Justia Contracts Opinion Summaries

To help finance her purchase of a condominium (condo) for $395,000, Mary McCulley sought a residential loan from Heritage Bank (Bank) for $300,000. American Land Title Company (ALTC) provided a commitment for title insurance. McCulley signed a promissory note and signed a deed of trust as collateral. Subsequently, ALTC changed the designated use of the condo in the deed from residential to commercial. After closing, McCulley discovered the Bank had issued her an eighteen-month, $300,000 commercial property loan rather than the thirty-year residential property loan for which she applied. When she was unable to obtain long-term refinancing on the property, McCulley signed a warranty deed transferring ownership of the condo to the Central Asia Institute and used the proceeds to pay off the loan. McCulley then sued ALTC and the Bank (collectively, Defendants) for, inter alia, negligence, breach of contract, slander of title, and fraud. The district court granted summary judgment for Defendants. The Supreme Court (1) reversed the district court's order of summary judgment in favor of the Bank on the issue of fraud, as genuine issues of material fact existed relative to McCulley's claim of fraud on the part of the Bank; and (2) otherwise affirmed. View "McCulley v. Am. Land Title Co." on Justia Law

Conlin refinanced with a loan from Bergin, secured by a mortgage containing a provision that recognized MERS as a nominee for Bergin and Bergin’s successors. Bergin sold the note to the Real Estate Mortgage Investment Conduit, for which U.S. Bank was trustee. The mortgage was held by MERS, and serviced by GMAC. In 2008, MERS assigned the mortgage to “U.S. Bank National Association as trustee.” In 2010 Orlans sent Conlan notice (Mich. Comp. Laws 600.3205a), of default and of his ability to request loan modification, stating that it was sent on behalf of GMAC as “the creditor to whom your mortgage debt is owed or the servicing agent for the creditor.” In 2011, Orlans published notice of foreclosure sale, stating that “the mortgage is now held by U.S. Bank National Association as Trustee by assignment.” The notice was also posted on the property, which was sold at a sheriff’s sale on March 31. On October 28, 2011, Conlin sought damages and to have the foreclosure sale set aside. The district court dismissed. The Sixth Circuit affirmed. Even if the “robo-signed” assignment were invalid, Conlin was not prejudiced. He has not clearly shown fraud in the foreclosure process, as required for a challenge after expiration of the six-month redemption period. View "Conlin v. Mrtg. Elec. Registration Sys., Inc." on Justia Law

This case involved multiple litigations among three parties - Insurer, insured Mortgagee, and Homeowner - arising out of a defect in the title to Homeowner's home. Insurer brought suit in the land court on behalf of Mortgagee seeking to reform the deed to the property or to equitably subrogate Homeowner's interest in the property behind Mortgagee's mortgage. Homeowner initiated suit in the superior court against Mortgagee. Eventually, all claims in both actions became part of a federal court case, which settled. Thereafter, Mortgagee filed a complaint against Insurer in the U.S. district court seeking to recover from Insurer for the costs Mortgagee incurred in defending against Homeowner's claims. The judge determined Insurer had no obligation under its title insurance policy to pay Mortgagee's defense costs but certified two questions to the Massachusetts Supreme Court. The Court answered by holding that, under Massachusetts law (1) a title insurer does not have a duty to defend the insured in the entire lawsuit where one claim is within the scope of the title insurance coverage and other claims are not; and (2) a title insurer that initiates litigation similarly does not have a duty to defend the insured against all reasonably foreseeable counterclaims. View "GMAC Mortgage, LLC v. First Am. Title Ins. Co." on Justia Law

The Sponsors formed West Run to construct and manage West Virginia University off-campus housing and retained CBRE to secure financing. CBRE provided prospective lenders with confidential information. Huntington’s predecessor loaned $39.975 million and construction began. A competing project (Copper Beach) was built across the street. West Run learned that Huntington had loaned $20 million for that project; West Run alleged that Huntington divulged to Copper Beach proprietary West Run information provided by CBRE. West Run‘s occupancy dropped from 95 percent to 64 percent. West Run sued, alleging that Huntington had breached its duty of good faith and fair dealing by financing Copper Beech. Two similar projects, involving the Sponsors, alleged breach of contract based on Huntington‘s failure to provide funds under their construction loan agreements. Huntington claimed that they had sold insufficient units to require Huntington to disburse additional funds under the agreements. The district court dismissed. The Third Circuit affirmed in part, holding that the complaint contained no corroborating facts that confidential information was disclosed and that no contract terms prohibited Huntington from lending to competitors. The court vacated with respect to the other projects for a chance to provide evidence showing that the pre-sale numbers in the original complaint were incorrect. View "W. Run Student Hous. v. Huntington Nat'l Bank" on Justia Law

The plaintiffs in this case appealed the grant of summary judgment upholding the validity of a bank's mortgage in real property that the plaintiffs had sold to a mortgagor in exchange for an interest in an investment account that turned out to be a Ponzi scheme. Plaintiffs filed an action against other parties to their transaction including the Bank of Commerce arguing, among other things, that they were entitled to rescind the sale of a portion of their property for lack or failure of consideration and mutual mistake ("They argue[d] that they did not receive any consideration because the . . . interest in their investment account with the Trigon Group turned out to be worthless. Mr. Harris testified that he 'assumed that was real money, which it later proved out not to be.'"). Finding no error in the district court's judgment, the Supreme Court affirmed the lower court. View "Harris v. Bank of Commerce" on Justia Law

