Justia New York Court of Appeals Opinion Summaries

Articles Posted in Banking

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Plaintiffs were affiliated commercial entities that sought to enforce the auction sale of a syndicated loan against Bank. When Bank accepted Plaintiffs’ bid and then refused to transfer the loan, Plaintiffs brought this action alleging breach of contract and breach of the implied covenant of good faith and fair dealing. In response, Defendant argued that it had no obligation to transfer the loan because the parties never executed a written sales agreement and Plaintiffs failed to submit a timely cash deposit. Supreme Court granted Plaintiffs’ motion for summary judgment on the breach of contract cause of action. The Appellate Division reversed. The Court of Appeals reversed, holding that Plaintiffs established their entitlement to summary judgment because the prerequisites of executing a written sales agreement and submitting a timely cash deposit were not conditions precedent to formation of the parties’ contract and did not render their agreement unenforceable. View "Stonehill Capital Mgt., LLC v. Bank of the West" on Justia Law
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Plaintiffs sued Defendants in a New York state court for concealing ill-gotten money from a scheme orchestrated by three of Plaintiff’s employees. Defendants moved to dismiss the complaint for lack of personal jurisdiction. Supreme Court granted the motion to dismiss for lack of jurisdiction. The Appellate Division affirmed, concluding that Defendants did not purposefully avail themselves of the privilege of conducting activities in New York. Plaintiffs appealed, alleging that the defendant-bank’s repeated use of New York correspondent accounts to receive and transfer millions of dollars in illicit funds constituted the transaction of business substantially related to their claims against Defendants sufficient to confer personal jurisdiction. Defendants argued in response that personal jurisdiction cannot depend on third party conduct and requires purposeful availment by Defendants that was lacking in this case. The Court of Appeals reversed, holding that Defendants’ use of the correspondent bank accounts was purposeful, that there was an articulable nexus between the business transaction and the claim asserted, and that the maintenance of suit in New York does not offend traditional notions of fair play and substantial justice. View "Rushaid v. Pictet & Cie" on Justia Law

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A condominium board commenced a foreclosure action on a condominium unit to recover unpaid common charges owed by the previous unit owner. Two mortgages were consolidated into a single mortgage lien years before the condominium board filed its common charges lien. Plaintiff, the winning bidder in the foreclosure action, commenced this action seeking a judgment declaring that the second mortgage was subordinate to the subsequently recorded common charges lien and was therefore extinguished by the condominium board’s successful action. Supreme Court declared that the consolidation agreement was the first mortgage of record and that Plaintiff purchased the unit subject to the consolidated mortgage. The Court of Appeals affirmed, holding that the consolidated mortgage qualifies as the first mortgage of record under N.Y. Real Prop. Law 9-B. View "Plotch v. Citibank, N.A." on Justia Law

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Defendant executed an adjustable rate note to First National Bank of Arizona, wherein she agreed to repay a loan. To secure payment, Defendants executed a mortgage with the the bank. The loan was subsequently made part of a residential mortgage-back securitization trust, and Deutsche Bank Trust Company Americas became the owner of the note. Aurora Loan Servicing, LLC later assumed servicer obligations, and thereafter, the mortgage was assigned to Aurora. When Defendants defaulted under the note, Aurora commenced this foreclosure action. Defendants moved for summary judgment, asserting that Aurora did not have standing to bring this foreclosure action. Supreme Court denied the motion and then granted Aurora’s motion for summary judgment of foreclosure and sale. The Appellate Division affirmed the first order, concluding that Aurora had standing. The court reversed the judgment of foreclosure and sale for reasons not relevant to this appeal. The Court of Appeals affirmed the finding that Aurora had standing to commence this mortgage foreclosure action, holding that because the note was transferred to Aurora before the commencement of the foreclosure action, Aurora was vested with standing to foreclose. View "Aurora Loan Servs., LLC v. Taylor" on Justia Law

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Defendant was a CEO and director of now bankrupt Agra Services of Canada, Inc (Agra Canada) and an officer and director of Agra USA. Agra Canada entered into a purchase agreement with Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) under which Rabobank purchased and financed certain receivables of Agra Canada. Thereafter, Defendant and Eduardo Guzman Solis, Agra Canada’s president and a manager of both Agra businesses, signed personal guarantees in favor of Rabobank. After Guzman Solis died, an investigation revealed fraudulent receivables based on nonexistent transactions submitted by Guzman Solis. Rabobank sued Agra Canada, Agra USA, and the estate of Guzman Solis seeking to recover the millions of dollars owed to Rabobank under the purchase agreement and guarantees. Defendant appeared represented by counsel but failed to retain counsel for Agra USA. The district court entered default judgment against Agra USA. Rabobank then filed this action in state court alleging that Defendant was liable under the guaranty. The Appellate Division granted Rabobank summary judgment. Defendant appealed, arguing that the default judgment against him was obtained by Rabobank’s collusion. The Court of Appeals affirmed, holding (1) Defendant’s collusion claim constituted a defense barred by the language in the guaranty; and (2) Defendant’s claim of collusion was contradicted by the record. View "Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. v. Navarro" on Justia Law

