Justia Banking Opinion Summaries

Deutsche Bank National Trust Company, as trustee in trust for the registered holders of Ameriquest Mortgage Securities, Inc., appealed from a summary judgment entered in the district court in favor of Donald and Kim Pelletier on the bank's complaint for foreclosure. The district court concluded that Deutsche Bank had failed to dispute facts asserted by the Pelletiers demonstrating that they had asserted a right of rescission. On appeal, the Supreme Court affirmed the grant of summary judgment, but because the district court's order reached only the point of determining that the Pelletiers were entitled to rescission, the Court remanded for further proceedings to effectuate the rescission.

Plaintiffs appealed the district court's order granting American Bankers Insurance Company's (American Bankers) motion to set aside default judgment for excusable neglect under Fed. R. Civ. P. 60(b)(1). Plaintiffs argued that once the district court concluded that American Bankers acted culpably in failing to respond to the complaint, it was precluded as a matter of law from setting aside the default judgment. The court found that a district court could exercise its discretion to deny relief to a defaulting defendant based solely upon a finding of defendant's culpability, but it need not do so. The court concluded that the district court's finding that American Bankers acted culpably did not preclude it, as a matter of law, from setting aside the default judgment under Rule 60(b)(1) based upon excusable neglect. Therefore, the court held that the district court applied the correct legal standard and that it did not abuse its discretion.

In connection with an assessment of a taxpayer for unpaid taxes, the IRS began searching for the taxpayer's assets and issued a summons to a bank for a related third party's account information. The taxpayer and third party argued that 26 U.S.C 7609 required the IRS to notify them, which would have enabled them to seek a court order quashing the summons. Applying Ip v. United States, the court held that under the circumstances of the case, no notice was necessary. Therefore, the court affirmed the judgment of the district court.

Defendants were convicted of mail fraud and wire fraud (18 U.S.C. 1341, 1346) for participating in a fraudulent scheme to obtain mortgage loans. The scheme involved: recruiters, who enlisted buyers to buy properties with fraudulently obtained funds; financiers, who provided funds to buyers to facilitate the transactions; administrators, who bought fake documents to enable buyers to obtain mortgages; loan officers, who prepared fraudulent applications and sent them to lenders. Between 2003 and 2005, the group acquired more than 70 properties for which lenders provided $7.2 million in loans. Most of the properties went into foreclosure, resulting in losses to the lenders of $2.2 million. The Seventh Circuit affirmed the convictions and sentences. The use of the term "straw buyer" in the confession of a nontestifying co-defendant did not obviously refer to the defendant and violate his Sixth Amendment right of confrontation under the "Bruton" doctrine. The court properly applied a "sophisticated means" sentence enhancement and gave an "ostrich" instruction concerning defendant's knowledge.

This case arose when Associates First Capital Corporation (Associates) purchased integrated risk policies from Certain Underwriters of Lloyd's of London (Lloyd's), the primary insurer, and nine excess insurers. Pursuant to the integrated risk policies, Citigroup, Inc. (Citigroup), as successor-in-interest to Associates, timely notified the insurers of two actions filed within the policy period and made claims for coverage. Initially, all of the insurers denied coverage, but later, Lloyd's settled with Citigroup. After the parties filed motions for summary judgment, the district court dismissed Citigroup's claims for coverage. The court affirmed the denial of coverage and held that the plain language of the insurers' policies (Federal, Steadfast, S.R., and St. Paul) dictated that their coverage did not attach when Citigroup settled with Lloyd's and that Citigroup's claim against another insurer (Twin City) was time barred.

Appellee Compass Bank and Amy Hovis petitioned the Supreme Court for a writ of mandamus to direct a circuit court to dismiss an action filed in that court filed by Appellant Jerome Sirote based on Alabama's abatement statute. Appellant filed suit against the Bank and several of its employees alleging breach of contract, breach of fiduciary duty, violations of the Real Estate Settlement Procedures Act, fraud, deceit, and violations of the Fair Debt Collection Practices Act. Appellant alleged that the Bank improperly processed transactions in his deposit account and misstated material facts related to that account. The Bank moved to dismiss the complaint. The district court entered an order dismissing Appellant's federal claims with prejudice. The court remanded the case for further proceedings on the state law claims. The Bank moved to dismiss the remaining charges under the Abatement Statute, arguing that Appellant was barred from prosecuting two actions simultaneously in different courts if the claims alleged in each action arose from the same underlying operative facts. Upon review, the Supreme Court granted the Bank's petition and issued the writ to direct the lower court to dismiss Appellant's state claims.

This case was an interlocutory appeal from the trial court's denial of Appellant RBS Citizens, N.A.'s motion for a writ of attachment to Appellee Jan Ouhrabka's property, which Appellee owned jointly with his wife as tenants by entirety.  The trial court held that a creditor like RBS cannot attach property owned jointly by a debtor and a nondebtor when they hold that property as tenants by entirety.  RBS contended on appeal that the estate of tenancy by entirety is an anachronism whose continuing utility should be reconsidered.  In the alternative, RBS argued that Vermont law did not explicitly preclude granting a creditor prejudgment attachment where the property is held jointly by the debtor and a nondebtor in a tenancy by entirety.  Upon review of the applicable legal authority, the Supreme Court disagreed with RBS' argument and affirmed the lower court's decision.

This case arose when plaintiff, Bank of New York (BNY), asserted that it acquired title to the home of defendant pursuant to foreclosure proceedings. At issue was whether the Housing Court had jurisdiction to decide the validity of a challenge to a title, raised by a former homeowner as a defense to a summary process eviction action by a party acquiring the property pursuant to a foreclosure sale. The court vacated the allowance of summary judgment and remanded for further proceedings because the court concluded that the Housing Court had jurisdiction to consider the validity of plaintiff's title as a defense to a summary process action after a foreclosure sale pursuant to G.L.c. 239, section 1.

This case stemmed from credit agreements Lehman entities entered into with Palmdale Hills, LLC entities. Palmdale filed for chapter 11 bankruptcy in November 2008 and Lehman subsequently filed eight motions for relief from Palmdale's stay to foreclose on the collateral securing the loans that were in default. The court held that the Bankruptcy Appellate Panel (BAP) correctly held that Lehman had standing to appeal the bankruptcy court's finding that the automatic stay did not prevent equitably subordinating Lehman's claims. The court also held that the BAP correctly determined that the appeal was not moot. The court further held that the BAP correctly determined that Lehman's automatic stay prevented Lehman's claims from being subordinated. Accordingly the court affirmed the BAP's judgment.

This case stemmed from the replevin actions filed by Klein Bank against debtors. Klein Bank appealed from the Orders of the Bankruptcy Court denying its motions to remand its replevin actions which had been removed from the state court to the bankruptcy court. In denying the motions, the Bankruptcy Court concluded that replevin actions were core proceedings. While this appeal was pending, the United States Supreme Court clarified that core proceedings were limited to those "arising under or arising in" a bankruptcy case. Based on that, the court now concluded that the matters involved in the replevin actions were not core proceedings. Accordingly, the court reversed and remanded to the Bankruptcy Court for further findings on the question of whether the court was required to abstain under 28 U.S.C. 1334(c)(2).