Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

This litigation arose out of the failure of WaMu and the assumption of WaMu's assets and liabilities by Chase from the FDIC, acting in its capacity as WaMu's receiver. On appeal, the FDIC and Chase challenged the district court's grant of summary judgment in favor of Hillside. The district court concluded that Hillside, which owned premises leased by WaMu before the financial crisis, had third-party standing to enforce the alleged assignment of WaMu's real estate lease to Chase under a purchase agreement between the FDIC and Chase, even though the FDIC validly repudiated the lease under section 212(e) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. 1821(e), and the parties to the purchase agreement asserted that it did not in fact assign the lease. The court held that Hillside lacked prudential standing to litigate whether WaMu's liabilities were assigned to Chase under the agreement because it was neither a contracting party nor a third-party beneficiary under the agreement. Accordingly, the court vacated and remanded with instructions to dismiss the complaint. View "Hillside Metro Associates, LLC v. JPMorgan Chase Bank, N.A." on Justia Law

These appeals challenged two orders entered in the district court holding that the separate entity rule precludes a court from ordering a garnishee bank with branches in New York to turn over or restrain assets of judgment debtors held in foreign branches of the bank. Because these appeals presented unresolved questions that implicate significant New York state interests and were determinative of these appeals, the court reserved decision and certified two questions to the New York Court of Appeals: (1) whether the separate entity rule precluded a judgment creditor from ordering a garnishee bank operating branches in New York to turn over a debtor's assets held in foreign branches of the bank; and (2) whether the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a debtor's assets held in foreign branches of the bank. View "Tire Eng'g and Distrib., L.L.C., et al. v. Bank of China Ltd." on Justia Law

Appellant appealed from the district court's order decertifying a class of plaintiffs who asserted claims against the FDIC and denying plaintiffs' motion to permit appellant, who was not a named party to the action before the district court, to intervene. The court dismissed the appeal because appellant failed to notice an appeal of the denial of the motion to allow him to intervene. As a nonparty, he could not otherwise challenge the decertification order on appeal. View "Bloom v. Federal Deposit Ins. Corp." on Justia Law

Plaintiffs appealed from the district court's grant of defendants' motion for summary judgment on plaintiffs' Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., claims and denial of plaintiffs' motion for reconsideration of an earlier dismissal of their Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq., claims against The Money Store. The court held that the district court erred in concluding that The Money Store was not a "debt collector" under the false name exception to FDCPA liability. Where a creditor, in the process of collecting its own debts, hires a third party for the express purpose of representing to its debtors that the third party is collecting the creditor's debts, and the third party engages in no bona fide efforts to collect those debts, the false name exception exposes the creditor to FDCPA liability. In regards to the TILA claims, the court concluded that the district court correctly determined that, because plaintiffs' mortgage documents did not name The Money Store as the person to whom the debt was initially payable, The Money Store was not a "creditor" under TILA and was therefore not subject to liability. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Vincent v. The Money Store" on Justia Law

Plaintiffs alleged that various foreign investment vehicles secretly funneled investors' assets to Madoff Securities. The district court granted defendants' motion to dismiss plaintiffs' claims against JPMorgan and BNY on the ground that the claims were precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 15 U.S.C. 78bb(f), and, alternatively, by New York's Martin Act, N.Y. Gen. Bus. Law 352 et seq. In this instance, the allegations were more than sufficient to satisfy SLUSA's requirement that the complaint alleged a "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security." Accordingly, the court affirmed the judgment, concluding that plaintiffs' claims against JPMorgan and BNY were properly dismissed as precluded by SLUSA. View "Trezziova v. Kohn" on Justia Law

U.S. Bank appealed the bankruptcy court's order authorizing AMR and American (collectively, "Debtors") to obtain postpetition financing; authorizing Debtors to repay certain prepetition notes held by U.S. Bank and secured by aircraft; and denying U.S. Bank's request to lift an automatic stay. The court concluded that: (1) under the language of the Indentures, American's voluntary petition for bankruptcy triggered a default and automatically accelerated the debt, the satisfaction of which required no make-whole payment; (2) ipso facto clauses in a nonexecutory contract were not unenforceable under 11 U.S.C. 365(e) or any other Bankruptcy Court provision identified by U.S. Bank; Debtors complied with its 11 U.S.C. 1110(a) elections to perform its obligations under the Indentures and cure any nonexempt defaults by making regularly schedule principal and interest payments; it was not required to cure its Section 4.01(g) default; and (4) the bankruptcy court did not abuse its discretion in denying U.S. Bank's motion to lift the automatic stay. Accordingly, the court affirmed the judgment of the district court. View "In re: AMR Corp." on Justia Law

