Justia Banking Opinion Summaries

Andrew King, a customer of Navy Federal Credit Union (NFCU), was charged a $15 returned-check fee despite not being at fault for the check's failure to clear. King argued that this fee constituted an "unfair" and "unlawful" business practice under California's Unfair Competition Law (UCL) and violated the federal Consumer Financial Protection Act (CFPA). He filed a lawsuit in state court, which NFCU removed to federal court.The United States District Court for the Central District of California dismissed King's state law claims, ruling that they were preempted by federal law. Specifically, the court found that 12 C.F.R. § 701.35(c), which governs federal credit unions, expressly preempted King's UCL claim. The court concluded that state laws regulating account fees are not applicable to federal credit unions, and thus, King's claim was preempted.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court's dismissal. The Ninth Circuit held that the plain language of 12 C.F.R. § 701.35(c) expressly preempts state laws regulating account fees for federal credit unions. The court rejected King's arguments that the UCL transcends the preemption clause, stating that all state laws regulating account fees, whether general or specific, have no application to federal credit unions. The court emphasized that the regulation's preemption clause operates independently of whether a fee complies with federal law. Thus, the Ninth Circuit affirmed the district court's decision to dismiss King's UCL claim on preemption grounds. View "KING V. NAVY FEDERAL CREDIT UNION" on Justia Law

Plaintiffs, American service members and civilians injured or killed in terrorist attacks in Afghanistan, along with their family members, sued Deutsche Bank, Standard Chartered Bank (SCB), and Danske Bank under the Anti-Terrorism Act (ATA) as amended by the Justice Against Sponsors of Terrorism Act (JASTA). They alleged that the banks aided and abetted terrorist organizations by providing banking services to customers involved in tax fraud and money laundering schemes, with proceeds allegedly funding terrorist activities. Plaintiffs also claimed SCB aided the attacks by providing banking services to fertilizer companies whose products were used to make bombs.The United States District Court for the Eastern District of New York dismissed the plaintiffs' amended complaint in its entirety for failure to state a claim. The court found that the plaintiffs did not establish a sufficient nexus between the banks' actions and the terrorist acts that caused their injuries. The court dismissed the complaint with prejudice, concluding that further amendment would be futile.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's dismissal. The appellate court applied the Supreme Court's decision in Twitter, Inc. v. Taamneh, which clarified the pleading standard for aiding-and-abetting claims under JASTA. The court held that the plaintiffs did not plausibly allege that the banks were generally aware of their role in the terrorist activities or that they provided knowing and substantial assistance to the terrorist organizations. The court emphasized that the plaintiffs' allegations were too attenuated and speculative to support a claim of aiding-and-abetting liability under JASTA. View "Wildman v. Deutsche Bank" on Justia Law

A bank holding company sued two guarantors for breach of their personal guaranties on a $1.5 million loan extended to an entity they were involved with. The guarantors argued that the bank holding company lacked standing to sue because there was no written assignment of the loan documents from the original lender, a bank, to the holding company. The district court admitted the written assignment into evidence and found that the holding company had standing. The court also granted summary judgment in favor of the holding company, finding the guarantors liable under the terms of their guaranties.The guarantors had counterclaimed against the holding company and other parties, alleging fraudulent concealment, fraudulent misrepresentation, civil conspiracy, and breach of the implied covenant of good faith and fair dealing. They argued that the bank and its president conspired with a now-deceased individual to conceal the financial instability of the individual’s entities, which led to the guarantors entering into the guaranties. The district court found no genuine issue of material fact regarding these counterclaims and granted summary judgment for the holding company.The guarantors also attempted to file a document in which the personal representative of the deceased individual’s estate confessed judgment against the estate. The district court ruled this filing a nullity, as the personal representative’s appointment had been terminated before the filing, and he was not authorized to act on behalf of the estate.The Nebraska Supreme Court affirmed the district court’s rulings, holding that the holding company had standing, the guarantors were liable under the guaranties, and the counterclaims were unsupported by evidence. The court also upheld the ruling that the purported confession of judgment was a nullity. View "Henderson State Co. v. Garrelts" on Justia Law

The plaintiff, Aleksandra Veljovic, filed a lawsuit against TD Bank, N.A. and its former employee, Zlata Cavka, alleging negligence, negligent supervision, and respondeat superior. Veljovic claimed that Cavka negligently notarized a fraudulent document used by her ex-husband to secure a divorce order in Serbia, which resulted in the loss of her marital property. Veljovic argued that TD Bank should be held liable for Cavka's actions. The Superior Court, Chittenden Unit, Civil Division, dismissed Veljovic's complaint with prejudice, concluding that she could not recover for purely economic losses and failed to demonstrate a special relationship between the parties. The court also denied her post-judgment request to amend her complaint.TD Bank moved to dismiss the complaint under Vermont Rule of Civil Procedure 12(b)(6), arguing that Veljovic's claims were barred by the economic-loss rule, that neither TD Bank nor Cavka owed her an independent duty of care, and that she failed to plead facts establishing necessary causation. The court granted the motion, finding that Veljovic sought compensation solely for economic losses and did not establish a special relationship with the defendants. The court also dismissed the claims against Cavka after Veljovic failed to respond to a show-cause order.Veljovic appealed to the Vermont Supreme Court, arguing that the trial court erred in dismissing her complaint and denying her motion to amend. The Vermont Supreme Court affirmed the lower court's decision, agreeing that Veljovic did not allege sufficient facts to show a special relationship with the defendants and that her claims were barred by the economic-loss rule. The court also found no abuse of discretion in denying her motion to amend the complaint, as the proposed amendments would not have established a special relationship or overcome the economic-loss rule. View "Veljovic v. TD Bank, N.A." on Justia Law

