Justia Banking Opinion Summaries
JPMorgan Chase Bank, National Ass’n v. SFR Investments Pool 1, LLC
The Supreme Court reversed the district court's order granting summary judgment in favor of Defendant in this foreclosure action, holding that the loan servicer timely commenced the action after the foreclosure sale and sufficiently demonstrated that a regulated entity under the Federal Housing Finance Agency's (FHFA) conservatorship owned the loan.Defendant purchased property at a foreclosure sale. Plaintiff JPMorgan Chase Bank filed a complaint seeking a declaration that the first deed of trust survived the sale and for quiet title. Plaintiff offered evidence that it was servicing the loan on behalf of Freddie Mac, which had previously been placed into an FHFA conservatorship and that the first deed of trust therefore survived under the Federal Foreclosure Bar. Applying a three-year limitations period, the district court entered summary judgment for Defendant, concluding that the foreclosure sale extinguished the deed of trust. The Supreme Court reversed, holding (1) the claims underlying the action are best described as sounding in contract for purposes of the House and Economic Recovery Act statute of limitations, which provides for a six-year statute of limitations; and (2) the Federal Foreclosure Bar prevented the foreclosure sale from extinguishing gate first deed of trust, and therefore, Defendant took the property subject to that deed of trust. View "JPMorgan Chase Bank, National Ass'n v. SFR Investments Pool 1, LLC" on Justia Law
Discover Bank v. Bolinske, Sr.
Robert V. Bolinske, Sr., appealed an order denying his motion to vacate a default judgment. Discover Bank (“Discover”) sued Bolinske for unpaid debt in the amount of $3,915.53 on a credit card Discover issued to Bolinske. Notice of entry of judgment was served on Bolinske on December 23, 2019. Bolinske moved to vacate judgment on January 10, 2020. Bolinske claimed he attempted to respond to Discover’s summons and complaint by mail on December 6, 2019, but accidentally misaddressed the envelope to Discover’s counsel and sent his answer and counterclaims to an incorrect address. Bolinske argued after his answer and counterclaims were returned as undelivered, he mailed them to the proper address on December 16, 2019. Bolinske argued that same day, he placed a call to Discover’s counsel and left a voicemail stating that he was making an appearance to avoid a default judgment and explaining he had sent his answer and counterclaim to the wrong address. Discover’s counsel asserted she did not receive Bolinske’s voicemail until after e-filing the motion for default judgment, but acknowledged the voicemail was received on December 16. Bolinske argued in his brief supporting his motion to vacate that his voicemail left with Discover’s counsel constituted an appearance entitling him to notice before entry of default. Bolinske also argued that he was entitled to relief from judgment due to his mistake, inadvertence, and excusable neglect. The district court denied Bolinske’s motion on January 31, 2020 without holding a hearing, stating Bolinske had not demonstrated sufficient justification to set the judgment aside. Fining no reversible error in the district court judgment, the North Dakota Supreme Court affirmed. View "Discover Bank v. Bolinske, Sr." on Justia Law
Federal Deposit Insurance Corp. v. Belcher
This action is one of many related to the collapse of First NBC Bank of New Orleans. The FDIC filed an action in the district court seeking to enforce an administrative subpoena that ordered defendant to submit to a deposition. The district court granted the motion to enforce the subpoena and defendant appealed. In the interim, the district court denied defendant's request for a stay pending the outcome of this appeal. Defendant then sat for the deposition.The Fifth Circuit vacated the district court's judgment enforcing the FDIC's subpoena and remanded for further proceedings. The court held that the district court erred by holding that the FDIC, in its capacity as the Bank's receiver, was "the appropriate Federal functional regulator" in this case, entitling it to receive otherwise confidential and privileged documents from the Public Company Accounting Oversight Board (PCAOB). Rather, the FDIC was not "the appropriate Federal functional regulator" in this case, and the PCAOB lacked the authority under 15 U.S.C. 7215(b)(5)(B) to share transcripts of defendant's deposition testimony before it with the FDIC. View "Federal Deposit Insurance Corp. v. Belcher" on Justia Law
Degroot v. Client Services, Inc.
