Justia Contracts Opinion Summaries

In 2006, Michael and Connie Jo Zimmerman obtained two separate commercial loans from Eagle National Bank, the predecessor in interest to Customers Bank. The Zimmermans later defaulted on these loans and entered into a forbearance agreement. In addition to the Forbearance Agreement, the Zimmermans each executed a Disclosure for the Confession of Judgment acknowledging that a Confession of Judgment provision in the Forbearance Agreement had been called to their attention, that they understood that the provision permitted Customers Bank to enter judgment against them without notice or opportunity for a hearing, and that the waiver of the right to notice and a hearing was knowing, intelligent, and voluntary. The Forbearance Agreement also provided that all notices, requests, demands, and other communications were to be sent to the Zimmermans at an address in Dover, Delaware with a copy sent to their attorney. Based on the Warrant of Attorney to Confess Judgment in the Forbearance Agreement, Customers Bank filed a complaint seeking the entry of a judgment by confession against the Zimmermans. The Zimmermans opposed the entry of a judgment by confession and a hearing was held where the Zimmermans argued, among other things, that at the time the Forbearance Agreement was executed they were residents of Florida and that Customers Bank had not complied with the requirements for entry of judgment by confession against a non-resident under Rule 58.1. The Zimmermans also argued that they did not knowingly, intelligently, and voluntarily waive their right to notice and a hearing before judgment could be entered against them. After deliberation, the superior court found the Zimmermans’ waiver of their right to notice and a hearing had been knowing, intelligent, and voluntary, and entered judgment by confession against the Zimmermans. The Zimmermans appealed. Finding no reversible error, the Supreme Court affirmed. View "Crothall, et al. v. Zimmerman, et al." on Justia Law

Merchants Bank appealed a Circuit Court judgment in favor of Elizabeth Head on Merchants Bank's claim against her alleging breach of a promissory note. After the 2008 promissory note at issue was executed, Merchants Bank wired the $400,000 to Elizabeth's husband, David Head's, personal account. David testified that he then wrote a check distributing the funds to his real-estate-development company, Head Companies, LLC. The Heads renewed the 2008 promissory note in March 2009 and again in March 2010, in August 2010, in February 2011, and, finally, in July 2011. With the exception of the July 2011 renewal, each renewal was signed on page three by both David and Elizabeth. A box on page two was left blank. On the initial version of the July 2011 renewal of the note, however, Elizabeth signed in both the box on page two, indicating that she intended to "give [Merchants Bank] a security interest" in the Heads' personal residence, and at the end of the document on page three. signature on page two of the initial July 2011 note was "a mistake in the nature of a scrivener's error and [Merchants] Bank subsequently had the Heads execute a corrected note, which they did knowingly and voluntarily." Elizabeth presented no evidence to the contrary. The "corrected note" bore the same date as the initial July 2011 note and, like all the previous renewals, was signed by both David and Elizabeth on page three of the document only. The box on page two of the corrected July 2011 note was left blank. The Heads defaulted on the promissory note in April 2012. In September 2012, Merchants Bank sued the Heads, alleging breach of the promissory note and attaching to the complaint the initial July 2011 note as evidence of the debt. David did not answer the complaint, and Merchants Bank obtained a default judgment against him in the amount of $415,142.57 plus interest on the judgment. Elizabeth did answer the complaint, arguing that the note was unenforceable against her because she had signed the initial July 2011 note only to give a security interest in her and David's residence not "for the purpose of agreeing to pay the debt evidenced thereby" and because she had not received consideration for her signature on the note. Merchants Bank moved for a summary judgment against Elizabeth. That motion was denied. After a bench trial in March 2013, the circuit court entered a final judgment in favor of Elizabeth. Upon review, the Supreme Court held that Elizabeth renewed her obligations under the 2008 promissory note in the capacity of a maker in July 2011, and that her obligations under the 2008 promissory note were supported by valid consideration. It was undisputed that she and David defaulted on their obligations under the corrected July 2011 note. Thus, Elizabeth was liable to Merchants Bank on its claim of breach of promissory note, and the circuit court erred in entering a judgment in her favor. View "Merchants Bank v. Head " on Justia Law

