Justia Banking Opinion Summaries

The Federal Deposit Insurance Corporation (FDIC) sought an order to prohibit brothers George and Robert Michael, former owners, directors, (Robert), officer of Citizens Bank, from participation in the affairs of any insured depository, 12 U.S.C. 1818(e)(7), and civil penalties, 12 U.S.C. 1818(i), for violations of Federal Reserve regulations, breaches of fiduciary duty, and unsafe and unsound practices. The ALJ issued a 142-page decision with detailed findings showing that the Michaels engaged in insider transactions and improper lending practices and recommending that the FDIC Board issue a prohibition order and civil penalties. The FDIC Board affirmed the decision. The Seventh Circuit affirmed. The Michaels urged overturn of numerous adverse credibility determinations and proposed inferences from the record in a way that paints a picture of legitimacy despite the Board’s contrary determinations. The court noted the deference owed the agency determination and found substantial evidence to support the Board’s decision.. View "Michael v. Fed. Deposit Ins. Corp." on Justia Law

Four named plaintiffs filed three separate class action lawsuits in state court alleging, inter alia, that three Missouri credit unions, by participating in a subprime motor vehicle lending and investment program administered by now-bankrupt Centrix Financial, LLC, violated provisions of the Missouri Uniform Commercial Code (Mo UCC) and the Missouri Merchandising Practices Act (MMPA). Defendants removed under the Class Action Fairness Act and moved to dismiss the complaints. The district court issued three identical orders dismissing all the state law claims. The Eighth Circuit Court of Appeals consolidated the three appeals and affirmed, holding that plaintiffs' Mo UCC claims were time-barred and that the MMPA expressly exempted Missouri credit unions. View "Rashaw v. United Consumers Credit Union" on Justia Law

In 2005, Banks, a construction worker, wanted to flip houses, but did not have capital. John, a mortgage broker, suggested that they purchase homes from distressed owners at inflated prices, with the sellers promising to return money above what they owed their own lenders. Owners cooperated rather than face foreclosure. Banks renovated the houses using funds received from sellers and resold them. Johns collected a broker’s fee. When they purchased a house from owners in bankruptcy, they wanted a mortgage to secure payment from the sellers and informed the trustee of the bankruptcy estate. Despite protestations by the trustee, the sale went through, and Banks used the rinsed equity to pay off sellers’ creditors through the trustee. The sellers’ lawyer discovered the scheme, which led to indictments. Johns was convicted of making false representations to the trustee regarding the second mortgage and for receiving property from a debtor with intent to defeat provisions of the Bankruptcy Code. With enhancements for financial loss and for targeting vulnerable victims, Johns was sentenced to 30 months. The Seventh Circuit affirmed the conviction, rejecting challenges to sufficiency of the evidence and jury instructions, but remanded for clarification of sentencing enhancements. View "United States v. Johns" on Justia Law

The Federal Deposit Insurance Corporation (FDIC), as receiver for Darby Bank & Trust Co., appealed an order of the district court that remanded the underlying case the action to state court. The district court determined that it did not have subject-matter jurisdiction because the FDIC had not been formally substituted as a party in the state court action prior to removal. After review, the Eleventh Circuit vacated the district court's remand order. The Court held that, as a matter of federal law, the FDIC is "substituted as a party" in a state court proceeding under 12 U.S.C. 1819(b)(2)(B) once it is appointed receiver and files a notice of substitution, and may at that point remove the action to federal court." View "North Savannah Properties, LLC, et al v. FDIC" on Justia Law

After Lender failed to respond to Plaintiff's correspondence regarding ownership of his loan, Lender foreclosed on Borrower's property. Plaintiff filed suit against all the actors involved (Defendants), alleging violations of the Truth in Lending Act (TILA) , seeking injunctive relief against foreclosure, and claiming breach of contract, failure to act in good faith, and wrongful foreclosure under Nevada law. The district court dismissed Plaintiff's Nevada law claims with prejudice. Plaintiff then filed an amended complaint claiming a breach of the covenant of good faith and fair dealing. The court dismissed the amended complaint without leave to amend. The Ninth Circuit Court of Appeals (1) affirmed the district court's dismissal of Plaintiff's TILA and breach of the covenant of good faith and fair dealing claims, as Lender was not legally required to respond to Plaintiff's correspondence in its capacity as loan servicer; and (2) vacated the district court's dismissal of Plaintiff's state law claims regarding the foreclosure of Plaintiff's property and remanded those remaining claims to the district court. View "Gale v. First Franklin Loan Servs." on Justia Law

Homeowners filed this lawsuit in Minnesota state court against Lender seeking legal and equitable relief from Lender's foreclosure and sale of their home. Lender removed the case to federal court and subsequently moved to dismiss the complaint for failure to state a claim, or, alternately, for summary judgment. The district court dismissed the suit, holding (1) the United States Department of the Treasury's Home Affordable Mortgage Program preempted Homeowners' state-law claims; and (2) Homeowners did not plead the claims with sufficient particularity. The Eighth Circuit Court of Appeals affirmed, holding that, in regard to the majority of Homeowners' claims, Homeowners failed to state a claim upon which relief could be granted. View "Cox v. Mortgage Elec. Registration Sys., Inc." on Justia Law