Michael Straus wired $60,000 to an account at GBC International Bank (GBC) owned by Apex Oil and Gas Trading, LLC (Apex). Apex allegedly failed to provide the services Straus paid for, withdrew the funds, and disappeared. Straus sued GBC in May 2024, claiming negligence and wantonness, alleging GBC closed Apex's account knowing Apex was engaged in fraud. Straus argued GBC's website acknowledged its obligations under the Patriot Act to prevent such fraud.The Jefferson Circuit Court denied GBC's motion to dismiss for lack of personal jurisdiction. GBC then petitioned the Supreme Court of Alabama for a writ of mandamus to direct the circuit court to dismiss the case.The Supreme Court of Alabama reviewed the case de novo. GBC argued it had no general or specific personal jurisdiction in Alabama, supported by an affidavit from its executive vice president and chief financial officer, Richard Holmes. Holmes stated GBC had no business operations, property, or targeted advertising in Alabama. Straus's response included an unsworn declaration, which the court found insufficient to establish jurisdiction.The Supreme Court of Alabama held that Straus's unilateral action of wiring money to GBC did not establish specific personal jurisdiction. GBC's general statements on its website about compliance with federal law did not constitute purposeful availment of conducting activities in Alabama. The court concluded that GBC did not have the minimum contacts necessary to subject it to personal jurisdiction in Alabama. Therefore, the court granted GBC's petition and directed the circuit court to dismiss Straus's complaint. View "Ex parte GBC International Bank" on Justia Law

Former students of the University of Montana filed a class action lawsuit against the university, alleging mishandling of student loan reimbursement payments. They claimed that the university's contract with Higher One Holdings, Inc. subjected them to excessive bank fees and unlawfully disclosed their personal information without consent. The university had contracted with Higher One from 2010 to 2015 to process student loan reimbursements, which involved issuing debit cards and charging various fees.The District Court of the Fourth Judicial District in Missoula County certified three classes of plaintiffs but was later partially reversed by the Montana Supreme Court, which upheld the certification of two classes and reversed the third. The case proceeded to a jury trial, where the jury found in favor of the university, concluding that it did not breach its fiduciary duty, violate privacy rights, or unjustly enrich itself.The Supreme Court of the State of Montana reviewed the case on appeal. The students raised several issues, including the admissibility of evidence regarding their banking practices, the testimony of the university's expert witness, the university's closing arguments, the admission of a fee comparison chart, and the refusal of a burden-shifting jury instruction. The court found that the District Court did not abuse its discretion in its evidentiary rulings, including allowing the university to present evidence about students' banking practices and admitting the fee comparison chart. The court also held that the expert witness's testimony was permissible and that the university's closing arguments did not prejudice the students' right to a fair trial.Ultimately, the Supreme Court of Montana affirmed the District Court's judgment in favor of the University of Montana, upholding the jury's verdict. View "Knudsen v. U. of M." on Justia Law

Lester Aceituno was convicted of conspiracy to commit bank fraud and two counts of aggravated identity theft. The fraudulent scheme involved using stolen identification information to open bank accounts, change addresses to rented mailboxes, deposit fraudulent checks, and withdraw funds using debit cards. Aceituno opened accounts in New Hampshire and Massachusetts using stolen identities and signed documents attesting to the accuracy of the information. He also created a mailbox using a stolen identity. The scheme was led by a man known as "Abby," who provided the stolen information.The United States District Court for the District of New Hampshire denied Aceituno's Rule 29 motion, which argued insufficient evidence to prove he knew he was using real persons' identifying information. The court also rejected his claim of prosecutorial misconduct during the government's closing argument and rebuttal. Aceituno was sentenced to 30 months in prison.The United States Court of Appeals for the First Circuit reviewed the case. The court held that sufficient evidence supported the jury's finding that Aceituno knew the identification information belonged to real people. The evidence included Aceituno's repeated use of stolen identities, the bank's verification process, and testimony from a co-conspirator. The court also found that the prosecution's statements during closing arguments were fair inferences from the evidence and did not constitute misconduct. The court affirmed Aceituno's conviction. View "United States v. Aceituno" on Justia Law