Bryant Bank appealed the grant of partial summary judgment in favor of defendants Talmage Kirkland & Company, Inc., d/b/a Kirkland & Company ("TKC"), and Quentin Ball and Jason Stoutamire, appraisers for TKC. This case arose out of an appraisal of real property conducted by TKC for Bryant Bank in the course of Bryant Bank's consideration of a loan application submitted by Wallace Seafood Traders, Inc. ("WST"), in September 2007 for the purchase of the property, which WST was renting and out of which it was operating its business. The Bryant Bank employees responsible for approving WST's loan application suspected that the value of the property might have been overstated in TKC's appraisal. However, Bryant Bank approved WST's loan application and issued the loan to WST. Ultimately, WST defaulted on the loan. Bryant Bank obtained another appraisal of the property from a different appraisal firm; this new appraisal indicated that the property had a value that differed drastically from that which TKC had appraised. Bryant Bank sued the defendants, alleging breach of contract and negligent misrepresentation arising from its reliance on TKC's appraisal report in issuing the loan to WST. In their partial-summary-judgment motion, the defendants argued that Ball and Stoutamire were entitled to a summary judgment as to the breach-of-contract claim because they were acting as agents of a disclosed principal, Bryant Bank. As to the negligent misrepresentation claim, the defendants argued that they were entitled to a summary judgment in their favor because: (1) the opinion of value expressed in TKC's appraisal report could not serve as the basis of a negligent-misrepresentation claim; (2) Bryant Bank had not relied upon TKC's valuation; and (3) the claim was barred by the statute of limitations. The Supreme Court concluded the Bank presented substantial evidence that it relied on TKC's appraisal of the property, and that each of the arguments defendants raised in their partial-summary-judgment motion did not warrant the entry of a summary judgment in their favor with respect to the Bank's negligent misrepresentation claim. Therefore, Court reversed the trial court's order and remanded the case for further proceedings. View "Bryant Bank v. Talmage Kirkland & Company, Inc." on Justia Law

Appellees filed a class-action complaint against a Bank, asserting several claims arising from the Bank’s alleged practice of manipulating customers’ checking-account debit transactions to maximize the amount of overdraft fees charged to each customer. The Bank filed a motion to dismiss, or alternatively, a motion to compel arbitration based on an arbitration provision contained in the Deposit Agreement attached to Appellees’ complaint. In response, Appellees denied the existence of a valid arbitration agreement. The circuit court denied Bank’s motion, ruling that the arbitration provision was unconscionable and, thus, unenforceable. The Supreme Court reversed, holding that because the circuit court did not find that there was a valid arbitration agreement, the case must be remanded to the circuit court to determine whether there was a valid agreement to arbitrate between the parties. View "Bank of the Ozarks, Inc. v. Walker" on Justia Law

A Bank and Re/Max Realty One signed a listing agreement granting Re/Max the exclusive right to sell a certain property. A buyer signed a purchase-and-sale agreement with the Bank and paid $86,900 in earnest money, which Re/Max held in escrow. The buyer later defaulted under the terms of the agreement. Re/Max subsequently procured a second buyer to purchase the property. After participating in mediation, the Bank and the first buyer agreed the divide the earnest money between themselves, with $49,500 going to the Bank and $37,400 to the buyer. Re/Max sent a $37,400 check to the buyer and a check for $24,750 to the Bank, retaining the remaining $24,750. The Bank sued Re/Max for breach of the listing agreement stemming from Re/Max’s retention of $24,750 of the earnest money. The superior court granted summary judgment to the Bank. The Supreme Court vacated the judgment of the superior court, holding that Re/Max was entitled to summary judgment on the Bank’s breach of contract claim because the unambiguous language of the listing agreement obligated the Bank to divide any forfeited earnest money with Re/Max, including money the Bank received pursuant to its mediated agreement with the first buyer. View "Bank of New York Mellon, N.A. v. Re/Max Realty One" on Justia Law

