Justia Banking Opinion Summaries

Plaintiff filed a voluntary Chapter 13 bankruptcy petition and successfully sought to avoid a lien on her manufactured home held by defendant. The Bankruptcy Appellate Panel and Sixth Circuit affirmed. The mortgage did not originally cover the manufactured home, which was personal property until 2007,when a state court entered an in rem judgment and order of sale converting it to an improvement to real property. After that, the home was covered by the mortgage. The conversion, unlike the mortgage, was involuntary as to the plaintiff, so she had standing under 11 U.S.C. 522(h) to avoid the lien.

This action for breach of contract and related tort claims had its origin in a February 9, 2006 Credit and Security Agreement, wherein defendant agreed inter alia to provide plaintiff with a revolving line of credit. Plaintiff subsequently appealed from a judgment of dismissal entered by the district court, contending that the district court erred in relying on releases executed in favor of defendant, most recently in a forbearance agreement to dismiss its claims because its complaint pleaded that these releases were induced by economic duress. The court held that plaintiff failed to plead plausibly that defendant made a "wrongful threat," an essential element of economic duress. Rather, the conduct alleged to have caused duress evidences only the exercise of defendant's legal rights under the parties' original contract and subsequent agreements. Therefore, to the extent that those rights included defendant's exercise of "reasonable discretion" in various areas, plaintiff's allegations failed as a matter of law to plead actions exceeding the scope of such discretion. Accordingly, the court affirmed the judgement of dismissal.

This case arose when respondent obtained a month-long $200 loan from a storefront in Georgia in 2004. Respondent later sought relief from a Georgia state court, arguing that the loan was illegal and usurious under Georgia law because it carried a finance charge of $36, equivalent to an annual percentage rate of 253%. At issue on appeal was whether the district court had jurisdiction to entertain a petition to compel arbitration pursuant to section 4 of the Federal Arbitration Act (FAA), 9 U.S.C. 4. The court held that, looking through the section 4 arbitration petition to the underlying controversy, respondent's dispute with Community State Bank (Bank) could have arisen under federal law and, thus, provided a basis for federal jurisdiction over the FAA petition. Therefore, the court held that the district court had jurisdiction over the Bank's section 4 petition. The court held that because Cash America's arbitration defenses were struck by the Georgia state court as a statutorily authorized sanction for their willful and deliberate discovery abuses, Cash America could not relitigate the issue of the arbitration clauses' enforceability in federal court. Therefore, the court affirmed the district court's dismissal of the FAA petition, on the alternative ground of issue preclusion, as to Cash America. The court, however, vacated the order of dismissal as to the Bank and remanded to the district court to consider in the first instance the merits of the Bank's petition to compel arbitration.

Plaintiffs Carol Metz and others filed a putative class action against fifty-five banks, including Fifth Third. The claims arose out of a Ponzi scheme involving bogus promissory notes. Five months later, attorney Daniel Morris filed a motion to intervene on behalf of his clients. Attached to the motion was a complaint similar to Metz's complaint except it was premised on promissory notes issued by different entities. The district court granted the motion to intervene. After the district court had dismissed Fifth Third with prejudice, Morris filed an intervenors' complaint against Fifth Third. The complaint was virtually identical to the complaint attached to the motion to intervene Morris filed earlier. The district court dismissed the claims with prejudice and granted Fifth Third's request for sanctions. The Sixth Circuit affirmed the imposition of sanctions, holding (1) the district court's imposition of sanctions under the bad faith standard was proper; (2) the record set forth sufficient evidence to support the district court's decision; (3) the district court properly sanctioned Morris under its inherent authority even though Fed. R. Civ. P. 11 also applied; (4) the district court did not deny Morris due process; and (5) the amount of fees awarded was not excessive.

This case arose when plaintiff filed a putative class action complaint against defendant and others following the decline of defendant's stock price. At issue was whether certain statements concerning goodwill and loan loss reserves in a registration statement of defendant's gave rise to liability under sections 11 and 12 of the Securities Act of 1933, 15 U.S.C. 77a et seq. The court held that the statements in question were opinions, which were not alleged to have falsely represented the speakers' beliefs at the time they were made. Therefore, the court affirmed the judgment of the district court.