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Plaintiff Bank was the owner and holder of note secured by a mortgage on commercial property in Brooklyn. When Defendant, the mortgagor and obligor on the note, defaulted, Bank commenced a mortgage foreclosure action against Defendant. The property was sold at auction to Bank. Bank subsequently retained an appraiser to determine the fair market value of the property. Bank then moved for a deficiency judgment against Defendant in an amount representing the outstanding amount Bank was owed less the alleged fair market value. Supreme Court denied Bank’s motion for a deficiency judgment, holding that Bank failed to meet its burden of establishing the fair market value of the premises because the affidavit from the appraiser was conclusory and lacked specific information about how he reached his fair market value determination. The Appellate Division affirmed. The Court of Appeals modified the order of the Appellate Division, holding that Supreme Court correctly found that the appraiser’s affidavit was insufficient to meet Bank’s burden, but that the court should have permitted Bank to submit additional proof establishing fair market value rather than denying the deficiency judgment motion outright. View "Flushing Savings Bank, FSB v. Bitar" on Justia Law

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Plaintiff filed a complaint against Bank of America and related entities seeking to set aside and cancel, as null and void, the Bank’s mortgage interest in real property conveyed on the authority of an allegedly forged deed. The Bank moved to dismiss the complaint under N.Y. C.P.L.R. 3211(a)(5) as untimely under N.Y. C.P.L.R. 213(8). Supreme Court dismissed the complaint in its entirety as time-barred. The Appellate Division affirmed as to the Bank, concluding that Plaintiff’s forgery-based claim against the Bank was subject to the six-year statute of limitations for fraud claims set forth in N.Y. C.P.L.R. 213(8). The Court of Appeals reversed, holding that the statute of limitations in section 213(8) did not foreclose Plaintiff’s claim against Defendant because, under prior case law, a forged deed is void ab initio, and as such, any encumbrance upon real property based on a forged deed is null and void. View "Faison v. Lewis" on Justia Law

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In 2005, Barclays Bank PLC, a major global bank based in the United Kingdom, and BDC Finance LLC, a Connecticut-based hedge fund, entered into a series of transactions that were memorialized in several forms, including a Master Agreement. In 2008, Barclays sent BDC a letter terminating the Agreement due to BDC’s alleged default. BDC filed this action for breach of contract and declaratory judgment. Barclays counterclaimed alleging corresponding causes of action. Both parties moved for summary judgment. The Appellate Division granted BDC’s motion to dismiss, concluding that Barclays breached the agreements and was not entitled to summary judgment on its counterclaims. The Supreme Court modified the judgment of the Appellate Division, holding that material issues of fact existed as to whether Barclays defaulted under the parties’ contract and, thus, neither party was entitled to summary judgment. View "BDC Finance LLC v. Barclays Bank PLC" on Justia Law
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At issue in this case was whether the “separate entity” rule continues to be valid law and serves to prevent a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a judgment debtor’s assets held in foreign branches of the bank. The United States Court of Appeals for the Second Circuit certified this question of law to the New York Court of Appeals. Plaintiff, the judgment creditor in this case, asked the Court of Appeals to disavow the separate entity doctrine as outmoded and unnecessary. Defendant, the garnishee bank, urged that the rule remains vital in the context of international banking. The Court of Appeals answered the certified question in the affirmative, holding that the separate entity remains valid, and thus, a judgment creditor’s service of a restraining notice on a garnishee bank’s New York branch is ineffective under the separate entity rule to freeze assets held in the bank’s foreign branches. View "Motorola Credit Corp. v Standard Chartered Bank" on Justia Law
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Corporation, which owned corporate operating accounts at Bank, took out a loan and line of credit. Corporation passed a corporate resolution providing that unless it notified Bank within fourteen days of an improperly paid item in order to recover the payment, Bank would not be held liable for any error in Corporation’s account. Corporation later discovered that its bookkeeper had been forging signatures on certain Bank documents and had embezzled approximately $386,000 over the course of two years. Corporation sued Bank to prevent Bank from forcing repayment on the loans. Bank counterclaimed to recover amounts due under the loans. Supreme Court granted summary judgment for Bank, concluding that a bank and its customer may agree to shorten from one year to fourteen days the statutory time period under N.Y. U.C.C. Law 4-406(4) within which the customer must notify its bank of an improperly paid item in order to recover the payment thereon. The Court of Appeals affirmed as modified, holding (1) a customer and bank can contractually reduce section 4-406(4)’s one-year limitations period; and (2) shortening the one-year period to fourteen days was not manifestly unreasonable under the facts of this case. View "Clemente Bros. Contracting Corp. v Hafner-Milazzo" on Justia Law