Justia Banking Opinion Summaries

In 2011, Eminence Investors, LLLP (Plaintiff) brought suit against against The Bank of New York Mellon (Defendant). Nearly two years later, Plaintiff filed an amended complaint adding class allegations on behalf of more than 100 class members and requesting compensatory damages expected to exceed $10 million. Within thirty days of the filing of the complaint, Defendant removed the action to federal court pursuant to the Class Action Fairness Act (CAFA). Plaintiff moved to remand the case to state court. The district court remanded the case to state court, concluding that removal was untimely. Defendant appealed. A panel of the Ninth Circuit dismissed for lack of subject matter jurisdiction the appeal, holding that the securities exception from CAFA removal applied to this case. View "Eminence Investors, LLLP v. Bank of New York Mellon" on Justia Law

After an LLC defaulted on a loan that had been used to purchase property for a section 1031 exchange, the lender’s successor brought a deficiency action to enforce commercial guaranty agreements executed by defendants Bradley and Yates, the managers of the LLC. They argued the guaranties were shams, and therefore unenforceable, due to their close relationship with the borrower on the subject loan, the LLC. Defendants filed a counterclaim, asserting that attempts to enforce the guaranties constituted an unfair business practice in violation of the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200). Under California law, a lender may not pursue a deficiency judgment against a borrower where the sale of property securing a debt produces proceeds insufficient to cover the amount of the debt. Lenders may pursue deficiency judgments against guarantors, but only true guarantors. Where the borrower and the guarantor are the same, the guaranty is considered an unenforceable sham. The jury found in favor of defendants on the sham issue, but the court rejected defendants’ UCL counterclaim. The court of appeal reversed, holding that substantial evidence did not support the finding that the guaranties were shams. View "CADC/RAD Venture v. Bradley" on Justia Law

In 2007, MTB Enterprises, Inc. obtained a $17 million construction loan from financial institution ANB Financial. ANB thereafter failed, and the Federal Deposit Insurance Corporation transferred the construction loan to ADC Venture 2011-2, LLC. In 2012, MTB filed suit in the United States District Court for the District of Idaho against ADC Venture alleging that ADC Venture assumed the obligations of ANB Financial and was therefore liable for breach of contract and damages from MTB’s failed construction venture. The district court dismissed MTB’s claims. The Ninth Circuit dismissed MTB’s appeal for lack of jurisdiction, holding (1) the rule set forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 that a claimant must sue in the district court where the failed bank’s principal place of business was located or the United States District Court for the District of Columbia is a jurisdictional limitation on federal court review; and (2) because the United States District Court for the District of Idaho lacked subject-matter jurisdiction over the case from the start, the case must be dismissed. View "MTB Enters., Inc. v. ADC Venture 2011-2, LLC" on Justia Law

The Boyces signed a $1.155 million promissory note payable to Pacific Mortgage, secured by a deed of trust on their Santa Barbara house. Pacific Mortgage endorsed the note to Option One, which endorsed the note in blank and put it in a mortgage investment pool, of which Wells Fargo was trustee. Pacific Mortgage assigned the deed of trust to Option One. The trust deed was later assigned to Wells Fargo. Boyces stopped making payments and filed an emergency bankruptcy petition to stay foreclosure. Wells Fargo moved for relief from the automatic stay. The bankruptcy court inspected the note and allonges; found a valid "chain of control and title of the note,” rejecting a claim that the assignment was invalid; and granted relief from the stay. The district court affirmed. Wells Fargo purchased the property at the trustee's sale and filed suit to evict the Boyces. The court rejected claims that the mortgage was invalid and that Wells Fargo did not perfect title and granted summary judgment for Wells Fargo, which sold the property. The Boyces filed claims for wrongful foreclosure, violation of the Unfair Practices Act (Bus. & Prof. Code, 17200), and quiet title. The court of appeal affirmed dismissal, citing res judicata and collateral estoppel. View "Boyce v. T.D. Serv. Co." on Justia Law

When Mark Chartier and Lisa Heward were married, Chartier purchased an annuity policy from Farm Family Life Insurance Co. for which he named Heward as primary beneficiary. Heward later requested the cash value of the annuity to Farm Family by signing Chartier’s name on the form. Farm Family issued a check payable to Chartier in the requested amount, Heward deposited the check into her and Chartier’s joint account with Gorham Savings Bank, and then withdrew $40,000 from the joint account. That same day, Heward informed Chartier that she wanted a divorce. Chartier filed a complaint against Farm Family, Gorham Savings Bank, and Farm Family’s sales agent, alleging breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and negligence. The superior court granted summary judgment in favor of the defendants as to all counts. The Supreme Judicial Court affirmed, holding that summary judgment was properly entered in the defendants’ favor as to all counts. View "Chartier v. Farm Family Life Ins. Co." on Justia Law

