Justia Banking Opinion Summaries

Investors joined together to buy property. To finance the purchase, they formed a distinct limited liability company, IPA, to negotiate and execute a loan on their behalf with Morgan Stanley. Okun was manager of IPA, which was not allowed to hold an ownership interest in any of the investors. Morgan Stanley sold the loan to an Okun-controlled entity, Lender, LLC, and agreed to offset the purchase price by the amount of funds available in escrow, reserve, and impound accounts, in which it held a security interest and which were, under the terms of the loan, required to reimburse investors for maintenance, taxes, and other property-related expenses. Lender LLC never reestablished the accounts, depriving the Investors of $1,361,184.63. Abandoning their suit against Lender, LLC, the investors claimed that Morgan Stanley breached their loan agreement and committed conversion. The district court granted summary judgment for Morgan Stanley. The Seventh Circuit affirmed. Morgan Stanley was not barred by the Note, the Mortgage, or the RSA from assigning its interest in the escrow accounts to Okun or structuring a sale of the loan as it wished; it committed neither breach of contract nor conversion. View "IP of A W. 86th St.t 1, LLC v. Morgan Stanley Mortg. Capital Holdings, LLC" on Justia Law

Stokes owned 1Point, which managed employee-benefits plans and 401(k) retirement plans as a third-party administrator (TPA). Most were governed by the Employee Retirement Income Security Act, 29 U.S.C. 1002. TPAs generally provide record-keeping and assist in transferring money, but do not handle money or securities. Stokes directed clients to send funds to accounts he had opened in 1Point’s name. Cafeteria plan clients deposited $45 million and 401(k) clients deposited $5.7 million in accounts at Regions. Because the accounts bore 1Point’s name, Stokes was able to transfer money. Between 2002 and 2006, Stokes stole large sums. Regions failed to comply with the Bank Secrecy Act, 31 U.S.C. 3513, requirements to report large currency transactions, file suspicious-activity reports, verify identities for accounts, and maintain automated computer monitoring. In 2004, the U.S. Financial Crimes Enforcement Network assessed a $10 million fine against Regions. In 2006, Stokes and 1Point filed for bankruptcy. The Trustee filed suit against Regions in bankruptcy court on behalf of victimized plans for which he assumed fiduciary status. The suit was consolidated with plaintiffs’ suit. The district court withdrew the Trustee’s case from bankruptcy court, dismissed ERISA claims, and found that ERISA preempted state law claims. The Sixth Circuit affirmed. View "McLemore v. Regions Bank" on Justia Law

Defendant was convicted of armed bank robbery, 18 U.S.C. 2113(a), and sentenced to the statutory maximum of 240 months, in part because of previous convictions for the same crime. The Seventh Circuit affirmed, upholding exclusion of a defense witness on the ground that he was an alibi witness and the defense had not given the prosecution the notice required before trial by FRCP 12.1(a). The proposed testimony, that defendant was calm at his employment as a personal trainer two hours after the robbery, would have no probative value. The court also rejected a challenge to the photo array shown the bank manager, whom the robber had confronted after forcing entry shortly after the bank had closed. The array was suggestive, but any error was harmless. There was no doubt that the dust mask found outside the bank was the robber’s, and DNA found on the dust mask matched defendant’s DNA; all of the bank employees gave a description that matched defendant. View "United States v. Ford" on Justia Law

After the owner of a construction project defaulted on its obligations to various creditors, mortgage holder Pinnacle Bank foreclosed on the real property securing its mortgage. Junior mortgage holder American National Bank (ANB) and construction lienholder Michael's Construction, Inc. (Michael's) both sought payment from the surplus funds resulting from the foreclosure proceeding. The district court declared that ANB's mortgage was superior to Michael's lien, but denied ANB's request for contractual interest from the date of foreclosure through the date of final judgment. The Supreme Court (1) affirmed the district court's order regarding the priority of liens; but (2) reversed the order regarding interest, holding that the district court did not have the discretion to limit ANB's recovery by denying it interest at the contractual rate from the time of foreclosure through final judgment. Remanded to determine the amount of interest due ANB under the promissory note for that time period. View "Michael's Constr., Inc. v. Am. Nat'l Bank " on Justia Law

