Articles Posted in Banking

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Nan Stevenson purchased a fifth wheel trailer at the Billings, Montana location of Big Sky RV, Inc., a Montana corporation with its principal office registered in Bozeman, Gallatin County, Montana. Stevenson provided a down payment and financed the remainder of the purchase price through Ally Bank. Ally later initiated this complaint against Stevenson in Chouteau County, claiming that Stevenson had defaulted on her payment obligations under the loan agreement. Steven filed a third-party complaint against Big Sky, alleging damages for breach of contract, violation of the implied covenant of good faith and fair dealing, negligence, and violations of the Montana Consumer Protection Act (MCPA). Big Sky filed a motion for judgment on the pleadings and for change of venue, arguing that, under Mont. Code Ann. 30-14-133(1), venue was improper in Chouteau County and that the district court lacked subject matter jurisdiction over the MCPA claim. The district court denied the motion. The Supreme Court affirmed, holding that the district court did not err in determining that it had subject matter jurisdiction and that venue was proper in Chouteau County. View "Ally Financial, Inc. v. Stevenson" on Justia Law

Posted in: Banking, Contracts

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In 2005, Martha Guthrie, Richard Guthrie, and Richard Guthrie, as custodian for Taylor Guthrie (collectively, Guthrie), took out a loan for the purchase of real property. Capital One eventually took over as successor to the mortgage. In 2010, Capital initiated a foreclosure action against Guthrie. Capital moved for summary judgment seeking the right to foreclose on the property. Ultimately, the trial judge granted Capital’s motion for summary judgment, concluding that Guthrie had failed to put any material fact in dispute. The Supreme Court affirmed, holding (1) the retired district court judge had jurisdiction over the proceedings; (2) the district court did not err in granting partial summary judgment to Capital One on the equitable estoppel claim; and (3) the district court properly relied on an affidavit when it granted Capital One’s summary judgment motion. View "Capital One, NA v. Guthrie" on Justia Law

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After securing two loans with deeds of trust on the same property, Appellants paid off the smaller loan. A title agent filed a deed of reconveyance containing a scrivener’s error that mistakenly released Appellants’ interest in their property from the larger lien. Although the error was later corrected, Appellants argued that U.S. Bank, the beneficiary to the larger loan, did not have a valid, perfected lien prior to commencement of Appellants’ Chapter 7 bankruptcy proceedings. The district court granted U.S. Bank’s motion for judgment on the pleadings. The Supreme Court affirmed, holding that the lien at issue survived Appellants’ bankruptcy proceedings because the lien was unaffected by the scrivener’s error contained within the deed of reconveyance. View "Reeves v. US Bank National Ass’n" on Justia Law

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In a period of approximately three years, Masonry by Muller, Inc. (Masonry) and Flathead Bank entered into four promissory notes. William Muller signed the promissory notes individually and as president of Masonry and personally guaranteed three of the loans. Flathead Bank later filed a complaint alleging that Muller and Masonry had defaulted on all four loans and that it was entitled to the outstanding balance of the loans. The district court granted Flathead Bank’s motion for summary judgment. Muller appealed. The Supreme Court affirmed, holding that the district court did not err (1) in finding that Flathead Bank’s filing of an IRS Form 1099-C did not extinguish Muller’s debt, as the issuance of an IRS Form 1099-C is not prima facie evidence of a creditor’s intent to discharge a debt; and (2) in finding that Muller could only represent himself personally and could not appear on behalf of Masonry. View "Flathead Bank of Bigfork, Montana v. Masonry by Muller, Inc." on Justia Law

Posted in: Banking

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Facing more than $40,000 in unsecured debt that she owed to Discover Bank and other banks, Susan Ossello enrolled in a debt reduction program and signed a contract with Global Client Solutions. Ossello subsequently stopped making payments on her credit card debt, and Discover Bank brought a collection action against her. Ossello filed a third-party complaint against Global, alleging that Global used deceptive and fraudulent representations to solicit her participation in an illegal debt settlement plan. Global filed a motion to compel arbitration and to dismiss the third-party complaint for lack of jurisdiction. The district court concluded that the arbitration clause in Global’s contract was unconscionable and not unenforceable and therefore denied Global’s motion to dismiss and to compel arbitration. The Supreme Court affirmed, holding that the district court did not err in (1) reserving to itself the determination of arbitrability, and (2) declaring that the arbitration provision was unconscionable and therefore not enforceable against Ossello. View "Discover Bank v. Ossello" on Justia Law

