Justia Banking Opinion Summaries

Over the course of a few years, an employee of Severin Mobile Towing Inc. (Severin) took about $157,000 in checks made payable to Severin’s d/b/a, endorsed them with what appears to be his own name or initials, and deposited them into his personal account at JPMorgan Chase Bank N.A. (Chase). Because the employee deposited all the checks at automated teller machines (ATM’s), and because each check was under $1,500, Chase accepted each check without “human review.” When Severin eventually discovered the embezzlement, it sued Chase for negligence and conversion under California’s version of the Uniform Commercial Code (UCC), and for violating the unfair competition law. Severin moved for summary judgment on its conversion cause of action, and Chase moved for summary judgment of all of Severin’s claims, asserting affirmative defenses under the UCC, and that claims as to 34 of the 211 stolen checks were time- barred. The trial court granted Chase’s motion on statute of limitations and California Uniform Commercial Law section 3405 grounds; the court did not reach UCL section 3406. The court denied Severin’s motion as moot, and entered judgment for Chase. On appeal, Severin argued only that the court erred in granting summary judgment to Chase on Severin’s conversion cause of action (and, by extension, the derivative UCL cause of action). Specifically, Severin argued the court erroneously granted summary judgment under section 3405 because Chase failed to meet its burden of establishing that Severin’s employee fraudulently indorsed the stolen checks in a manner “purporting to be that of [his] employer.” Severin further argued factual disputes about its reasonableness in supervising its employee precluded summary judgment under section 3406. The Court of Appeal agreed with Severin in both respects, and therefore did not reach the merits of Chase’s claim that its automated deposit procedures satisfied the applicable ordinary care standard. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Severin Mobile Towing, Inc. v. JPMorgan Chase etc." on Justia Law

Metaxas was the president and CEO of Gateway Bank in 2008, during the financial crisis. Federal regulators categorized Gateway as a “troubled institution.” Gateway tried to raise capital and deal with its troubled assets. Certain transactions resulted in a lengthy investigation. The U.S. Attorney became involved. Metaxas was indicted. In 2015, she pleaded guilty to conspiracy to commit bank fraud. Gateway sued Metaxas based on two transactions involving Ideal Mortgage: a March 2009 $3.65 million working capital loan and a November 2009 $757,000 wire transfer. A court-appointed referee awarded Gateway $250,000 in tort-of-another damages arising from “the fallout” from the first transaction, and $132,000 in damages for the second.The court of appeal affirmed, rejecting arguments that the first transaction resulted in “substantial benefit” to Gateway and that Metaxas had no alternative but to approve the wire transfer. Gateway did not ask for any purported “benefit.” The evidence showed that the Board would not have approved either the toxic asset sale or the working capital loan if Metaxas had disclosed the true facts. Metaxas damaged Gateway’s reputation. Metaxas knew that the government was trying to shut Ideal down but approved the wire transfer on the last business day before Ideal was shut down, by expressly, angrily, overruling the CFO. View "Gateway Bank, F.S.B. v. Metaxas" on Justia Law

The Ninth Circuit certified to the Nevada Supreme Court the following question: Whether, under Nevada law, an HOA's misrepresentation that its superpriority lien would not extinguish a first deed of trust, made both in the mortgage protection clause in its CC&Rs and in statements by its agent in contemporaneous arbitration proceedings, constitute slight evidence of fraud, unfairness, or oppression affecting the foreclosure sale that would justify setting it aside.The panel also asked the Nevada Supreme Court to consider the related issue of what evidence a first deed of trust holder must show to establish a causal relationship between a misrepresentation that constitutes unfairness under Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev. 740 (2017), and a low sales price. View "U.S. Bank, NA v. Southern Highlands Community Ass'n" on Justia Law