BNY, as Trustee of an investment portfolio of collateralized loan obligations, initiated an interpleader action to resolve a contract dispute between certain shareholders and the manager of that portfolio, Franklin. At issue were the terms of the indenture and, specifically, terms governing distribution of a Contingent Collateral Management Fee, which was payable to Franklin only if distributions reached a twelve percent internal rate of return (IRR). The court granted the partial summary judgment to Franklin and the denial of summary judgment to the Shareholders, as well as the award of attorneys fees and costs. The court vacated, however, the award of statutory prejudgment interest with instruction to award prejudgment interest actually accrued on the fee owed to Franklin, to be paid from the court's account. View "Franklin Advisers, Inc. v. CDO Plus Master Fund, Ltd." on Justia Law

Plaintiff, a recipient of Supplemental Security Income (SSI) benefits, appealed from the district court's judgment sua sponte dismissing his amended complaint under 28 U.S.C. 1915(e)(2)(B). Plaintiff sought an Order to Show Cause, a temporary restraining order, and a preliminary injunction enjoining defendants from levying against his SSI benefits to enforce a child support order. At issue was whether 42 U.S.C. 659(a) authorized levy against SSI benefits provided under the Social Security Act, 42 U.S.C. 301 et seq., to satisfy the benefits recipient's child support obligations. The court concluded that SSI benefits were not based upon remuneration for employment within the meaning of section 659(a); section 659(a) did not preclude plaintiff's claims; and the Rooker-Feldman doctrine and the exception to federal jurisdiction for divorce matters did not preclude the district court from exercising jurisdiction over the matter. Accordingly, the court vacated the judgment to the extent the district court dismissed plaintiff's claims against the agency defendants and remanded for further proceedings. However, the court affirmed the portion of the judgment dismissing plaintiff's claims against Bank of America because his complaint had not alleged facts establishing that the bank was a state actor for purposes of 42 U.S.C. 1983. View "Sykes v. Bank of America" on Justia Law

Trustee sued on behalf of victims in the Ponzi scheme worked by Bernard Madoff under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa, alleging that, when defendants were confronted with evidence of Madoff's illegitimate scheme, their banking fees gave incentive to look away, or at least caused a failure to perform due diligence that would have revealed the fraud. The court concluded that the doctrine of in pari delicto barred the Trustee from asserting claims directly against defendants on behalf of the estate for wrongdoing in which Madoff participated; SIPA provided no right to contribution; and the Trustee did not have standing to pursue common law claims on behalf of Madoff's customers. Accordingly, the court affirmed the district court's dismissal of the Trustee's claims. View "In Re: Bernard L. Madoff Investment Securities" on Justia Law

Gaia and State Street were bound by a mezzanine loan agreement with Lehman Brothers to help finance the construction of a residential building in Manhattan. At issue on appeal was whether equitable estoppel, principles of good faith and fair dealing, or general principles of equity prevented State Street from keeping the Accrued Interest. The court concluded that Gaia could not rely on equitable estoppel to recover the Accrued Interest because Gaia did not demonstrate an omission or misrepresentation by State Street on which Gaia reasonably relied to its substantial detriment; State Street was entitled to act in its own self-interest and require payment of the Accrued Interest, even if such action lessened Gaia's anticipated profits, because State Street acted consistently with the contract and did not violate a presumed obligation or Gaia's reasonable expectations; State Street's actions were not taken in bad faith; State Street did not unlawfully demand payment of the Accrued Interest and it was not liable for the Doral damages; and the Professional Fee provision applied in this action and State Street was entitled to Professional Fees incurred as a result of this litigation. Accordingly, the court reversed and remanded. View "Gaia House Mezz LLC v. State St. Bank & Trust Co." on Justia Law