Justia Contracts Opinion Summaries

Appellants Branch Banking & Trust Company ("BB&T"), Rusty Winfree, and Todd Fullington appealed a Circuit Court judgment in favor of Rex ("Sonny") and Claudene Nichols on the Nicholses' claims against the appellants, and on BB&T's counterclaim against the Nicholses. The dispute arose over loans made by BB&T's predecessor-in-interest, Colonial Bank. After a development loan was made, but before it could be paid back, Colonial became insolvent and entered receivership. BB&T purchased much of Colonial's assets, including the loan made to the Nicholses for development of their parcel. After refusing to extend the terms of the original Colonial loan, or to provide any additional funds to finish the development, the Nicholses stopped making payments on their loan and sued 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. After careful consideration, the Supreme Court concluded the circuit court erred in entering a judgment in favor of the Nicholses and on BB&T's counterclaim. The case was remanded for further proceedings. View "Branch Banking & Trust Co. v. Nichols" 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 Federal Deposit Insurance Corporation (“FDIC”) was appointed to act as receiver for the assets of First Heritage Bank, N.A. (“Heritage”). Heritage had previously purchased, pursuant to an agreement (“Agreement”), interest in a commercial loan that Professional Business Bank (“PBB”) had made to Al’s Garden Art, Inc. The FDIC subsequently sold Heritage’s interest under the Agreement to Commerce First Financial, Inc. (“CFF”). When Al’s Garden Art defaulted on its loan obligations, PBB sued to collect on the loan. CFF then brought a breach of contract action against PBB. PBB filed a third party complaint against the FDIC, alleging that the FDIC’s failure to satisfy the Agreement’s pre-receivership contractual provisions constituted breach of contract. The FDIC moved to dismiss on the grounds that the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) preempted PBB’s claims. The district court denied the motion and granted summary judgment for PBB. The Ninth Circuit affirmed, holding that the FDIC, in its role of receiver of a closed bank, may not breach underlying asset contractual obligations without consequence. View "Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp." on Justia Law

Synergy4 Enterprises, Inc. brought an action against Pinnacle Bank on claims of promissory estoppel, negligent misrepresentation, and fraud, alleging that Pinnacle Bank caused damages by orally assuring Synergy4 that Pinnacle would provide a $1 million credit line and then only providing $400,000 provided for in a commitment letter. The district court sustained Pinnacle’s motion for summary judgment, concluding that Synergy4’s claims were barred by Nebraska’s credit agreement statute of frauds. The Supreme Court affirmed, holding that because Synergy4’s claims were based on a credit agreement that was not in writing, they were barred by Nebraska’s credit agreement statute of frauds. View "Synergy4 Enters., Inc. v. Pinnacle Bank" on Justia Law

In 2005, Barclays Bank PLC, a major global bank based in the United Kingdom, and BDC Finance LLC, a Connecticut-based hedge fund, entered into a series of transactions that were memorialized in several forms, including a Master Agreement. In 2008, Barclays sent BDC a letter terminating the Agreement due to BDC’s alleged default. BDC filed this action for breach of contract and declaratory judgment. Barclays counterclaimed alleging corresponding causes of action. Both parties moved for summary judgment. The Appellate Division granted BDC’s motion to dismiss, concluding that Barclays breached the agreements and was not entitled to summary judgment on its counterclaims. The Supreme Court modified the judgment of the Appellate Division, holding that material issues of fact existed as to whether Barclays defaulted under the parties’ contract and, thus, neither party was entitled to summary judgment. View "BDC Finance LLC v. Barclays Bank PLC" on Justia Law

This case stemmed from the largely fraudulent lending operations of First United Funding, LLC (First United). After First United collapsed, a court-appointed Receiver commenced this action under Minnesota’s Uniform Fraudulent Transfer Act (MUFTA) against several financial institutions, including Alliance Bank and certain Respondent Banks, that had participated in First United’s loan-participation scheme. The district court (1) dismissed the claims against the Respondent Banks for failure to bring the action in a timely fashion, and (2) allowed the claim against Alliance Bank, concluding that that the Receiver had pleaded legally sufficient claims based on a “Ponzi-scheme presumption.” The district court then entered judgment against Alliance Bank. The Receiver and Alliance Bank appealed. The court of appeals (1) divided the Ponzi-scheme presumption into three separate components and concluded that the third component was unfounded in the case of Alliance Bank; and (2) concluded that the district court erred when it dismissed the Receiver’s actual-fraud claims against the Respondent Banks. The Supreme Court affirmed as modified, holding (1) all three components of the Ponzi-scheme presumption lack support in MUFTA; and (2) the Receiver failed to adequately plead constructive fraud, but the district court erred when it dismissed the Receiver’s actual fraud claims. Remanded. View "Finn v. Alliance Bank" on Justia Law

