Justia Banking Opinion Summaries

Timberly Hughes, a U.S. citizen, failed to report her foreign bank accounts for the years 2010 through 2013, as required under the Bank Secrecy Act of 1970. Hughes owned two companies in New Zealand and had financial interests in their accounts. The United States assessed penalties against her for willful failure to file the required Reports of Foreign Bank and Financial Accounts (FBARs) for 2012 and 2013, totaling $678,899. Hughes did not pay, leading the United States to file suit in federal court.The United States District Court for the Northern District of California held a bench trial and found that Hughes willfully failed to file FBARs for 2012 and 2013 but not for 2010 and 2011. The court concluded that "willfulness" for civil FBAR penalties could be shown through recklessness or willful blindness, following the Supreme Court's reasoning in Safeco Insurance Co. of America v. Burr. The court entered a final judgment against Hughes for $238,125.19 in substantive penalties but denied the United States' request for prejudgment interest and late payment penalties.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court's decision. The Ninth Circuit agreed that "willfulness" for civil FBAR penalties includes both knowing and reckless violations, aligning with the reasoning in Safeco and the consensus of other circuits. The court found that Hughes's failure to file was willful for 2012 and 2013, as she had acknowledged the requirement on her tax returns but failed to comply. The Ninth Circuit upheld the district court's judgment and rejected Hughes's argument that subjective intent was necessary to establish willfulness. View "USA V. HUGHES" on Justia Law

William Lyons opened a Home Equity Line of Credit (HELOC) account with National City Bank in 2005, which was later acquired by PNC Bank. PNC withdrew funds from Lyons' deposit accounts to offset outstanding HELOC payments without prior notification. Lyons contested these withdrawals, claiming they were unauthorized. PNC responded, asserting their right to make the withdrawals. Lyons then sued for economic and statutory damages, as well as emotional distress.The case was initially heard in the United States District Court for the District of Maryland. PNC moved to compel arbitration on the Truth in Lending Act (TILA) claim, which the district court partially granted. Both parties appealed, and the United States Court of Appeals for the Fourth Circuit held that the Dodd-Frank Act prohibits arbitration of claims related to residential mortgage loans. The case was remanded to the district court, which ruled in favor of PNC on both the TILA and Real Estate Settlement Practices Act (RESPA) claims. The district court held that TILA’s offset provision does not apply to HELOCs and that the CFPB had the authority to exempt HELOCs from RESPA’s requirements.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that TILA’s offset provision does apply to HELOCs, reversing the district court’s decision on the TILA claim. The court found that the term "credit card plan" includes HELOCs when accessed via a credit card. However, the court affirmed the district court’s decision on the RESPA claim, agreeing that the CFPB has the authority to exempt HELOCs from RESPA’s definition of “federally related mortgage loans.” The case was reversed and remanded in part and affirmed in part. View "Lyons v. PNC Bank, N.A." on Justia Law

In 2019, Tamika Miller filed a qui tam action under the False Claims Act (FCA) against Citibank, alleging that the bank violated 2015 consent orders by hiding failures in its management of third-party risks to avoid paying regulatory fines. Miller claimed that Citibank altered audit reports to downplay compliance violations, thereby avoiding penalties. The United States declined to intervene in June 2020. In October 2020, Citibank entered into a new consent order with the Office of the Comptroller of the Currency (OCC) and paid a $400 million civil penalty. Miller sought a share of this penalty, arguing it was an alternate remedy for her qui tam claim.The United States District Court for the Southern District of New York granted Citibank's motion to dismiss Miller's complaint for failure to state a claim and denied her motion for a share of the $400 million penalty. The court found that Miller failed to allege an "obligation" to pay the government as required by the FCA and did not meet the particularity requirement of Federal Rule of Civil Procedure 9(b). The court also denied Miller's request for leave to amend her complaint, concluding that the deficiencies could not be cured by amendment.The United States Court of Appeals for the Second Circuit affirmed the district court's decision. The appellate court held that Miller failed to state a reverse false claim because she did not allege an established duty for Citibank to pay the government. The court also found that Miller's complaint did not meet the particularity requirement of Rule 9(b) as it failed to identify specific false statements or reports. Consequently, Miller was not entitled to a share of the $400 million penalty, and the district court did not err in denying her leave to amend her complaint. View "Miller v. United States, Citibank, N.A." on Justia Law

