Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Banking
Thompson v. JPMorgan Chase Bank, N.A.
In this foreclosure case, a panel of the First Circuit withdrew its earlier opinion in this case, vacated the judgment below, and certified a question to the Massachusetts Supreme Judicial Court (SJC), reasoning that if serious harm was threatened as a result of this litigation that might prompt the SJC to reexamine its precedents, the SJC can address it. In the First Circuit's previous decision, the panel concluded that JP Mortgage Chase, holder of a mortgage on Plaintiffs' home, could not properly foreclose the mortgage based on Plaintiffs' failure to pay their required months installments because the foreclosure notice was inaccurate. Citing wide support from the banking community, Chase filed a petition for rehearing, claiming that a state banking regulation required Chase to use the precise language it had used in its pre-foreclosure notice to Plaintiffs. The First Circuit ordered certification of a question to the SJC regarding the pre-foreclosure notice in this case and whether the notice was inaccurate or deceptive in a manner that rendered the subsequent foreclosure sale void under Massachusetts law. View "Thompson v. JPMorgan Chase Bank, N.A." on Justia Law
U.S. Bank Trust, N.A. v. Jones
The First Circuit affirmed the judgment of the district court granting judgment to U.S. Bank Trust, N.A. in the amount of $226,458.28 on U.S. Bank's complaint against Julia Jones alleging breach of contract and breach of promissory note, holding that the district court did not err by admitting into evidence a computer printout, marked as Exhibit 8, that contained an account summary and a list of transactions related to the loan. On appeal, Jones argued that admitting Exhibit 8 violated the Federal Rules of Evidence. At issue was whether the records were "reliable enough to be admissible." The First Circuit answered in the affirmative, holding (1) the district court did not abuse its discretion in finding Exhibit 8 reliable enough to admit under Fed. R. Evid. 803(6); (2) the district court's admission of Exhibit 8 did not violate Fed. R. Evid. 901, 1001, or 1002; and (3) the district court did not err by awarding U.S. Bank approximately $23,000 in charges for escrow, title fees, and inspections that were not recoverable under the terms of the promissory note. View "U.S. Bank Trust, N.A. v. Jones" on Justia Law
AER Advisors Inc. v. Fidelity Brokerage Services, LLC
The First Circuit affirmed the decision of the district court dismissing Plaintiffs' complaint against Fidelity Brokerage Services, LLC for failure to state a claim, holding that First Circuit law barred Plaintiffs' claims. The district judge concluded that Fidelity was immune from suit based on an immunity provision in the Bank Secrecy Act (BSA), 31 U.S.C. 5318(g)(3)(A). On appeal, Plaintiffs argued that Eleventh Circuit precedent, which holds that BSA immunity requires good faith dealing, applied because the case came to the First Circuit via a transfer order from a court in the Eleventh Circuit and that, even if First Circuit caselaw applied, Fidelity could not get BSA immunity. The First Circuit affirmed, holding (1) First Circuit law, rather than Eleventh Circuit law, governed this case; and (2) the First Circuit's opinion in Stoutt v. Banco Popular de Puerto Rico, 320 F.3d 26 (1st Cir. 2003), applied and gave Fidelity BSA immunity. View "AER Advisors Inc. v. Fidelity Brokerage Services, LLC" on Justia Law
Posted in: Banking
Zucker v. Rodriguez
The First Circuit affirmed the decision of the district court dismissing the complaint brought by the plan administrator of R&G Financial Corporation (Administrator) alleging that negligence and breach of fiduciary duties owed to R&G Financial (the Holding Company) caused the failure of R-G Premier Bank of Puerto Rico (the Bank) and the Holding Company's resultant loss of its investment in the Bank, holding that the complaint must be dismissed because the claims the Administrator asserted for the Holding Company were the Federal Deposit Insurance Corporation's (FDIC) under 12 U.S.C. 1821(d)(2)(A). R&G Financial entered Chapter 11 bankruptcy after the Bank, its primary subsidiary, failed. Previously, Puerto Rican regulators had closed the Bank and named the FDIC as the Bank's receiver. After the Bank failed, the Administrator filed this suit against six of the Holding Company's former directors and officers and their insurer. The FDIC intervened. The district court dismissed the complaint. The First Circuit affirmed on different grounds, holding that, under section 1821(d)(2)(A), the FDIC succeeded to the Administrator's claims. View "Zucker v. Rodriguez" on Justia Law
Fawcett v. Citizens Bank, N.A.
