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

Relators filed suit under the False Claims Act, 31 U.S.C. 3729(b)(2)(A), against various lenders and loan servicers, alleging that defendants certified that loans purchased by Fannie Mae and Freddie Mac were free and clear of certain home owner association liens and charges when they were not. At issue was whether Fannie Mae and Freddie Mac are officers, employees, or agents of the federal government for purposes of the Act. The court concluded that the district court properly held that a claim presented to Fannie Mae or Freddie Mac is not presented to an “officer, employee or agent” of the United States. Fannie Mae and Freddie Mac are private companies, albeit companies sponsored or chartered by the federal government. The court's prior decision in Rust v. Johnson, where it held that Fannie Mae was a federal instrumentality for state/city tax purposes, does not change the result, because Rust does not address Fannie Mae or Freddie Mac’s status under the False Claims Act. Accordingly, the court affirmed the judgment. View "United States ex rel. Adams v. Aurora Loan Servs." on Justia Law

Plaintiffs filed a putative class action against Wells Fargo and U.S. Bank, alleging federal and state law claims arising out of the modification of the deed of trust for plaintiffs' home. At issue is the retroactivity of 15 U.S.C.1641(g), a 2009 amendment to the 1968 Truth in Lending Act (TILA). Section 1641(g) requires a creditor who obtains a mortgage loan by sale or transfer to notify the borrower of the transfer in writing. The court held that section 1641(g) does not apply retroactively because Congress did not express a clear intent to do so. The court noted that its holding is consistent with numerous district court decisions. Accordingly, the court affirmed the judgment. View "Talaie v. Wells Fargo Bank" on Justia Law

Plaintiff, a homeowner, appealed the dismissal of his action against Freddie Mac, for breach of contract and breach of fiduciary duty where Freddie Mac purchased plaintiff's mortgage from Taylor Bean, the loan originator, on a secondary market. Taylor Bean failed to pay the insurance premium from an escrow account and caused plaintiff's insurance to be cancelled. The court concluded that plaintiff failed to allege facts that, if true, would establish that Freddie Mac had a contractual duty to service the loan where the Deed of Trust expressly disavows any assumption of servicing obligations by a subsequent purchaser of the loan, and Freddie Mac never expressly assumed any such obligations. The court concluded that Washington law did not prohibit this arrangement and that this arrangement is typical for such home loans. Finally, the court concluded that plaintiff's breach of fiduciary duty argument failed because Section 20 of the Deed of Trust where the duty to hold the money for the insurance premiums in escrow remained with the loan servicer, Taylor Bean. Accordingly, the court affirmed the judgment. View "Johnson v. FHLMC" on Justia Law

In 2011, Eminence Investors, LLLP (Plaintiff) brought suit against against The Bank of New York Mellon (Defendant). Nearly two years later, Plaintiff filed an amended complaint adding class allegations on behalf of more than 100 class members and requesting compensatory damages expected to exceed $10 million. Within thirty days of the filing of the complaint, Defendant removed the action to federal court pursuant to the Class Action Fairness Act (CAFA). Plaintiff moved to remand the case to state court. The district court remanded the case to state court, concluding that removal was untimely. Defendant appealed. A panel of the Ninth Circuit dismissed for lack of subject matter jurisdiction the appeal, holding that the securities exception from CAFA removal applied to this case. View "Eminence Investors, LLLP v. Bank of New York Mellon" on Justia Law

In 2007, MTB Enterprises, Inc. obtained a $17 million construction loan from financial institution ANB Financial. ANB thereafter failed, and the Federal Deposit Insurance Corporation transferred the construction loan to ADC Venture 2011-2, LLC. In 2012, MTB filed suit in the United States District Court for the District of Idaho against ADC Venture alleging that ADC Venture assumed the obligations of ANB Financial and was therefore liable for breach of contract and damages from MTB’s failed construction venture. The district court dismissed MTB’s claims. The Ninth Circuit dismissed MTB’s appeal for lack of jurisdiction, holding (1) the rule set forth in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 that a claimant must sue in the district court where the failed bank’s principal place of business was located or the United States District Court for the District of Columbia is a jurisdictional limitation on federal court review; and (2) because the United States District Court for the District of Idaho lacked subject-matter jurisdiction over the case from the start, the case must be dismissed. View "MTB Enters., Inc. v. ADC Venture 2011-2, LLC" on Justia Law

The Federal Deposit Insurance Corporation (“FDIC”) was appointed to act as receiver for the assets of First Heritage Bank, N.A. (“Heritage”). Heritage had previously purchased, pursuant to an agreement (“Agreement”), interest in a commercial loan that Professional Business Bank (“PBB”) had made to Al’s Garden Art, Inc. The FDIC subsequently sold Heritage’s interest under the Agreement to Commerce First Financial, Inc. (“CFF”). When Al’s Garden Art defaulted on its loan obligations, PBB sued to collect on the loan. CFF then brought a breach of contract action against PBB. PBB filed a third party complaint against the FDIC, alleging that the FDIC’s failure to satisfy the Agreement’s pre-receivership contractual provisions constituted breach of contract. The FDIC moved to dismiss on the grounds that the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) preempted PBB’s claims. The district court denied the motion and granted summary judgment for PBB. The Ninth Circuit affirmed, holding that the FDIC, in its role of receiver of a closed bank, may not breach underlying asset contractual obligations without consequence. View "Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp." on Justia Law

Defendant pleaded guilty to two counts of conspiracy to engage in prohibited monetary transactions in property for his part in the purchase of two parcels of real property with fraudulently obtained loans. The district court ordered Defendant to pay $615,935 in restitution to JP Morgan Chase, a loan purchaser, and $329,767 in restitution to CitiGroup, a loan originator. Defendant appealed the restitution order. The Ninth Circuit (1) affirmed the district court’s determination that the requirements of the Mandatory Victim Restitution Act were met in this case; (2) affirmed the calculation of restitution owed to CitiGroup; and (3) vacated and remanded for the district court to recalculate the amount owed to Chase because the court applied a formula for a loan originator, although Chase had purchased the loans. View "United States v. Luis" on Justia Law

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

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

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