Articles Posted in Banking

by
An employee of a nonprofit serving disabled adult clients used her position to embezzle more than half a million dollars held by the nonprofit for its clients. After the embezzlement was discovered, Travelers Casualty & Surety Company, the nonprofit's insurance company, made the nonprofit whole. Travelers then sought contribution from the bank in federal court. By submitting certified questions of Washington law, that court has asked the Washington Supreme Court to decide, among other things, whether a nonpayee's signature on the back of a check was an indorsement. Furthermore, the Court was also asked whether claims based on unauthorized indorsements that are not discovered and reported to a bank within one year of being made available to the customer are time barred. The Supreme Court answered yes to both questions. View "Travelers Cas. & Sur. Co. v. Wash. Trust Bank" on Justia Law

by
Newman Park, LLC was formed for the sole purpose of developing a piece of property. In 2004, it took out a loan to purchase the property at issue in this suit. In 2008, without knowledge of the other owners in Newman Park, one member went to Columbia Community Bank and requested a loan for his 95%-owned company, Trinity. Trinity had nothing to do with Newman Park, but the Bank's loan to Trinity was secured by a second deed of trust on the Newman Park property. The issue before the Supreme Court in this case was whether the Bank, who was tricked into refinancing the property that the borrower lacked authority to pledge as security, could benefit from equitable subrogation when that Bank had no preexisting interest in the property. The property-owner/debtor argued that the Bank's lack of the preexisting interest barred it from equitable subrogation because of the "volunteer rule" which would characterize it as an intermeddler. The Court rejected the volunteer rule as a bar to equitable subrogation. The Court affirmed the appellate court which held that the defrauded Bank was entitled to be equitably subrogated as first priority lienholder. View "Columbia Cmty. Bank v. Newman Park, LLC" on Justia Law

by
Dorothy Halstein suffered from dementia. She owned a home worth between $235,000 and $320,000. While suffering demential, she owed approximately $75,000 to Washington Mutual Bank (WaMu), secured by a deed of trust on her home. Because of the cost of her care, her guardian did not have the funds to pay her mortgage. Quality Loan Services, acting as trustee of the deed of trust, foreclosed on her home. Quality sold the home for $83,087.67, one dollar more than Ms. Halstein owed. A notary falsely notarized the notice of sale by predating the notary acknowledgement. The falsification permitted the sale to take place earlier than it could have had the notice of sale been dated when it was actually signed. Before the foreclosure sale, Halstein's court-appointed guardian secured a buyer for her house willing to pay $235,000. There was not enough time before the scheduled foreclosure to close the sale with the buyer. Despite numerous requests, WaMu did not postpone the sale. A jury found that the trustee was negligent, and that the trustee's acts violated the Consumer Protection Act (CPA), and that the trustee breached its contractual obligations. The Court of Appeals reversed all but the negligence claim. Upon review, the Supreme Court reversed the Court of Appeals in part, and restored the award based on the CPA. View "Klem v. Wash. Mut. Bank" on Justia Law

by
The issue before the Supreme Court in this case was whether particular officers and employees of a bank owed a quasi-fiduciary duty to particular bank depositors. Michael and Theresa Annechino deposited a large amount of money at a bank specifically to ensure that their savings would be protected by the Federal Deposit Insurance Corporation (FDIC). The Annechinos relied on bank employees’ recommendations of how to structure their accounts to meet FDIC coverage rules. Unfortunately, the bank went into receivership, and the FDIC found that nearly $500,000 of the Annechinos’ deposits were not insured. The Annechinos alleged that individual officers and employees of the bank owed them a duty, the breach of which resulted in their loss. The trial court granted summary judgment in favor of the individual defendants, and the Court of Appeals affirmed. Upon review, the Supreme Court affirmed the Court of Appeals. The officers and employees of the bank did not owe the Annechinos a quasi-fiduciary duty. Holding the officers and employees personally liable under these facts would have contravened established law regarding liability for acts committed on behalf of a corporation or principal. View "Annechino v. Worthy" on Justia Law