The Superintendent of the New York State Department of Financial Services (DFS) filed suit against the Office of the Comptroller of the Currency and the U.S. Comptroller of the Currency (together, the "OCC"), challenging the OCC's decision to begin accepting applications for special-purpose national bank (SPNB) charters from financial technology companies (fintechs) engaged in the "business of banking," including those that do not accept deposits. The district court ultimately entered judgment in favor of DFS, setting aside OCC's decision.The Second Circuit reversed, concluding that DFS lacks Article III standing because it failed to allege that OCC's decision caused it to suffer an actual or imminent injury in fact. The court explained that the Fintech Charter Decision has not implicated the sorts of direct preemption concerns that animated DFS's cited cases, and it will not do so until OCC receives an SPNB charter application from or grants such a charter to a non-depository fintech that would otherwise be subject to DFS's jurisdiction. The court was also unpersuaded that DFS faces a substantial risk of suffering its second alleged future injury—that it will lose revenue acquired through annual assessments. Because DFS failed to adequately allege that it has Article III standing to bring its Administrative Procedure Act claims against OCC, those claims must be dismissed without prejudice.The court also found that DFS's claims are constitutionally unripe for substantially the same reason. Finally, the court lacked jurisdiction to decide the remaining issues on appeal. Accordingly, the court remanded to the district court with instructions to enter a judgment of dismissal without prejudice. View "Lacewell v. Office of the Comptroller of the Currency" on Justia Law

AgCountry Farm Credit Services, PCA appealed a district court judgment granting Michael and Bonita McDougall’s unjust enrichment claim and ordering AgCountry to pay $170,397.76. Kent and Erica McDougall were farmers and ranchers who began raising cattle in 2007. Michael and Bonita (collectively, “the McDougalls”) were Kent’s parents. In 2013, Kent and Erica began financing their operations through AgCountry.On various dates Kent and Erica obtained eight loans from AgCountry and signed promissory notes secured by real estate mortgages and security agreements. From fall of 2015 through March 2016, Kent and Erica repeatedly requested AgCountry restructure their loans and assist them in obtaining operating funds. Although Kent and Erica were in default on their loans with AgCountry, they signed a mortgage on the home quarter to AgCountry. When Kent and Erica were informed their request for restructuring was denied, they filed for bankruptcy. As part of the bankruptcy proceedings, Kent and Erica initiated an adversary action against AgCountry and the McDougalls. The complaint in the adversary action asserted a count for avoidance of transfer, for avoidance of the mortgage on the basis of fraud, and to determine the transfer of the home quarter back to the McDougalls from Kent and Erica was appropriate and nonavoidable. Then in 2018, the McDougalls sued AgCountry seeking a declaration that the mortgage on the home quarter was void and asserting claims of deceit, conversion, estoppel and unjust enrichment. AgCountry moved for summary judgment, arguing the McDougalls’ claims failed as a matter of law based on undisputed facts. AgCountry also argued the claims were barred by the prior judgment in Kent and Erica’s bankruptcy proceedings. Summary judgment was granted in favor of AgCountry dismissing the McDougalls’ claims of conversion, promissory estoppel, unjust enrichment and deceit and granting a declaration of superiority in AgCountry’s mortgage on the home quarter. The McDougalls appealed, and a trial ordered on their claims of deceit and unjust enrichment. The jury found in favor of AgCountry on the deceit claim, but in favor of the McDougalls on unjust enrichment. After review, the North Dakota Supreme Court directed the district court to modify the cost judgment, and affirmed as modified. View "McDougall, et al. v. AgCountry Farm Credit Services, et al." on Justia Law

The Fifth Circuit affirmed the judgment of the tax court and held that MoneyGram, a global payment services company, is not a "bank" under the tax code, 26 U.S.C. 581, because customers do not give MoneyGram money for safekeeping, which is the most basic feature of a bank. The court explained that purchasers of money orders are not placing funds with MoneyGram for safekeeping. Nor are the financial institutions that use MoneyGram to process official checks doing so for the purpose of safekeeping. In this case, examining the substance of MoneyGram's business confirms how the company has long described itself on its tax returns: as a nondepository institution. Therefore, without deposits, MoneyGram cannot be a bank. View "MoneyGram International, Inc. v. Commissioner of Internal Revenue" on Justia Law

