Justia Banking Opinion Summaries

First Union National Bank of Florida (First Union) appealed a judgment in favor of the Lee County Commission (Commission) and Philip Summers. Mr. Summers executed a mortgage on property he owned within the County on which he built a summer home. The home was ultimately subject to a tax sale by the County. The trustee for Mid-State Trust IV sued the Commission and Mr. Summers in 2009 seeking the excess redemption proceeds from the tax sale of the Summers property. The trustee later filed a motion to substitute First Union as the real party in interest. The trial court eventually entered a judgment finding that Mr. Summers was entitled to the excess funds from the tax sale because he was the last "owner" as defined by state law against whom the taxes were assessed. Upon careful consideration of the trial court’s record and the applicable legal authority, the Supreme Court affirmed the lower court’s decision.

Countrywide Home Loans, a mortgage holder on certain real estate, foreclosed its mortgage, took title to the property at a sheriff's sale, and then sold the property to a third party. Before these events, the property owners executed a promissory note in favor of Citizens State Bank. When the property owners failed to pay the note, Citizens Bank obtained a judgment in trial court, which was properly recorded. At the time Countrywide filed its foreclosure action, it did not name Citizens Bank as a party. After Countrywide discovered Citizens Bank's judgment lien on the property, Countrywide filed an action to foreclose any interest Citizen Bank may have had on the property. Citizens Bank filed a separate complaint seeking to foreclose its judgment lien. The trial court directed Citizens Bank to redeem Countrywide's mortgage or be barred from asserting its judgment lien. The court of appeals reversed. The Supreme Court also reversed the judgment of the trial court but on different grounds, holding that because Citizen Bank's lien on the property was properly recorded and indexed and because Countrywide did not explain why the lien was overlooked, Countrywide failed to demonstrate that it was entitled to the remedy of strict foreclosure.

TCF National Bank (TCF) sued to enjoin a portion of the Dodd-Frank Wall Street Reform Act (Act) of 2010, Pub. L. No. 111-203, 124 Stat. 1376, that would limit the rate some financial institutions could charge for processing debit-card transactions. Section 1075 of the Act, the Durbin Amendment, amended the Electronic Fund Transfer Act, 15 U.S.C. 1693, et seq., by adding several provisions regarding debit-card interchange fees. TCF alleged that section 1693o-2(a)(2), (a)(4), and (a)(6) of the Act were facially unconstitutional because these provisions would require the Board of Governors of the Federal Reserve Board (Board) to set an interchange rate below the cost of providing debit-card services. TCF also alleged that these provisions arbitrarily exempted smaller issuers from the Board's rate regulations and thus violated TCF's due process and equal-protection rights under the Fifth Amendment. The court held that the challenged provisions in the Durbin Amendment survived rational basis review where "Congress's decision to link interchange fees to issuing banks' actual costs was reasonably related to proper legislative purposes: (1) to ensure that such fees were reasonable and (2) to prevent retailers and consumers from having to bear a disproportionate amount of costs of the debit card system." The court also held that the Durbin Amendment's distinction between larger and smaller issuers of debit-cards was rationally related to the government's legitimate interests in protecting smaller banks, which did not enjoy the competitive advantage of their larger counterparts and which provided valuable diversity in the financial industry. Therefore, the court held that TCF was not likely to prevail on its equal-protection argument. Accordingly, the court affirmed the district court's denial of TCF's motion for a preliminary injunction.

This case stemmed from a dispute between MBIA Insurance Corporation (MBIA) and certain of its policyholders who hold financial guarantee insurance policies. The principal question presented was whether the 2009 restructuring of MBIA and its related subsidiaries and affiliates authorized by the Superintendent of the New York State Insurance Department precluded these policyholders from asserting claims against MBIA under the Debtor and Creditor Law and the common law. The court held that the Superintendent's approval of such restructuring pursuant to its authority under the Insurance Law did not bar the policyholders from bringing such claims. Accordingly, the court held that the order of the Appellate Division should be modified, without costs, in accordance with the opinion.

1/2 Price Checks Cashed (Half-Price) brought a suit in a Dallas County justice court asserting breach of contract on the basis of the obligation owed by the drawer of a check under Tex. Bus. & Com. 3.414 and requested attorney's fees. At issue was whether a holder of a dishonored check could recover attorney's fees under Texas Civil Practice and Remedies Code section 38.001(8) in an action against a check's drawer under section 3.414. The court held that Half-Price's section 3.414 claim was a suit on a contract to which section 38.001(a) applied and applying section 38.001(8) to the claim did not disrupt Article 3 of the Uniform Commercial Code's statutory scheme. Therefore, the court reversed the judgment and remanded for a determination of attorney's fees.