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JAS, Inc. purchased certain property at a trustee’s sale. JAS later filed a quiet title action, naming several defendants, including Mortgage Electronic Systems, Inc. (MERS), Countrywide Home Loans, Inc., and OneWest Bank, FSB. Bank of America, N.A. (BOA), the successor to Countrywide, later intervened. The district court granted summary judgment in favor of BOA, concluding that the trustee’s sale of the property was void ab initio for failure to strictly follow Montana’s foreclosure laws. The Supreme Court affirmed, holding (1) the district court properly voided the sale on the basis of failure of strict compliance with the Small Tract Financing Act of Montana; and (2) the issue of JAS’s recovery of the funds it paid to OneWest Bank at the trustee’s sale was not properly before the Court. View "JAS, Inc. v. Eisele" on Justia Law

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Defendants acquired real property by borrowing more than $2 million from Whitefish Credit Union (WCU) and signing a promissory note to WCU, secured by mortgages on the property. Defendants later defaulted on that note, owing a principal balance of $1,951,670. WCU filed this action for foreclosure and collection of the debt. The property was sold at a sheriff’s sale to WCU for $1,100,000. Thereafter, WCU filed a request for entry of a deficiency judgment against Defendants for the amount of $745,365. Defendants opposed the request, arguing that the fair market value of the property exceeded the loan balance. After a hearing, the district court found the property was worth $2,366,667 as of the date of the sheriff’s sale and that no deficiency was owed to WCU. The Supreme Court affirmed in part and reversed in part, holding (1) the district court did not abuse its discretion by proceeding in equity to determine the fair value of the property for purposes of entering a deficiency judgment; but (2) evidentiary errors clearly affected the outcome of the proceeding to the prejudice of WCU. Remanded for further proceedings on the evidentiary issues and the applicable standard. View "Whitefish Credit Union v. Prindiville" on Justia Law

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The Butte Local Development Corporation (BLDC) filed a complaint against Masters Group International alleging that Masters had failed to pay its obligations under a loan agreement, as modified. Masters filed a third-party complaint against Comerica Bank, alleging, among other claims, that Comerica breached a Forbearance Agreement. A jury found Masters liable to BLDC for $275,251 and found Comerica liable to Masters for a total of $52,037,593, which included punitive damages. The Supreme Court reversed the judgment against Comerica, holding (1) the district court did not abuse its discretion by implicitly denying Comerica’s severance motion; (2) the district court erred in applying Montana law despite the existence of a contractual Michigan choice-of-law provision, and had the district court properly applied Michigan law, Masters’ tort claims would not have been permitted to go to the jury as stand-alone tort claims, and the jury’s award of $10.5 million in punitive damages must be vacated; (3) the law of both Montana and Michigan supports the district court’s decision to submit the companion questions of contract formation and waiver to the jury; and (4) the district court abused its discretion by allowing Troubled Asset Relief Program (TARP) evidence to be presented to the jury. Remanded for a new trial on the contract claims applying Michigan law. View "Masters Group Int’l v. Comerica Bank" on Justia Law

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Plaintiff sought a thirty-year residential financing loan from the predecessor to U.S. Bank in the amount of $300,000. Three years later, Plaintiff filed suit against U.S. Bank alleging that the Bank committed fraud by issuing, without notice, an eighteen-month, $300,000 commercial loan, rather than the thirty-year residential property loan for which she applied. A jury ultimately found in favor of Plaintiff and awarded her $1,000,000 in compensatory damages and $5,000,000 in punitive damages. The district court confirmed the punitive damages award and ordered that post-judgment interest would accrue from the of its decision. The Bank appealed, and Plaintiff cross-appealed. The Supreme court affirmed the direct appeal and reversed the cross-appeal, holding that the district court (1) did not abuse its discretion by excluding law witness testimony and Plaintiff’s medical records; (2) correctly concluded that the Bank committed actual fraud; (3) did not err in holding U.S. Bank liable for punitive damages arising out of Heritage Bank’s pre-merger conduct; (4) did not err in upholding the jury’s award of punitive damages; but (5) erred by ordering accrual of post-judgment interest from the date of its decision. View "McCulley v. U.S. Bank of Montana" on Justia Law

Posted in: Banking

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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