amount, including interest, pertaining to the unsecured loan; for the secured loan, the court must comply with the provisions of 71-1-222, MCA. Upon receipt of notice of the proceeds received in the sheriff’s sale, in the event of a deficiency, the court must determine the appropriate rate of interest vis-a-vis the deficiency, and enter an order of judgment computing and stating the amount owed by Defendants. View "Mtn. West Bank, NA v. Helena Christian School, Inc." on Justia Law

Home Federal agreed to lend up to $95.5 million to finance construction of a new ethanol production plant. When the developer of the plant ran into serious trouble finishing the project, the bank did not disburse the final $8 million. The developer defaulted on the debt and fired its general contractor, which then filed a mechanic’s lien on the property to recover $6 million allegedly owed it. When the bank sought to foreclose on its mortgage, the general contractor counterclaimed, asserting that its lien had priority over, or at least parity with, the bank’s mortgage. The bank tendered its defense to the title insurer under a policy that required the insurer to defend the bank against a “claim . . . alleging a defect, lien or encumbrance or other matter insured against by this policy.” The policy contained an exclusion from coverage for claims “created, suffered, assumed, or agreed to” by the insured. The district court ruled in favor of the title insurer. The Seventh Circuit reversed. The undisputed facts show that the title insurer breached its duty to defend the bank on the contractor’s claim that its mechanic’s lien had priority over or parity with the mortgage. View "Home Fed. Savings Bank v. Ticor Title Ins. Co." on Justia Law

In 2005, the Wyo Central Federal Credit Union (Credit Union) filed an action in state district court against Mark Broderick (Broderick) seeking judgment and foreclosure on a note and mortgage on which Broderick had defaulted. Broderick immediately filed a Chapter 13 bankruptcy petition, which stayed the Credit Union’s state court action. Following the conclusion of the bankruptcy proceedings, which cured Broderick’s original default under the note and mortgage but did not discharge the debt, Broderick again defaulted on the note. In 2010, the Credit Union amended its original complaint and again sought judgment and foreclosure on its note and mortgage. The district court granted the Credit Union summary judgment both on the amount the Credit Union demanded as due and owing under the note and on the attorney fees and costs it requested pursuant to the mortgage enforcement terms. Broderick raised the following issues on appeal, all of them relating to the award of attorney fees and costs: (1) whether the determination by a state court of an oversecured creditor’s attorney fees incurred in a bankruptcy proceeding is subject to the Preemption Doctrine; (2) whether the Credit Union should be denied its attorney fees by its failure to submit these fees to the Bankruptcy Court for approval; and (3) whether the Credit Union proved its damages with a reasonable degree of certainty. Upon review, the Supreme Court determined that the district court acted within its discretion in its award of fees and costs to the Credit Union, and its order did not violate bankruptcy law or procedure. View "Broderick v. Wyo Central Fed. Credit Union" on Justia Law

A corporation (Infodisc) and one of its subsidiaries (M-TX) defaulted on a loan from a bank. A California court placed the borrowers in receivership to liquidate their assets securing the loan, and an ancillary receivership was opened in Texas. Meanwhile, another Infodisc subsidiary, a California corporation (M-CA), declared bankruptcy. The receiver claimed and sold property in a Texas warehouse that the Landlord alleged was not leased to Infodisc or M-TX but to M-CA. The parties disputed who the tenant was and who owned the property and fixtures in the warehouse. After the trial court rejected almost all of the Landlord's claims, the Landlord appealed. The court vacated the trial court's judgment and dismissed the case, holding that the proceedings violated the automatic stay even though M-CA was not a party to the case. The Supreme Court granted review and reversed, holding that the court of appeals should have abated the appeal to allow the application of the automatic stay to be determined by the trial court in the first instance. Remanded. View "Evans v. Unit 82 Joint Venture" on Justia Law

