Justia Banking Opinion Summaries

After a dispute over the purchase of a motor coach, Plaintiff brought suit against Defendants, a used car salesman, a used car dealership, and a bank, asserting claims of, inter alia, breach of contract, fraud, and negligent misrepresentation. Plaintiff subsequently filed a motion to compel discovery, which the district court granted. Defendants did not meet their discovery deadlines, and Defendants' counsel failed to attend several status conferences. The district court then entered a default judgment for Plaintiff as a discovery sanction and later and awarded Plaintiff $74,154 in damages. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) did not abuse its discretion when it entered a default judgment for Plaintiff as a discovery sanction under Mont. R. Civ. P. 37(b); (2) did not abuse its discretion when it refused to set aside the sanction orders; (3) did not err as a matter of law in calculating damages; but (4) failed to property calculate and award prejudgment interest. Remanded. View "Kraft v. High Country Motors Inc." on Justia Law

This case involved the question of how the amount of a deficiency owed by Fischer & Frichtel Inc, a commercial debtor, after a foreclosure sale of its property should be measured. The trial court submitted an instruction directing the jury to award the difference between the amount of the debt and the property's fair market value at the time of the foreclosure sale. The court then granted First Bank's motion for a new trial in light of its showing that Missouri case law instead requires the deficiency to be determined by the difference between the debt and the amount received at the foreclosure sale. The Supreme Court affirmed after discussing Missouri common law, which requires that the deficiency should be measured by the amount received at the foreclosure sale, but if the sale price is so inadequate as to raise an inference of fraud, then the foreclosure sale can be voided. View "First Bank v. Fischer & Frichtel, Inc." on Justia Law

The Fair and Accurate Credit Transactions Act, 15 U.S.C. 1681c(g), requires that electronically printed receipts not display more than the last 5 digits of the card number, but does not define "card number." A Shell card designates nine digits as the "account number" and five as the "card number" and has 14 digits embossed on the front and 18 digits encoded on the magnetic stripe. Shell printed receipts at its gas pumps with the last four digits of the account number. Plaintiffs contend that it should have printed the final four numbers that are electronically encoded on the magnetic stripe, which the industry calls the "primary account number." Plaintiffs did not claim risk of identity theft or any actual injury, but sought a penalty of $100 per card user for willful failure to comply. The district court denied Shell summary judgment. The Seventh Circuit reversed, holding that Shell did not willfully violate the Act.View "Shell Oil Prods. Co. v. Van Straaten" on Justia Law

This case arose from a dispute over certain property subject to a foreclosure. At issue was whether the parol evidence rule required that a person who claimed to hold a "purchase money mortgage" must prove his purchase money mortgage holder status solely by reference to the mortgage instrument itself. The court concluded that, in this case, the recorded deed and purchase money mortgage established that the sellers' mortgage satisfied, at least prima facie, all three requirements of 25 Del. C. 2108. Moreover, the mortgage contained no subordination language that would relinquish priority to the third party lenders. Therefore, the presumption that the sellers' mortgage was a purchase money mortgage entitled to statutory priority standards stood unrebutted. By applying the parol evidence rule to reach a contrary conclusion, the Superior Court erred as a matter of law. View "Galantino v. Baffone" on Justia Law

Valerio, a citizen of Costa Rica, entered the U.S. illegally in 1991. Her companion paid $500 to obtain a birth certificate and Social Security card in the name of Rosa Hernandez, a person living in Puerto Rico. For about 12 years, Valerio used Hernandez's identity to hold a variety of jobs, pay taxes, open lines of credit, purchase cars, obtain a drivers' license, and take a loan to purchase a home. She obtained various welfare benefits for herself and her family under her real name, withholding information regarding income and assets she held under Hernandez's name. She used the Hernandez identity to vouch for herself as Valerio. When the real Hernandez discovered the situation, police apprehended Valerio, searched her apartment, and found numerous documents relating to her true identity and her assumed Hernandez identity. She was convicted of three counts of mail fraud, 18 U.S.C. 1341 and aggravated identity theft, 18 U.S.C. 1028A. The First Circuit affirmed, rejecting a challenge to sufficiency of the evidence and holding that Valerio was not prejudiced by the performance of her trial attorney.View "United States v. Valerio" on Justia Law

As part of a retention package, the bank purchased a split dollar life policy for plaintiff's trust with cash value of more than $662,000. The bank paid part of the premiums and had a senior interest in the policy to the extent of those premiums. To safeguard this interest, the trust assigned the policy to the bank as collateral. The bank paid $421,890 of the premiums. The trust interest was about $240,000. In 2009, the bank failed and was placed under FDIC receivership. The Insurer surrendered the entire cash value of the policy to the FDIC. The trustee demanded return of the value of the policy; the insurer refused. The trustee first contacted the FDIC receiver after expiration of the 90-day period for claims under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(13)(D), although he received notice 12 days before expiration of the period. The district court dismissed for lack of jurisdiction. The Seventh Circuit affirmed. It would be possible for a claim to arise so close to the bar date as to deprive a claimant of due process, but this case did not present that situation. View "Campbell v. Fed. Deposit Ins. Corp." on Justia Law

