Articles Posted in Banking

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At issue in this case was whether, under Connecticut law, after a judgment debtor’s wages have been garnished, the remaining wages are exempt from execution, and whether the transfer of those wages to a third party constitutes a fraudulent transfer. Pursuant to two state court judgments, The Cadle Company was Terry Fletcher’s judgment creditor, Fletcher owing the company more than $3 million. Since at least 2005, Terry has transferred more than $300,000 of his residual wages to the bank account of his wife, Marguerite Fletcher. The Cadle Company sued the Fletchers in federal district court, alleging, inter alia, that the transfer violated the Connecticut Uniform Fraudulent Transfer Act (CUFTA). The district court granted the Fletchers’ motion for partial summary judgment, granted The Cadle Company’s motion for partial summary judgment, and ultimately rendered judgment for The Cadle Company in the amount of $401,426 on its CUFTA claim. The Fletchers appealed to the Second Circuit Court of Appeals. The Second Circuit subsequently certified a question to the Supreme Court, which the Court accepted. The Supreme Court answered that Terry’s residual wages would not have been exempt from execution if he had retained possession of them, and therefore, they were subject to execution after Terry transferred them to his wife’s account. View "Cadle Co. v. Fletcher" on Justia Law

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At issue in this case was Connecticut’s debt negotiation statutes, Conn. Gen. Stat. 36a-671 through 36a-671e, which authorize the Banking Commissioner to license and regulate persons engaged in the debt negotiation. Plaintiff, a national consumer advocate law firm, petitioned the Commissioner for a declaratory ruling stating that Plaintiff qualified for exemption from the debt negotiation statutes under the attorney exception. This exception exempts only those attorneys admitted to the practice of law in Connecticut who engage or offer to engage in debt negotiation as an ancillary matter to the attorneys’ presentation of a client. The Commissioner concluded that Plaintiff did not qualify for exemption. The superior court affirmed. The Supreme Court reversed, holding that the debt negotiation statutes impermissibly intrude on the Judicial Branch’s exclusive authority to regulate attorney conduct and licensure and, therefore, violate the separation of powers provision contained in article II of the state Constitution. View "Persels & Assocs., LLC v. Banking Comm’r" on Justia Law

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Plaintiff, the named Defendant in this action, and others formed a limited liability company (the LLC) to purchase and redevelop certain property. After the LLC acquired the property, Plaintiff guaranteed the payment of two loans from a Bank. In the meantime, Plaintiff, Defendant, and others entered into backstop guarantee agreements that provided protection to Plaintiff in the event he was required to honor his personal guarantees to the Bank. The Bank later commenced foreclosure proceedings against the LLC and Plaintiff as guarantor. The court rendered a judgment of strict foreclosure, and the Bank sought a deficiency judgment against the Plaintiff. The Bank and Plaintiff entered into a settlement agreement. Thereafter, Plaintiff commenced the present action against Defendants to enforce the backstop guarantee agreements. The trial court concluded that the backstop guarantee agreements were unenforceable. The Appellate Court reversed. Defendant appealed, claiming that Plaintiff’s tax treatment of the debt that Defendant guaranteed effectively divested Plaintiff of his interest in the debt, and therefore, Plaintiff had no standing to enforce the backstop guarantee agreement. The Supreme Court affirmed, holding that Plaintiff had standing to enforce the agreement. View "One Country, LLC v. Johnson" on Justia Law

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Defendant borrowed $143,065 in two separate loans from a Corporation. The Corporation assigned its interest in the notes to a Bank, which assigned the second loan (loan two) to Plaintiff, a municipality. Defendant had fully paid off the first loan (loan one), but determining that Defendant had defaulted on his payment obligations as to loan two, Plaintiff brought an action against Defendant to foreclose on the property. Defendant counterclaimed, arguing, among other things, that he made an overpayment on loan two. The trial court concluded that Plaintiff was liable to Defendant for the total amount Defendant claimed to have overpaid on loan two to Plaintiff and all other prior holders of the note. The Appellate Court reversed, concluding that, in the absence of an express contract provision, “an assignee generally does not assume the original responsibilities of the assignor." The Supreme Court affirmed, holding that the Appellate Court properly determined that Plaintiff, “as the most recent assignee and current holder of Defendant’s note, could not be held liable to repay Defendant for sums that were overpaid on the note before it was assigned to Plaintiff.” View "Hartford v. McKeever" on Justia Law

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Plaintiff-school opened a bank account for its operating fund with Defendant-bank. One of Plaintiff’s employees later opened a bank account with Defendant that Plaintiff had not authorized and deposited into that account several hundred checks originating from, or intended to be deposited into, Plaintiff’s bank account with Defendant. Over the course of approximately four years, the employee deposited $832,776 into this bank account and withdrew funds just short of that amount. Defendant refused Plaintiff’s demand to return the funds that the employee had funneled through this account to himself. Thereafter, Plaintiff commenced this action, alleging breach of contract, violations of the Uniform Commercial Code (UCC), negligence, and common law conversion. The trial court rendered judgment in favor of Plaintiff on each of the counts and awarded $832,776 in total compensatory damages. The Supreme Court affirmed in all respects with the exception of the damages award, holding that some of Plaintiff’s claims under the UCC were time barred and that the trial court did not otherwise err in its judgment. Remanded with direction to reduce the award by $5,156 and to proportionately reduce prejudgment interest, . View "Saint Bernard Sch. of Montville, Inc. v. Bank of Am. " on Justia Law

