Justia Contracts Opinion Summaries

A mandatory arbitration clause is contained in each deposit agreement for customers of appellee SunTrust Bank. The clause permits an individual depositor to reject the agreement’s mandatory arbitration clause by giving written notice by a certain deadline. SunTrust claimed it drafted the arbitration clause in such a way that only an individual depositor may exercise this right to reject arbitration on his or her own behalf, thereby permitting that individual to file only an individual lawsuit against the bank. But SunTrust asserted that even if, as it has been determined here, the filing of a lawsuit prior to the expiration of the rejection of arbitration deadline operated to give notice of the individual plaintiff’s rejection of arbitration, the complaint could not be brought as a class action because the filing of a class action could not serve to reject the arbitration clause on behalf of class members who have not individually given notice. Jeff Bickerstaff, Jr., who was a SunTrust Bank depositor, filed a complaint against SunTrust on behalf of himself and all others similarly situated alleging the bank’s overdraft fee constitutes the charging of usurious interest. At the time Bickerstaff opened his account (thereby agreeing to the terms of SunTrust’s deposit agreement), that agreement included a mandatory arbitration provision. In response to the ruling of a federal court in an unrelated action finding the arbitration clause in SunTrust’s deposit agreement was unconscionable at Georgia law, and after Bickerstaff’s complaint had been filed, SunTrust amended the arbitration clause to permit a window of time in which a depositor could reject arbitration by sending SunTrust written notification that complied with certain requirements. SunTrust had not notified Bickerstaff or its other customers of this change in the arbitration clause of the deposit agreement at the time Bickerstaff filed his complaint, but the complaint, as well as the first amendment to the complaint, was filed prior to the amendment’s deadline for giving SunTrust written notice of an election to reject arbitration. It was only after Bickerstaff’s complaint was filed that SunTrust notified Bickerstaff and its other existing depositors, by language printed in monthly account statements distributed on August 24, 2010, that an updated version of the deposit agreement had been adopted, that a copy of the new agreement could be obtained at any branch office or on-line, and that all future transactions would be governed by the updated agreement. SunTrust appealed the order denying its motion to compel Bickerstaff to arbitrate his claim, and the Court of Appeals affirmed the trial court, finding that the information contained in the complaint filed by Bickerstaff’s attorney substantially satisfied the notice required to reject arbitration. Bickerstaff appealed the order denying his motion for class certification, and in the same opinion the Court of Appeals affirmed that decision, holding in essence, that the contractual language in this case requiring individual notification of the decision to reject arbitration did not permit Bickerstaff to reject the deposit agreement’s arbitration clause on behalf of other putative class members by virtue of the filing of his class action complaint. The Georgia Supreme Court reversed that decision, holding that the terms of the arbitration rejection provision of SunTrust’s deposit agreement did not prevent Bickerstaff’s class action complaint from tolling the contractual limitation for rejecting that provision on behalf of all putative class members until such time as the class may be certified and each member makes the election to opt out or remain in the class. Accordingly, the numerosity requirement of OCGA 9-11-23 (a) (1) for pursuing a class complaint was not defeated on this ground. View "Bickerstaff v. SunTrust Bank" on Justia Law

After seeking a mortgage modification under the Home Affordable Modification Program Plaintiff filed a complaint against Wells Fargo Bank, N.A. and Homeward Residential Inc., claiming breach of contract, unfair debt collection under Mass. Gen. Laws ch. 93A, and derivative equitable relief. A federal district court dismissed Plaintiff’s action in its entirety. The First Circuit vacated and remanded, holding that Plaintiff’s complaint sufficiently alleged that Defendants failed to offer her a mortgage modification in a timely manner and that Plaintiff had sufficiently pled damages for her Chapter 93A claim. On remand, the district court granted summary judgment in favor of Defendants. The First Circuit affirmed, holding that Plaintiff’s breach of contract and Chapter 93A claims failed, and therefore, her derivative claim for equitable relief failed as well. View "Young v. Wells Fargo Bank, N.A." on Justia Law

