Justia Banking Opinion Summaries

Husband and wife operated a mortgage fraud scheme that bought residential properties and sold those properties to nominee buyers at inflated prices. They provided lenders with false information about buyers' finances, sources of down payments, and intentions to occupy the residences. The scheme involved 37 separate transactions and resulted in net loss of more than $700,000 to various lenders. After the scheme collapsed, they went bankrupt but were not immediately prosecuted. Wife worked as a nurse in a pediatric intensive care unit. Husband worked as a installer and technician. They raised their three children and became fully engaged in their community. On the day before the ten-year statute of limitations would have expired, the government charged them with wire fraud, 18 U.S.C. 1343, and two counts of bank fraud, 18 U.S.C. 1344. They pled guilty to a single count of wire fraud, and were sentenced based on the 2010 USGS, wife to 41 months in prison, and husband to 63 months, and ordered to pay more than $700,000 in restitution. The Seventh Circuit remanded, stating that the sentencing judge failed to consider adequately unusually strong evidence of self-motivated rehabilitation. For this reason, we vacate their sentences

This case stemmed from the taking of property in downtown Los Angeles to comply with a federal court order to improve the quality of bus services and involved California's "quick-take" eminent domain procedure, Code of Civil Procedure 1255.010, 1244.410, where a public entity filing a condemnation action could seek immediate possession of the condemned property upon depositing with the court the probable compensation for the property. At issue was Section 1255.260's proper interpretation. The court of appeals in this case held that, under the statute, if a lender holding a lien on condemned property applied to withdraw a portion of the deposit, and the property owner did not object to the application, the lender's withdrawal of a portion of the deposit constituted a waiver of the property owner's claims and defenses, except a claim for greater compensation. The court found the court of appeal's conclusion was inconsistent with the relevant statutory language and framework. Therefore, the court reversed the judgment of the court of appeals.

Relator, on behalf of the United States, appealed the district court's dismissal of his qui tam complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). The district court held that an earlier-filed complaint barred its consideration of relator's complaint under the first-to-file rule of the federal False Claims Act (FCA), 31 U.S.C. 3730(b)(5). At issue was whether Section 3730(b)(5) required the first-filed complaint to meet the heightened pleading standards of Federal Rule of Civil Procedure 9(b) for alleging fraud in order to bar a later-filed complaint. The court held that the earlier-filed complaint alleged the same material elements of a fraudulent scheme as relator's complaint, and that the earlier-filed complaint need not meet the heightened pleading standards of Rule 9(b) to allege facts sufficient to prompt a government investigation, and thus, to bar later-filed complaints under Section 3730(b)(5). The court also held that relator waived his argument that the case should not have been dismissed with prejudice.

Appellants Eleanor and Robert Reed, Diane Martin and Meredith Farmer petitioned the Supreme Court to challenge the Court of Civil Appeals' decision which upheld the trial court's determination regarding Appellee-Trustee JP Morgan Chase Bank's previously-adjudicated ability to draw on the trusts's principal. The trust in question named Appellant Eleanor Reed as beneficiary, and authorized payments of up to half of its income payable quarterly, for her support and well-being. In 1998, Reed filed a Petition for Instructions in district court in Tulsa County, requesting the court determine what distributions were permitted under the Trust. Specifically, Reed sought instructions for the co-trustee, Bank One Trust Company, N.A., to pay certain of Reed's expenses from the Trust's principal. In 2007, Reed and three of her four children, Robert Reed, Diane Martin and Meredith Farmer, filed suit to modify the terms of the trust to allow Appellee JP Morgan Chase to make payments from the remaining half of the trust's principal. Appellants stated that Reed was "an incapacitated person afflicted with Alzheimer's disease, and her condition constitutes an emergency condition which will necessitate her being housed in a nursing home. She is wheel-chair bound, 84 years old, and in precarious health." Appellants maintained that Testator would have wanted Reed, his only child, to have the use of the remaining Trust funds to provide for her well-being. Appellees objected to the suit, arguing that the Testator's intent regarding the payment from principal had been determined in a 1998 Order and, as such, the claims asserted in the Amended Petition are barred by the doctrine of res judicata and collateral estoppel. Upon review, the Supreme Court saw no connection between the 1998 Order and the issue presented to it on appeal: "[w]hile we agree that the subject matter, the parties, and the capacity of the parties remain the same, we cannot agree that the cause of the action is the same as that in the 1998 matter. The focus of the 1998 lawsuit was to provide instructions to the trustee to make payments from half of the Trust corpus on behalf of Reed. This payment was expressly provided for in the Trust instrument. In the present action, Appellants [sought] due to an unforeseen medical emergency, to modify the express terms of the Trust and to show that Testator would have intended Reed's present needs be cared for even if it meant invading the remaining half of the Trust corpus." The Court vacated the appellate court's opinion in this matter and remanded the case back to the trial court for determination of whether modification should be allowed under the terms of the trust.

