Justia Banking Opinion Summaries

Appellants Branch Banking & Trust Company ("BB&T"), Rusty Winfree, and Todd Fullington appealed a circuit court judgment entered in favor of Rex Nichols ("Sonny") and Claudene Nichols on the Nicholses' claims against appellants and on BB&T's counterclaim against the Nicholses. In late 2005, Sonny began talking to Winfree about obtaining financing from Colonial Bank ("Colonial"), Winfree's employer, for the purchase of approximately 500 acres of real property in Stapleton, Alabama. The Nicholses intended to develop the Stapleton property into a subdivision. In February 2006, the Nicholses executed a loan agreement with Colonial, in which Colonial agreed to lend the Nicholses close to $2.8 million to purchase the property. Sonny testified that in late 2007, as the maturity date on the note approached, he began contacting Colonial regarding renewing the loan; he further testified that, around the same time, Winfree became slow to communicate with him. Sonny also testified that before the February 27, 2008, maturity date on the promissory note, he spoke to Fullington about renewing the loan, with Colonial carrying the interest going forward. A few weeks later, the Nicholses were notified that Colonial would not carry the interest on the loan or provide additional funds for development of the property. Colonial ultimately renewed the terms of the note until Colonial failed in August 2009. The FDIC assumed control of its assets and liabilities. The FDIC sold many of Colonial's assets and liabilities to BB&T, including the Nicholses' loan. Fullington was hired by BB&T; Winfree was not. In early November 2009, BB&T informed the Nicholses that it would not lend them additional funds to develop the property. The Nicholses stopped making interest payments on the loan in November 2009. On March 10, 2010, the Nicholses sued the appellants and fictitiously named defendants, alleging fraud, reformation, negligence, wantonness, and breach of fiduciary duty against all appellants. Against BB&T, the Nicholses also alleged a claim of unjust enrichment and sought damages on a theory of promissory estoppel. The appellants separately moved the circuit court to dismiss the complaint pursuant to Rule 12(b)(6), Ala. R. Civ. P. BB&T also filed a counterclaim, alleging that the Nicholses had defaulted on their obligations under a June 2009 promissory note and seeking damages related to that default. The circuit court denied the motions to dismiss the complaint but granted a motion to strike the request for a jury trial. Upon review, the Supreme Court held that the circuit court erred in entering a judgment in favor of the Nicholses on their claims against the appellants and on BB&T's counterclaim against them. The judgment was reversed and the case remanded with instructions to the circuit court to enter a judgment in favor of the appellants on the Nicholses' claims against them and in favor of BB&T on its counterclaim against the Nicholses and to determine the damages to be awarded on the counterclaim. View "Branch Banking & Trust Company v. Nichols" on Justia Law

Investors who suffered losses when an Arizona golf course and residential development failed, allegedly due to the fraud and mismanagement of the developer, McClung, were unable to recover from the insolvent McClung and sued the development’s principal lender, Hillcrest Bank and its officers and directors. The Kansas Banking Commissioner closed Hillcrest Bank and appointed the FDIC as receiver. The district court dismissed 14 of the 16 counts, dismissed the FDIC because Hillcrest Bank’s bankruptcy rendered claims against the Bank prudentially moot, and granted summary judgment to the remaining defendants on the remaining count. The Eighth Circuit affirmed, noting that the Bank had insufficient assets for distribution to unsecured creditors and that, as to claims against the officers and directors, the investors made only conclusory assertions such as, “each defendant knew about McClung’s bad financial condition, his scam attempts to get more financing, knew that the development had not been completed, and knew that the Bank had engaged in improper banking practices . . . to conceal its own bad financial condition and avoid being shut down by the FDIC.” View "Quintero Cmty. Ass'n Inc. v. Fed Deposit Ins. Corp." on Justia Law

Comar filed suit against vessel-owning LLCs after the LLCs decided to terminate an agreement with Comar in which Comar would manage the vessels on behalf of the LLCs. JPMorgan and Allegiance provided the financing for the vessel purchases and intervened to defend their preferred ship mortgages. The district court granted summary judgment in favor of JPMorgan and Allegiance. The court concluded that the district court correctly concluded that breach of the management agreements did not give rise to maritime liens; the court affirmed the district court’s grant of summary judgment in favor of Allegiance and JPMorgan; and the court did not reach whether the district court’s alternate holding that Comar was a joint venturer and therefore foreclosed from asserting a maritime lien was erroneous. The court also concluded that the district court did not commit reversible error in concluding that the termination-fee provision is unenforceable; the district court’s award to Comar is plausible in light of the record and not clearly erroneous; the district court did not clearly err in finding that Comar acted in bad faith when arresting the vessels and did not rely on legal advice in good faith; the district court did not clearly err in denying lost-profit and lost-equity damages; and the court concluded that the district court did not commit any other errors. Accordingly, the court affirmed the judgment. View "Comar Marine, Corp. v. Raider Marine Logistics" on Justia Law