Cach, L.L.C., alleging that it was an assignee of Bank of America, filed a complaint against Nathaniel Kulas seeking principal and interest on an unpaid credit card balance. The complaint stated that Kulas owed $6042 on the account. Cach then filed a motion for summary judgment, supporting its motion with affidavits and other documents alleging that the balance due on the account was $6042. In response, Kulas filed an objections to the summary judgment motion. The court found Kulas's responses were procedurally defective and granted Cach's motion for summary judgment. On appeal, the Supreme Court held that Cach's support for its assertions that it received an assignment of the account from the bank and that Kulas owed $6042 on the account was inadequate. Because Cach failed to properly establish each element of its claim without dispute as to material fact, the Court vacated the district court's grant of summary judgment and remanded the case.

Bondholders of the failed Washington Mutual Bank ("WAMU") alleged that JPMorgan Chase ("Chase"), through a series of improper acts, pressured the federal government to seize WAMU and then sell to it the bank's most valuable assets, without any accompanying liabilities, for a drastically undervalued price. The bondholders asserted three Texas state law claims in Texas state court, but after the Federal Deposit Insurance Corporation ("FDIC") intervened in the lawsuit, the case was removed to federal district court. At issue was whether the district court properly dismissed the complaint, finding that 12 U.S.C. 1821(d)(13)(D)(ii) jurisdictionally barred appellants from obtaining judicial review of their claims because they had not exhausted their administrative remedies under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). The court held that the suit fell outside the scope of the jurisdictional bar of section 1821(d)(13)(D) because the complaint neither asserted a claim under FIRREA nor constituted an action for payment from, or seeking a determination with respect to, the assets of a depository institution for which the FDIC was receiver. Consequently, the court did not reach alternative arguments and therefore, reversed the decision of the district court and remanded for further proceedings.

Appellee First Community Bank loaned $175,000 to Catherine Warbington and two Warbington family trusts, listing the property in the trusts as security. After Catherine died, the bank later filed a foreclosure complaint, asserting that payments were not being made on the loan and naming as defendants the unknown heirs of Catherine, the trusts, the trustee of the trusts, and others. Later, a foreclosure judgment was entered finding that the parties before the court had consented to the judgment and were indebted to the bank for the principal amount. The heirs and trusts then filed a motion to vacate the foreclosure, asserting (1) that the judgment was void by operation of law because Bert Warbington had not been personally served as trustee, and (2) Bert was not named individually in the complaint though he was a known heir and as such Ark. R. Civ. P 4 and due process required the bank name him as a party. The circuit court denied the motion. On appeal, the Supreme Court found (1) the circuit court did not clearly err in finding from the evidence that there was personal service and (2) that the circuit court did not err in finding that Bert was an unknown heir. Affirmed.

BancInsure, Inc. appealed a declaratory judgment in favor of Columbian Financial Corporation and a former director, Carl McCaffree (collectively the Insureds). The insurance policy at issue here was a "claims-made" policy covered any claim made to BancInsure against any Columbian officer or director for a "Wrongful Act" as defined by the policy. A disputed provision of the policy pertained to the scope of coverage if Columbian was placed in receivership or otherwise ceased to engage in active banking business. The parties interpreted the provision differently. The Insureds contended that if Columbian went into receivership, the policy covered all claims made through the end of the original policy period, although only for Wrongful Acts committed before the receivership. BancInsure contended that the policy covered only claims made before the receivership. The operation of the disputed provision became relevant in August 2008 when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Soon thereafter, Columbian’s management sent BancInsure a letter to notify it of potential claims by the FDIC and others. The parties disputed many of the claims against Columbian which led to Columbian filing suit to the district court to determine which claims were covered under the policy. The sole issue on appeal to the Tenth Circuit was whether the district court had jurisdiction. Though no party disputed jurisdiction, the Tenth Circuit found that there was no actual controversy between the parties when the district court below rendered its judgment. The court therefore lacked jurisdiction. The Tenth Circuit reversed the lower court’s decision and remanded to case with instructions to the court to vacate its judgment.

Petitioner Monica Ware appealed a summary judgment in favor of Respondent Deutsche Bank National Trust Company, the trustee for HSI Asset Securitization Corporation. The Bank foreclosed on Petitioner and published notice of the foreclosure in a local Birmingham newspaper. The court entered summary judgment against her. Petitioner then filed a motion to amend or vacate the judgment and requested a hearing. The trial court refused to rule on Petitioner’s motion or hold a hearing. The motion was deemed denied by operation of law. On appeal to the Supreme Court, Petitioner challenged the timing and propriety of the summary judgment and its refusal to rule on her motion to amend or vacate. In affirming the trial court’s judgment, the Supreme Court "searched [Petitioner’s] briefs in vain for the argument that she actually made in the trial court, namely, that the foreclosure was "null and void. . . .[A] remand . . . would serve no purpose other than to afford her a 'second bite at the apple.'" The Court affirmed the lower court’s decision.