Plaintiff contracted to sell a furniture business to Mendoza in 2004. Westernbank provided partial funding and obtained a first mortgage. To secure a deferred payment of $750,000, Mendoza signed a mortgage in favor of plaintiff and a contract under which plaintiff consigned goods with expected sales value of more than $6,000,000. An account was opened at Westernbank for deposit of sales proceeds. Plaintiff alleges that Westernbank kept funds to which plaintiff was entitled for satisfaction of Mendoza’s debts to Westernbank. Mendoza filed for bankruptcy and transferred its real estate to Westernbank in exchange for release of debt to the bank. Plaintiff agreed to forgive unpaid debts in order to obtain relief from the stay and foreclose its mortgage, then sued Westernbank, employees, and insurers, alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-68, and Puerto Rico law causes of action. After BPPR became successor to Westernbank, plaintiff agreed to dismiss the civil law fraud and breach of fiduciary duty claims and the RICO claim. The district court later dismissed remaining claims for lack of subject matter jurisdiction, declining to exercise supplemental jurisdiction over non-federal claims. The First Circuit affirmed. View "Fabrica de Muebles J.J. Alvare v. Inversiones Mendoza, Inc." on Justia Law

Westin Hills West Three Townhome Owners Association (the Association) appealed an order of the district court, which entered summary judgment in favor of the owner of the property, Federal National Mortgage Association, doing business as Fannie Mae (FNMA). In this foreclosure of lien case, the Association claimed that the recording of its declaration of covenants before the deed of trust gave the assessment lien recorded after the deed of trust first priority. The district court rejected this claim. The Supreme Court affirmed, holding that the court did not err in granting FNMA's motion for summary judgment, as the deed of trust was superior to any assessment lien mentioned in the declaration of the Association. View "Westin Hills Townhome Owners Ass'n v. Fed. Nat'l Mortgage Ass'n" on Justia Law

Mutual of Omaha Bank filed a petition seeking declaratory judgment against Patrick and April Kassebaum, who owed the Bank payments due under several promissory notes. In particular, the Bank sought to have the district court declare the rights of the parties with respect to an assignment of unliquidated proceeds or personal injury litigation executed by the Kassebaums. The Kassebaums filed a motion to dismiss or, in the alternative, a motion for summary judgment, alleging that the assignment was ineffective. The district court denied the motion, and the matter proceeded to trial. A jury entered a verdict in favor of the Bank in the amount of $126,376. The Supreme Court affirmed, holding that the Kassebaums' assignment was valid and enforceable under Nebraska law. View "Mut. of Omaha Bank v. Kassebaum " on Justia Law

Regions Bank, in its fiduciary capacity as trustee or cotrustee of various trusts, Delores Ancell, and David Puckett filed two permissive appeals, pursuant to Rule 5, Ala. R. App. P., to challenge the Jefferson Circuit Court's orders denying the trustees' motions to dismiss in part Ernest Kramer's and Kenyon R. Kirkland's complaints filed against the trustees. In his complaint, Kramer alleged that the trustees' management of the assets held by the Kramer revocable trust constituted a breach of fiduciary duty, negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of the Alabama Securities Act. Finding that the trustees failed to support their argument with relevant legal authority, the Supreme Court affirmed the trial court's orders. View "Regions Bank v. Ernest Kramer " on Justia Law

In 2007, Debtor purchased a manufactured home, borrowing the funds from Creditor and granting a security interest. Creditor filed an application for first title and a title lien statement in Whitley County, Kentucky. The seller of the manufactured home is located in Whitley County. Debtor resided at the time in Laurel County, Kentucky. Later, the Kentucky Transportation Cabinet issued a Certificate of Title for the Manufactured Home showing the lien as being filed in Whitley County. In 2010, Debtor filed his voluntary Chapter 7 bankruptcy petition. The Chapter 7 Trustee initiated an adversary proceeding. The Bankruptcy Court avoided the lien, 11 U.S.C. 544. The Sixth Circuit affirmed. The statute requires that title lien statements be filed in the county of the debtor’s residence even if the initial application for certificate of title or registration is filed in another county under KRS 186A.120(2)(a). View "In re: Pierce" on Justia Law

Before the 2008 financial crisis, six AIG subsidiaries sold Sharia-compliant financing products. Sharia refers to Islamic law; an SCF product uses a portion of product reserves to fulfill the Islamic duty of charitable giving and does not invest premiums in industries dealing with pork, alcohol, interest, gambling, or pornography. The subsidiaries are consolidated in AIG financial statements and received part of the funds AIG received in 2008, when the Federal Reserve Bank of New York lent AIG $85 billion in exchange for AIG shares. The Treasury Department also took an ownership stake in AIG by committing $40 billion pursuant to the Troubled Asset Relief Program, established under the Emergency Economic Stabilization Act, 12 U.S.C. 5201–61. Treasury committed $ 30 billion to AIG in 2009, in exchange for more stock. Plaintiff challenged EESA, arguing that it violated the Establishment Clause for the government to allow a portion of the capital given to AIG to support the marketing of SCF products. Plaintiff is a Michigan resident, a veteran of Operation Iraqi Freedom, a Catholic, and a taxpayer. His status as a federal taxpayer is his sole basis for asserting standing. The district court entered summary judgment for defendants. The Sixth Circuit affirmed. View "Murray v. U.S. Dep't of Treasury" on Justia Law