Justia Montana Supreme Court Opinion Summaries

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

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

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

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

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

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

In 2011, IndyMac Bank foreclosed on a certain property. JAS, Inc. purchased the property and subsequently initiated a quiet title action. Defendants Countrywide Home Loans and Mortgage Electronic Registration Systems (MERS) defaulted. Bank of America (BOA), which had acquired Countrywide in 2008, was not named as a party defendant and did not appear in the proceeding. Final judgment was issued quieting title to the property in JAS’s name. Countrywide and MERS subsequently moved to have the entries of default entered against them set aside, and BOA filed a motion to intervene in the proceeding and sought to have the default entered against Countrywide set aside. The district court granted the motions. The Supreme Court affirmed, holding that the district court (1) did not abuse its discretion in granting BOA’s motions to intervene and to set aside the default judgment entered against Countywide, as BOA met the express requirements of Mont. R. Civ. P. 24(a), and Countrywide had no present interest in the subject property at the time suit was filed; and (2) did not manifestly abuse its discretion by granting MERS’s motion to set aside the default judgment entered against it, as MERS established good cause to set aside the default judgment. View "JAS, Inc. v. Eisele" on Justia Law

To secure a loan, Plaintiff executed a promissory note naming ABN AMRO Mortgage Group (ABN) as the note holder. ABN later merged with CitiMortgage, Inc., which became the holder of Plaintiff’s note. CitiMortgage notified Plaintiff that her balloon payment was due and that she could either make the payment or exercise her “reset option.” Plaintiff did not notify CitiMortgage of her intent to exercise the reset option and did not make the payment. The property was foreclosed. CitiMortgage purchased the property and conveyed it to Federal National Mortgage Association (FNMA). Plaintiff filed a complaint against FNMA and CitiMortgage (Defendants). Plaintiff then moved for partial summary judgment, asserting that no evidence of the transfer of the note from ABN to CitiMortgage had been produced during discovery. Defendants subsequently produced a copy of the certificate of merger between ABN and CitiMortgage. The district court granted summary judgment for Defendants, concluding that the untimely disclosure was harmless. The Supreme Court affirmed, holding (1) the district court did not abuse its discretion by declining to impose sanctions against Defendants for discovery violations; and (2) the clause requiring Plaintiff to give written notice of her intent to exercise the reset option was not an unenforceable contract of adhesion or a violation of the Montana Consumer Protection Act. View "Doherty v. Fed. Nat'l Mortgage Ass'n" on Justia Law

Ruby Valley National Bank (RVNB) obtained and recorded a deed of trust (DOT) on certain real property subsequent to a previously recorded DOT. Wells Fargo Delaware Trust Co. (Wells Fargo) claimed to be the beneficiary of the first DOT. RVNB filed for judicial foreclosure of its interest in the property. The district court granted summary judgment for RVNB, holding that RVNB’s DOT was entitled to priority over the earlier DOT held by Wells Fargo because Wells Fargo had not proven the elements necessary for judicial foreclosure and was unable to do so because its trial witness and exhibit list had been stricken. The Supreme Court reversed, holding (1) Wells Fargo was not required to file a counterclaim for foreclosure to protect its interest in the property; and (2) because the undisputed facts established that Wells Fargo was the current beneficiary of the first DOT, the undisputed facts established that Wells Fargo was entitled to judgment as a matter of law that its indenture held priority over RVNB’s indenture. View "Ruby Valley Nat'l Bank v. Wells Fargo Del. Trust Co., N.A." on Justia Law

Borrowers obtained a home loan from Mann Mortgage and executed of deed of trust (DOT) naming the lender. Borrowers also signed a promissory note, which was endorsed to GreenPoint Mortgage Funding, Inc. Mortgage Electronic Registration Systems (MERS) was identified in the DOT as the beneficiary of the note. Borrowers later defaulted on the note. MERS then assigned its interest in the DOT to Greenpoint, and Greenpoint assigned the servicing rights to Countrywide Home Loans. Following a series of cancelled foreclosure sales, Borrowers filed a complaint against MERS, Greenpoint, and Countrywide (collectively, Lenders), alleging that they lacked the authority to foreclose. The district court granted summary judgment for Lenders. The Supreme Court reversed, holding that the district court erred in granting summary judgment to Lenders because (1) MERS did not qualify as a beneficiary of the DOT under Montana's Small Tract Financing Act; and (2) MERS' agency relationship with the lender was not sufficiently established to warrant summary judgment. View "Pilgeram v. Greenpoint Mortgage Funding, Inc." on Justia Law