Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Articles Posted in Banking

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The Debtors were account holders at Wells Fargo. When Wells Fargo discovered that the Debtors had filed a voluntary Chapter 7 bankruptcy petition, it placed a “temporary administrative pledge” on their accounts and requested instructions from the Chapter 7 trustee regarding the distribution of account funds, a portion of which the Debtors claimed as exempt under Nevada Revised Statutes 21.090(1)(g). The Debtors brought an adversary proceeding, which the bankruptcy court dismissed. The district court affirmed, holding that they did not state a claim for a willful violation of 11 U.S.C. 362(a)(3), which prohibits “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” Before the account funds revested in the Debtors, they remained estate property, and the Debtors had no right to possess or control them. The administrative pledge could cause the Debtors no injury before the account funds revested. After the account funds revested in the Debtors, they lost their status as estate property and thus were no longer subject to section 362(a)(3). View "In re: Mwangi" on Justia Law
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The Hawaii AG filed suit in state court against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products. The card providers removed to federal court and the AG moved to remand. The district court denied the motion to remand. The court concluded that the state law claims were not preempted by the National Bank Act of 1864, 12 U.S.C. 85-86. The court joined the Fifth Circuit in holding that sections 85 and 86 did not completely preempt the claims, as there is a difference between alleging that certain customers are being charged too much, and alleging that they should have never been charged for the service in the first place. Therefore, the AG did not plead a completely preempted claim and the district court erred in finding federal question jurisdiction. The court agreed with its sister circuits in holding that the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. 1332(d), does not completely preempt state law. Because the complaints unambiguously disclaimed class status, these actions cannot be removed under CAFA. There is no basis for federal jurisdiction and the cases should have been remanded to state court. Accordingly, the court reversed and remanded. View "State of Hawaii v. HSBC Bank of Nevada" on Justia Law

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Plaintiffs filed suit against Chase and WaMu, alleging claims arising out of allegedly fraudulent acts by WaMu concerning the refinancing of their mortgage. WaMu was later placed into receivership of the FDIC and the FDIC transferred plaintiffs' mortgage to Chase. The court concluded that plaintiffs' claims in their complaint are "claims" for purposes of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1821(d)(3)(D), and related to WaMu's acts or omissions for purposes of section 1821(d)(13)(D). Because plaintiffs have not exhausted their administrative remedies under section 1821(d), the plain language of section 1821(d)(13)(D)(ii) stripped the district court of jurisdiction to consider plaintiffs' complaint. Accordingly, the court affirmed the district court's dismissal of plaintiffs' claims. View "Rundgren v. Washington Mutual" on Justia Law

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Plaintiffs filed suit against Countrywide and others involved in their residential mortgage, alleging violations of numerous federal statutes. The district court dismissed the claims with prejudice and plaintiffs appealed. The court held that plaintiffs can state a claim for rescission under the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., without pleading that they have tendered, or that they have the ability to tender, the value of their loan; only at the summary judgment stage may a court order the statutory sequence altered and require tender before rescission - and then only on a case-by-case basis; and, therefore, the court reversed the district court's dismissal of plaintiffs' rescission claim and remanded for further proceedings. The court held that, although the limitations period in the Real Estate Settlement Practices Act (RESPA), 12 U.S.C. 2614, ordinarily runs from the date of the alleged RESPA violation, the doctrine of equitable tolling may, in the appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the violation; just as for TILA claims, district courts may evaluate RESPA claims case-by-case; and, therefore, in this case, the court vacated the dismissal of plaintiffs' Section 8 of RESPA claims on limitations grounds and remanded for reconsideration. View "Merritt v. Countrywide Financial Corp." on Justia Law

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This case arose when Meritage submitted an administrative claim to the FDIC. The FDIC disallowed Meritage's administrative claim and Meritage then filed suit. Meritage obtained a default judgment against the FDIC and the FDIC provided Meritage with a receiver's certificate in the amount of the judgment. The FDIC also filed with the district court a Satisfaction of Judgment. Meritage sought to have the district court strike the FDIC's Satisfaction of Judgment and instead direct the FDIC to pay the judgment in cash. Subsequently, on appeal, Meritage challenged the district court's judgment and challenged orders denying its motion to strike or, in the alternative, issue a summons to certain third parties to this action and denying its motion for reconsideration. The court held that the district court's denial of Meritage's request for a summons was to be reviewed for clear error. On the merits, the court held that the district court did not abuse its discretion in ruling that the receiver's certificate satisfied the judgment against the FDIC. The court also held that the district court did not commit clear error in declining to issue a summons to Rescon and Stearns. Accordingly, the court affirmed the judgment of the district court. View "Meritage Homes of Nevada v. FDIC" on Justia Law