Degroot defaulted on a debt owed to Capital. AllianceOne sent Degroot a letter, stating: The amount of your debt is $425.86 ... interest and fees are no longer being added. Degroot understood that Capital had “charged-off” his account, meaning that his debt would no longer accrue interest or other fees for any reason. Capital subsequently transferred the account to CSI. CSI's 2019 letter stated: BALANCE DUE: $425.86 and “NEW INFORMATION ON YOUR ACCOUNT,” indicating that Capital had placed the account with CSI for collections, with an itemized summary of Degroot’s balance. After offering to resolve the debt, with disclosures required by certain states, concluded by stating “no interest will be added to your account balance through the course of” CSI collection effortsDegroot filed a purported class action, alleging that CSI’s letter misleadingly implied that Capital would begin to add interest and fees to previously charged-off debts if consumers failed to resolve their debts with CSI and that he was “confused.” Degroot asserted that CSI violated the Fair Debt Collection Practices Act. 15 U.S.C. 1692. The Seventh Circuit affirmed the dismissal of the suit. The 2019 letter accurately disclosed the amount of the debt and did not imply fees or interest would be added in the future. Even if CSI’s letter did imply that fees and interest could begin to accrue if the debt remained outstanding, the statement was not misleading given that Wisconsin law provided for the assessment of fees and interest on “static” debts in certain circumstances. View "Degroot v. Client Services, Inc." on Justia Law
County of Sonoma v. U.S. Bank N.A.
Quail's 47,480-square-foot unincorporated Sonoma County property contained two houses, garages, and several outbuildings. In 2013, a building with hazardous and unpermitted electrical wiring, hazardous decking and stairs, unpermitted kitchens and plumbing, broken windows, and lacking power, was destroyed in a fire. Two outbuildings, unlawfully being used as dwellings, were also damaged. One report stated: “The [p]roperty . . . exists as a makeshift, illegal mobile home park and junkyard.” After many unsuccessful attempts to compel Quail to abate the conditions, the county obtained the appointment of a receiver under Health and Safety Code section 17980.7 and Code of Civil Procedure section 564 to oversee abatement work. The banks challenged a superior court order authorizing the receiver to finance its rehabilitation efforts through a loan secured by a “super-priority” lien on the property and a subsequent order authorizing the sale of the property free and clear of U.S. Bank’s lien.The court of appeal affirmed in part. Trial courts enjoy broad discretion in matters subject to a receivership, including the power to issue a receiver’s certificate with priority over pre-existing liens when warranted. The trial court did not abuse its discretion in subordinating U.S. Bank’s lien and confirming the sale of the property free and clear of liens so that the receiver could remediate the nuisance conditions promptly and effectively, but prioritizing the county’s enforcement fees and costs on equal footing with the receiver had no basis in the statutes. View "County of Sonoma v. U.S. Bank N.A." on Justia Law
Harrell v. Freedom Mortgage Corp.
After his taxes were paid late from his mortgage escrow account, causing him to incur $895 in penalties, the homeowner-borrower filed a putative class action against the company that serviced his mortgage. Under the Real Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C. 2601, if a mortgage contract requires the borrower to place property tax payments in escrow, “the servicer” must make those tax payments on time. The right to service a mortgage is subject to purchase and sale. The rights to service the plaintiff’s mortgage had been transferred between the time of the plaintiff’s payment into the escrow account and the tax’s due date.Reversing the district court, the Fourth Circuit concluded that when servicing rights are transferred in the window between the borrower’s payment to escrow and the tax’s due date, RESPA requires taxes to be paid by the entity responsible for servicing the mortgage at the time the tax payment is due. By requiring “the servicer” to make tax payments “as [they] become due,” RESPA connects the servicer’s obligation to a payment’s due date, not the date of payment into escrow by the borrower. View "Harrell v. Freedom Mortgage Corp." on Justia Law
McShannock v. JP Morgan Chase Bank NA
In 2005-2007, the borrowers obtained residential home mortgages on California properties. California law would normally have entitled them to “at least 2 percent simple interest per annum” on any funds held in escrow, California Civil Code Section 2954.8. The lender, a federal savings association organized and regulated under the Home Owners’ Loan Act of 1933 (HOLA), 12 U.S.C. 1461, did not pay interest because HOLA preempts California law. In a suit against the lender’s successor, Chase, a national bank organized and regulated under the National Bank Act, 12 U.S.C. 38, the district court denied the lender’s motion to dismiss; the Ninth Circuit has held that there is no “conflict preemption” between the National Bank Act and the California law.The Ninth Circuit reversed. HOLA field preemption principles applied to the claims against Chase even though its conduct giving rise to the complaint occurred after it acquired the loans in question. Because California’s interest-on-escrow law imposed a requirement regarding escrow accounts; affected the terms of sale, purchase, investment in, and participation in loans originated by savings associations; and had more than an incidental effect on the lending operations of savings associations, it was preempted by 12 C.F.R. 560.2(b)(6) and (b)(10), and 560.2(c). View "McShannock v. JP Morgan Chase Bank NA" on Justia Law