Salem Logistics entered into a loan agreement with Ark Royal Capital that required Salem to instruct its customers to send payments directly to an account maintained by Ark at Wachovia Bank. Salem subsequently agreed to provide freight bill auditing services to Variety Wholesalers. Salem requested that Variety send the amounts on the master invoices directly to the Wachovia account but did not inform Variety that the account was actually controlled by Ark. Variety later terminated its contract with Salem and filed suit for recovery of money it had forwarded to Salem that had not been paid to carriers. When Variety discovered the Wachovia account actually belonged to Ark, Variety added Ark as a defendant. The trial court entered summary judgment for Variety on its claim of conversion against Ark and for Ark on Variety's claim of constructive trust and ordered Ark to pay Variety $888,000. The court of appeals reversed and entered summary judgment for Ark on both issues. The Supreme Court reversed and remanded on both issues, holding (1) summary judgment was improper because there were genuine issues of material fact to be resolved; and (2) accordingly, the trial court also erred in its award of damages to Variety. View "Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs." on Justia Law

Respondent Hook Point, LLC (Hook Point) was granted a preliminary injunction preventing Appellant Branch Banking and Trust Company (BB&T) from drawing on, and Defendant First Reliance Bank (First Reliance) from honoring, a $1.5 million letter of credit. BB&T appealed. In late 2007, Hook Point sought a loan from BB&T for the purpose of developing a subdivision on property Hook Point owned on Lake Murray called Panama Pointe. BB&T issued a commitment letter to Hook Point in September 2007 indicating that it would loan the company $5.1 million and establish a $2 million line of credit to enable Hook Point to develop the subdivision. Security for the loan included a first mortgage on the Panama Pointe property, personal guarantees of Hook Point’s four principals, and a $1.5 million standby letter of credit issued by First Reliance in favor of BB&T. On December 23, Hook Point filed suit alleging several causes of action against BB&T, including for fraudulent misrepresentation by which BB&T induced Hook Point to enter into a loan agreement. Hook Point admitted to being $70,000 in arrears on interest but argued that the terms of the agreement did not permit BB&T to draw the full amount of the letter of credit (LC) if that exceeded the amount of interest due. It also sought an ex parte temporary restraining order to prevent First Reliance from honoring a draft on the LC by BB&T, which the court granted. After a hearing, the court also granted a preliminary injunction against drafts on or honor of the LC beyond amounts of accrued interest, requiring extension of the LC for one year, and requiring Hook Point to post a $50,000 bond with the court. The Supreme Court reversed the circuit court's grant of the injunction: "[t]he standard under which a fraud in the transaction claim must be measured when deciding whether to enjoin honor of a letter of credit requires that the beneficiary have no colorable claim or basis in fact for asserting its rights under the letter of credit. In this case BB&T has, in [the Court's] view, not only a colorable claim but an undeniable basis in fact for asserting its rights under the letter of credit. Therefore, the circuit court erred when it granted the preliminary injunction." View "Hook Point v. Branch Banking" on Justia Law

Dean and Stacey Norcutt bought a home for cash and satisfied the existing first mortgage held by Zions National Bank. They later discovered the home was also subject to a judgment lien obtained by Sourcecorp, Inc. that far exceeded the property's value. Sourcecorp subsequently initiated a sheriff's sale to foreclose on its judgment lien, and the Norcutts sued to enjoin the sale. The trial court granted relief to the Norcutts, and the court of appeals reversed. On remand, the trial court entered summary judgment for Sourcecorp. The Court of appeals reversed, holding that the Norcutts were equitably subrogated to the position of Zions Bank in priority over Sourcecorp. The Supreme Court affirmed, holding that the Norcutts were equitably subrogated to the mortgage lien's priority for the amount they paid to satisfy the mortgage. Remanded. View "Sourcecorp, Inc. v. Norcutt" on Justia Law

Fred and Nancy Eagerton appealed a summary judgment granted in favor of Vision Bank in the bank's action seeking to enforce the Eagertons' obligations under certain guaranty contracts. "Dotson 10s, LLC" was organized to operate a tennis club in Fairhope. Dotson 10s executed a note and security agreement with Vision Bank, and the bank obtained in exchange, unlimited personal guarantees from John and Elizabeth Dotson, and limited guarantees from the Eagertons. The Dotsons executed a second loan to which the Eagertons were not a party. The Dotsons defaulted on both loans, and the bank sued the Dotsons as the primary obligors, and the Eagertons as personal guarantors. Dotson 10s then filed for bankruptcy protection. Part of the reorganization plan provided in part that the two loans would be combined and paid in full. Dotson 10s subsequently defaulted on the bankruptcy plan. The properties were foreclosed and sold, with the proceeds applied to the consolidated loan. The circuit court then entered a partial summary judgment in favor of the bank against Dotson 10s, but denied the motion as to the Eagertons. The bank argued that the Eagertons were still responsible under their guaranty contracts for the deficiency remaining on the consolidated loan. The Eagertons argued that the creation of the consolidated loan without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. Upon review, the Supreme Court agreed, and reversed the circuit court's judgment in favor of the bank, and remanded the case for further proceedings. View "Eagerton v. Vision Bank " on Justia Law