Justia Banking Opinion Summaries

Between 2004 and 2008, Brown ran an elaborate scheme that tricked lenders into issuing fraudulent mortgage loans in Chicago and Las Vegas. Brown recruited or directed dozens of individuals: lawyers, accountants, loan officers, bank employees, realtors, home builders, and nominee buyers. Of his accomplices, 32 people were criminally charged. The Chicago scheme resulted in about 150 fraudulent loans, totaling more than $95 million in proceeds from victim lenders. The Las Vegas scheme resulted in approximately 33 fraudulent loans totaling about $16 million. Brown entered guilty pleas and was sentenced to 216 months’ imprisonment for the Las Vegas scheme and 240 months’ imprisonment for the Chicago scheme, to run concurrently. The district court also imposed a restitution amount of more than $32.2 million. The Seventh Circuit affirmed Brown’s sentence, rejecting a challenge to the loss calculation. The court remanded the 66-month sentence and $7.1 restitution order against another participant in the Chicago scheme because the court incorrectly determined the number of victims. View "United States v. Love" on Justia Law

In this derivative action, the parties sought judicial approval of a settlement. Defendants agreed to pay the Fund, on whose behalf the derivative claims were brought, and agreed not to pursue claims for indemnification against the Fund. Certain limited partners in the Fund, including the named plaintiffs, objected to the settlement consideration as inadequate. The court held that the settlement consideration fell within a range of fairness, albeit at the low end. Because the consideration fell within the range of fairness, the court will approve the settlement unless the objectors make the equivalent of a topping bid. View "Forsythe, et al. v. ESC Fund Management Co. (U.S.), Inc., et al." on Justia Law

Plaintiff filed suit in Minnesota state court against her mortgage lender, seeking legal and equitable relief from the lender's foreclosure and sale of her home. The court held that, because there was no dispute as to whether the foreclosure was actually postponed, Minn. Stat. 580.07, subdiv. 1 was inapplicable. The court also held that the Minnesota Credit Agreement Statute (MCAS), Minn. Stat. 513.33, subdiv. 2, prohibited the enforcement of an oral promise to postpone a foreclosure sale and that the lender was entitled to summary judgment on plaintiff's promissory estoppel claim. Finally, the court held that plaintiff did not raise a genuine question of material fact as to whether she detrimentally relied on the lender's promise. Accordingly, the court affirmed the district court's grant of summary judgment on Counts I-V. View "Brisbin v. Aurora Loan Services, LLC, et al." on Justia Law

In 1997 Javier unlawfully entered the U.S.; he married in 2001. In 2007 the bank hired wife. Husband, attempting to start a business, could not open a bank account without a social security number. He obtained an individual tax identification number. Wife named him a joint owner on her account and helped use his ITIN to open accounts of his own. The business failed. Husband returned to Mexico to deal with his citizenship. Wife revealed the situation to her supervisor, requesting time off to help husband obtain citizenship. The supervisor agreed and called the bank security officer, who was concerned that the accounts might implicate bank fraud laws. During a meeting, the security officer became angry and berated wife. Wife refused to attend another meeting without her attorney The bank terminated her employment and reported her activity to U.S. Immigration and Customs Enforcement and a consortium of area banks. Wife sued, claiming blacklisting, defamation, emotional distress, and employment discrimination, 42 U.S.C. 2000e. The district court granted the bank summary judgment. The Seventh Circuit affirmed, holding that any discrimination was not based on race or national origin, but on an unprotected classification, husband’s status as an alien lacking permission to be in the country. View "Cortezano v. Salin Bank & Trust Co." on Justia Law

These consolidated cases involved two properties purchased by John Hogan. Each parcel became subject to a deed of trust when Hogan took out loans from Long Beach Mortgage Company. Hogan was delinquent on both loans, which triggered foreclosure proceedings. The trustee recorded a notice of sale for the first parcel, naming Washington Mutual Bank (WaMu) as the beneficiary. A notice of trustee's sale recorded for the second parcel identified Deutsche Bank as the beneficiary. Hogan filed lawsuits seeking to enjoin the trustees' sales unless the beneficiaries proved they were entitled to collect on the respective notes. The superior court granted the defendants' motions to dismiss. The court of appeals affirmed, holding that Arizona's non-judicial foreclosure statute did not require presentation of the original note before commencing foreclosure proceedings. The Supreme Court vacated the court of appeals and affirmed the superior court's orders, holding that Hogan was not entitled to relief because the deed of trust statutes impose no obligation on the beneficiary to "show the note" before the trustee conducts a non-judicial foreclosure. View "Hogan v. Washington Mut. Bank. N.A." on Justia Law

