Articles Posted in Banking

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Dos Lagos, LLC and Mellon Valley, LLC defaulted on a loan in which Utah First Federal Credit Union owned a fifty-two percent interest and RADC/CADC Venture, LLC (RADC) owned a forty-eight percent interest. Utah First filed a deficiency action against Dog Lagos, Mellon Valley, and several guarantors (collectively, Dos Lagos). After the statute of limitations had expired, Utah First filed an emended complaint adding RADC as a party plaintiff. The district court awarded RADC the full amount of the loan, concluding that the amended complaint related back to the date of the original complaint under Utah R. Civ. P. 15(c). The court of appeals affirmed. The Supreme Court affirmed, holding that the court of appeals did not err when it found that RADC’s claim was not time barred and awarded RADC the full deficiency amount. View "2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC" on Justia Law

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Shayne Crapo defaulted on a $250,000 loan from Zions First National Bank. After the expiration of a three-year period with no payments being made on the loan, Zions Bank issued Mr. Crapo a Form 1099-C - a reporting tool designed to help the IRS track lenders’ debt forgiveness. Crapo claimed that he reported the $250,000 as income on his tax return, thus increasing his tax burden for that year. After Zions Bank brought a deficiency action to recover the amount due on the loan, Crapo argued that the Form 1099-C was prima facie evidence that Zions Bank discharged the debt and that Zions Bank was estopped from collecting the debt. The district court rejected Crapo’s arguments and granted summary judgment in favor of Zions Bank. The Supreme Court affirmed, holding that Crapo failed to show that there was a genuine dispute of material fact as to either actual discharge or estoppel. View "Crapo v. Zions First National Bank" on Justia Law

Posted in: Banking

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In 2005, Connor Libby and Elena Chapa (collectively, Defendants) signed credit card agreements with Federated Capital Corporation’s predecessor-in-interest, a Utah corporation with its principal place of business in Pennsylvania. The agreements contained a forum selection clause and choice of law provision that adopted Utah substantive and procedural law to govern any dispute under the contract. The agreements required Defendants to make monthly payments to the address specific on their billings statements, and each billing statement required Defendants to send their payments to an address in Philadelphia, Pennsylvania. Defendants defaulted in 2006. In 2012, Federated filed separate claims in separate proceedings against Defendants. In each proceeding, the district court granted summary judgment in favor of Defendants, ruling that Utah’s borrowing statute required the court to apply Pennsylvania’s four-year statute of limitations, thereby barring Federated’s claims. Federated appealed, arguing that the agreement’s forum selection clause precluded the application of Utah’s borrowing statute. The Supreme Court affirmed, holding that the borrowing statute applied to and barred Federated’s causes of action. View "Federated Capital Corp. v. Libby" on Justia Law

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Plaintiff filed a public records request under the Government Records Access and Management Act (GRAMA) seeking bank records the State had legally seized during a criminal investigation. The district court denied the request, concluding that article I, section 14 of the Utah Constitution provides a broad right of privacy that prevented the State from disclosing the records. The district court also denied Plaintiff access to a summary of the bank records (the Quicken Summary) and an investigator’s handwritten notes (the Post-it Note), concluding that both documents were protected attorney work product. The Supreme Court reversed, holding (1) there can be no violation of section 14 when the government obtains information through a valid warrant or subpoena, and therefore, the bank records were not exempted from GRAMA’s public disclosure requirements; and (2) the district court correctly classified the Quicken Summary and the Post-it Note as attorney work product, but, because the State terminated its investigation years ago, the interests favoring protection were not as compelling as those favoring disclosure. View "Schroeder v. Utah Attorney General’s Office" on Justia Law

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At issue in this case was the effect of a subordination agreement between fewer than all of the creditors who hold an interest in the same collateral. Appellant VCS, Inc. provided labor and materials to improve real property located in a planned unit development. The developer, Acord Meadows, secured funding for the project from America West Bank and Utah Funding Commercial. The loans were secured with trust deeds to the development properties, and the lenders entered into subordination agreements among themselves that altered the priority arrangement of their trust deeds. Because VCS was never paid for its work, it filed a mechanic’s lien covering several lots of the development, four of which were sold through a foreclosure sale after Acord defaulted on its loans from Utah Funding. VCS claimed it was entitled to payment of its mechanic’s lien because its lien had priority over Utah Funding’s liens. The district court ruled that VCS’s mechanic’s lien was extinguished by the foreclosure of Utah Funding’s liens. The Supreme Court affirmed after adopting the partial subordination approach to the issue in this case, holding that under the partial subordination approach, VCS’s mechanic’s lien was extinguished once Utah Funding’s lien was foreclosed upon. View "VCS Inc. v. Countrywide Home Loans, Inc." on Justia Law