Thomas and Frances Frangos (Plaintiffs) secured a loan and pledged their home as collateral to secure a promissory note issued to the lender. Plaintiffs defaulted on the mortgage twice. A foreclosure sale was scheduled, but on the eve of the sale, Plaintiffs filed suit. Plaintiffs sought an injunction permanently barring Bank of America, N.A. and New Penn Financial, LLC (Defendants) from foreclosing, as well as damages premised on an alleged breached of a provision in the mortgage agreement. The district court granted summary judgment in favor of Defendants. The First Circuit affirmed, holding that the district court did not err in its judgment. View "Frangos v. Bank of America, N.A." on Justia Law

This appeal arose out of a $17 million verdict rendered in favor of Francis Maybank for claims sounding in contract, tort, and the South Carolina Unfair Trade Practices Act (UTPA). Maybank brought this action alleging he received faulty investment advice from Branch Banking and Trust (BB&T - the Bank) through BB&T Wealth Management (Wealth Management) and BB&T Asset Management (Asset Management), all operating under the corporate umbrella of BB&T Corporation (collectively, Appellants). Appellants appealed on numerous grounds, and Maybank appealed the trial court's denial of prejudgment interest. After review, the Supreme Court reversed as to an award of punitive damages based on a limitation of liability clause. The Court affirmed on all other grounds. View "Maybank v. BB&T" on Justia Law

BNY appealed the district court's grant of summary judgment for Morgan Stanley, arguing that the district court erred in concluding, as a matter of law, that Morgan Stanley was not contractually obliged to repurchase a mortgage loan allegedly issued in breach of a contract representation because (1) the Trustee’s duty to give “notice to cure” within three business days of becoming aware of a material breach was a condition precedent to the seller’s repurchase obligation, and (2) that condition was not performed within the specified three days, but two to four weeks later. The court concluded that the contract at issue did not require notice to cure as a condition precedent to Morgan Stanley remedying breach where the phrase “notice to cure” does not appear in the contract. In this case, the contract contains distinct provisions for giving notice of breach and making request for cure, neither of which is cast in the express language of condition. Therefore, the request for cure is not a condition precedent to Morgan Stanley’s remedy obligations, and the timeliness of a request for cure, as well as of a notice of breach, is properly construed as a promise and reviewed for substantial performance. The court also concluded that the notice of breach and request for cure in this case cannot be held untimely as a matter of law, particularly when reviewed for substantial performance. Accordingly, the court reversed and remanded for further proceedings. View "Bank of New York Mellon Trust v. Morgan Stanley Mortgage" on Justia Law

Plaintiff Bank of America brought an action against First American Title Insurance Company, Westminster Abstract Company, and others, alleging breach of contract and negligent misrepresentation in connection with mortgages that plaintiff had partially financed on four properties whose value had been fraudulently inflated and whose purchasers were straw buyers who had been paid for their participation. Shortly after closing, all four borrowers defaulted. After discovering the underlying fraud in the four loans during the foreclosure proceedings, plaintiff sued, among others, First American, which had issued closing protection letters that promised to reimburse plaintiff for actual losses incurred in connection with the closings if the losses arose from fraud or dishonesty, and Westminster, alleging that it had violated the terms of the closing instructions. The other defendants either defaulted or were dismissed. The Court of Appeals held that plaintiff’s claim against First American relating to the properties on which it had made full credit bids was barred by "New Freedom Mtg Corp v Globe Mtg Corp," (281 Mich App 63 (2008)). With respect to First American’s liability on the other two closings, the Court of Appeals concluded that the trial court properly granted summary disposition to First American and Westminster because plaintiff had failed to produce evidence that created a question of fact regarding whether Westminster knew of or participated in the underlying fraud in those closings. Finally, the Court of Appeals concluded that plaintiff had not established a link between Westminster’s alleged violations of the closing instructions and the claimed damages and, even if a link had been established, there were no damages because of plaintiff’s full credit bid at the foreclosure sale. The Supreme Court reversed, finding the Court of Appeals erred by concluding that plaintiff’s full credit bids barred its contract claims against the nonborrower third-party defendants. To the extent that New Freedom held that the full credit bid rule barred contract claims brought by a mortgagee against nonborrower third parties, it was overruled. Further, the closing instructions agreed to by plaintiff and Westminster constituted a contract upon which a breach of contract claim could be brought. Finally, the lower courts erred by relying on New Freedom to interpret the credit protection letters given that the terms of the letters in New Freedom differed materially from the ones at issue here. View "Bank of America, NA v. First American Title Ins. Co." on Justia Law

