Justia Banking Opinion Summaries

This putative class action was one of a number of breach-of-contract suits being brought against financial institutions nationwide by mortgagors who claimed that they were improperly forced to increase flood insurance coverage on their properties. The plaintiff in this case asserted that Bank of America's demand that he increase his flood coverage by $46,000 breached both the terms of his mortgage contract and the contract's implied covenant of good faith and fair dealing. The district court concluded that the pertinent provision of the mortgage unambiguously permitted the lender to require the increased flood coverage and, hence, it granted the defendants' motion to dismiss the complaint. The First Circuit Court of Appeals vacated the judgment of dismissal in favor of the Bank, holding that the mortgage was reasonably susceptible to an understanding that supported the plaintiff's breach of contract and implied covenant claims. Remanded. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law

Defendant filed for bankruptcy. Defendant was later charged with bankruptcy fraud on the basis that she failed to include in the bankruptcy petition information related to her past fraudulent use of credit cards that she obtained under the names of two acquaintances, one of whom was Susan Blake. Defendant was subsequently convicted of two counts of bankruptcy fraud. The First Circuit Court of Appeals reversed the conviction as to Count One, which alleged that Debtor had knowingly and fraudulently failed and refused to disclose debts to three card issuers. The First Circuit held that Count One failed for lack of proof because the prosecution failed to establish that at the time the bankruptcy petition was filed, there were still extant claims held by the issuers against Defendant for merchandise or services Defendant secured through her use of the cards she procured using Blake's name. View "United States v. Marston" on Justia Law

Six banks (the Banks) alleged that the negligent misrepresentation of Respondent, James H. Bedard, Inc., caused them to be damaged when the Housing and Redevelopment Authority of the City of Brainerd defaulted on bonds held by the Banks. Specifically, the Banks purchased $3.3 million in bonds from the City, which helped finance a development project in the City. In deciding to purchase the bonds, the Banks relied on an appraisal and feasibility study prepared by Bedard. The Banks filed a negligent misrepresentation claim against Bedard, alleging that Bedard's study overstated the value of the project and the rate at which the land would sell. The district court dismissed the action, concluding that the Banks failed to plead their negligent misrepresentation claim against Bedard with particularity. The court of appeals affirmed. The Supreme Court reversed, holding that because the Banks specifically pleaded facts underlying each of the elements of their negligent misrepresentation claim, the Banks pleaded the "ultimate facts" of their claim and thus satisfied the particularity requirement under Minn. R. Civ. P. 9.02. Remanded. View "Hardin County Savings Bank v. City of Brainerd Hous. & Redevelopment Auth." on Justia Law

Plaintiff, a realtor, filed suit under the California False Claims Act (CFCA), Cal. Gov't Code 12650-12655, against defendants on behalf of numerous California counties, alleging that defendants made false representations in naming MERS as a beneficiary in recorded mortgage documents in order to avoid paying recorded fees. Defendants moved to dismiss the qui tam action under Rule 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim upon which relief may be granted. Because plaintiff failed to demonstrate that the district court erred in dismissing his claims as jurisdictionally barred, the court affirmed the district court's decision. View "Bates v. Mortgage Electronic Registration, et al" on Justia Law

Countrywide appealed a class certification order of the bankruptcy court. Plaintiffs are former chapter 13 debtors with mortgages serviced by Countrywide. Plaintiffs claimed, among other things, that the fees Countrywide charged while plaintiffs' bankruptcy cases were still pending were unreasonable, unapproved, and undisclosed under Federal Rule of Bankruptcy Procedure 2016(a). Because the bankruptcy court's decision was not an abuse of discretion, the court affirmed its grant of class certification for plaintiff's injunctive relief claim. Because the court's precedence rejected the fail-safe class prohibition, the court concluded that the bankruptcy court did not abuse its discretion when it defined the class in the present case. Because the court concluded that Countrywide's Rule 59(e) motion for reconsideration was not based on newly discovered evidence, the court did not revisit the bankruptcy court's separate merits denial of the motion. View "Rodriguez, et al v. Countrywide Home Loans, Inc." on Justia Law

This was an appeal of a judgment which held that a mechanic’s lien had priority over a mortgage. The judgment was predicated upon the district court's refusal to permit the mortgagee to withdraw an admission made in open court by its counsel that the mechanic's lien was valid. Upon review of the matter, the Supreme Court reversed the district court and held that the mechanic's lien was invalid because the lien did not show that it was verified before a person entitled to administer oaths. View "First Federal Savings Bank of Twin Falls v. Riedesel Engineering, Inc." on Justia Law

When AFC filed for bankruptcy in 2009, the FDIC was appointed receiver for AFC’s subsidiary, AmTrust and sought payment from AFC under 11 U.S.C. 365(o), which requires that a party seeking Chapter-11 bankruptcy fulfill “any commitment . . . to maintain the capital of an insured depository institution.” The FDIC argued that AFC made such a commitment by agreeing to entry of a cease-and-desist order requiring AFC’s board to “ensure that [the Bank] complies” with the Bank’s own obligation to “have and maintain” capital ratios of 7 percent (Tier 1) and 12 percent (total). The district court found that the order was not a capital-maintenance commitment under section 365(o). The Sixth Circuit affirmed. The cease-and-desist order is ambiguous and could reasonably be read as establishing either an oversight role or a capital-maintenance commitment and the bulk of the extrinsic evidence favored the “oversight” reading. View "Fed. Deposit Ins. Corp. v. Amtrust Fin. Corp." on Justia Law

Hawthorn Bank appealed the trial court's entry of summary judgment in favor of Plaintiffs on Hawthorn Bank's claim that its purchase-money deed of trust being recorded after the mechanics' liens attached to the property. Hawthorn Bank asserted that purchase-money deeds of trust are always superior in priority to mechanics' liens under Missouri law and that the recording statutes, Mo. Rev. Stat. 442.380 and 442.400, do not govern the relative priority of a purchase-money deed of trust over a mechanic's lien. The Supreme Court affirmed the judgment of the trial court, holding that because sections 442.380 and 442.400 provided that Hawthorn Bank's purchase-money deed of trust was not valid until recorded and because the mechanics' liens attached before it was recorded, the purchase-money deed of trust was a subsequent encumbrance that was inferior in priority to the mechanics' liens. View "Bob DeGeorge Assocs., Inc. v. Hawthorn Bank" on Justia Law

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