In 2008, Harris N.A. loaned Acadia money on a revolving basis. Acadia is a limited liability company consisting of members of the Hershey family and three trusts. The loan was personally guaranteed by Loren Hershey, a managing member of Acadia. The amount of the loan was enlarged to $15.5 million, again guaranteed by Hershey. The agreement enlarging the loan amount required Acadia to reduce its principal debt to Harris to less than 35 percent of the value of Acadia’s assets by the end of each quarter and to make a principal payment of $3 million by January 31, 2009. By February 2009, Acadia had not made the $3 million principal payment and was in default. After granting additional time, Harris declared a default and filed suit to collect the debt from Acadia and to enforce Hershey’s guaranty. The district court granted summary judgment in favor of Harris as to all issues except the calculation of prejudgment interest. Acadia sought bankruptcy protection and its appeal has been stayed. The Seventh Circuit affirmed as to Hershey and, finding the appeal frivolous, imposed sanctions under FRAP 8. The court noted that there was no evidence of various promises Hershey claimed were made. View "Harris N.A. v. Acadia Invs. L.C." on Justia Law

Appellants lost their home in a foreclosure sale. When Appellants failed to vacate the home, Wells Fargo Bank, the foreclosure purchaser, sued for unlawful detainer. Appellants raised equitable defenses and counterclaims concerning the validity of Wells Fargo's title. Wells Fargo successfully moved to dismiss the defenses and counterclaims on the ground that they exceeded the statutory scope of issues that may be litigated in an unlawful detainer action under Mo. Rev. Stat. 534.210. The circuit court then granted summary judgment to Wells Fargo. Appellants appealed, arguing that section 534.210, which prohibits a defendant from raising equitable defenses and/or challenges to the validity of the plaintiff's title in an unlawful detainer action, was unconstitutional. The Supreme Court affirmed, holding (1) statutory limitations on the scope of unlawful detainer actions are not unconstitutional; and (2) Appellants failed to raise a genuine issue of fact concerning Wells Fargo's right to possession. View "Wells Fargo Bank, N.A. v. Smith" on Justia Law

Plaintiff bought a used pickup truck in 2011 for $28,000 and financed the purchase with a six-year installment contract at an interest rate of 23.9 percent. The dealer assigned the contract to AmeriCredit. After making the first installment the plaintiff sent AmeriCredit a copy of the installment contract that he had stamped “accepted for value and returned for value for settlement and closure,” and told AmeriCredit to collect the balance under the contract from the U.S. Treasury. AmeriCredit repossessed the truck, sold it, and billed the plaintiff $11,322.28 to cover the difference. The plaintiff sued AmeriCredit and its officers for $34 million in compensatory damages and $2.2 billion in punitive damages. The district judge could not make sense of the pro se complaint and dismissed it as frivolous. The Seventh Circuit vacated and remanded with directions that the judge either dismiss without prejudice or dismiss with prejudice, as a sanction; vacate the default judgment in favor of AmeriCredit on its counterclaim; and dismiss the counterclaim without prejudice. The court noted the earmarks of the “Sovereign Citizens” movement. View "Baba-Dainja El v. AmeriCredit Fin. Servs., Inc." on Justia Law

In 1999 the Sellers conveyed businesses to CT Acquisition Corp. The price was to be paid over time. The Sellers insisted on a surety bond (put up by Frontier Insurance) and personal guarantees by the principals of CT Acquisition. The Guarantors also promised to indemnify Frontier and promised to post collateral on Frontier’s demand. CT Acquisition did not pay, the Guarantors failed to keep their promise, and the Sellers turned to Frontier, which did not pay because it was in financial distress. Frontier demanded that the Guarantors post collateral. The district court read the agreement to require collateral only after Frontier’s obligation to the Sellers had been satisfied, or at least quantified. The suit was dismissed as unripe. Meanwhile the Sellers had sued Frontier and obtained judgment of $1.5 million. Frontier then filed another suit against the Guarantors. The district court concluded that, Frontier’s obligation having been quantified, the Guarantors must post collateral and, following remand, ordered the Guarantors to deposit with the Clerk $1,559,256.78, The Seventh Circuit affirmed, rejecting the Guarantors’ argument that they need not post collateral until Frontier has paid the Sellers. View "Frontier Ins. Co. v. Hitchcock" on Justia Law

Construction Company contracted with Subcontractor for construction of elements of an HVAC system. As partial collateral for a revolving line of credit, Subcontractor assigned to Bank its right to receive payment under the contract with Construction Company. Construction Company instead made twelve payments to Subcontractor. Subcontractor subsequently ceased business operations, leaving an outstanding debt to Bank on its line of credit. Bank filed an action against Construction Company for breach of contract and violation of the UCC. A jury found (1) Construction Company liable on both counts for ten of the twelve checks that it had delivered to Subcontractor, and (2) Bank was estopped from recovering with respect to the final two checks. The judge entered judgment on the statutory claim in the amount of $3,015,000, the full face value of the ten checks. The Supreme Court affirmed in part and reversed in part, holding that the trial judge (1) properly entered judgment on Bank's statutory claim in the amount of the wrongfully midirected payments; but (2) erred in denying the bank's motion for partial judgment notwithstanding the verdict with respect to the final two checks, as there was insufficient evidence to support Construction Company's defense of estoppel. View "Reading Coop. Bank v. Constr. Co." on Justia Law