Plaintiff filed suit for breach of contract, negligence, wrongful foreclosure, and violations of the Texas Deceptive Trade Practices Act (DTPA), Tex. Bus. & Com. Code 17.50(a)(1)). On appeal, plaintiff challenged the district court's dismissal of her claims, as well as her motion to join a non-diverse defendant. The court concluded that the district court's dismissal of plaintiff's breach-of-contract claim was proper because she failed to allege any facts showing her own performance and did not refute the facts in documents referred to in her complaint, central to her claims, and attached to the motion to dismiss; the dismissal of the negligence claim was proper where any damages stemming from an alleged violation of those solely contractual duties are not redressable in tort; the wrongful-foreclosure claim was properly dismissed where plaintiff never alleged that Wells Fargo disposed of the house at a “grossly inadequate selling price,” nor does she allege that Wells Fargo fraudulently chilled the bidding at the foreclosure sale; and, where plaintiff bases her DTPA claims on Wells Fargo’s failure to make automatic withdrawals to pay the loan, such services cannot form the basis of a DTPA claim because they are incidental to the loan and would serve no purpose apart from facilitating the mortgage loan. Finally, in regard to the motion to join a non-diverse defendant, the district court applied the correct legal standard and its finding of fact were not clearly erroneous. Accordingly, the court affirmed the judgment. View "Villarreal v. Wells Fargo Bank, N.A." on Justia Law

The Regional Utility Service Systems Commission (RUSS) brought a breach of contract action against the City of Mount Union. The district court entered judgment in favor of RUSS. The clerk of court subsequently issued a writ of general execution commanding the county sheriff to levy on all bank accounts held by the City at Iowa State Bank in Mount Union. The City filed a motion to quash the garnishment on the grounds that the bank account was exempt from execution under Iowa Code 627.18. The district court denied the motion to quash and claim of exemption. The Supreme Court reversed, holding that the bank account was exempt under section 627.18 because the general funds in the account were “necessary and proper for carrying out the general purpose” for which the City was organized. View "Reg’l Util. Serv. Sys. v. City of Mount Union" on Justia Law

Scott Harvard was a former senior executive officer of Shore Bank and Hampton Roads Bankshares (HRB). During the 2008 financial crisis, HRB elected to participate in the federal Troubled Assets Relief Program (TARP). The TARP agreement required HRB to comply with the limits on executive compensation set forth in the Emergency Economic Stabilization Act (EESA) and its implementing regulations. In 2009, Harvard terminated his employment. Thereafter, Harvard filed a breach of contract action against Shore Bank and HRB alleging that HRB breached the parties’ employment agreement by refusing to make a “golden parachute payment” pursuant to the agreement. HRB filed a plea in bar, arguing that the prohibition on golden parachute payments in EESA section 111, as implemented by the June Rule, barred it from paying Harvard pursuant to the employment agreement. The circuit court rejected HRB’s argument and awarded Harvard $655,495 plus interest. The Supreme Court reversed and vacated the award of damages in favor of Harvard, holding that EESA section 111, as implemented by the June Rule, prohibited the golden parachute payment under the circumstances of this case. View "Hampton Roads Bankshares, Inc. v. Harvard" on Justia Law

Plaintiff, a bank, filed suit against multiple defendants for fraud, constructive fraud, civil conspiracy, negligent misrepresentation, unjust enrichment, and violation of the Tennessee Securities Act. Three non-resident defendants (the “Ratings Agencies”) moved to dismiss based on lack of personal jurisdiction and failure to state a claim. The trial court granted the motion and dismissed Plaintiff’s claims. The Supreme Court (1) affirmed the judgment of the trial court finding that Plaintiff failed to establish a prima facie case of personal jurisdiction under a theory of general jurisdiction or specific jurisdiction; but (2) vacated the dismissal of Plaintiff’s action against the Ratings Agencies on the theory of conspiracy jurisdiction, holding that although Plaintiff has failed to establish a prima facie case of conspiracy jurisdiction at this point, the case must be remanded for the trial court to determine if Plaintiff should be allowed to conduct jurisdictional discovery on the conspiracy theory of personal jurisdiction in a manner consistent with the guidelines set forth in this opinion. View "First Cmty. Bank, N.A. v. First Tennessee Bank, N.A." on Justia Law