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A mortgagee (Plaintiff) obtained a judgment of strict foreclosure against the mortgagor of certain property. More than thirty days after the time in which to redeem the subject property had expired, Plaintiff filed a motion for a deficiency judgment seeking to collect money damages from the guarantors of the mortgage note. The guarantors objected to the request for a hearing in damages, arguing that Plaintiff was barred from obtaining any additional remedy from the guarantors under Conn. Gen. Stat. 49-1, under which the foreclosure of a mortgage is a bar to further action against persons liable for the payment of the mortgage debt, note or obligation who are, or may be, made parties to the foreclosure. The Supreme Court reversed the Appellate Court’s judgment in favor of the guarantors, holding that section 49-1 had no effect on Plaintiff’s ability to recover the remaining unpaid debt from the guarantors because the guarantors were not parties to the foreclosure claim, as the guarantors’ liability arose separately under their guarantee. View "JP Morgan Chase Bank, NA v. Winthrop Props., LLC" on Justia Law

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This case arose when plaintiff initiated a foreclosure action against defendant. At issue on appeal was whether the trial court had authority to open a judgment of foreclosure by sale and related supplemental judgments after title had passed to the purchaser when a series of errors by the court and the parties caused the purchaser to buy a property that, unbeknownst to him but actually known by the second mortgagee, was in fact subject to a first mortgage that was to be foreclosed shortly thereafter. The court concluded that the appellate court incorrectly determined that the purchaser lacked standing under the circumstances of the present case; defendants inadequately briefed the issue of 17 Ridge Road, LLC's standing to intervene as a defendant and, therefore, the issue was deemed abandoned; and the appellate court correctly determined that the passing of title divested the trial court of jurisdiction to open the judgment of foreclosure by sale. Accordingly, the court reversed the judgment of the appellate court insofar as that court concluded that the trial court lacked authority to open the supplemental judgments. View "Citibank, N.A. v. Lindland" on Justia Law

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Defendant executed a promissory note secured by a mortgage deed. Plaintiff subsequently sought to foreclose on the mortgage, claiming it was the holder of the note and mortgage. The trial court rendered a judgment of foreclosure by sale. Defendant filed an objection to the foreclosure, alleging that because he was no longer in default, Plaintiff did not have standing to foreclose the mortgage. Defendant also requested that the court direct Plaintiff to produce the original note to prove Plaintiff had standing to institute the foreclosure action. The court determined Plaintiff had standing and rendered judgment of strict foreclosure. The appellate court reversed, concluding that the trial court erred by failing to conduct an evidentiary hearing to determine whether Plaintiff had standing to bring this action after Defendant challenged Plaintiff's standing. The Supreme Court reversed, holding that, under the circumstances, Defendant failed to demonstrate that he was entitled to a full evidentiary hearing on the issue of Plaintiff's standing where the trial court's determination that Plaintiff had standing to commence this action was not in error. Remanded. View "Equity One, Inc. v. Shivers" on Justia Law

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Signature Properties executed a promissory note payable to JPMorgan Chase Bank. The loan was secured by a mortgage and security interest on Signature's commercial property. The loan was guaranteed by Signature's members (guarantors). JPMorgan later assigned Signature's note and mortgage to LaSalle Bank National Association. A pooling agreement established a mortgage back security wherein LaSalle was identified as trustee and paying agent and J.E. Robert Company as loan servicer for Signature's mortgage loans. After Signature ceased to make payments on the loan, J.E. Robert brought a foreclosure action against Signature. LaSalle subsequently assigned the note to Shaw's New London, and Shaw's was substituted as the plaintiff. The guarantors were then added as defendants. The trial court ordered strict foreclosure of Signature's property and a deficient judgment against the defendants. The Supreme Court affirmed, holding that the trial court properly determined that, under the facts of this case, J.E. Robert had standing to institute this foreclosure action in its own name. The Court rejected the remainder of the defendants' claims. View "J.E. Robert Co. v. Signature Props., LLC" on Justia Law

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Midland Funding obtained judgments against Plaintiff Susan Ballou in two cases. The small claims court entered installment payment orders pursuant to Conn. Gen. Stat. 52-356d. Defendant, the Law Offices Howard Lee Schiff, P.C., which represented Midland in small claims court, did not apply for an order of postjudgment interest in either of the two cases, and the small claims court did not issue an order of postjudgment interest in either case. Defendant thereafter sought a bank execution against Plaintiff for the judgment amounts and directed the state marshal to add postjudgment interest of ten percent to the amount of the judgments. Plaintiff commenced an action in the U.S. district court disputing the amount of the debts. At issue before the court was whether postjudgment interest accrues automatically on any unpaid balance under a judgment for which the court has entered an installment payment order. The Connecticut Supreme Court accepted certification to answer this question and held that section 52-356d(e) does not provide for the automatic accrual of postjudgment interest on all judgments in which an installment payment order has been entered by the court. View "Ballou v. Law Offices Howard Lee Schiff, P.C." on Justia Law