Justia Banking Opinion Summaries

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

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