Fesnel Lafortune, a Haitian national, entered the U.S. on a B-2 visitor visa in 2008 and overstayed. In 2019, he pleaded guilty to conspiracy to commit bank fraud and aggravated identity theft, receiving a combined prison sentence of 31 months. Following his convictions, the Department of Homeland Security (DHS) charged him with removability due to his lack of lawful status and his conviction for an aggravated felony involving fraud exceeding $10,000.The Immigration Judge (IJ) found Lafortune removable and denied his claims for asylum, withholding of removal, and protection under the Convention Against Torture (CAT). Lafortune, appearing pro se, requested continuances to find counsel, which were denied. He admitted to the allegations and expressed fear of returning to Haiti. The IJ ruled him ineligible for asylum and other protections, citing his conviction as a particularly serious crime. Lafortune appealed to the Board of Immigration Appeals (BIA), which remanded the case for him to secure counsel. On remand, the IJ again denied his requests for continuances and upheld the original decision. Lafortune, now with counsel, appealed again to the BIA, which dismissed his appeal.The United States Court of Appeals for the First Circuit reviewed the case. The court upheld the BIA's decision, agreeing that Lafortune's conviction for conspiracy to commit bank fraud constituted a particularly serious crime, making him ineligible for withholding of removal. The court also found no error in the IJ's and BIA's handling of Lafortune's CAT claim, concluding that he failed to demonstrate a particularized risk of torture by or with the acquiescence of Haitian officials. The petition for review was denied. View "Lafortune v. Garland" on Justia Law

Brian Cook entered a bank in Roseville, Illinois, wearing a disguise and armed with what appeared to be a gun, later identified as an air pistol. He threatened two tellers, directing one to retrieve money from the vault and instructing the other to stay put. Cook fled with a bag of cash but was quickly apprehended by law enforcement, who found the stolen money and the air pistol in his vehicle. Cook pleaded guilty to bank robbery under 18 U.S.C. § 2113(a).The United States District Court for the Central District of Illinois sentenced Cook to 144 months of imprisonment and three years of supervised release. The court applied a four-level enhancement under § 2B3.1(b)(2)(D) of the United States Sentencing Guidelines, finding that Cook had "otherwise used" the gun during the robbery. Cook contested this, arguing that he had only "brandished" the gun, which would warrant a lesser, three-level enhancement under § 2B3.1(b)(2)(E). The district court also considered Cook's extensive criminal history and his deliberate targeting of a small-town bank in its sentencing decision.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's judgment. The appellate court found no procedural error in the application of the four-level enhancement, agreeing that Cook's actions constituted "otherwise using" the gun. The court also upheld the above-Guidelines sentence, noting that the district court had provided a thorough explanation for its decision, including Cook's extensive criminal history and the need for deterrence and public protection. The appellate court concluded that the sentence was neither procedurally erroneous nor substantively unreasonable. View "USA v. Cook" on Justia Law

Michigan First Credit Union reimbursed its customers for unauthorized electronic fund transfers resulting from a SIM Swap scam involving T-Mobile USA, Inc. Michigan First sought to recover these funds from T-Mobile, claiming indemnification or contribution under the Electronic Fund Transfer Act (EFTA) and state law. The district court dismissed the complaint, ruling that Michigan First failed to state a claim for indemnification or contribution under both the EFTA and state law.The United States District Court for the Eastern District of Michigan dismissed Michigan First’s claims, finding no basis for indemnification or contribution under the EFTA or state law. Michigan First appealed, arguing that the EFTA implies a right to indemnification or contribution, that the Michigan Electronic Funds Transfer Act (MEFTA) is not preempted by the EFTA, and that its state common-law indemnification claim should stand.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court held that the EFTA does not imply a right to indemnification or contribution for financial institutions, as the statute is designed to protect consumers, not financial institutions. The court also found that the EFTA preempts the MEFTA and any state common-law claims for indemnification or contribution, as allowing such claims would conflict with the EFTA’s comprehensive regulatory scheme. Consequently, the Sixth Circuit affirmed the district court’s dismissal of Michigan First’s complaint. View "Michigan First Credit Union v. T-Mobile USA, Inc." on Justia Law

Dr. Igor DeCastro, a neurosurgeon, worked at the Hot Springs Neurosurgery Clinic for seven years. He claimed that after his initial 18-month salary period, he was supposed to receive compensation based on the net proceeds of his production, less 33% of the clinic's overhead. However, he alleged that he never received more than his base salary because Dr. James Arthur, the clinic's owner, diverted the funds into a "secret account." DeCastro also sued Bank OZK, where the account was held, leading the bank to request the court to determine the rightful owner of the funds.The United States District Court for the Western District of Arkansas dismissed DeCastro's amended complaint for failing to include essential facts, such as specific amounts received, production details, and overhead costs. The court also disbursed the funds to Arthur and denied DeCastro's motions for reconsideration, discovery, and leave to file a second amended complaint. DeCastro's subsequent attempts to revive the case, including a counterclaim in an unrelated contribution action, were dismissed based on res judicata.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that DeCastro's amended complaint lacked sufficient factual matter to state a plausible claim for relief. The court noted that the complaint was filled with legal conclusions rather than specific facts about the alleged breach. Additionally, the court found no abuse of discretion in the district court's denial of DeCastro's post-dismissal motions, as the employment agreement he later produced did not support his original claims. The court also upheld the dismissal of DeCastro's counterclaim based on res judicata, as it was identical to the previously adjudicated claims. View "DeCastro v. Arthur" on Justia Law

