Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Wells Fargo foreclosed on Frank’s home by advertisement. Frank is deceased and Mitan is the estate representative. The Federal Home Loan Mortgage Corporation purchased the home at a sheriff’s sale in February 2010, and the redemption period expired six months later. Two weeks prior to expiration, Mitan sued, claiming that the foreclosure was contrary to Michigan law. The district court dismissed. The Sixth Circuit reversed, holding that the district court did not establish an adequate record to determine whether Wells Fargo complied with the law. If the foreclosure was void, Mitan’s rights were not terminated at the end of the redemption period. When a lender wishes to foreclose by advertisement on a principal residence, it must provide the borrower with notice designating a person whom the borrower may contact to negotiate a loan modification. Mich. Comp. Laws 600.3205a(1). If the borrower requests negotiation, the lender’s designated person may request certain documents. If negotiations fail, the designated person is required to apply statutory calculations to determine whether the borrower qualifies for a loan modification. If the borrower qualifies, the lender may not foreclose by advertisement unless the designated person offers a modification agreement that the borrower fails to timely return. View "Mitan v. Fed. Home Loan Mortg. Corp." on Justia Law

In 2005, the Coyers entered into a mortgage agreement with Option One to purchase property in Linwood, Michigan. Subsequently, HSBC purchased the mortgage. After the Coyers allegedly stopped making payment to HSBC in 2010, HSBC began foreclosure proceedings pursuant to the mortgage contract’s “power of sale” clause. The Coyers filed a complaint asserting numerous allegations concerning alleged illegal conduct routinely practiced in the mortgage industry. They claimed: breach of fiduciary duty; negligence; common law fraud; breach of implied covenant of good faith and fair dealing; violation of the Truth in Lending Act, 15 U.S.C. 1601; and intentional infliction of emotional distress. The district court entered judgment on the pleadings in favor of HSBC. The Sixth Circuit affirmed. View "Coyer v. HSBC Mortg. Servs/, Inc." on Justia Law

Boggio and wife, Sarah, resided in Texas. Boggio served military tours, and assigned Sarah power of attorney. They separated; Boggio left the state. Six months later Sarah purchased a car with financing through USAA. Sarah allegedly signed Boggio’s name, unbeknownst to him, on the check issued to the car dealership. The car was later listed on Boggio’s car insurance. The divorce decree confirmed that the car was acquired during the marriage, identified the associated loan as a marital debt, and stated that Sarah alone would be responsible for payment. Later, Boggio, residing in Cincinnati, experienced credit problems due to missed payments. Boggio wrote to consumer reporting agencies and USAA disputing his status as co-obligor. USAA attempted to mail Boggio (but not his counsel) a copy of the allegedly forged check, but the letter was sent to an incorrect Texas address. Because Boggio would not go to Texas to file a police report, USAA declared the dispute a civil matter between the Boggios. In Boggio’s suit under the Fair Credit Reporting Act, the district court granted summary judgment to USAA. The Sixth Circuit reversed. A reasonable jury could find that USAA’s investigation and notices were unreasonable.View "Boggio v. USAA Fed.l Sav. Bank" on Justia Law

Cleveland sued financial institutions, alleging that by securitizing subprime mortgages and foreclosing on houses, defendants allegedly contributed to declines in property values, shrinking tax base, and increased criminal activity, causing a public nuisance. The district court dismissed, finding preemption by state law and failure to demonstrate that defendants unreasonably interfered with a public right or were the proximate cause of alleged harm. The Sixth Circuit affirmed. Cleveland filed another suit in state court against non-diverse institutions, alleging public-nuisance, violation of the Ohio Corrupt Activities Act, (RICO analogue), by inaccurately claiming title to mortgages and notes in foreclosures in violation of Ohio Rev. Code 2923.32. Cleveland also sought to recover (Ohio Revised Code 715.261) costs incurred maintaining or demolishing foreclosed houses. While the case was pending, banks sought a declaratory judgment that Cleveland’s public-nuisance claim was preempted by the National Bank Act and an injunction against the suits. The district court suggested that it lacked subject-matter jurisdiction and dismissed. Subsequently, the state court dismissed Cleveland’s public-nuisance and OCAA claims; appeal is pending. The U.S. Supreme Court denied certiorari in the first case, so that declaratory relief is now moot. The Sixth Circuit reversed with respect to the second suit; the district court had jurisdiction.View "Chase Bank USA, N.A. v. City of Cleveland" on Justia Law

When AFC filed for bankruptcy in 2009, the FDIC was appointed receiver for AFC’s subsidiary, AmTrust and sought payment from AFC under 11 U.S.C. 365(o), which requires that a party seeking Chapter-11 bankruptcy fulfill “any commitment . . . to maintain the capital of an insured depository institution.” The FDIC argued that AFC made such a commitment by agreeing to entry of a cease-and-desist order requiring AFC’s board to “ensure that [the Bank] complies” with the Bank’s own obligation to “have and maintain” capital ratios of 7 percent (Tier 1) and 12 percent (total). The district court found that the order was not a capital-maintenance commitment under section 365(o). The Sixth Circuit affirmed. The cease-and-desist order is ambiguous and could reasonably be read as establishing either an oversight role or a capital-maintenance commitment and the bulk of the extrinsic evidence favored the “oversight” reading. View "Fed. Deposit Ins. Corp. v. Amtrust Fin. Corp." on Justia Law