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Plaintiffs filed suit against Wells Fargo, raising multiple causes of action under state and federal law pertaining to plaintiffs' home loan and deed of trust. At issue was whether, under 28 U.S.C. 1348, a national bank is a citizen of both the state in which its principal place of business is located as designated in the banks' articles of association. The court concluded that, under section 1348, a national bank is a citizen only of the state in which its main office is located. Therefore, the district court had diversity jurisdiction because there was complete diversity between plaintiffs, citizens of California, and Wells Fargo, a citizen of South Dakota. Accordingly, the court reversed the district court's judgment to the contrary and remanded for further proceedings. View "Rouse, et al. v. Wachovia Mortgage" on Justia Law

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Deutsche Bank appealed the dismissal of its claims against the FDIC. At issue was whether Deutsche Bank's claims were general unsecured claims under 12 U.S.C. 1821(d)(11) and thereby prudentially moot because of the lack of sufficient funds in the estate to pay unsecured claims. The court concluded that, because Deutsche Bank was a quintessential creditor, its claims were third-tier general unsecured liabilities under section 1821(d)(11)(A)(iii), and the district court properly held that Deutsche Bank's claims were prudentially moot, as there were insufficient funds to satisfy general unsecured liabilities. Accordingly, the court affirmed the judgment of the district court. View "Deutsche Bank Nat'l Trust Co. v. FDIC" on Justia Law

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Plaintiff appealed the district court's dismissal of his claim under Rule 12(b)(6), alleging that Nationstar violated section 533 of the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. app. 533, when it maintained certain fees related to a rescinded Notice of Default on his account while he was on active duty. Because the state-law statutory definition of foreclosure contemplates the inclusion of specified fees as part of the foreclosure proceeding, and because the Supreme Court has unambiguously required courts to give a broad construction to the statutory language of the SCRA to effectuate the Congressional purpose of granting active-duty members of the armed forces repose from some of the trials and tribulations of civilian life, the court held that the attempted collection of fees related to a Notice of Default on a California property constituted a violation of section 533. In this case, plaintiff has pled sufficient facts to allege that Nationstar's continuing failure to remove the fees incidental to the Notice of Default was a continuation of that foreclosure proceeding while plaintiff was on active duty service in violation of section 533. Accordingly, the court reversed and remanded. View "Brewster v. Sun Trust Mortgage" on Justia Law

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Plaintiffs, a class of cardholders who paid credit card penalty fees, challenged those fees on constitutional grounds. Plaintiffs argued that the fees are analogous to punitive damages imposed in the tort context and are subject to substantive due process limits described in BMW of North America, Inc. v. Gore. The court concluded that the due process analysis developed in the context of jury-awarded punitive damages was not applicable to contractual penalty clauses. Further, there was no derivative liability under the Unfair Competition Law. Accordingly, the district court did not err in dismissing the complaint where constitutional due process jurisprudence did not prevent enforcement of excessive penalty clauses in private contracts and the fees were permissible under the National Bank Act, 12 U.S.C. 85-86, and the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 12 U.S.C. 1831d(a). View "In re: Late Fee & Over-Limit Fee Litigation" on Justia Law

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This case concerned the Home Affordable Modification Program (HAMP), a government program created to help distressed homeowners with delinquent mortgages. At issue was whether Wells Fargo was contractually required to offer plaintiffs a permanent mortgage modification after they complied with the requirements of a trial period plan (TPP). Following the Seventh Circuit, the court held that Wells Fargo was required to offer the modification. The district court should not have dismissed plaintiffs' complaints when the record showed that Wells Fargo had accepted and retained the payments demanded by the TPP, but neither offered a permanent modification, nor notified plaintiffs they were not entitled to one, as required by the terms of the TPP. Accordingly, the court reversed and remanded. View "Corvello v. Wells Fargo Bank N.A." on Justia Law