Plaintiffs, Wachovia Bank and WCM, appealed from a judgment of the district court dismissing their action seeking to enjoin an arbitration proceeding brought by VCG before the Financial Industry Regulatory Authority, Inc. (FINRA), against WCM in connection with a credit default swap (CDS) transaction between VCG and WCM. The district court granted VCG's motion for an order compelling arbitration and dismissed the complaint, ruling that the FINRA Code of Arbitration Procedure for Customer Disputes provided for arbitration of disputes between a FINRA member and its customers, and that, as WCM was a FINRA member and negotiated part of the CDS agreement entered into by VCG and Wachovia Bank, VCG should be considered a customer of WCM within the meaning of the FINRA Code. On appeal, plaintiffs contended that the district court erred in ruling that VCG was a customer of WCM. The court held that no rational factfinder could infer that VCG was a customer of WCM. Therefore, Wachovia and WCM were entitled to summary judgment in their favor. The court considered all of VCG's contentions on appeal and found them to be without merit. Accordingly, the judgment of the district court was reversed and the matter remanded for the entry of judgment in favor of plaintiffs, enjoining VCG from proceeding with its FINRA arbitration against WCM with respect to VCG's 2007 credit default swap agreement with Wachovia Bank.

In 1990, Roy Sharpe executed an inter vivos trust and a will containing a testamentary trust. According to both trusts, Sharpe preferred his attorney, Charles Brown, to be employed to provide legal advice regarding trust administration and to choose a successor trustee if the need arose. Bank of America eventually served as trustee of both trusts. In 2009, Brown filed a petition to change trustees, asserting that in violation of the terms of the trusts, Bank of America intended to manage the trusts from a location outside the boundaries of Little Rock. The circuit court granted the motion. The Supreme Court reversed, holding that Brown lacked standing to bring the petition. Because the trusts did not provide a means for removing a trustee, Brown obtained no authority from the trusts to bring an action to change the trustees and had no interest in the trusts that granted him standing and permitted him to enforce the terms of the trusts. Remanded with directions to dismiss the case.

As part of the distribution of property following the dissolution of Kenneth Treiger and J’Amy Lyn Owens’ marriage, a home belonging to them (the Maplewood property) was sold, and, pursuant to a trust agreement, the proceeds were deposited in a trust account. Bank of America NA (the Bank), which had obtained a writ of attachment on the Maplewood property, filed a declaratory judgment action to determine each party’s rights to the proceeds. This presented two issues for the Supreme Court's review: (1) to determine whether the “Supplemental Decree of Dissolution” (Supplemental Decree) established a lien on the Maplewood property in favor of Treiger; and (2) to determine whether various documents were valid judgments. Upon review, the Court concluded that the Supplemental Decree established an equitable lien on the Maplewood property in favor of Treiger in the amount of one-half of the proceeds of the court-ordered sale of the property. Furthermore, Documents "1375" and "13761" were valid judgments entitling Treiger to further awards but that Document "1370" was properly not given separate effect. Accordingly, the Court affirm in part and reversed in part the decision of the Court of Appeals.

The issue before the Supreme Court was whether the appearance of impartiality/conflict of interest in disciplinary proceedings before the Oklahoma Real Estate Appraiser Board (the Board) required invalidation of the proceedings. In December of 2005, Appellee real estate appraiser Beverly Bowen appraised a parcel of real property for her client BancFirst (Bank). By July of 2007, after having sat vacant for 19 months, the property sold at a sheriff's sale which resulted in a loss to the private mortgage insurer (insurer). The insurer filed a grievance against the appraiser with the Board alleging possible appraisal fraud. The insurer hired another local appraiser, JoElla Jones (Jones/review appraiser), to reappraise the property nineteen months after Bowen's initial appraisal. Apparently, the property remained unoccupied the entire time, and it may have been vandalized. Jones reviewed Bowen's work. She valued the property at $197,000.00 or $58,000 below Bowen's appraisal. While the dispute between the bank and the insurer regarding the property's value was ongoing, the bank discovered that Jones had a personal and direct history with Bowen: the appraisers had known one another for more than 26 years. Learning this information prompted the bank to write a letter to the insurer notifying them of the unmistakable conflict of interest and alleging that if a mistake in an appraisal occurred, it was made by the review appraiser. Soon thereafter, the Board brought disciplinary proceedings against Bowen. Notwithstanding the conflict of interest, a probable cause committee (committee) of the Board held a hearing. The Board adopted the committee's findings of fact and conclusions of law but modified the disciplinary recommendation. The trial court held another hearing reversing the Board's discipline, finding that the appearance of impropriety was so apparent on the face of the record that reversible legal error occurred. The Board appealed and the Court of Civil Appeals reversed the trial court. Upon review, the Supreme Court found that under the fact of this case, the disciplinary proceedings required invalidating proceedings because of the appearance of impartiality. The Court affirmed the trial court.

Defendant appealed from a judgment convicting him of (1) conspiracy to violate the Iranian Transaction Regulations (ITR) and operate an unlicensed money-transmitting business; (2) violating the ITR; (3) operating an unlicensed money-transmitting business; and (4) two counts of making false statements in response to government subpoenas. On appeal, defendant argued that the district court erred in several respects when instructing the jury on the conspiracy, ITR, and money-transmitting counts; defendant was entitled to a new trial on the false statement counts because the government constructively amended the indictment; the government committed misconduct in its rebuttal summation, which he claimed necessitated a new trial on all counts; and defendant should be resentenced because the district court miscalculated the applicable offense level. The court reversed Count One to the extent it alleged a violation of the ITR as an overt act and vacated and remanded to the extent it was based on the money-transmission violation as an overt act; reversed Count Two; vacated and remanded Count Three; and affirmed Counts Four and Five.

In 2004 and 2005, while allegedly bedridden and taking prescription pain medication, Plaintiff Gregory Erkins took out two successive loans on his house. The proceeds of the second, larger loan were used in part to pay off the first. In early 2007, Plaintiff ceased making regular payments and this loan fell into default. His house was listed for foreclosure sale. Also, at some point between February 2005 and November 2007, the loan was assigned from Ameriquest Mortgage Company to Appellee Bank of New York Trust Company, N.A. Acting pro se, Plaintiff filed suit in the superior court against Alaska Trustee, LLC, Bank of New York (the current holder of the loan), and JP Morgan Chase Bank, N.A. (JP Morgan) (a party apparently unconnected to the proceedings except in that Bank of New York was listed as its successor). Plaintiff disputed the terms of the second loan, and argued fraud as well as lack of contractual capacity at the time of its origination. Several months after Plaintiff filed his complaint, as a trial date was about to be set, counsel for the defendants presented Plaintiff with a forbearance agreement. This agreement contemplated postponing the foreclosure sale in exchange for $2,000 monthly payments. Plaintiff executed this agreement. Allegedly unbeknownst to Plaintiff, the agreement also contained a waiver of claims broad enough to cover his claims against the defendants. Nine months later, the defendants moved for summary judgment, arguing that this waiver of claims functioned as a settlement and released all of Plaintiff's claims in this suit. The superior court granted summary judgment to the defendants, finding no genuine issue of material fact barring judgment that they were not liable for any tort of Ameriquest, and that Plaintiff had released his claims in the forbearance agreement. Upon review, the Supreme Court affirmed that portion of the superior court’s decision finding that defendants could not be held liable for the alleged torts of Ameriquest. But the Court reversed that portion of the superior court’s order concluding that Plaintiff released his claims against the defendants by entering into a forbearance agreement because a genuine issue of material fact existed as to whether the inclusion of the waiver of claims provision in the forbearance agreement constituted constructive fraud.