In 2003, the Meyers signed a revolving credit note and agreement and later signed term notes and loan agreements with U.S. Bank, to finance their swine production business. In 2006, the Meyers transferred all their business assets to a revocable trust, naming themselves as grantors and trustees. The revolving credit loan went into default in 2008. U.S. Bank agreed not to exercise its default rights. The lending relationship continued until the Meyers withheld proceeds from the sale of collateral (hogs). U.S. Bank filed suit; the Meyers sought Chapter 11 bankruptcy protection in 2010. In 2011 the Meyers, individually, sued U.S. Bank, alleging breach of contract, fraud, violations of the Nebraska Uniform Deceptive Trade Practices Act, and unjust enrichment. The Eighth Circuit affirmed dismissal. The Trust then commenced another suit, alleging that U.S. Bank tortiously interfered with the Trust’s contractual relations with a feed supplier. The district court granted summary judgment and imposed a $5,000 sanction against the Trust and its attorneys. The Trust appealed. U.S. Bank sought additional sanctions under Federal Rule of Appellate Procedure 38, arguing that appeal was frivolous. The Eighth Circuit affirmed the rulings, held that appeal was not frivolous but was frivolously argued, and granted double costs as a Rule 38 sanction. View "David M. Meyer & Nancy R. Meyer Trust v. U.S. Bank Nat'l Ass'n" on Justia Law

In "Vinings Bank v. Brasfield & Gorrie, LLC," (759 SE2d 886 (2014)), the Court of Appeals affirmed, among other rulings, the trial court’s determination that Vinings Bank was not entitled to summary judgment with regard to a counterclaim for conversion brought against the Bank by Brasfield & Gorrie, LLC ("B&G"). This case stemmed from a defaulted $1.4 million business loan. The bank made the loan to Wagner Enterprises, Inc., which used as collateral, a security interest in all of its accounts and accounts receivable, including Wagner's contract to provide drywall services for general contractor B&G. Wagner defaulted on the loan, and the Bank filed suit against B&G seeking to collect on Wagner's accounts receivable. B&G counterclaimed for conversion, and the parties filed cross-motions for summary judgment. The bank appealed the denial of its motion. The Supreme Court affirmed in part, reversed in part, and remanded. In affirming the trial court's judgment, the Court of Appeals did not consider whether B&G had any right to assert a counterclaim against the bank for conversion of funds due to Wagner's subcontractors. The Supreme Court found that B&G had no direct relationship with the Bank, B&G was not, itself, a subcontractor of Wagner entitled to any of Wagner's funds, B&G did not have direct contractual relationships with any of Wagner's subcontractors, and B&G had no fiduciary relationship with any of Wagner's subcontractors. Furthermore, there was no evidence that Wagner or Wagner's affected subcontractors assigned B&G any of their rights. "Therefore, even if we assume without deciding that funds in [Wagner's] account were held in a constructive trust for the benefit of [Wagner's] subcontractors, B&G is not the party to assert those rights and had no standing to do so." View "Vinings Bank v. Brasfield & Gorrie, LLC" on Justia Law

Under Nev. Rev. Stat. 104.4406, a customer generally must exercise reasonable promptness in examining a bank statement and within thirty days notify the bank of any unauthorized transactions. Plaintiff, a law firm, sued Bank of America after discovering that the firm’s employee had used unauthorized signatures to withdraw funds from the firm’s operating account with the bank. The district court granted summary judgment in favor of Bank of America, concluding that all claims were time-barred under section 104.4406 because there was no dispute that the bank statements received by the firm were sufficient to notify it of the unauthorized activity on the firm’s account. The Supreme Court reversed, holding (1) genuine issues of material fact remained as to the delivery method of the bank statements, the content of online and received-in-branch statements, and Bank of America’s exercise of due care in paying certain unauthorized transactions; and (2) unauthorized account transactions that occur within the one-year period before the customer gives notice to the bank are not time-barred under section 104.4406(6)’s one-year period of repose because the statute does not differentiate between a single forgery and multiple forgeries by the same wrongdoer, and therefore, the one-year period of repose begins to run with each successive forgery. View "C. Nicholas Pereos, Ltd. v. Bank of Am." on Justia Law