A large commercial development in Kansas City, Missouri was aborted in the middle of construction due to cost overruns. When the developer would not cover the shortfall, the construction lender stopped releasing committed loan funds, and contractors filed liens against the property for their unpaid work on the unfinished project. Bankruptcy followed, and the contractors’ liens were given priority over the lender’s security interest in the failed development, leaving little recovery for the lender. The lender looked to its title insurer for indemnification. The title policy generally covers lien defects, but it also contains a standard exclusion for liens “created, suffered, assumed or agreed to” by the insured lender. The Seventh Circuit affirmed judgment in favor of the title company. The exclusion applies to the liens at issue, which resulted from the lender’s cutoff of loan funds, so the title insurer owed no duty to indemnify. The liens arose from insufficient project funds, a risk of loss that the lender, not the title company, had authority and responsibility to discover, monitor, and prevent. View "BB Syndication Servs, Inc. v. First Am. Title Ins. Co" on Justia Law

Plaintiffs obtained loans to purchase their home in 2005, each secured by a deed of trust. Wells Fargo had the senior lien, and Chase had the junior lien. Wells Fargo foreclosed on the property, but the proceeds were not enough to pay off Chase’s loan. About a year later, Chase sent plaintiffs a letter, stating that plaintiffs still “owe[d]” $67,002.04 and offering to accept $16,750.56 “as settlement for [their] loan balance.” The letter purported to offer a short window of opportunity to resolve the] delinquency before the debt was accelerated. In its final sentence, the letter disavowed any “attempt to collect a debt or to impose personal liability” that “was discharged.” Chase sent a similar second letter. Chase and PRS also made collection calls to plaintiffs. Plaintiffs sued Chase and PRS on behalf of a potential class, claiming that Chase’s right to enforce its loan against them personally had been extinguished and that defendants’ letters and calls were misleading for implying that the debt was still owed. Plaintiffs cited California’s Rosenthal Act, Consumer Legal Remedies Act (CLRA), and Unfair Competition Law (UCL), and the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692. The trial court dismissed. The court of appeal held that a borrower may sue the debt collector under the FDCPA and may sue the junior lienholder or its debt collector under the Rosenthal Act and UCL, but may not sue for violations of CLRA. View "Alborzian v. JPMorgan Chase Bank, N.A." on Justia Law

At issue in this appeal was whether a respondent in a try title action may test the substantive merits of a petition’s claims in the first step of such an action, where the first step requires that the petition satisfy the jurisdictional elements of the statute. Petitioner in this case filed a petition to try title in the Land Court asserting that a purported assignment of a mortgage was invalid, thereby challenging a foreclosure by a Bank as trustee. Respondents filed motions to dismiss for failure to state a claim because, at the time of filing, the Bank as the assignee of the mortgage had already foreclosed on Petitioner’s mortgage. The Land Court allowed the motion, concluding that Petitioner’s petition failed to sufficiently allege effective record title, which in turn resulted in a lack of standing, because none of the allegations established any ground on which the assignment could be found invalid. The Supreme Court affirmed, holding (1) a petitioner claiming defect in the legal title of a purported mortgagee may only meet the jurisdictional element of an “adverse claim” after that mortgagee has foreclosed; and (2) the judge correctly considered the merits of Petitioner’s claims as a necessary step in determining the absence of his record title, and therefore, dismissal with prejudice was proper. View "Abate v. Fremont Inv. & Loan" on Justia Law

Despite having only a few hundred dollars in her checking account at SunTrust Bank, Appellant cut herself a check for nearly $10,000, resulting in a sizable overdraft. SunTrust hired a Maryland law firm, Mitchell Rubenstein & Associates (MR&A) to bring a debt collection suit. MR&A filed suit on SunTrust’s behalf in a general district court in Virginia. The general district court entered judgment in favor of MR&A. Appellant subsequently filed a complaint against SunTrust and MR&A (collectively, Appellees), alleging that Appellees violated Maryland consumer protection laws and that MR&A violated the Fair Debt Collection Practices Act. The federal district court dismissed Appellant’s suit for failure to state a claim. The Fourth Circuit affirmed, holding that the district court did not err in finding that the counts alleged in Appellant’s complaint failed to state a claim for relief. View "Elyazidi v. SunTrust Bank" on Justia Law

Borrower took out a loan from the predecessor-in-interest of Bank. The loan was secured by a deed of trust on certain property and personally guaranteed by Guarantor. After Borrower defaulted and Guarantor failed to fulfill his obligations, Bank instituted an action seeking a receiver to collect rents from and to sell the secured property. The district court approved the request. The receiver (Receiver) subsequently entered into a purchase and sale agreement with a third-party purchaser (Purchaser). The district court approved the sale, and Purchaser paid the agreed-upon price and obtained the deed to the property. Bank then filed a complaint seeking to recover the amount of Guarantor’s indebtedness that the net proceeds that the sale did not satisfy. Borrower and Guarantor (together, Respondents) moved for summary judgment, arguing that the relief sought was in essence an application for a deficiency judgment under Nev. Rev. Stat. 40.455(1), which Bank was precluded from seeking because Bank failed to comply with section 40.455(1)’s time frame. The district court granted the motion. The Supreme Court reversed, holding (1) section 40.455(1) applied in this case; and (2) Bank’s application for a deficiency judgment was timely. Remanded. View "U.S. Bank Nat’l Ass’n v. Palmilla Dev. Co." on Justia Law