American Pearl Group, L.L.C., John Sarkissian, and Andrei Wirth (collectively, “Pearl”) and National Payment Systems, L.L.C. (“NPS”) operate in the credit-card-payment-processing industry. In May 2019, NPS loaned $375,100.85 to Pearl, to be repaid with interest over forty-two months. The Loan Agreement required Pearl to pay back $684,966.76, with a schedule allocating each month’s payment between principal and interest. Pearl sued NPS in March 2022, seeking a declaration that the Loan and Option Agreement violated Texas usury law.The U.S. District Court for the Northern District of Texas granted NPS’s motion to dismiss, concluding that the scheduled interest payments were not usurious under the “spreading doctrine,” the purchase option’s value was too uncertain to constitute interest, and Pearl had not adequately alleged a scheme to conceal usury. The district court calculated the interest by spreading it over the term of the loan in equal parts, finding no usury violation. Pearl appealed to the U.S. Court of Appeals for the Fifth Circuit, arguing that the district court erred by applying the “equal parts” method instead of the actuarial method required by Section 306.004(a) of the Texas Finance Code.The Supreme Court of Texas reviewed the case and held that Section 306.004(a) requires courts to calculate the maximum permissible interest based on the declining principal balance for each payment period, using the actuarial method. The court emphasized that the Legislature’s deliberate choice of words in the statute matters, and the actuarial method calls for interest amounts to be calculated for each payment period based on the declining principal balance. The court answered the Fifth Circuit’s certified question affirmatively, clarifying that the interest calculations must be based on the declining principal balance when periodic principal payments are provided during the loan term. View "AMERICAN PEARL GROUP, L.L.C. v. NATIONAL PAYMENT SYSTEMS, L.L.C." on Justia Law

William H. Tatum Jr. was convicted of bank fraud and had a $15,284,348 restitution judgment against him. He owned a 50% membership interest in Tatum Land and Cattle Company, LLC (TLCC). Upon his death in 2018, his estate, including his TLCC interest, was left to his wife, Betsy Gay Roberts-Tatum. Betsy died in 2020, and her son, Zachary I. Haynie, became the executor of her estate. Darrell Tatum, William’s grandson, was appointed executor of William’s estate. The United States, Peoples Bank, and John Deere Financial filed claims against William’s estate.The Tippah County Chancery Court admitted William’s will to probate and appointed Gay as executrix. After Gay’s death, Darrell was appointed as successor executor. Darrell petitioned for the public sale of William’s TLCC interest to satisfy estate debts. Zach opposed, seeking to enforce the TLCC operating agreement’s buyout provision. The chancellor ordered the public sale, which resulted in Joe Tatum purchasing the interest for $675,000. Zach objected, arguing the sale price was inadequate and sought relief, including assignment of the promissory note and deed of trust from Peoples Bank.The Supreme Court of Mississippi reviewed the case. The court found that any additional funds recovered from the estate would go to the United States due to the restitution judgment, rendering Zach’s claims moot. The court dismissed the appeal as moot, noting that a decision would not benefit Zach practically since the United States would claim any additional funds. The court affirmed the chancellor’s decisions, including the public sale and denial of Zach’s motions. View "In The Matter of The Estate Tatum" on Justia Law

Oljine Noguez and Manuel Zepeda Mendoza were investigated for their alleged involvement in an opioid trafficking operation. Following the investigation, the State of Texas seized their bank accounts and cash, initiating four civil-forfeiture actions. The State alleged that the funds were contraband related to the trafficking operation, attaching a sworn declaration and affidavit from the investigating officer, Bryan Bacon, to each notice of seizure. Nearly two years later, the Claimants filed a no-evidence motion for summary judgment, arguing that the State had no evidence to support its claims. The State responded but did not attach any exhibits, instead referencing Officer Bacon’s affidavit.The trial court considered the motion and granted summary judgment for the Claimants, noting that the State did not attach the affidavit to its response. The State then filed a motion for leave to file a response with the affidavit attached, which the trial court denied, finalizing its order granting summary judgment to the Claimants. The State appealed, and the Court of Appeals for the Seventh District of Texas affirmed the trial court’s decision, holding that the State failed to meet its burden by not attaching the affidavit and not sufficiently directing the trial court to specific portions of the affidavit.The Supreme Court of Texas reviewed the case and held that Texas Rule of Civil Procedure 166a(i) does not require the attachment of previously filed summary judgment evidence. The Court found that the State’s response sufficiently pointed out and discussed the evidence, reversing the Court of Appeals’ judgment. The Supreme Court remanded the case to the trial court for further proceedings, instructing the trial court to reconsider the no-evidence motion in light of the opinion that previously filed evidence referenced in a response can be considered without being attached. View "THE STATE OF TEXAS v. THREE THOUSAND, SEVEN HUNDRED SEVENTY-FOUR DOLLARS AND TWENTY-EIGHT CENTS U.S. CURRENCY ($3,774.28)" on Justia Law