E-Shops filed a class action complaint, after receiving a number of chargebacks resulting from fraudulent use of U.S. Bank credit cards, alleging that U.S. Bank knowingly allowed itself to be an instrument of the fraud, thereby making E-Shop's performance under its contract with its merchant bank more expensive. The district court dismissed E-Shops complaint for failure to state a claim. The court affirmed, holding that E-Shops failed to satisfy the required pleading standards. View "E-Shops Corp. v. U.S. Bank Nat'l Assoc." on Justia Law

Rachelle Hunter received a loan from Highmark Federal Credit Union to purchase a home and property. A flood damaged the home a few years later, and Hunter had no flood insurance. Hunter filed suit against Highmark, arguing that Highmark was negligent in failing to warn her to purchase flood insurance and in failing to purchase the insurance at her expense. The circuit court granted summary judgment in favor of Highmark. The Supreme Court affirmed, holding that Hunter's negligence claim failed as a matter of law because she could not show that Highmark owed her a duty, and accordingly, summary judgment was appropriate. View "Highmark Fed. Credit Union v. Hunter" on Justia Law

Petitioners Club Vista Financial Services and others (Club Vista) entered into a real estate development project with real parties in interest Scott Financial Corporation and others (Scott Financial). When a loan guaranteed by some of the Petitioners went into default, Club Vista filed an action against Scott Financial. During discovery, Scott Financial obtained a deposition subpoena for Club Vista's attorney, K. Layne Morrill. An Arizona court granted Morrill's motion to quash the subpoena. The Nevada district court, however, denied Morrill's motion for a protective order and permitted Scott Financial to depose Morrill as to the factual matters supporting the allegations in the complaint. The Supreme Court granted Morrill's petition for writ of mandamus or prohibition in part after adopting the framework espoused by the Eighth Circuit Court of Appeals in Shelton v. American Motors Corp., which states that the party seeking to depose opposing counsel must demonstrate that the information sought cannot be obtained by other means, is relevant and nonprivileged, and is crucial to the preparation of the case. Because the district court did not analyze the Shelton factors, the Court directed the district court to evaluate whether, applying the Shelton factors, Scott Financial may depose Morrill. View "Club Vista Fin. Servs., LLC v. Dist. Court" on Justia Law

This bankruptcy appeal involved a transfer of liens by subsidiaries of TOUSA, Inc., to secure the payment of a debt owed only by their parent, TOUSA. This appeal by the Committee of Unsecured Creditors presented two issues: (1) whether the bankruptcy court clearly erred when it found that the Conveying Subsidiaries did not receive reasonably equivalent value in exchange for the liens to secure loans used to pay a debt owed only by TOUSA; and (2) whether the Transeastern Lenders were entities "for whose benefit" the Conveying Subsidiaries transferred the liens. The court held that the bankruptcy court did not clearly err when it found that the Conveying Subsidiaries did not receive reasonably equivalent value for the liens and that the bankruptcy court correctly ruled that the Transeastern Lenders were entities "for whose benefit" the liens were transferred. The court reversed the judgment of the district court, affirmed the liability findings of the bankruptcy court, and remanded for further proceedings. View "Senior Transeastern Lenders, et al. v. Official Committee of Unsecured Creditors" on Justia Law

BMD was a subcontractor for Industrial, a subcontractor for Walbridge, the general contractor for construction of a factory near Indianapolis. Fidelity was surety for Industrial’s obligations to BMD. The project proceeded for about a year before the manufacturer declared bankruptcy. Walbridge failed to pay Industrial, Industrial failed to pay BMD, and Fidelity refused to pay BMD, which sued Fidelity on the bond. Their subcontract conditioned Industrial's duty to pay on its own receipt of payment. The district court held that the pay-if-paid clause required Industrial to pay BMD only if Industrial received payment from Walbridge, rejecting an argument that it controlled only the timing of Industrial's obligation. The court held that pay-if-paid clauses are valid under public policy and that Fidelity could assert all defenses of its principal. The Sixth Circuit affirmed. The subcontract expressly provides that Industrial's receipt of payment is a condition precedent to its obligation; it could have stated that BMD assumed the risk of the owner’s insolvency, but additional language was not necessary. Pay-if-paid clauses are valid under Indiana law and, under surety law, Fidelity may assert all defenses of its principal. Industrial was never obligated to pay BMD; BMD may not recover on the bond. View "BMD Contractors, Inc. v. Fid. & Deposit Co. of MD" on Justia Law