BADD, L.L.C. purchased three warehouse units in Myrtle Beach. To finance the transaction, BADD executed two promissory notes. A personal guaranty was also executed by William McKown, who was a member of BADD. After BADD defaulted, the Bank brought this foreclosure action and included McKown as a party based on his status as a guarantor. In McKown's amended answer and counterclaim, he demanded a jury trial because the Bank sought a money judgment for the breach of a guaranty arrangement. McKown further sought an accounting and a determination that the guaranty agreement was unconscionable. McKown then asserted two counterclaims: (1) civil conspiracy and (2) breach of contract, both based on an alleged conspiracy between the Bank and William Rempher. Finally, McKown asserted third-party claims against Rempher. The Bank moved for an order of reference. The circuit granted the motion, referring the matter in its entirety to the master-in-equity. The Court of Appeals reversed, holding McKown was entitled to a jury trial because the Bank's claim on the guaranty agreement was a separate and distinct legal claim. The Bank appealed, challenging the Court of Appeals' finding that McKown was entitled to a jury trial. The Supreme Court reversed, finding that McKown was not entitled to a jury trial solely because the Bank exercised its statutory right to join him as a party in the event of a deficiency judgment. Furthermore, the Court held McKown was not entitled to a jury trial based on his counterclaims, which, while legal, were permissive. McKown waived his right to a jury trial by asserting permissive counterclaims in an equitable action. View "Carolina First Bank v. BADD, L.L.C." on Justia Law

Borrowers executed the Note in favor of GACC in the amount of $62,000,000, with a maturity date of August 2016. Borrowers, as trustors, executed in favor of Chicago Title Company, as trustee, a “Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing” for the benefit of GACC with respect to the real property security—the Trust Property—which included real property in Los Angeles County. The individual defendants executed a Guaranty of “all obligations, requirements, and indemnities of Borrowers under the Loan Documents.” Through various assignments and a merger, plaintiff became the holder of the Loan Documents. In 2011, plaintiffs claimed default by failure to make various required payments and purported to accelerate the loan and claim interest at the default rate. Borrowers apparently filed a voluntary bankruptcy petition under Chapter 11. The trial court granted plaintiff summary judgment of $81,850,619.33, which included a “Yield Maintenance Amount”—i.e. a prepayment fee—of $14,007,811.30. The court of appeal reversed, holding that even though the legal issue was not raised before the trial court, the documents should be interpreted so that the prepayment obligation only accrues upon payment and not on acceleration of the Note. View "U.S. Bank Nat'l Ass'n v. Yashouafar" on Justia Law

The Avakians purchased a house with a loan secured by a properly executed deed of trust. The property was their homestead, where they lived together. Citibank refinanced the loan. Unlike the original loan, the refinancing note only listed Norair as the debtor. Citibank required that the Avakians execute another deed of trust. Norair signed the Citibank deed of trust. The next day, Burnette signed an identical deed of trust. The deeds of trust did not mention each other, and did not refer to signature of counterpart documents. Citibank recorded them as separate instruments. The Avakians received a loan modification. Around the time of Norair’s death, Burnette received notice that Citibank was taking steps to foreclose. After Norair’s death, Burnette sought a declaratory judgment. The district court granted summary judgment to Burnette, finding that, because the two were living together when they signed the Citibank deeds of trust, the instruments were invalid. The Fifth Circuit reversed. Under Mississippi law, a deed of trust on a homestead is void if it is not signed by both spouses, but the Mississippi Supreme Court would likely hold that a valid deed of trust is created when husband and wife contemporaneously sign separate, identical instruments. View "Avakian v. Citibank, N.A." on Justia Law

In 2006, Thompson signed a $354,800 mortgage note with AME as the lender. Several sections of the note and deed of trust noted AME’s intent to transfer the note. Its signature page contains a signed, undated stamp memorializing AME’s transfer to Countrywide and another signed, undated endorsement from Countrywide to blank. BOA purchased Countrywide and has the note. In 2012, BOA offered to short-sell her house in lieu of foreclosure. Thompson requested modification of her repayment terms under the HAMP program (Emergency Economic Stabilization Act, 12 U.S.C. 5201), that gives lenders incentives to offer modifications to borrowers with a payment-to-income ratio over 31%. Thompson claims that she complied with numerous document requests. BOA never granted her application. She sued BOA, Mortgage Electronic Registration Systems, and unidentified persons she believes to be the note’s true owners, claiming: that BOA falsely induced her to sign the mortgage by pretending it was an actual lender; that her title is clouded by the note’s transfer; and that BOA fraudulently induced her to seek modification, knowing it lacked authority to modify her terms or intending to drive her into foreclosure. The district court dismissed for failure to comply with pleading standards. The Sixth Circuit affirmed. View "Thompson v. Bank of Am., N.A." on Justia Law