Abraham and Betty Jean Morrow filed a request for a modification of their home loan, serviced by Bank of America, through the federal Home Affordable Modification Program. Bank of America denied the modification and scheduled a trustee’s sale of the property. The Morrows subsequently filed a complaint against Bank of America based on the bank’s alleged breach of an oral contract for modification of their loan. The district court granted summary judgment to Bank of America, concluding (1) the Morrows’ claims for breach of contract, fraud, and violation of the Montana Consumer Protection Act (MCPA) were barred by the Statute of Frauds; and (2) the Morrows could not succeed on their claims of negligence, negligent misrepresentation, and tortious breach of the covenant of good faith and fair dealing because Bank of America owed no duty to the Morrows. The Supreme Court reversed as to the negligence, negligent misrepresentation, fraud, and violations of MCPA claims, holding that Bank of America owed a duty to the Morrows, genuine issues of material fact existed as to some claims, and the Statute of Frauds did not preclude the remainder of the Morrows’ claims. View "Morrow v. Bank of Am., N.A." on Justia Law

Farm Credit had a security interest in corn delivered to Cargill and filed suit against Cargill in replevin for the corn. The district court concluded that Farm Credit's security interest under the Food Security Act (FSA) of 1985, 7 U.S.C. 1631(e), entitled it to proceeds from the corn delivered to Cargill. The court concluded that Cargill did not dispute that Farm Credit complied with the FSA. To the extent that the U.C.C. governs priority disputes as a foundation for the FSA, Cargill's argument failed because U.C.C. 9-404 does not apply in this case. Accordingly, the court affirmed the district court's grant of summary judgment in favor of Farm Credit. View "Farm Credit Serv. v. Cargill, Inc." on Justia Law

To purchase her home, Kim King executed a promissory note to Virginia Housing Development Authority (“VHDA”) that was secured by a deed of trust. When King lost her full-time job, she arranged for a special forbearance agreement with VHDA. The VHDA eventually foreclosed on King’s loan, and King’s home was sold. King filed a complaint against VHDA and Evans & Bryant, PLC (“Evans”), as substitute trustee, alleging, among other things, that (1) certain federal regulations prevented VHDA from foreclosing until she was three months in arrears and VHDA had a face-to-face meeting with her, and (2) VHDA breached the deed of trust by foreclosing before it fulfilled these requirements and Evans breached its fiduciary duty by foreclosing when neither of the requirements had been met. The trial court sustained Defendants’ demurrers. The Supreme Court affirmed in part, reversed in part, and remanded, holding that the trial court (1) erred in sustaining the demurrers regarding the failure to hold a face-to-face meeting prior to foreclosure; and (2) did not err in sustaining demurrers against King’s allegation of breach of contract regarding the forbearance agreement and against King's requests for declaratory judgment, rescission, and to quiet title. View "Squire v. Va. Housing Dev. Auth." on Justia Law

Plaintiff (the customer) filed suit against State Street (the custodian bank), alleging in essence that it had a duty to notify him that the securities in his account were worthless. The district court granted State Street's motion to dismiss the contract claims on the ground that State Street had a merely administrative role in managing plaintiff's accounts and thus owed him no duty to guard against his investment advisor's misconduct. The district court concluded that plaintiff's negligence claims were barred by Florida's economic loss rule and plaintiff had not sufficiently alleged knowledge on the part of State Street in regards to the aiding and abetting claims. The court affirmed, holding that, under these facts, the custodian bank breached no duty, contractual or otherwise, by accepting on behalf of its customer securities that later turn out to be fraudulent and listing those securities on monthly account statements issued to the customer. Plaintiff's allegations failed to state claims for breach of contract; plaintiff failed to establish that State Street owed him an independent duty to monitor the investments in his account, verify their market value, or ensure they were in valid form; therefore, he failed to state valid negligence claims; plaintiff's allegations were insufficient to state a claim for aiding and abetting; and plaintiff's claims for breach of fiduciary duty and negligent misrepresentation also failed. View "Lamm v. State Street Bank and Trust" on Justia Law

Plaintiffs filed suit against the Bank seeking to void a mortgage foreclosure sale of their home. Plaintiffs alleged that the Bank represented orally that it would postpone the foreclosure sale, but then proceeded to foreclose anyway. The court concluded that plaintiffs' claim of negligent misrepresentation was barred by the Minnesota Credit Agreement Status, Minn. Stat. 513.33, where any party asserting the existence of a credit agreement must comply with the writing and signature requirements of section 513.33. The court concluded that the complaint alleged a claim of promissory estoppel, rather than equitable estoppel, and was barred by the Minnesota Credit Agreement Statute. Accordingly, the court affirmed the district court's grant of the Bank's motion to dismiss. View "Bracewell, et al. v. U.S. Bank Nat'l Assoc." on Justia Law