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Cottage Capital, LLC brought this action to enforce a guaranty agreement against Red Ledges Land Development. The district court dismissed the enforcement action with prejudice, concluding that the enforcement action was precluded as a compulsory counterclaim because it arose out of the same transaction or occurrence as a previously filed declaratory judgment action between the parties, and there could be no waiver of the preclusive effect of Utah R. Civ. P. 13(a). The Supreme Court reversed, holding that Rule 13(a) was not implicated in this case because (1) Rule 13(a) does not extend to a counterclaim that has not yet matured at the time of a civil proceeding; and (2) Cottage Capital’s enforcement claim had not matured at the time of the earlier proceedings between the parties, and therefore, this claim was not precluded. Remanded. View "Cottage Capital, LLC v. Red Ledges Land Dev." on Justia Law

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2 Ton Plumbing, LLC recorded a notice of mechanics’ lien against a lot in a development (Lot 30). Gregory and Kendra Thorgaard later purchased Lot 30 and executed a trust deed in favor of Washington Federal. Thereafter, 2 Ton recorded amended notices of mechanics’ lien against Lot 30 and filed a lien foreclosure claim against the Thorgaards and Washington Federal. Washington Federal, meanwhile, recorded its notice of release of lien and substitution of alternate security purporting to release 2 Ton’s original notice of lien. The district court ultimately entered judgment against Lot 30, which included principal and fees and costs. The Supreme Court reversed, holding (1) 2 Ton’s amended notices of lien were invalid because they included attorney fees and costs in the value of the mechanics’ lien, but 2 Ton’s original notice of lien remained valid; (2) the Thorgaards’ notice of release of lien and substitution of alternate security complied with the statutory requirements, and therefore, the district court erred in refusing to release Lot 30 from the lien; but (3) because the Thorgaards stipulated to the accuracy of the original lien claim, 2 Ton was entitled to recover its costs and a reasonable attorney fees award. Remanded. View "2 Ton Plumbing, LLC v. Thorgaard" on Justia Law

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Appellant filed an action against a Bank seeking to foreclose his judgment lien against property owned by the Bank. Wells Fargo subsequently filed a motion to dismiss Appellant’s complaint because the judgment lien had expired while the foreclosure action was pending. The district court granted the Bank’s motion and dismissed the complaint. On appeal, Appellant argued that the Court should overturn its precedent holding that a foreclosure action does not toll the expiration of a judgment or hold that the Bank should be estopped from asserting the expiration of the judgment because the Bank unfairly extended the foreclosure litigation past the judgment’s expiration. The Supreme Court affirmed, holding (1) filing a foreclosure action does not toll the expiration of a judgment; and (2) principles of equity do not support tolling the expiration of Appellant’s judgment. View "Gildea v. Wells Fargo Bank" on Justia Law

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This case stemmed from the district court’s approval of the Utah Department of Financial Institutions’ (UDFI) seizure of America West Bank Members, L.C. (Bank) and the appointment of the Federal Deposit Insurance Corporation as receiver of the Bank. The Bank filed a complaint against the State, UDFI, and the director of UDFI (collectively, the State), alleging breach of contract, breach of the covenant of good faith and fair dealing, constitutional takings, and due process violations. The district court dismissed the Bank’s claims for lack of sufficient factual allegations under Utah R. Civ. P. 12(b)(6). The Supreme Court affirmed, holding (1) the district court did not err when it dismissed the Bank’s claims; and (2) the district court did not hold the Bank to a heightened pleading standard. View "America West Bank Members, L.C. v. State" on Justia Law

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Plaintiffs filed a complaint against America West Bank, L.C. (the Bank) alleging, among other claims, improper acceptance of unauthorized signatures. The Bank tendered defense of the claim to its insurer under the terms of a financial institution bond. The Utah Department of Financial Institutions subsequently closed the Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC mailed and published notices indicating that all claims against the Bank had to be submitted to the FDIC for administrative review. After the administrative claims review deadline, Plaintiff filed a proof of claim with the FDIC, which the FDIC disallowed because it was untimely filed. Plaintiffs then filed a notice of intent to prosecute. The district court granted the FDIC’s motion to dismiss, concluding that Plaintiffs failed to exhaust the administrative claims review process made available to them by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). The Supreme Court affirmed, holding (1) Plaintiffs’ failure to comply with the administrative exhaustion requirements of FIRREA deprived the district court of subject matter jurisdiction; and (2) Plaintiffs’ failure to avail themselves of the available claims review process did not amount to a violation of due process. View "Summerhaze Co., L.C. v. Fed. Deposit Ins. Corp." on Justia Law