The First Circuit affirmed the decision of the district court dismissing this putative class action against a bank after concluding that the bank's "Sustained Overdraft Fees" for overdrawn checking accounts were not "interest" under the National Bank Act, 12 U.S.C. 1 et seq., holding that the bank's overdraft fees were not interest under the Act. Plaintiff filed this complaint alleging that Citizens Bank's Sustained Overdraft Fees violated the Act because they constituted interest at a rate above that allowed by Rhode Island, the state in which the bank was located. The district court dismissed the action for failure to state a claim. The First Circuit affirmed, holding that flat excess overdraft fees like the fee at issue in this case are not interest under the Act. View "Fawcett v. Citizens Bank, N.A." on Justia Law
Posted in: Banking
Alvarez-Mauras v. Banco Popular of Puerto Rico
In this case brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962, 1964, the First Circuit affirmed the district court's ruling dismissing Plaintiff's claims against all defendants, holding that Plaintiff's claims against his securities broker may only be resolved through arbitration, the claims against the broker's wife and the couple's conjugal partnership were also subject to the arbitration agreement, and Plaintiff's claims against a bank were out of time. Plaintiff, a building contractor in Puerto Rico, argued that his securities broken, in collusion with the investment firm and affiliated bank, fraudulently stole more than $400,000 from his investment account. Plaintiff also named as defendants his broker's wife and their conjugal partnership . The district court dismissed all claims against all defendants. The First Circuit affirmed, holding (1) subject to the binding agreement between the parties, Plaintiff's claims against the broker may only be resolved through arbitration; (2) the claims against the broker's wife and the conjugal partnership were derivative of the claims against the broker and therefore also subject to the arbitration agreement; and (3) Plaintiff's claims against the bank were time-barred under 18 U.S.C. 1964. View "Alvarez-Mauras v. Banco Popular of Puerto Rico" on Justia Law
Thompson v. JPMorgan Chase Bank, N.A.
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
US Bank, N.A. v. HLC Escrow, Inc.
The First Circuit affirmed in substantial part the district court’s judgment dismissing US Bank’s complaint against HLC Escrow, Inc. and First American Title Insurance Company, vacating only its dismissal of US Bank’s claim against First American alleging violation of Maine’s Unfair Claims Settlement Practices Act (USCPA), which the First Circuit concluded was timely filed. US Bank, the current holder of a 2007 mortgage that incorrectly identified a parcel of unimproved land rather than the correct parcel of improved land that encompassed the mortgagors’ residence, sued the closing agent and the title insurer in 2016. The complaint included causes of action for negligence and “duty of care” against HLC Escrow, and negligence, unilateral mistake, and violation of USCPA against First American. The district court dismissed the complaint in its entirety, concluding that Maine’s six-year statute of limitations for civil actions barred US Bank’s claims. The First Circuit vacated the dismissal with respect to US Bank’s USCPA claim against First American and otherwise affirmed, holding that the USCPA claim was timely for statute of limitations purposes but that the remainder of US Bank’s claims were untimely filed. View "US Bank, N.A. v. HLC Escrow, Inc." on Justia Law
Flores v. OneWest Bank, F.S.B.
The First Circuit affirmed the district court’s order dismissing a suit that challenged the lawfulness of a 2012 foreclosure sale of a Massachusetts home. In their complaint, Plaintiffs, who formerly owned the property at issue, alleged that Defendants - OneWest Bank, Indymac Mortgage Services, Ocwen Servicing, and the Federal National Mortgage Association - had engaged in unfair and predatory mortgage lending and loan servicing practices. The complaint set forth nine claims. The district court granted Defendants’ motion to dismiss all of the claims. The First Circuit affirmed, holding that the district court did not err in (1) dismissing three claims for which Plaintiffs sought a judgment declaring that the foreclosure sale was void; (2) dismissing for lack of standing the claim in which Plaintiffs sought to quiet title; (3) dismissing the claim for breach of the duty of good faith and reasonable diligence on the basis that there was no such duty; and (4) dismissing Plaintiffs’ remaining claims. View "Flores v. OneWest Bank, F.S.B." on Justia Law
Galvin v. U.S. Bank, N.A.
Plaintiffs took out a loan to buy a property in Massachusetts. Plaintiffs executed a mortgage naming the Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee and executed a promissory note to Chevy Chase Bank, FSB. Plaintiffs later fell behind on their mortgage. U.S. Bank, which was assigned the mortgage and came into physical possession of the note, conducted a foreclosure sale of the property and purchased the property. Plaintiffs filed suit against U.S. Bank, MERS and other defendants, alleging, inter alia, a claim for a declaratory judgment that the foreclosure was invalid. The district court disposed of the complaint by (1) granting Defendants’ partial motion to dismiss several counts for failure to state a claim; (2) granting summary judgment to U.S. Bank on its counterclaim for possession; and (3) granting summary judgment to Defendants on Plaintiffs’ remaining claims and to U.S. Bank on its counterclaim for deficiency. The First Circuit reversed in part and affirmed in part, holding (1) the entry of judgment in favor of U.S. Bank on its deficiency claim was in error because U.S. Bank did not comply with Mass. Gen. Laws ch. 244, 17B; and (2) the judgment of the district court was otherwise without prejudicial error. View "Galvin v. U.S. Bank, N.A." on Justia Law