Justia Banking Opinion Summaries

BAC Home Loans Servicing, LP (formerly known as Countrywide Home Loans Servicing, LP); Countrywide Home Loans of Texas, Incorporated; and Countrywide Home Loans, Incorporated appealed an order for remand where the district court dismissed the lone federal claim under the Truth in Lending Act (TILA), 15 U.S.C. 1601-1667f, and declined to exercise supplemental jurisdiction over the remaining state law claims. Defendants argued that this was an abuse of discretion because Countrywide Home Loans of Texas was improperly joined and thus the district court had diversity jurisdiction over the state law claims. Plaintiffs argued that there was no improper joinder and that defendants waived any right to argue improper joinder or the existence of diversity jurisdiction when they failed to remove the action to federal court within 30 days of service of the original complaint that listed Countrywide Home Loans of Texas. The court held that defendants carried their burden of proving improper joinder; the district court had jurisdiction over the state law claims at the time of remand; and the exercise of that jurisdiction was mandatory. Accordingly, the court reversed the district court's decision to remand the state law claims to Texas state court and remanded for further proceedings.

Plaintiff US Bank National Association appealed a trial court order that granted summary judgment to Defendant Homeowner Christine Kimball and dismissed with prejudice US Bank’s foreclosure complaint for lack of standing.  On appeal, US Bank argued that it had standing to prosecute the foreclosure claim and that the court’s dismissal with prejudice was in error.  Homeowner cross-appealed, arguing that the court erred in not addressing her claim for attorney’s fees. Homeowner purchased the property in question in June 2005.  To finance the purchase, she executed an adjustable rate promissory note in favor of Accredited Home Lenders, Inc. (Accredited).  The note was secured by a mortgage deed to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Accredited. In 2009, US Bank filed a foreclosure complaint for Homeowner’s failure to make required payments.  The complaint alleged that the mortgage and note were assigned to US Bank by MERS, as nominee for Accredited.  Attached to the complaint was a copy of the instrument signed by a "Duly Authorized Agent" of MERS.  The promissory note was also attached to the complaint and appended to it was an undated allonge signed by a corporate officer of Accredited, endorsing the note in blank. Homeowner moved for summary judgment claiming, among other things, that US Bank failed to present sufficient evidence that it held homeowner’s note and corresponding mortgage. Because neither note submitted by US Bank was dated, the court concluded that there was no evidence that the note was endorsed to US Bank before the complaint was filed.  Therefore, the court held that US Bank lacked standing to bring the foreclosure action.  Following a hearing, the court denied the motions for reconsideration and to amend the complaint.  The court concluded that US Bank had submitted a defective complaint and the deficiencies were not mere technicalities, but essential items, without which the case could not proceed.  The court held that US Bank lacked standing when the complaint was filed, and dismissed the complaint “with prejudice.”  Upon review of the trial record and briefs submitted by the parties, the Supreme Court affirmed the trial court's decision in all respects but for the 'with prejudice': "this may be but an ephemeral victory for homeowner.  Absent adjudication on the underlying indebtedness, the dismissal cannot cancel her obligation arising from an authenticated note, or insulate her from foreclosure proceedings based on proven delinquency." The Court dismissed the foreclosure complaint and remanded the case for consideration of the parties' fees dispute.

This case arose when the SEC brought suit against Stanford Group Company (SGC), along with various other Stanford entities, including Stanford International Bank (SIB), for allegedly perpetrating a massive Ponzi scheme. In this interlocutory appeal, defendants appealed the preliminary injunction that the receiver subsequently obtained against numerous former financial advisors and employees of SGC, freezing the accounts of those individuals pending the outcome of trial. The court held that the district court had the power to decide the motion for preliminary injunction before deciding the motion to compel arbitration; the district court did not abuse its discretion in granting a preliminary injunction; the preliminary injunction was not overbroad; and the district court acted within its power to grant a Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code Ann. 24.005(a)(1), injunction rather than an attachment; and that the court did not have jurisdiction to rule on the motion to compel arbitration. Accordingly, the court affirmed and remanded the motion to compel arbitration for a ruling in the first instance.

