Justia Banking Opinion Summaries

In 2008, Kinzel, then CEO of Cedar Fair, borrowed $8,000,000 from Merrill Lynch to finance his exercise of the company’s stock options and to pay estimated taxes that would be due immediately upon exercise. Kinzel pledged the shares that he would acquire as collateral and entered into an agreement that allowed Merrill Lynch, “in its sole discretion and without prior notice,” to “liquidate” the collateral upon any of twelve events, including “if the value of the . . . collateral is in the sole judgment of [Merrill Lynch] insufficient.” The market value of the company dropped from the exercise price of $23.19 per share in April 2008 to $6.99 per share in March 2009. Having set a $7.00-per-share “trigger” to liquidate, Merrill Lynch began selling Kinzel’s shares, without advance notice to Kinzel and without first making demand upon Kinzel for repayment. Kinzel appealed the district court’s denial of leave to file an amended complaint to reassert a breach-of-contract claim that had been dismissed, and final judgment in favor of Merrill Lynch on a breach-of-good-faith claim. The Sixth Circuit affirmed, finding that Kinzel could not state a claim for breach of contract and that Merrill Lynch exercised its discretion within the “contemplated range” of “judgment based upon sincerity, honesty, fair dealing and good faith.” View "Kinzel v. Bank of America" on Justia Law

David and Crystal Holm filed a wrongful foreclosure action against Wells Fargo Home Mortgage, Inc. for allegedly foreclosing on their home without right. The Holms also filed a quiet title action against Freddie Mac, which took title to the property after the foreclosure sale. After a jury-waived trial, the trial court entered judgment in favor of the Holms on their wrongful foreclosure claim, awarded them actual and punitive damages, and quieted title to the house in the Holms. The mortgage companies appealed. The Supreme Court affirmed in part and reversed in part, holding (1) the trial court did not abuse its discretion in sanctioning the mortgage companies for their discovery violations; (2) substantial evidence supported the trial court’s conclusion that Wells Fargo wrongfully foreclosed on the Holms’ house; but (3) the trial court erred in awarding damages and quieting title to the house in the Holms because the mortgage companies had a constitutional right to have a jury determine the extent of the Holms’ actual and punitive damages on the wrongful foreclosure claim. Remanded for a new trial before a jury on the Holms’ damages for wrongful foreclosure. View "Holm v. Wells Fargo Home Mortgage, Inc." on Justia Law

Bank of America, N.A. filed a complaint seeking to foreclose on Homeowner’s property. Homeowner asserted numerous defenses, including that the Bank was not the lawful holder of the note and mortgage and therefore was not entitled to foreclosure. Homeowner also asserted four counterclaims. The circuit court granted Bank of America’s motion to dismiss Homeowner’s counterclaims. Thereafter, the court granted Bank of America’s motion for summary judgment, finding that the Bank was the “current holder” of the note and mortgage and was therefore entitled to foreclosure of the mortgage and sale of the property. The intermediate court of appeals (ICA) affirmed. The Supreme Court vacated the ICA’s judgment on appeal and vacated the circuit court’s judgment to the extent it granted summary judgment to Bank of America, holding (1) the circuit court erred in granting Bank of America’s motion for summary judgment; and (2) the ICA erred in determining that it did not have jurisdiction over the circuit court’s order granting the Bank’s motion to dismiss Homeowner’s counterclaims. Because the ICA did not reach the merits of Homeowner’s appeal with respect to the dismissal of her counterclaims, the case must be remanded to address the merits of Homeowner’s appeal of the dismissal of her counterclaims. View "Bank of America, N.A. v. Reyes-Toledo" on Justia Law

JPMorgan Chase Bank, N.A. filed a complaint against Terrance Lowell seeking foreclosure on residential property. The complaint alleged that Lowell had defaulted by failing to make payments due on a promissory note. After a bench trial, the district court entered a judgment of foreclosure in favor of JPMorgan. The Supreme Judicial Court vacated the judgment, holding (1) the district court properly admitted certain documents pursuant to the business records exception to the hearsay rule; but (2) the district court erred by finding that the notice of default issued by JPMorgan complied with the requirement established in Me. Rev. Stat. 14, 6111(1-A)(C), which is a required element of foreclosure. Remanded for entry of judgment in favor of Lowell. View "JPMorgan Chase Bank, N.A. v. Lowell" on Justia Law

Shayne Crapo defaulted on a $250,000 loan from Zions First National Bank. After the expiration of a three-year period with no payments being made on the loan, Zions Bank issued Mr. Crapo a Form 1099-C - a reporting tool designed to help the IRS track lenders’ debt forgiveness. Crapo claimed that he reported the $250,000 as income on his tax return, thus increasing his tax burden for that year. After Zions Bank brought a deficiency action to recover the amount due on the loan, Crapo argued that the Form 1099-C was prima facie evidence that Zions Bank discharged the debt and that Zions Bank was estopped from collecting the debt. The district court rejected Crapo’s arguments and granted summary judgment in favor of Zions Bank. The Supreme Court affirmed, holding that Crapo failed to show that there was a genuine dispute of material fact as to either actual discharge or estoppel. View "Crapo v. Zions First National Bank" on Justia Law