Plaintiffs Charles Best Jr. and Robbie Johnson Best alleged that defendants (collectively the Bank), attempted to collect a debt secured by the Bests’ home, despite having no legal right to do so. They alleged that, in the process, the Bank engaged in unlawful, unfair, and fraudulent debt collection practices. Based on these allegations, they raised six causes of action, including one under the Rosenthal Fair Debt Collection Practices Act. The trial court sustained the Bank’s demurrer to the entire complaint on the ground of res judicata; it ruled that the Bests were asserting the same cause(s) of action as in a prior federal action that they brought, unsuccessfully, against the Bank. In the nonpublished portion of its opinion, the Court of Appeal held that, as to three of the Best’s causes of action (including their Rosenthal Act cause of action) the trial court erred by sustaining the demurrer based on res judicata. As to the other three, the Court found the Bests did not articulate any reason why res judicata does not apply; thus, they have forfeited any such contention. In the published portion of its opinion, the Court held that the Rosenthal Act could apply to a nonjudicial foreclosure; the lower federal court opinions on which the Bank relied were superseded by controlling decisions of the United States Supreme Court, the Ninth Circuit, and the California Courts of Appeal. View "Best v. Ocwen Loan Servicing, LLC" on Justia Law

The Court of Appeal affirmed the district court's judgment sustaining CIT's demurrer without leave to amend based on res judicata. The court explained that appellant's present lawsuit involves the same primary right as three prior lawsuits that she brought against CIT, and plaintiff lost on the merits in all three prior lawsuits: one in the Los Angeles County Superior Court and two in the United States District Court. The court further explained that the prior adverse decisions by three trial and two appellate courts were not advisory opinions suggesting how appellant should proceed in the future. The court concluded that, pursuant to the doctrine of res judicata, the decisions constitute final judgments on the merits precluding further litigation against respondent concerning the same primary right. The court noted that, although the present appeal is frivolous, it will not order sanctions to be imposed on appellant. However, the court cautioned appellant that further attempts to litigate the subject matter of this lawsuit will result in sanctions. View "Colebrook v. CIT Bank, N.A." on Justia Law

The Supreme Court reversed the judgment of the Appellate Court insofar as it upheld the trial court's order directing Defendants to reimburse Plaintiff for property taxes and insurance premiums, holding that the ordered relief was inconsistent with the remedial scheme available to a mortgagee in a strict foreclosure.At issue was whether a trial court may order a mortgagor to reimburse a mortgagee for the mortgagee's advancements of property taxes and insurance premiums during the pendency of an appeal from a judgment of strict foreclosure. The trial court ordered Defendants to reimburse Plaintiff for such property tax and insurance premium payments, and the Appellate Court affirmed. The Supreme Court reversed in part, holding (1) the trial court abused its discretion in directing Defendants to make monetary payments to Plaintiff outside of a deficiency judgment; and (2) the Appellate Court's judgment is affirmed in all other respects. View "JPMorgan Chase Bank, National Ass'n v. Essaghof" on Justia Law

The Supreme Judicial Court affirmed the judgment of a judge of the superior court dismissing Relator's claims alleging that Defendants collectively engaged in and conspired to engage in fraud, holding that this suit was subject to the public disclosure bar of the Massachusetts False Claims Act (MFCA), Mass. Gen. Laws ch. 12, 5A-50.The MCFA contains a public disclosure bar that generally requires that an action be dismissed if substantially the same allegations or transactions as alleged have previously been disclosed through certain enumerated sources. Relator commenced this action on behalf of the Commonwealth against certain financial institutions and their subsidiaries. Defendants argued that dismissal was required pursuant to the MFCA's public disclosure bar because the subject transactions had previously been disclosed to the public through news media and Relator was not an original source of the information concerning the fraud. The superior court dismissed the complaint. The Supreme Judicial Court affirmed, holding that the superior court correctly dismissed Relator's claims. View "Rosenberg v. JPMorgan Chase & Co." on Justia Law