by
Christa Albice and Karen Tecca (hereinafter Tecca) inherited the property at issue in this case. In 2003, Tecca borrowed $115,500 against the property. The loan was serviced by Option One Mortgage Corporation (Option One), and Premier Mortgage Services of Washington (Premier) acted as the trustee. In 2006, Tecca defaulted on the loan and received a notice of trustee's sale. In July 2006, Tecca negotiated and entered into a forbearance agreement to cure the default. The trustee's sale originally set for September 8, 2006 was continued six times. Each continuance was tied to the payments Tecca made under the Forbearance Agreement. The foreclosure sale finally took place on February 16, 2007. Through an agent, Petitioner Ron Dickinson, successfully bid on the property. Tecca first learned the property was sold when Dickinson told Tecca they no longer owned it and needed to leave. Dickinson then filed an unlawful detainer action and sought to quiet title. Tecca countersued, seeking to quiet title in an action to set aside the nonjudicial sale. Tecca also brought suit against Option One and Premier, but the trial court dismissed the action based on an arbitration clause. Dickinson moved for summary judgment to establish that he was a BFP and entitled to quiet title. Tecca also moved for summary judgment, arguing the foreclosure sale should have been set aside because the sale occurred after the statutory deadline and Premier was not a qualified trustee with authority to conduct the sale. The trial court granted Dickinson's motion, ruling that Dickinson was a BFP and despite procedural noncompliance by the trustee. Following trial, the court concluded Premier was authorized to act as the trustee, quieted title in Dickinson, and awarded Dickinson damages. Tecca appealed. The Court of Appeals reversed, setting the sale aside. The Supreme Court affirmed the Court of Appeals: the nonjudicial foreclosure proceedings were "marred" by repeated statutory noncompliance. The financial institution acting as the lender also appeared to be acting as the trustee under a different name; the lender repeatedly accepted late payments and, at its sole discretion, rejected only the final late payment that would have cured the default; and the trustee conducted a sale without statutory authority. The Court concluded the sale was invalid. View "Albice v. Premier Mortg. Servs. of Wash., Inc." on Justia Law

by
As part of the distribution of property following the dissolution of Kenneth Treiger and J’Amy Lyn Owens’ marriage, a home belonging to them (the Maplewood property) was sold, and, pursuant to a trust agreement, the proceeds were deposited in a trust account. Bank of America NA (the Bank), which had obtained a writ of attachment on the Maplewood property, filed a declaratory judgment action to determine each party’s rights to the proceeds. This presented two issues for the Supreme Court's review: (1) to determine whether the “Supplemental Decree of Dissolution” (Supplemental Decree) established a lien on the Maplewood property in favor of Treiger; and (2) to determine whether various documents were valid judgments. Upon review, the Court concluded that the Supplemental Decree established an equitable lien on the Maplewood property in favor of Treiger in the amount of one-half of the proceeds of the court-ordered sale of the property. Furthermore, Documents "1375" and "13761" were valid judgments entitling Treiger to further awards but that Document "1370" was properly not given separate effect. Accordingly, the Court affirm in part and reversed in part the decision of the Court of Appeals. View "Bank of America, NA v. Owens" on Justia Law

by
Washington residents who were consumers of allegedly illegal debt adjustment programs filed a class action lawsuit against Defendants Global Client Solutions, LLC (GCS) and Rocky Mountain Bank and Trust (RMBT). Defendants managed and held âspecial purpose accountsâ as part of their adjustment programs. Payments to consumersâ creditors were authorized from these accounts. When enough money accumulated in a consumerâs account, Defendants would attempt to use the funds to negotiate settlement with creditors on terms favorable to the consumer. Defendants charged consumers various fees for its services. GCSâ earnings came from the fees they charged directly to the special purpose account holders. RMBT did not receive fees, but benefited by holding Plaintiffsâ money without paying interest. In 2009, the Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order that required a reformation of RMBTâs banking practices. GCS subsequently stopped opening new accounts at RMBT. Later that year, Plaintiffs filed a class action lawsuit against GCS and RMBT on behalf of all consumers who has special purpose accounts. The U.S. District Court for the Eastern District of Washington certified three questions to the state Supreme Court regarding interpretation of state law in the Plaintiffsâ case. In response, the Supreme Court concluded that GCS is a âdebt adjusterâ and as such, is not exempt from liability under state law. Furthermore, the Court concluded that debt settlement companies that worked with GCS and RMBT are likely subject to the stateâs debt adjusting statute fee limits, depending on whether they are debt adjusters providing debt adjustment services.