Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

The Texas Uniform Fraudulent Transfer Act's good faith affirmative defense does not allow defendants to retain fraudulent transfers received while on inquiry notice of the Ponzi scheme. In this case arising out of the Stanford International Bank Ponzi scheme, the Fifth Circuit reversed the district court's judgment and rendered judgment in favor of plaintiff. Because the jury determined that defendants were on inquiry notice here when they received $79 million in fraudulent transfers, their TUFTA good faith defense was defeated. View "Janvey v. GMAG, LLC" on Justia Law

The Fifth Circuit affirmed the district court's dismissal of plaintiff's claim that the bank was vicariously liable for the failure of the bank's loan servicer to comply with the Real Estate Settlement Procedures Act (RESPA). The court held that plaintiff did not plead an agency relationship between the bank and the loan servicer, an essential element of a vicarious liability claim. Furthermore, even if the bank had an agency relationship with the loan servicer, the bank cannot be held vicariously liable, as a matter of law, for the servicer's alleged RESPA violations. View "Christiana Trust v. Riddle" on Justia Law

The Fifth Circuit affirmed the district court's grant of summary judgment for HSBC in an action seeking to foreclose on defendant's property. The court held that HSBC was the holder of the home equity note and that defendant failed to present evidence raising an issue of material fact as to HSBC's ownership of the note. The court also held that HSBC's suit was timely because defendant's bankruptcy suit tolled the statute of limitations for 127 days. Finally, the court held that defendant waived his argument that the district court erred when it signed and entered a final judgment that authorized a foreclosure sale of the property, without complying with Texas Rule of Civil Procedure 309. View "HSBC Bank USA, NA v. