Justia Banking Opinion Summaries

The defendants were indicted for committing and conspiring to commit wire fraud, 18 U.S.C. 1343 & 1349, by extracting money from lenders (including Bank of America) that had financed the sale of defendants' Gary, Indiana properties. The defendants had represented that buyers of the properties were the source of the down payments; the defendants had actually given the buyers the money to enable them to make the down payments. They had also helped the buyers provide, in loan applications, false claims of creditworthiness. The judge ordered restitution of $893,015 to Bank of America. The Seventh Circuit remanded, directing the court to consider an alternative remedy. Restitution is questionable because Bank of America, though not a coconspirator, did not have clean hands. It ignored clear signs that the loans were “phony.” The court referred to a history of “shady” practices and characterized the Bank as “reckless.” The court acknowledged that the Mandatory Victim Restitution Act requires “mandatory restitution to victims,” 18 U.S.C. 3663A, for “an offense resulting in damage to or loss or destruction of property of a victim of the offense,” but stated that Bank of America was deliberately indifferent to the risk of losing its own money, because it intended to sell the mortgages and transfer the risk of loss to Fannie Mae for a profit. View "United States v. Tartareanu" on Justia Law

This appeal involves the Bank, Ocwen, and Power Default's attempt to foreclose on property in Grand Prairie, Texas. On appeal, plaintiff challenged the district court's denial of her motion for remand based on its finding that Power Default, a non-diverse defendant and substitute trustee for the attempted foreclosure, was improperly joined in the proceeding because the foreclosure did not take place. The district court concluded that plaintiff had no wrongful foreclosure claim against Power Default absent an actual foreclosure. In this case, because she would have been unable to assert a cause of action against Power Default in state court, the district court found that joinder of Power Default as a defendant was improper. Therefore, the court agreed with the district court's analysis and conclusion denying plaintiff's motion to remand to state court. The court also agreed with the district court's grant of summary judgment to defendants, concluding that plaintiff may not assert a cause of action for wrongful foreclosure. Accordingly, the court affirmed the judgment. View "Foster v. Deutsche Bank National Trust Co." on Justia Law

Watson, the chairman of Cyberco, created Teleservices as a “paper company” to run a Ponzi scheme. Teleservices had no separate officers, directors, or employees. Watson borrowed money and instructed lenders to send the money to Teleservices to pay for computer equipment. Watson then moved the money from Teleservices account to Cyberco’s account at Huntington. He used that money to pay salaries and earlier debts. By 2004, Cyberco owed Huntington $16 million. In September 2003, Cyberco tried to deposit a $2.3 million Teleservices check; the check bounced. Huntington employees became suspicious. In January 2004, Huntington asked Cyberco to find a new bank, noting “‘red flags.” As Huntington investigated, Cyberco paid its debt to Huntington. Later, the FBI raided Cyberco’s offices. Watson committed suicide. Cyberco’s creditors commenced an involuntary Chapter 7 proceeding; an appointed receiver filed for Teleservices’s bankruptcy. Teleservices’s bankruptcy trustee sought to recover from Huntington all direct and indirect loan repayments and excess deposits. The bankruptcy court concluded that the trustee could recover $72 million; that Huntington had received transfers in good faith until April 2004; but that Huntington gained inquiry notice of Cyberco’s fraud on September 2003. The district court affirmed. The Sixth Circuit reversed, in part. Cyberco, free to withdraw money from its account, retained “dominion and control,” despite Huntington’s security interest. Huntington gained dominion and control only over money that it received in satisfaction of Cyberco’s debt to it; Huntington was a transferee of direct and indirect loan repayments, but not of the excess deposits. Huntington failed to prove that it received transfers from Teleservices in good faith after April, but precedent does not require recoverability of earlier transfers, just because Huntington had earlier inquiry notice. View "Meoli v. Huntington National Bank" on Justia Law

Plaintiffs Andrew and Kathi Kalnoki (the Kalnokis) appealed a judgment dismissing their second amended complaint for wrongful foreclosure-related causes of action after the trial court sustained the defendants’ demurrers without leave to amend (case No. C073207, the foreclosure appeal). They separately appealed an order after judgment awarding attorney fees to defendants (case No. C075062, the attorney fees appeal), and an order disbursing funds the Kalnokis deposited with the court under Code of Civil Procedure section 1170.5 to delay the trial in an unlawful detainer action filed against them regarding the residential property at issue here (case No. C079144, the rental disbursement appeal). The Court of Appeal consolidated all three appellate cases for argument and decision. Finding that the Kalnokis failed to allege a cause of action on any theory, the Court affirmed the judgments dismissing the second amended complaint with prejudice. The Court also concluded the trial court properly awarded attorney fees. The Court found, however, that the court erred in disbursing to Wells Fargo the rental funds on deposit with the court. The Court therefore reversed the rental disbursement order and order that the funds be returned to the Kalnokis. View "Kalnoki v. First American" on Justia Law