Former Fifth Third employees participated in a defined contribution retirement plan with Fifth Third as trustee. Participants make voluntary contributions and direct the Plan to purchase investments for their individual accounts from preselected options. The options included Fifth Third Stock, two collective funds, or 17 mutual funds. Fifth Third makes matching contributions for eligible participants that are initially invested in the Fifth Third Stock Fund but may be moved later to other investment options. Significant Plan assets were invested in Fifth Third Stock. Plan fiduciaries incorporated by reference Fifth Third’s SEC filings into the Summary Plan Description. Plaintiffs allege that Fifth Third switched from being a conservative lender to a subprime lender, its loan portfolio became increasingly at-risk, and it either failed to disclose or provided misleading disclosures. The price of the stock declined 74 percent. The district court dismissed a complaint under the Employee Retirement Income Security Act, 29 U.S.C. 1001, based on a presumption that the decision to remain invested in employer securities was reasonable. The Sixth Circuit reversed, holding that the complaint plausibly alleged a claim of breach of fiduciary duty and causal connection regarding failure to divest the Plan of Fifth Third Stock and remove that stock as an investment option. View "Dudenhoefer v. Fifth Third Bancorp" on Justia Law

In 2007, Fifth Third loaned Buford $406,000 in exchange for a mortgage on property that Buford purportedly owned. Fifth Third obtained a title-insurance policy from Direct Title, an issuing agent for Chicago Title. Direct Title was a fraudulent agent; its sole “member” was the actual title owner of the property and conspired with Buford to use that single property as collateral to obtain multiple loans from different lenders. When creditors foreclosed on the property in state court, Fifth Third intervened and asked Chicago Title to defend and compensate. Chicago Title refused to defend or indemnify. Chicago Title sought to avoid summary judgment, indicating that it needed discovery on the questions whether “Fifth Third failed to follow objectively reasonable and prudent underwriting standards” in processing Buford’s loan application and whether Direct Title had authority to issue the title-insurance policy. The district court granted Fifth Third summary judgment. The Sixth Circuit affirmed, noting that “When a party comes to us with nine grounds for reversing the district court, that usually means there are none.”View "Fifth Third Mortg. Co. v. Chicago Title Ins. Co." on Justia Law

Since at least 1995, Community Trust Bancorp, Inc. (plaintiff) has used the mark “COMMUNITY TRUST” to promote its services; it included this mark on its website since 1998. Defendants, Community Trust Financial Corporation, and two subsidiaries, Community Trust Bank and Community Trust Bank of Texas, use the marks “COMMUNITY TRUST” and “COMMUNITY TRUST BANK,” and display these marks on their website. Defendants’ contacts with Kentucky are limited. They have branch offices exclusively in Texas, Louisiana, and Mississippi and limit their advertising and marketing campaigns to those states; they have no officers, directors, employees, agents, or any other physical presence in Kentucky. They do have customers who moved to Kentucky and continue to maintain their bank accounts from there. Three or four account owners, while residing in Kentucky, requested passwords to access the Defendants’ online banking website. Plaintiff brought a claim of trademark infringement under the Lanham Act, 15 U.S.C. 1114(1), and state law. The district court denied a motion to dismiss for lack of jurisdiction. The Sixth Circuit reversed, stating that the cause of action only tangentially related to defendants’ acts, providing passwords, within the forum state. View "Cmty. Trust Bancorp, Inc. v. Cmty Trust Fin. Corp." on Justia Law

A Stonefire loan officer, contacted the Lees and convinced them that they could refinance and lower their mortgage payment, get rid of private mortgage insurance, and consolidate credit card debt. They signed papers that they did not read, agreeing to pay Stonefire a brokerage fee of $7000.00 and a processing fee of $995, and that the exact amount of “additional compensation,” would be disclosed at closing. The additional compensation was the “Yield Spread Premium,” to lower up-front closing costs. The lender paid a Premium of 3.5 percent, which increased the interest rate on the loan. The Lees received a variable rate a five percent higher than the fixed rate on their prior loan. At closing, they signed a HUD-1 settlement statement that described a “[p]remium pd to broker by lender to Stonefire” of $5670 paid outside closing. The district court granted summary judgment to the lender on conspiracy and civil fraud claims and to Stonefire on the claim of civil conspiracy. The Lees and Stonefire settled. With respect to the lender, the Sixth Circuit affirmed as to fraud, but reversed on the civil conspiracy claim; Ohio case law prohibits lenders from knowingly conspiring with brokers to conceal mortgage costs, from borrowers. View "Lee v. Countrywide Home Loans, Inc." on Justia Law

Plaintiffs, Lewis, Ross and Jennings, were limited guarantors of loans owed by River City, which filed for bankruptcy. Defendant acquired the original lender’s position and reported to credit reporting agencies that the plaintiffs were obligated in the full amount of the underlying loans rather than in limited amounts. In a suit under the Fair Credit Reporting Act 15 U.S.C.1681–1681x, defendant counterclaimed on the guaranty agreements. The district court found defendant liable to each plaintiff for FCRA violations and the plaintiffs in breach of their guaranty agreements. The court awarded Lewis $30,000 in actual damages and $120,000 in punitive damages and each remaining plaintiff $25,000 in actual damages and $100,000 in punitive damages. The court jointly awarded plaintiffs $20,024.55 in costs and $218,674.00 in attorney’s fees. On the breach of guaranty claims, the court found Lewises liable for $256,797.29, Jennings liable for $255,367.29, and Ross liable for $306,726.14. Defendant objected to Lewis’s garnishment, arguing that defendant was the net judgment creditor because the proper method of calculation required the court to: add the amounts defendant owed plaintiffs (including attorney’s fees and costs); add the amount paintiffs collectively owed defendant; then set off the former sum from the latter. The district court rejected the argument. The Sixth Circuit affirmed. View "Lewis v. United Joint Venture" on Justia Law