Justia Banking Opinion Summaries

Holocaust survivors and heirs of other Holocaust victims sued, alleging that defendant banks participated in expropriating property from Hungarian Jews during the Holocaust. Invoking subject-matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. 1330(a), the Alien Tort Statute, 28 U.S.C.1350, and federal question jurisdiction, 28 U.S.C. § 1331, they alleged: genocide, aiding and abetting genocide, bailment, conversion, constructive trust, and accounting. Plaintiffs sought certification as a class action and asked that each bank be held jointly and severally responsible for damages of approximately $75 billion. This case and a parallel case against the Hungarian national railway have produced nine appeals and mandamus petitions. The district court declined to dismiss for lack of personal jurisdiction. The Seventh Circuit, noting that such a decision would ordinarily not be reviewable, stated that: “This is the rare case, however, in which it is appropriate for this court to exercise its discretion to issue a writ of mandamus to confine the district court to the exercise of its lawful jurisdiction” The court cited the extraordinary scale of the litigation, the inherent involvement with U.S. foreign policy, and the “crystal clarity” of the lack of foundation for exercising general personal jurisdiction over the banks. View "Abelesz v. OTP Bank" on Justia Law

Central Mortgage and Morgan Stanley entered into a contract concerning the purchase of servicing rights for loans that Morgan Stanley planned to sell to Fannie Mae and Freddie Mac (the agencies) and private investors. Subsequently, many of the loans for which Morgan Stanley sold the servicing rights began to fall delinquent. The agencies exercised their contract right to put delinquent agency loans back to Central Mortgage. Central Mortgage then filed a complaint against Morgan Stanley for breach of contract. The Chancery Court granted Morgan Stanley's motion to dismiss. The Supreme Court reversed and remanded, holding that the claims were legally sufficient to withstand the motion. Central Mortgage then filed an amended complaint to add new claims for additional agency loans (new loans) that had been put back by the agencies and to challenge the private loans. Morgan Stanley moved to dismiss the amended complaint. The Chancery Court (1) denied the motion to dismiss to the extent that it rehashed theories that the Court and Supreme Court already considered in the context of its original motion to dismiss; but (2) granted the motion to dismiss the claims related to the new loans because those claims were barred by Delaware's statute of limitations. View "Central Mortgage Co. v. Morgan Stanley Mortgage Capital Holdings LLC" on Justia Law

In 2008, the General Assembly enacted a statute to require that a foreclosing lender provide advance written notice to the borrower of its intention to foreclosure. Among the information to be provided in that notice is the identity of the "secured party," although the statute does not specifically define that phrase. In this case, there was more than one entity that qualified as a "secured party" under the commonly understood meaning of the phrase. At issue before the Court of Appeals was whether, in such a situation, a foreclosing party was obligated to identify all secured parties in the advance written notice to the borrower. The Court held (1) a foreclosing party should ordinarily identify, in the notice of intent to foreclose, each entity that is a "secured party" with respect to the deed of trust in question; (2) however, a failure to disclose every secured party is not a basis for dismissing a foreclosure action when certain conditions are met; and (3) under the circumstances of the instant case, because many of the enumerated conditions were met even though the notice failed to disclose every secured party, the dismissal of the foreclosure action was not required. View "Shepherd v. Burson" on Justia Law

Tenant rented her residence from Landlord, who defaulted on the mortgage on that property. U.S. Bank National Association (USBNA), as trustee for a mortgage-backed security that owned that debt, foreclosed on Landlord's deed of trust and terminated Tenant's lease. In doing so, it sent conflicting notices to Tenant about her right under the Protecting Tenants at Foreclosure Act (PTFA) to remain on the property temporarily and filed a premature motion for immediate possession of the property. The circuit court granted USBNA's motion for possession. The Court of Appeals reversed, holding (1) misleading and contradictory notices concerning a tenant's right to remain in a residence temporarily are ineffective to satisfy the purchaser's obligation under the PTFA; and (2) a motion for possession is premature when it is filed prior to the expiration of the period that the PTFA permits a bona fide tenant to remain in a residential property subject to foreclosure. Remanded. View "Curtis v. US Bank Nat'l Ass'n" on Justia Law

The Republic of Argentina appealed from an order of the district court granting NML Capital's motion to compel non-parties Bank of America and Banco de la Nacion Argentina to comply with subpoenas duces tecum and denying Argentina's motion to quash the subpoena issued to Bank of America. Argentina argued that the banks' compliance with the subpoenas would infringe on its sovereign immunity. The court concluded, however, that because the district court ordered only discovery, not the attachment of sovereign property, and because that discovery was directed at third-party banks, Argentina's sovereign immunity was not affected. Accordingly, the court affirmed the district court's order. View "NML Capital, Ltd. v. Republic of Argentina" on Justia Law

McKenna and his wife, Suzette, refinanced with Wells Fargo, to help pay for his children's college education and granted a mortgage on their residence. On the same day, Wells Fargo provided the McKennas with a disclosure form stating the loan amount and terms. The mortgage was recorded. McKenna died; Suzette fell behind on payments. Under Massachusetts law, if a mortgage contains a "power of sale" (the McKenna mortgage did), the mortgagee may foreclose, without a judgment ordering sale, after a "limited judicial procedure" to establish that the mortgagor is not a member of the armed forces. Wells Fargo successfully brought such a proceeding and sent Suzette a notice of foreclosure sale. Suzette countered by asserting a right to rescind and filing suit to preclude the sale. She claimed that Wells Fargo had provided only one Truth in Lending disclosure statement at the time of the loan rather than two copies, and had understated the finance charge in its Truth in Lending statement by "more than $35.00." The district court dismissed. The First Circuit affirmed. The suit was not timely under the federal Truth in Lending Act, 15 U.S.C. 1635(a), and the complaint did not state claims under the equivalent state law.View "McKenna v. Wells Fargo Bank, N.A." on Justia Law