This case arose when elderly widow Dorothy Chase Stewart filed for bankruptcy in 2007 and Wells Fargo Bank filed a proof of claim with the bankruptcy court reciting debts owed from an outstanding mortgage on Ms. Stewart's house. The bankruptcy court subsequently found that Wells Fargo's mortgage claims exhibited systematic errors arising from its highly automated, computerized loan-administration program and issued an injunction requiring Wells Fargo to audit every proof of claim it had filed on or filed after April 13, 2007; to provide a complete loan history on every account and file that history with the appropriate court; and "to amend...proofs of claim already on file to comply with the principles established in this case and [In re] Jones." Wells Fargo appealed, challenging the claim amount and the injunction. The court vacated the injunction as exceeding the reach of the bankruptcy court. Because neither the injunction nor the calculation of Ms. Stewart's debt was properly before the court, the court dismissed as moot Wells Fargo's appeal of legal rulings underlying the bankruptcy court's interpretation of the mortgage.

The district court granted a default judgment of foreclosure in favor of the mortgage company. Following a sale, at which the mortgage company was the successful bidder, the court granted a motion to set aside the sale because the mortgage company had failed to notify a junior lien holder of the sale, as required by state law, so that the junior lien remained in place. The court subsequently granted the junior lien holder's motion to vacate the set-aside order, reasoning that the notice issue involved an independent question of state law and was not properly before it. The Third Circuit vacated. The court's diversity jurisdiction extends to resolving issues that arise from an error committed during the pendency of its jurisdiction over a marshal's sale that it ordered. No overriding state policy or matter of substantial public concern, justifying abstention, was implicated in this case.

Plaintiffs, evicted from their home following a state court foreclosure judgment, sought relief in federal court. The district court rejected all claims. The Seventh Circuit affirmed. The district court correctly considered the Rooker-Feldman doctrine and concluded that the doctrine applied to only two of the 22 claims: those that claimed injury caused by the state-court judgment of foreclosure, as opposed to injury caused by the defendants’ actions in enforcing the judgment. Plaintiffs offered no evidence of discriminatory motive with respect to their race or disabilities and did not allege specific facts establishing that there were material facts in dispute.

This case stemmed from continuing disputes between Argentina and its various private creditors. Argentina and its Brady bondholders entered into a Continuation of Collateral Pledge Agreement that extended the security interest in the tendered bonds' collateral during its transfer and liquidation. Capital Ventures International (CVI) held certain non-Brady bonds on which Argentina also defaulted and chose to sue Argentina to collect on the defaulted bonds it held, seeking to attach Argentina's reversionary interest in the Brady collateral. At issue was whether the attachments blocked the proposed exchange and whether the district court properly modified the attachments to allow the exchange. The court held that CVI was entitled to maintain its attachments even though a quirk of the bonds' Collateral Pledge Agreement meant that the attachments would effectively block the proposed exchange between Argentina and the Brady bondholders. Therefore, the court reversed the district court's orders that modified the attachments to permit the exchange.

Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.

Petitioner appealed a final decision and order of the Office of the Comptroller of the Currency (Comptroller) requiring him to bear the costs of his own defense in an underlying administrative proceeding in which he prevailed. In the underlying lawsuit, petitioner and his law firm were retained by Hamilton Bank (Bank) to conduct an independent investigation of fraud at the Bank and the Comptroller's Enforcement and Compliance Division subsequently alleged that petitioner had breached his fiduciary duties to the Bank. The court held that the Comptroller was not "substantially justified" in bringing the underlying administrative proceeding against petitioner and therefore, petitioner was entitled to attorney's fees under the Equal Access to Justice Act, 5 U.S.C. 504. Accordingly, the court remanded for the Comptroller to calculate the amount of those fees.

Defendant is one of several investors (underwriters) in a mortgage bankers blanket bond issued to plaintiff to insure against financial loss resulting from employee misconduct. One of plaintiff's employees engaged in a scheme by which, for a kickback, he caused plaintiff to fund mortgages below its standards. Not knowing the loans were substandard, plaintiff sold them, warranting that they met its standards. Plaintiff was forced to repurchase the loans. The underwriters denied the claim. The district court dismissed a suit, finding that the bond did not cover the loss. The Seventh Circuit affirmed. The fidelity bond at issue contains direct-loss causation language. A financial loss resulting from contract liability to third parties is not directly caused by employee misconduct, even if employee misconduct is the source of the contract liability. Plaintiff's loss resulted from its contractual repurchase obligations; the employee misconduct did not directly cause the eventual financial loss. In addition, a specific exclusion in the bond bars coverage for losses resulting from loan-repurchase obligations.