Plaintiff filed suit against Deutsche Bank, seeking a declaratory judgment that the bank's foreclosure of the mortgage on plaintiff's home was invalid and seeking to quiet title to the property. The superior court granted the bank's motion to dismiss. The court concluded, as did the trial court judge, that a foreclosing mortgagee's failure to comply with G. L. c. 244, § 15A, by failing to send the postforeclosure notices required by the statute, does not render the foreclosure void. In this case, where the provision in question does not set forth preforeclosure requirements that are a part of the foreclosure process, the Bank's failure to comply with section 15A's postforeclosure notice provisions did not render the foreclosure void. Accordingly, the court affirmed the judgment. View "Turra v. Deutsche Bank Trust Company Americas" on Justia Law

North Idaho Resorts (NIR) appealed the district court’s grant of summary judgment in favor of Union Bank, N.A. (Union Bank) in a mortgage priority dispute. The district court held that NIR did not possess a vendor’s lien because NIR was not the owner of record and that any lien NIR might have possessed had no value. The district court further held that if NIR possessed a valid lien, NIR released any such lien as part of a recorded agreement and that Union Bank was a good faith encumbrancer with no actual or constructive knowledge of the lien. On appeal, NIR argued: (1) the district court misconstrued Idaho Code section 45-801 and that the statute did not require the seller to be the owner of record; (2) the remaining conditional purchase price constituted an unpaid and unsecured value; (3) Union Bank knew NIR was still owed money under the contract; and (4) Union Bank did not qualify as a good faith encumbrancer. Finding no reversible error, the Supreme Court affirmed the district court’s judgment. View "Union Bank, N.A. v. North Idaho Resorts" on Justia Law

JV, LLC (JV) appealed the district court’s grant of summary judgment in favor of Union Bank, N.A. (Union Bank) in a mortgage priority dispute. Union Bank sought to foreclose a mortgage on a property known as “Trestle Creek.” JV claimed priority to the Trestle Creek property through a mortgage recorded June 19, 2006. Union Bank’s mortgage was recorded March 25, 2008. Union Bank moved for summary judgment, arguing that JV had subordinated its lien to that of Union Bank. The district court agreed and granted the motion. Finding no reversible error, the Supreme Court affirmed the district court’s judgment. View "Union Bank, N.A. v. JV L.L.C" on Justia Law

BMS provides administrative services to bankruptcy trustees. It uses Rabobank as the depositary for banking services that BMS provides through its software. Crane, the trustee in the Integrated bankruptcy, hired BMS; the contract required Crane to hire Rabobank for banking services in the proceeding. In a separate contract, Crane authorized Rabobank to withdraw its monthly fee. The plaintiff, a law firm, was a creditor of Integrated and filed a bankruptcy claim, ultimately receiving a distribution of $12,472.55. It would have received $12,666.90, but for its part of Rabobank’s fee, and more had Rabobank paid interest on the estate’s deposits. Plaintiff sued under the Bank Holding Company Act, 12 U.S.C. 1972(1)(E), which states that a bank shall not "extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition … that the customer shall not obtain some other credit, property, or service from a competitor of such bank … other than a condition … to assure the soundness of the credit.” The Seventh Circuit affirmed dismissal. Had Rabobank conditioned its provision of services on the trustee never hiring any other bank in any bankruptcy proceeding, it would constitute exclusive dealing. No one forced Crane to deal with BMS and Rabobank and there was no argument that the fee was exorbitant, or would have been lower with a different bank. View "McGarry & McGarry, LLC v. Rabobank, N.A." on Justia Law

Plaintiff filed a series of lawsuits challenging Chase's efforts to foreclose upon his real property. In this appeal, plaintiff challenges a judgment of dismissal entered after the trial court sustained the demurrer of Chase. The court concluded that plaintiff failed to state a cause of action for violation of the Homeowners Bill of Rights, lack of standing to foreclose, illegal substitution of trustee, and fraud. The court also concluded that the trial court properly considered the declaration of Chase's counsel, among other things, before denying plaintiff's motion for a preliminary injunction. Finally, the court explained that principles of res judicata are fatal to the present lawsuit and theoretical future lawsuits seeking to vindicate the same primary right. Accordingly, the court affirmed the judgment. View "Gillies v. JPMorgan Chase Bank, N.A." on Justia Law

JPMorgan offers to manage clients’ securities portfolios. Its affiliates sponsor mutual funds in which the funds can be placed. Plaintiffs in a putative class action under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), alleged that customers invested in these mutual funds believing that, when recommending them as suitable vehicles, JPMorgan acts in clients’ best interests (as its website proclaims), while JPMorgan actually gives employees incentives to place clients’ money in its own mutual funds, even when those funds have higher fees or lower returns than third-party funds. The Seventh Circuit affirmed dismissal under the Securities Litigation Uniform Standards Act, 15 U.S.C. 78bb(f), which requires the district court to dismiss any “covered class action” in which the plaintiff alleges “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.” Under SLUSA, securities claims that depend on the nondisclosure of material facts must proceed under the federal securities laws exclusively. The claims were framed entirely under state contract and fiduciary principles, but necessarily rest on the “omission of a material fact,” the assertion that JPMorgan concealed the incentives it gave its employees. View "Holtz v. J.P. Morgan Chase Bank, N.A." on Justia Law