Knight was owner and CEO of Knight Industries, which owned other companies. Bank had provided credit ($34 million) to the companies, which, in 2009, filed bankruptcy petitions. Chatz was appointed trustee and was authorized to retain the Freeborn law firm. Chatz and the Bank alleged that Knight had made fraudulent transfers, had breached duties of good faith and fair dealing and duties to creditors, had misappropriated corporate opportunities, had committed conversion, and had violated securities laws, and demanded $27 million for the companies and $34 million for the Bank. In 2010 Knight filed a chapter 7 petition, listing the claims, value “unknown.” Chatz, appointed as trustee, requested representation by the Freeborn law firm, without disclosing intent to pursue the claims against Knight. The bankruptcy court approved. Later, the Bank and Chatz asked to assign the companies’ claims to the Bank. Knight objected, arguing that approval of the law firm conflicted with the companies having viable claims against Knight. The bankruptcy court overruled Knight’s objection. The district court and Seventh Circuit affirmed. Failure to disclose intent to pursue the claims did not harm Knight, and other remedies are available. It would be inequitable to permit Knight to reap huge benefits from harmless omission.View "Knight v. Bank of America, N.A." on Justia Law

Former Fifth Third employees participated in a defined contribution retirement plan with Fifth Third as trustee. Participants make voluntary contributions and direct the Plan to purchase investments for their individual accounts from preselected options. The options included Fifth Third Stock, two collective funds, or 17 mutual funds. Fifth Third makes matching contributions for eligible participants that are initially invested in the Fifth Third Stock Fund but may be moved later to other investment options. Significant Plan assets were invested in Fifth Third Stock. Plan fiduciaries incorporated by reference Fifth Third’s SEC filings into the Summary Plan Description. Plaintiffs allege that Fifth Third switched from being a conservative lender to a subprime lender, its loan portfolio became increasingly at-risk, and it either failed to disclose or provided misleading disclosures. The price of the stock declined 74 percent. The district court dismissed a complaint under the Employee Retirement Income Security Act, 29 U.S.C. 1001, based on a presumption that the decision to remain invested in employer securities was reasonable. The Sixth Circuit reversed, holding that the complaint plausibly alleged a claim of breach of fiduciary duty and causal connection regarding failure to divest the Plan of Fifth Third Stock and remove that stock as an investment option. View "Dudenhoefer v. Fifth Third Bancorp" on Justia Law

Stephanie and Kenneth Woolsey attempted to discharge a second mortgage on their home held by Citibank, N.A. through Chapter 13 bankruptcy. In their plan, they took the position that the bankruptcy code voided Citibank’s lien because it was unsupported by any current value in the home. The bank objected to the Woolseys’ plan and eventually persuaded the bankruptcy court to reject it. The district court affirmed the bankruptcy court, and the Woolseys appealed to the Tenth Circuit. In their argument on appeal, "[t]hey choose to pursue instead and exclusively a line of attack long foreclosed by Supreme Court precedent. To be sure, the Woolseys argue[d] vigorously and with some support that the Supreme Court ha[d] it wrong. But, as Justice Jackson reminds us, whether or not the Supreme Court is infallible, it is final." The Tenth Circuit was "obliged" to apply the Supreme Court's current case law and affirmed the district and bankruptcy court's decisions. View "Woolsey, et al v. Citibank, N.A." on Justia Law

In 2007, Fifth Third loaned Buford $406,000 in exchange for a mortgage on property that Buford purportedly owned. Fifth Third obtained a title-insurance policy from Direct Title, an issuing agent for Chicago Title. Direct Title was a fraudulent agent; its sole “member” was the actual title owner of the property and conspired with Buford to use that single property as collateral to obtain multiple loans from different lenders. When creditors foreclosed on the property in state court, Fifth Third intervened and asked Chicago Title to defend and compensate. Chicago Title refused to defend or indemnify. Chicago Title sought to avoid summary judgment, indicating that it needed discovery on the questions whether “Fifth Third failed to follow objectively reasonable and prudent underwriting standards” in processing Buford’s loan application and whether Direct Title had authority to issue the title-insurance policy. The district court granted Fifth Third summary judgment. The Sixth Circuit affirmed, noting that “When a party comes to us with nine grounds for reversing the district court, that usually means there are none.”View "Fifth Third Mortg. Co. v. Chicago Title Ins. Co." on Justia Law

Plaintiff commenced this action, on behalf of herself and the 181 other individuals in New York State who had received student loan collection letters from defendant. At issue was whether a debt collector's inaccurate representation to a debtor that her student loans were "ineligible" for bankruptcy discharge was a "false, misleading, or deceptive" debt collection practice, in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq. The court held that it was because the least sophisticated consumer would interpret defendant's letter as representing, incorrectly, that bankruptcy discharge of her loans was wholly unavailable to her. Accordingly, the court reversed and remanded. View "Easterling v. Collecto, Inc." on Justia Law