The case involves Corner Post, a merchant that accepts debit cards as a form of payment. Debit card transactions require merchants to pay an "interchange fee" to the bank that issued the card. The fee amount is set by the payment networks (such as Visa and MasterCard) that process the transaction. In 2010, Congress tasked the Federal Reserve Board with ensuring that interchange fees were "reasonable and proportional to the cost incurred by the issuer with respect to the transaction." In 2011, the Board published Regulation II, which sets a maximum interchange fee of $0.21 per transaction plus .05% of the transaction’s value.In 2021, Corner Post joined a suit against the Board under the Administrative Procedure Act (APA), challenging Regulation II on the ground that it allows higher interchange fees than the statute permits. The District Court dismissed the suit as time-barred under 28 U. S. C. §2401(a), the default six-year statute of limitations applicable to suits against the United States. The Eighth Circuit affirmed the decision.The Supreme Court of the United States reversed the decision of the Eighth Circuit. The Court held that an APA claim does not accrue for purposes of §2401(a)’s 6-year statute of limitations until the plaintiff is injured by final agency action. The Court disagreed with the Board's argument that an APA claim “accrues” under §2401(a) when agency action is “final” for purposes of §704; the claim can accrue for purposes of the statute of limitations even before the plaintiff suffers an injury. The Court held that a right of action “accrues” when the plaintiff has a “complete and present cause of action,” which is when she has the right to “file suit and obtain relief.” Because an APA plaintiff may not file suit and obtain relief until she suffers an injury from final agency action, the statute of limitations does not begin to run until she is injured. View "Corner Post, Inc. v. Board of Governors" on Justia Law

A mortgage company, Approved Mortgage Corporation, initiated two wire transfers, but the instructions for the transactions were altered by a third party. The funds were transferred to Truist Bank, which deposited the funds into an account it had previously flagged as suspicious. The funds were then withdrawn in the form of cashier’s checks. Approved Mortgage sued Truist, seeking damages in the amount of the transfers. The company asserted two claims under the Indiana Uniform Commercial Code (UCC), which governs the rights, duties, and liabilities of banks and their customers with respect to electronic funds transfers, and a common law negligence claim.The district court dismissed the UCC claims due to lack of privity between Approved Mortgage and Truist, and dismissed the negligence claim as preempted by the UCC. The court held that the UCC does not establish an independent remedy and must be read with another section of the UCC, which entitles a sender to a refund only from the bank which received its payment.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of the UCC claims, agreeing with the lower court that the UCC does not establish an independent remedy and must be read with another section of the UCC. However, the appellate court reversed the dismissal of the negligence claim, holding that to the extent the negligence claim arises from Truist’s issuance of the cashier’s checks after Truist credited the funds to the suspicious account, the claim is not preempted by the UCC. The case was remanded to the district court for further proceedings. View "Approved Mortgage Corporation v. Truist Bank" on Justia Law

The case revolves around a dispute between Treslong Dairy, LLC, First Merchants Bank, the Earl Goodwine Trust, and Jeffrey and Kathie Foster. Treslong Dairy had executed promissory notes with all parties, granting them security interests in various properties. After Treslong defaulted on its note with the Bank, the Bank sued to collect its debt. The Trust and the Fosters (collectively “Farmers”) intervened in the action. When Treslong failed to sell its property, the Bank sought final judgment on its unpaid balance. The Bank sold the haylage and corn silage for $230,000, which was insufficient to satisfy the full judgment. As junior lienholders, the Farmers received no proceeds from the sale. The Farmers then sued the Bank for money damages, claiming that the sale was not conducted in a commercially reasonable manner.The trial court granted the Bank's motion to dismiss the Farmers' case under Rule 41(E), which allows for dismissal of a civil case for a party's failure to move the case along. The Farmers appealed, arguing that the Bank's motion was untimely for Rule 41(E) purposes. The Court of Appeals reversed the trial court's decision as to Rule 41(E) but affirmed based on laches.The Indiana Supreme Court agreed with the Farmers. It held that the Bank's motion for dismissal under Rule 41(E) was untimely because it was filed after the Farmers had resumed prosecution by requesting a case-management conference. Therefore, the case could not be dismissed under that rule. The court also rejected the Bank's alternative argument that the equitable doctrine of laches applied. The court reversed the lower court's dismissal order and remanded for proceedings consistent with its opinion. View "Foster v. First Merchants Bank, N.A." on Justia Law