At issue in this case was a non-judicial foreclosure conducted pursuant to Haw. Rev. Stat. Chapter 667 Part I, which was repealed by the legislature by Act 182. Russell Hungate, the property owner, filed a complaint and first amended complaint alleging that Deutsche Bank National Trust Company (Deutsche Bank) and David B. Rosen and his law office (collectively, Rosen), the attorney hired by Deutsche Bank to conduct the foreclosure of Hungate’s property, violated statutory, contractual, and common law duties and committed unfair or deceptive acts or practices. The circuit court granted Rosen’s motion to dismiss and then granted Deutsche Bank’s motion to dismiss. The Supreme Court vacated in part the circuit court’s orders, holding (1) the circuit court erred in dismissing the majority to Hungate’s claims alleging Haw. Rev. Stat. Chapter 667 Part I violations against Deutsche Bank; (2) Duetsche Bank must use reasonable means to obtain the best price for a foreclosed property; and (3) the circuit court erred in dismissing Hungate’s unfair or deceptive acts or practices claim against Deutsche Bank, but property dismissed Hungate’s claim against Rosen. View "Hungate v. Rosen" on Justia Law

Homeowners obtained loans from Bank for the construction of a new home and entered into an agreement with Contractor to complete the new home construction. When Homeowners defaulted on payments owed to Contractor and on both loans, the house was sold at foreclosure, and Homeowners filed for bankruptcy. Contractor filed a fourth amended complaint against Homeowners, who were later dismissed as parties, and Bank. Following a trial the court granted summary judgment for Bank on Contractor’s claims of fraud and civil conspiracy. The Supreme Court reversed. After remand, Contractor filed a fifth amended complaint, which differed from the fourth amended complaint in several respects. The district court determined that the election of remedies doctrine and judicial estoppel required a dismissal of Contractor’s claims. The Supreme Court reversed, holding (1) Contractor’s claims were consistently premised on the existence of a contract, and therefore, no election was required; and (2) Contractor’s claims were based on different facts and obligations, and therefore, both could be pursued. View "deNourie & Yost Homes, LLC v. Frost" on Justia Law

In 2009, the SEC initiated the Nadel action following the collapse of a Ponzi scheme perpetrated by Arthur Nadel. In 2010, the district court entered an order establishing a claims administration process by which potential claimants could file proof of their claims against the receivership. Wells Fargo submitted a Proof of Claim as to its loan that secured one receivership property within the set claim bar date, but did not submit a Proof of Claim detailing its secured interest in the other two receivership properties. In 2012, Wells Fargo submitted a motion seeking a determination that the filing of Proofs of Claim was unnecessary to preserve its security interests in, and claims against, collateral in the Receiver's possession. In the alternative, Wells Fargo sought leave to file belated claims. The district court granted the Receiver's motion seeking a determination that Wells Fargo's failure to submit Proofs of Claim for the loans secured by two properties extinguished its interests in those properties, and the release of the proceeds from the sale of one of the properties for which Wells Fargo did not file a Proof of Claim. Determining that Wells Fargo's appeal was timely, the court concluded that the district court erred when it terminated Wells Fargo's security interest in the properties at issue. The court found bankruptcy law was both analogous and instructive here. The court reasoned that, in the bankruptcy context, a secured creditor’s lien remains intact through the bankruptcy, regardless of whether the creditor files a proof of claim. In this case, the court concluded that Wells Fargo's security interests remained intact as to the two properties for which it did not file a Proof of Claim in the district court. Accordingly, the court reversed and remanded. View "SEC v. Wells Fargo Bank, N.A." on Justia Law

Under the Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654, the Federal Housing Finance Agency (FHFA) became the conservator of Fannie Mae and Freddie Mac. In 2012, FHFA and Treasury adopted the Third Amendment to their stock purchase agreement, which replaced the fixed 10% dividend with a formula by which Fannie and Freddie just paid to Treasury an amount (roughly) equal to their quarterly net worth. Plaintiffs, Fannie Mae and Freddie Mac stockholders, filed suit alleging that FHFA's and Treasury's alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A). The court held that plaintiffs' statutory claims are barred by the Recovery Act's strict limitation on judicial review; the court rejected most of plaintiffs' common law claims; insofar as the court has subject matter jurisdiction over plaintiffs' common-law claims against Treasury, and Congress has waived the agency's immunity from suit, those claims are also barred by the Recovery Act's limitation on judicial review; in regard to claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, and others failed to state a claim upon which relief could be granted; and, as to the remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, the court remanded for further proceedings. View "Perry Capital LLC v. Mnuchin" on Justia Law

In consolidated cases, the debtors obtained Federal Housing Administration-insured residential mortgage loans and subsequently defaulted due to financial hardship. The law firms represented the loan servicing agents in filing Illinois foreclosure complaints, using the statutory complaint template (Illinois’ Mortgage Foreclosure Law, 735 Ill. Comp. Stat. 5/15-1504(a)), which includes the language: “Names of defendants claimed to be personally liable for deficiency, if any[,]” and, “[a] personal judgment for a deficiency, if sought.” The firms included both allegations, and identified debtors to be personally liable for any deficiency. The debtors filed suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, alleging that the FHA does not authorize deficiency judgments where borrowers suffered a financial hardship. They submitted a letter from the FHA responding to a Freedom of Information Act request, stating: There have been zero foreclosed FHA loans in Illinois in which the pursuit of a deficiency judgment was authorized. FHA is not currently pursuing deficiency judgments.” The district court dismissed. The Seventh Circuit affirmed. Debtors did not identify any law, regulation, or FHA policy requiring a mortgagee to obtain authorization from the FHA prior to including the two allegations at issue in their state-foreclosure complaint. View "Zuniga v. Pierce & Associates" on Justia Law