Justia Banking Opinion Summaries

In 2006 Trinity borrowed about $2 million from a bank, secured by a mortgage. The bank sold the note and mortgage to ColFin, which relied on Midland to collect the payments. In 2013, Midland recorded a “satisfaction,” stating that the loan had been paid and the mortgage released. The loan was actually still outstanding. Trinity continued paying. In 2015, ColFin realized Midland’s mistake and recorded a document canceling the satisfaction. Trinity stopped paying. ColFin filed a state court foreclosure action. Trinity commenced a bankruptcy proceeding, which stayed the foreclosure, then filed an adversary action against ColFin, contending that the release extinguished the debt and security interest. The bankruptcy court, district court, and Seventh Circuit rejected that argument and an argument that the matter was moot because the property had been sold under the bankruptcy court’s auspices. There is a live controversy about who should get the sale proceeds; 11 U.S.C. 363(m), which protects the validity of the sale, does not address the disposition of the proceeds. Under Illinois law, Trinity did not obtain rights from the 2013 filing, which was unilateral and without consideration; no one (including Trinity) detrimentally relied on the release, so ColFin could rescind it. ColFin caught the problem before Trinity filed its bankruptcy petition, so a hypothetical lien perfected on the date of the bankruptcy would have been junior to ColFin’s interest. View "Trinity 83 Development LLC v. Colfin Midwest Funding LLC" on Justia Law

The City brought an action against homeowners and their mortgage lender, SunTrust, and sought the appointment of a receiver to undertake the remediation of a public nuisance created by the homeowners on their residential property.Determining that the appeal was not moot, the Court of Appeal held that the trial court did not abuse its discretion in authorizing a super-priority lien to secure the loan taken by the receiver to fund remediation of the homeowners' property. In this case, because neither the homeowners nor SunTrust was willing to fund the costly remediation and the property did not produce any income, the receiver had to borrow money in order to proceed with the remediation. Because no lender would loan money to the receiver unless the loan was secured with a super-priority lien on the property, the only way to effect the remediation was to authorize the receiver's request to issue such a receiver's certificate. The court held that SunTrust's contention that it should remain the senior lienholder—and benefit from the increased property value provided by the remediation while bearing none of the cost—was simply untenable. View "City of Sierra Madre v. SunTrust Mortgage" on Justia Law

SE Property Holdings, LLC ("SEPH") appealed the grant of summary judgment entered in favor of Bank of Franklin ("BOF") on BOF's claim demanding specific performance of a contractual provision. In March 2005, Vision Bank, a Florida company, loaned Bama Bayou, LLC, formally known as Riverwalk, LLC ("the borrower"), $6,000,000. Multiple individuals allegedly personally guaranteed repayment of the loan ("the guarantors"). In June 2008, pursuant to a "participation agreement," Vision Bank conveyed to BOF a 25 percent interest in the loan. Vision Bank conveyed additional participation interests in the loan to other banks. The borrower and the guarantors allegedly defaulted on their obligations with respect to the loan, and in January 2009 Vision Bank filed suit against them. The borrower and the guarantors asserted counterclaims against Vision Bank and brought BOF into the action as an additional counterclaim defendant. In April 2009, Vision Bank foreclosed on a mortgage securing the loan. Vision Bank was the highest bidder at the foreclosure sale and thereafter executed foreclosure deeds in favor of BOF and the other participating banks. In 2012, Vision Bank sold its operating assets to Centennial Bank and relinquished its Florida bank charter. Vision Bank and SEPH entered into an "agreement and plan of merger," whereby Vision Bank merged "with and into" SEPH. In October 2016, the trial court entered an order setting aside the foreclosure sale and declaring the foreclosure deeds void. Among other things, BOF asserted in its cross-claim that SEPH had an obligation to repurchase BOF's participation interest in the loan. In support, BOF pointed to the participation agreement between BOF and SEPH's predecessor, Vision Bank. The court granted BOF's motion for summary judgment on its claim for specific performance based on the participation agreement. SEPH argued on appeal that the trial court erred in determining that a "proceeding" involving Vision Bank's termination of existence was "commenced," so as to invoke the contractual provision; it asserted Vision Bank's voluntary merger with SEPH was not a "proceeding." The participation agreement in this case stated that BOF's participation interest was conveyed without recourse, but the contract provision provided BOF at least some security in the form of a right to force the repurchase of its participation interest in the event of the financial deterioration of the originating bank, i.e., Vision Bank. The Alabama Supreme Court concluded the voluntary merger like the one entered into by Vision Bank and SEPH is not a "proceeding" as that term is used in the participation agreement, and reversed the trial court's judgment ordering SEPH to purchase BOF's participation interest. View "SE Property Holdings, LLC, f/k/a Vision Bank v. Bank of Franklin" on Justia Law

The First Circuit reversed the judgment of the district court granting Bank’s motion to dismiss this case alleging that Bank failed to comply with the notice requirements in Plaintiffs’ mortgage before foreclosing on their property, holding that Bank’s failure to strictly comply with paragraph 22 of the mortgage invalidated the foreclosure.Paragraph 22 required that prior to accelerating payment by Plaintiffs, the mortgagee had to provide Plaintiffs with notice specifying certain elements. After Bank sent default and acceleration notices to Plaintiffs Plaintiff failed to cure the default, and Bank conducted a foreclosure sale. Plaintiffs then filed a complaint alleging that Bank failed to comply with the paragraph 22 notice requirements prior to foreclosing on their property. The district court granted Bank’s motion to dismiss for failure to state a claim, concluding that Bank’s default and acceleration notice strictly complied with paragraph 22. The First Circuit disagreed, holding (1) the mortgage terms for which Massachusetts courts demand strict compliance include the provisions in paragraph 22 requiring and prescribing the preforeclosure default notice; and (2) because the default letter omitted certain information that rendered the notice potentially deceptive the Bank violated the strict compliance requirement, thus invalidating the foreclosure. View "Thompson v. JPMorgan Chase Bank, N.A." on Justia Law