DLJ Mortgage Capital, Inc. v. Sheridan
DLJ brought a debt and foreclosure action against the Sheridans and the IRS. At the close of DLJ’s case-in-chief, the district court granted judgment in favor of DLJ under FRCP 52(c), concluding that DLJ satisfied all elements of its claim. The Third Circuit affirmed. Sheridan was “fully heard” prior to judgment. At the close of its case-in-chief, DLJ moved for judgment based on partial findings. Sheridan did not object to the consideration of the motion. The parties made their respective arguments as to whether DLJ met its burden of providing evidence sufficient to establish its debt and foreclosure claims and whether DLJ had standing. Sheridan could have only challenged the validity of the loan documents through cross-examination of DLJ’s witness, Holmes, which he was given the opportunity to do, or through his own testimony, to the extent he had any personal knowledge. Sheridan has not indicated what additional admissible evidence he intended to present to contest DLJ’s standing. The court heard and considered Sheridan’s arguments concerning the transfer of the note and the validity of the assignment. He was fully heard with regard to DLJ’s standing to foreclose. Sheridan’s original answer asserted boilerplate affirmative defenses, none of which contained any allegations of fraud or violations of the Truth in Lending Act; Sheridan’s motion to amend was untimely, and the late assertion of fraud would have prejudiced DLJ. View "DLJ Mortgage Capital, Inc. v. Sheridan" on Justia Law
Bennett v. Bank of Eastern Oregon
Bret and Mary Bennett filed an action to quiet title to their residence in Payette, Idaho, against the Bank of Eastern Oregon (“BEO”), seeking to remove a judgment lien and a deed of trust. In 2007, the Bennetts started a motorsports business in Ontario, Oregon, which leased its premises from a different business entity owned by the Bennetts. In 2008, the Bennetts personally guaranteed one or more loans between BEO and these businesses. Among these loans was a $100,000 promissory note (“the Note”) that was secured by a deed of trust on the Bennetts’ residence situated on the other side of the Snake River in Payette, Idaho (“the Property”). The deed of trust designated 1st American Title Company of Malheur County, Oregon as trustee. The parties signed the deed of trust on April 10, 2008. One day later, on April 11, 2008, BEO recorded the deed of trust in the Payette County Recorder’s Office. By its terms, the deed of trust was set to mature on May 5, 2009. The Bennetts later defaulted on the Note and other obligations to BEO. Rather than seeking to foreclose on the Property for a breach of the Note’s terms, BEO successfully pursued a collection action against the Bennetts in Oregon state court to recover on all of the Bennetts’ debts, including the Note. This appeal addressed whether a debtor could use Idaho’s single-action rule as a sanction to quiet title against a deed of trust when the secured creditor has violated the rule by filing an action against the debtor to recover on the debt before seeking satisfaction of the debt by foreclosing on the property serving as security. The Idaho Supreme Court determined the Bennetts stated a cause of action that could allow them to quiet title against BEO for the deed of trust. Construing the pleadings in favor of the Bennetts, BEO violated the single-action rule codified in Idaho Code section 45-1503(1) by seeking to recover from the Bennetts on the Note personally before seeking to foreclose on the Property. Thus, the Supreme Court reversed the district court's decision granting BEO's motion to dismiss, vacated the judgment of dismissal, and remanded for further proceedings. View "Bennett v. Bank of Eastern Oregon" on Justia Law
Helvetica Servicing, Inc. v. Pasquan
The Supreme Court held that a trial court should consider the totality of the circumstances surrounding a residential purchase loan and identify certain factors in determining whether a loan is a construction loan entitled to anti-deficiency protection or a home improvement loan not entitled to anti-deficiency protection.Homeowners borrowed money from Desert Hills Bank to renovate and expand their property. Later, Homeowners borrowed money from Helvetica Servicing Inc. to pay off the Desert Hills loan. Homeowners' property secured the deed of trust. After Homeowners defaulted on the Helvetica loan, Helvetica sued to judicially foreclose. The trial court entered judgment for Helvetica and entered a deficiency judgment. Homeowners appealed, arguing that the Helvetica loan was entitled to anti-deficiency protection. The trial court ultimately found that the Desert Hills loan was a home improvement loan not entitled to anti-deficiency protection because Homeowners did not build a new home from scratch. The Supreme Court remanded the matter, holding (1) the "built from scratch" standard does not further the legislative objectives of Arizona's anti-deficiency statutes; (2) courts should consider the totality of the circumstances surrounding a loan when determining whether it is a home improvement or construction loan; and (3) the trial court did not make an independent factual determination as to whether the Desert Hills loan was a construction loan or a home improvement loan. View "Helvetica Servicing, Inc. v. Pasquan" on Justia Law