In connection with a loan, Bayonne provided Nuveen with an audit report authored by accounting firm, Withum and an opinion letter from Bayonne’s counsel, Lindabury. Soon after the transaction, Bayonne filed a Chapter 11 bankruptcy petition, 11 U.S.C. 101. Nuveen claimed that the audit report and opinion letter concealed problems with Bayonne’s financial condition and that, had it known about these financial issues, it would not have entered into the transaction. The district court dismissed claims of fraud (Withum), negligent misrepresentation, and malpractice (Lindabury) based on Nuveen’s noncompliance with New Jersey’s Affidavit of Merit statute, N.J. Stat. 2A:53A-26, which requires an affidavit of merit for certain actions against professionals. The Third Circuit remanded for reconsideration of diversity jurisdiction. On remand, the court accepted an argument that the action was “related to” Bayonne’s bankruptcy proceeding, establishing jurisdiction under 28 U.S.C. 1334(b), and again dismissed. The Third Circuit affirmed as to jurisdiction and held that the AOM Statute can be applied by a federal court without conflicting with FRCP 8. If the AOM Statute applies, noncompliance requires dismissal. The court certified to the New Jersey Supreme Court questions relating to the “nature of the injury” and “cause of action” elements of the statute. View "Nuveen Mun. Trust v. Withumsmith Brown PC, et al" on Justia Law

A Stonefire loan officer, contacted the Lees and convinced them that they could refinance and lower their mortgage payment, get rid of private mortgage insurance, and consolidate credit card debt. They signed papers that they did not read, agreeing to pay Stonefire a brokerage fee of $7000.00 and a processing fee of $995, and that the exact amount of “additional compensation,” would be disclosed at closing. The additional compensation was the “Yield Spread Premium,” to lower up-front closing costs. The lender paid a Premium of 3.5 percent, which increased the interest rate on the loan. The Lees received a variable rate a five percent higher than the fixed rate on their prior loan. At closing, they signed a HUD-1 settlement statement that described a “[p]remium pd to broker by lender to Stonefire” of $5670 paid outside closing. The district court granted summary judgment to the lender on conspiracy and civil fraud claims and to Stonefire on the claim of civil conspiracy. The Lees and Stonefire settled. With respect to the lender, the Sixth Circuit affirmed as to fraud, but reversed on the civil conspiracy claim; Ohio case law prohibits lenders from knowingly conspiring with brokers to conceal mortgage costs, from borrowers. View "Lee v. Countrywide Home Loans, Inc." on Justia Law

Regions Bank ("Regions"), as sole trustee of the J.F.B. Lowrey Trust ("the Lowrey Trust"), appealed a circuit court's order that denied Regions' motion to award it attorney fees and costs. Sam G. Lowrey, Jr., and Shelby Lowrey Jones, two of the current beneficiaries of the Lowrey Trust ("the beneficiaries") cross-appealed the trial court's judgment in favor of Regions on their breach-of-fiduciary-duty claim. The beneficiaries claimed that Regions failed to protect and preserve the assets of the Lowrey Trust, which consisted primarily of approximately 20,000 acres of timberland located in Monroe and Conecuh Counties and which have been the subject of much intra-family litigation. The trial court entered a detailed order in favor of Regions, rejecting the beneficiaries' claims of mismanagement of the trust assets and taxing costs against the beneficiaries. Regions filed a bill of costs and a supplemental bill of costs detailing all the expenses incurred in defending the claim, and attaching supporting documentation. The beneficiaries filed a motion to review taxation of costs and a motion to vacate the judgment. The trial court did not rule on the motions, and all post-trial motions were deemed denied by operation of law. Regions timely appealed, and the beneficiaries filed a cross-appeal. Upon review of the record of the five-day bench trial and the considerable documentary evidence, the Supreme Court held that there was substantial evidence to support the trial court's decision on the beneficiaries' breach-of-fiduciary-duty claim. Thus, the Court affirmed the trial court's judgment in favor of Regions on that claim. The Court reversed the trial court's ruling on Regions' motion for attorney fees, and remanded this case back to the trial court for a hearing on Regions' attorney-fee motion to consider the reasonableness of the attorney fee. View "Regions Bank v.Lowrey" on Justia Law

Defendant was indicted for bank fraud, mail fraud, and wire fraud. The government alleged that Defendant's sale of collateral pledged as security for a loan from a bank and his failure to carry out his disclosure duties under the security agreement amounted to a scheme to defraud for purposes of the bank, mail, and wire fraud statutes. The district court dismissed the indictment, finding (1) a false representation is a required element of a federal fraud offense and the indictment failed to allege any express misrepresentation by Defendant; and (2) absent a statutory, fiduciary, or independent disclosure duty, nondisclosure was insufficient to state a fraud claim under any of the charged offenses. The Eighth Circuit Court of Appeals affirmed, holding that the district court correctly dismissed the indictment for failure to state an offense, as the indictment failed to sufficiently allege a scheme to defraud under the mail, wire, and bank fraud statutes. View "United States v. Steffen" on Justia Law