After plaintiff obtained a home equity loan from Countrywide, he filed a pro se complaint alleging five causes of action against Bank of America, the company that acquired Countrywide. The Eighth Circuit affirmed the district court's dismissal of two claims based on Bank of America's failure to honor plaintiff's alleged early payoff right. In this case, plaintiff's claims were barred by the doctrine of res judicata because he had been a member of a global class action settlement that included a broad release of claims by all class members. The court also held that the district court did not abuse its discretion by promptly setting the remaining claims for trial. The court explained that, at minimum, Bank of America failed to establish that the statute of frauds barred these claims as a matter of law on the record. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Calon v. Bank of America Corp." on Justia Law

Plaintiff filed suit against Propel, alleging violations of the Truth in Lending Act (TILA), the Electronic Funds Transfer Act (EFTA), and the Virginia Consumer Protection Act (VCPA). Plaintiff's action stemmed from a tax payment agreement (TPA) he entered into with Propel under Virginia Code section 58.1-3018. Propel then moved to dismiss the TILA and EFTA claims.The Fourth Circuit affirmed the district court's denial of Propel's motion to dismiss, holding that plaintiff had standing to bring claims under EFTA because the harm that he alleged was a substantive statutory violation that subjected him to the very risks that EFTA, a consumer protection statute, was designed to protect against. The court also held that the TPA was subject to TILA and EFTA because the TPA was a consumer credit transaction. In this case, the TPA was a credit transaction because it provided for third-party financing of a tax obligation. Furthermore, the TPA was a consumer transaction because, as financing of a real property tax debt, it was a voluntary transaction that plaintiff entered into for personal or household purposes. View "Curtis v. Propel Property Tax Funding, LLC" on Justia Law

CMI, a purchaser and reseller of mortgage loans, filed suit against Platinum, an originator and seller of mortgage loans, alleging that Platinum breached a contract by failing to repurchase seven allegedly defective loans after CitiMortgage demanded repurchase by sending multiple notices to Platinum for each loan. The Eighth Circuit reversed and held that CMI adequately and substantially complied with the contract, which neither specified a form of notice nor indicated that the prescription of a time for cure had to be contained within the notice. Accordingly, the court remanded for further proceedings. View "CitiMortgage, Inc. v. Platinum Home Mortgage, Corp." on Justia Law

US Bank appealed the district court's dismissal of its second amended consolidated complaint as untimely. The Second Circuit affirmed and held that ACE Secs. Corp. v. DB Structured Prods., Inc., 25 N.Y.3d 581 (2015), and Deutsche Bank Nat'l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 868 n.8 (2d Cir. 2015), governed U.S. Bank's contractual claims in this case.The court held that the district court properly granted summary judgment to GreenPoint where the first two causes of action for breach of contract were untimely under settled New York law, because they were filed over six years after the statute of limitations began running. The court also held that the district court properly dismissed the third cause of action for indemnification under section 9 of the Flow Mortgage Loan Purchase and Warranties Agreement, because U.S. Bank's claim was in reality a repackaged version of its breach of contract claims. Finally, the court held that the fourth cause of action for breach of the indemnification agreements did relate back to the original filing for claims based on any of the Trusts, and was therefore untimely asserted. View "Lehman XS Trust v. Greenpoint Mortgage Funding, Inc." on Justia Law

The Supreme Court quashed the decision of the Fourth District Court of Appeal on the question of whether a voluntary dismissal provides a basis for being considered the prevailing party for the purpose of appellate attorney fees, holding that the court of appeal improperly denied appellate attorney’s fees based on the bank’s voluntary dismissal of the appeal.Appellant, a homeowner, sought appellate attorney’s fees pursuant to Fla. Stat. 57.105(7) after a bank filed a notice of voluntary dismissal in the court of appeal. The court of appeal concluded that Appellant was not entitled to appellate attorney’s fees because she prevailed on her standing argument presented in the trial court. The Supreme Court quashed the decision below, holding (1) caselaw makes clear that a voluntary dismissal of an appeal renders the opposing party the prevailing party for the purpose of appellate attorney fees; and (2) Appellant was entitled to appellate attorney fees because the bank maintained its right to enforce the reverse mortgage contract in its appeal until the dismissal. View "Glass v. Nationstar Mortgage, LLC" on Justia Law

The receiver filed suit against Associated Bank, which provided banking services to some of the scammers' entities, accusing the bank of aiding and abetting the Ponzi scheme. The Eighth Circuit affirmed the district court's conclusion that there was insufficient evidence to reasonably infer the bank knew about and assisted the scammers' tortious conduct. The court held that a conclusion that the bank aided and abetted the Ponzi scheme could only be reached through considerable conjecture and speculation. In this case, the receiver failed to show that the bank had actual or constructive knowledge of the fraud or that it provided substantial assistance to the tortious conduct. View "Zayed v. Associated Bank, N.A." on Justia Law