Appellants appealed the district court's denial of certification of their putative class action in Mancini v. Ticketmaster; Stearns v. Ticketmaster, and Johnson v. Ticketmaster. Appellants' actions were directed against a number of entities that were said to have participated in a deceptive internet scheme, which induced numerous individuals to unwittingly sign up for a fee-based rewards program where amounts were charged to their credit cards or directly deducted from their bank accounts. The court held that Rule 23 did not give the district court broad discretion over certification of class actions and the district court erred when it based its exercise of that discretion on what turned out to be an inaccurate reading of the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200-17210. Therefore, the court reversed the district court's denial of the motions for class certification of the UCL claims in Mancini and affirmed its determination that Mancini and Sanders were not proper representatives. The court affirmed the district court's dismissal of the California's Consumers Legal Remedies Act (CLRA), Cal. Civ. Code 1750-1784, claim in Stearns; affirmed the district court's refusal to certify a class regarding the CLRA injunctive relief claims in Mancini; reversed the district court's dismissal of the Johnson action regarding the CLRA claim; and affirmed its refusal to certify a class regarding the Electronic Fund Transfer Act (EFTA), 15 U.S.C. 1693-1693r, claim in Mancini.

This case concerned the termination of an employee, plaintiff, in the wake of an investigation into the disappearance of approximately $58,000 from a branch of Washington Mutual Bank (defendant). Plaintiff asserted that defendant unlawfully asked him to submit to a polygraph test and unlawfully failed to notify plaintiff of his right to continue his employer-provided health insurance for a period after his termination. The court held that because defendant requested plaintiff to submit to a polygraph test in connection with an "ongoing investigation" of a specific incident in which defendant had a "reasonable suspicion" that plaintiff was involved, the district court did not err in granting summary judgment for defendant on plaintiff's Employee Polygraph Protection Act (EPPA), 29 U.S.C. 2002(1), claim. The court held, however, that the district court erred in granting summary judgment for defendant on plaintiff's improper notice claim under the Consolidated Omnibus Budget Reconciliation Act (COBRA) 29 U.S.C. 1163(2), 1166, where the court should have considered the claims on the merits because it was timely filed. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings.

Appellant was the target of a grand jury investigation seeking to determine whether he used secret Swiss bank accounts to evade paying federal taxes. The district court granted a motion to compel appellant's compliance with a grand jury subpoena dueces tecum demanding that he produce certain records related to his foreign bank accounts. The court declined to condition its order compelling production upon a grant of limited immunity, and pursuant to the recalcitrant witness statute, 28 U.S.C. 1826, held appellant in contempt for refusing to comply. The court held that because the records sought through the subpoena fell under the Required Records Doctrine, the Fifth Amendment privilege against self-incrimination was inapplicable, and appellant could not invoke it to resist compliance with the subpoena's command. The court also held that because appellant's Fifth Amendment privilege was not implicated, it need not address appellant's request for immunity. Accordingly, the judgment of the district court was affirmed.

Plaintiff, on behalf of himself and similarly situated individuals, brought an action against Chase, alleging that it increased his interest rates retroactively to the beginning of this payment cycle after his account was closed to new transactions as a result of a late payment to Chase or another creditor. The court had previously issued an opinion reversing the district court's dismissal of most of plaintiff's federal and state claims. However, Chase sought Supreme Court review of the court's decision and the Supreme Court reversed with respect to the federal claim and remanded for further proceedings. Consequently, the court withdrew its prior opinion and, consistent with the Supreme Court's ruling, affirmed the district court's dismissal of plaintiff's first cause of action under the Truth in Lending Act (TILA), 15 U.S.C. 1601-1615, for failure to notify of rate increase, as well as plaintiff's sixth cause of action for breach of contract for failure to notify him "of any change if required by applicable law." Although the Supreme Court's decision did not specifically address the court's ruling on plaintiff's state law claims, the court held: as Delaware law permitted the actions taken by Chase, the district court correctly concluded that plaintiff's second, third, and fourth state law causes of action were foreclosed; plaintiff's fifth cause of action failed to state a claim for consumer fraud under 6 Del. C. 2513(a); and plaintiff's seventh cause of action failed to state a claim for breach of an implied duty of good faith. Therefore, the court affirmed the judgment of the district court.

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d).