Karen Anthony, a Nebraskan citizen, filed in federal district court an action against The Cattle National Bank & Trust Company (the Bank), a national bank headquartered in Nebraska, alleging fraud. Anthony asserted subject matter jurisdiction under 12 U.S.C. 24(4), 12 U.S.C. 1831n(a)(2)(A), and 28 U.S.C. 1331. The district court dismissed the complaint for lack of subject matter jurisdiction, concluding (1) there was no diversity jurisdiction, and (2) federal-question jurisdiction did not exist. The Eighth Circuit Court of Appeals affirmed, holding (1) diversity jurisdiction did not exist; (2) section 1831n did not create a private right of action; and (3) Anthony's remaining arguments were meritless or improperly raised for the first time on appeal. View "Anthony v. Cattle Nat'l Bank" on Justia Law

After JPMorgan Chase Bank (Chase) initiated foreclosure proceedings on Appellants' home and subsequently bought the property at a sheriff's sale, Appellants filed suit against Chase, doing business as Washington Mutual, seeking damages under theories of promissory estoppel and negligence. The district court dismissed the claims. Appellants subsequently filed a second suit against Chase and Washington Mutual, alleging causes of action relating to purported misrepresentations and alleged failure to disclose information and Chase's alleged failure to provide adequate notice of the sheriff's sale and to respond to two qualified written requests in violation of the Real Estate Settlement Practices Act (RESPA). The district court dismissed all claims against Washington Mutual without prejudice and all claims against Chase with prejudice. The Eighth Circuit Court of Appeals affirmed, holding (1) other than their claim under RESPA, the claims set forth in Appellants' complaint were barred by the doctrine of res judicata; and (2) as for the RESPA claims, Appellants failed to show how the complaint could be amended to survive a motion to dismiss. View "Hintz v. JPMorgan Chase Bank, N.A." on Justia Law

Alice Corporation owns three patents covering a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate “settlement risk.” Settlement risk is the risk that only one party’s obligation will be paid, leaving the other party without its principal. The trusted third party eliminates this risk by either exchanging both parties’ obligations or exchanging neither obligation. CLS sought a declaration of invalidity; Alice counterclaimed infringement. The district court ruled in favor of CLS, holding that each asserted claim of the four patents is invalid for failure to claim patent eligible subject matter. The Federal Circuit reversed. The system, method, and media claims at issue are not drawn to mere “abstract ideas” but are directed to practical applications of invention falling within the categories of patent eligible subject matter defined by 35 U.S.C. 101. View "CLS Bank Int'l v. Alice Corp. Pty. Ltd." on Justia Law

Defendant-Appellant Branch Banking & Trust Company (BB&T) appealed the denial of its motion to compel arbitration of a putative class action brought by Plaintiff-Appellee Lacy Baras, a customer of BB&T. Barras alleged in her complaint on behalf of herself and the class she sought to represent that BB&T charged her and others overdraft fees for payments from checking accounts even when the account contained sufficient funds to cover the payments. She also alleged that BB&T supplied inaccurate and misleading information about account balances, and failed to notify customers about changes to BB&T's policies for processing checking account transactions, thereby increasing overdraft charges assessed against customers. Barras asserted claims under the state Unfair Trade Practices Act for unfair and deceptive trade practices, breach of contract, breach of the covenant of good faith and fair dealing and unconscionability, and sought to certify a class of BB&T account holders who were likewise charged allegedly inflated overdraft fees. BB&T moved to compel arbitration of all of Barras's claims pursuant to a provision in its "Bank Services Agreement" (BSA). The district court denied BB&T's motion, holding that the arbitration agreement was unconscionable under state law, and could not be enforced. Before the Eleventh Circuit decided BB&T's appeal to that order, the Supreme Court decided "AT&T Mobility, LLC v. Concepcion" (131 S.Ct. 1740 (2011). The Eleventh Circuit remanded the case to the district court for reconsideration in light of that decision. On remand, BB&T renewed its motion to compel arbitration, and again the district court denied it. BB&T appealed that ruling, arguing that: (1) the question of whether the arbitration provision was enforceable must be resolved by an arbitrator; (2) the cost-and-fee shifting provision in the agreement that the district court held unconscionable did not apply to the arbitration provision; (3) "Concepcion" prohibited application of the state unconscionability doctrine to the arbitration provision; (4) the cost-and-fee shifting provision is not unconscionable; and (5) the cost-and-fee shifting privision was severable from the arbitration process. Taking each argument in turn, the Eleventh Circuit reversed the district court's decision and remanded the case with instructions to compel arbitration. View "Barras v. Branch Banking & Trust Co." on Justia Law