The Butte Local Development Corporation (BLDC) filed a complaint against Masters Group International alleging that Masters had failed to pay its obligations under a loan agreement, as modified. Masters filed a third-party complaint against Comerica Bank, alleging, among other claims, that Comerica breached a Forbearance Agreement. A jury found Masters liable to BLDC for $275,251 and found Comerica liable to Masters for a total of $52,037,593, which included punitive damages. The Supreme Court reversed the judgment against Comerica, holding (1) the district court did not abuse its discretion by implicitly denying Comerica’s severance motion; (2) the district court erred in applying Montana law despite the existence of a contractual Michigan choice-of-law provision, and had the district court properly applied Michigan law, Masters’ tort claims would not have been permitted to go to the jury as stand-alone tort claims, and the jury’s award of $10.5 million in punitive damages must be vacated; (3) the law of both Montana and Michigan supports the district court’s decision to submit the companion questions of contract formation and waiver to the jury; and (4) the district court abused its discretion by allowing Troubled Asset Relief Program (TARP) evidence to be presented to the jury. Remanded for a new trial on the contract claims applying Michigan law. View "Masters Group Int’l v. Comerica Bank" on Justia Law

At issue in this case was the correct interpretation of two different state statutes concerning defects in real estate titles. A Chapter 7 bankruptcy trustee filed this action to avoid a mortgage held by a bank that contained a material defect: the certificate of acknowledgement did not include the names of the mortgagors. After the mortgage was recorded, the notary on the mortgage executed an affidavit, later recorded, attesting that the debtors had personally and voluntarily signed the mortgage. The debtors later went into bankruptcy. At issue in this case was whether, under Massachusetts law, the affidavit could cure the defective acknowledgement or otherwise provide constructive notice to a bona fide purchaser. If not, the bankruptcy trustee could avoid the mortgage. Because the state law questions were dispositive and unresolved by the Massachusetts Supreme Judicial Court (SJC), the First Circuit certified the questions for resolution by the Massachusetts SJC. View "Bank of America, N.A. v. Casey" on Justia Law

The Federal National Mortgage Association (“FNMA”) purchased Russell Hafer’s home at a non-judicial foreclosure sale. FNMA filed an eviction suit when Russell and his wife, Sandra, refused to vacate. The Hafers claimed that the foreclosure sale was invalid because their loan servicer, American Home Mortgage Services, Inc.(now known as Homeward Residential, Inc.), agreed to modify the terms of Russell’s loan just prior to instituting foreclosure proceedings. They claimed that Russell was therefore not in default at the time of the sale. The Hafers filed a third-party complaint against Homeward, stating eleven causes of action and asking the district court to quiet title in Russell. FNMA and Homeward filed a joint motion for summary judgment, arguing that there was no agreement to modify the loan terms because Russell did not sign and return a permanent loan modification agreement to Homeward by the specified deadline. The district court granted the motion in favor of FNMA and partially granted the motion in favor of Homeward, holding that there was no agreement between Homeward and Russell modifying Russell’s loan because no Homeward representative signed an agreement. The Hafers appealed, arguing: (1) the district court erred in considering the question whether an agreement had to be signed by a Homeward representative when that issue was not raised in the joint motion for summary judgment; and (2) that the district court erred substantively in concluding that there was no agreement to modify Russell’s loan absent a signature from a Homeward representative. Upon review, the Supreme Court concluded that the district court erred in dismissing the Hafers' first, third, and fourth causes of action against Homeward, as well as granting FNMA's claim for possession. The case was remanded for further proceedings. View "Federal National Mortgage Association v. Hafer" on Justia Law

Respondents, three married couples, obtained home equity lines of credit from Petitioners, a bank and its loan officer. Approximately four years later, Petitioners filed a putative class action alleging that these transactions were part of an elaborate “buy-first-sell-later” mortgage fraud arrangement carried out by Petitioners and other defendants. Petitioners alleged numerous causes of action, including fraud, conspiracy, and violations of Maryland consumer protection statutes. The circuit court granted summary judgment for Petitioners, concluding that the statute of limitations barred several of Respondents’ claims and that no Petitioner violated the Maryland Secondary Mortgage Loan Law as a matter of law. The Court of Special Appeals reversed. The Court of Appeals reversed, holding that the Court of Special Appeals (1) erred in concluding that Respondents stated a claim upon which relief could be granted under the Maryland Secondary Mortgage Loan Law; and (2) erred in concluding that it was a question of fact to be decided by the jury as to whether Respondents’ claims against Petitioners were barred by the relevant statute of limitations. View "Windesheim v. Larocca" on Justia Law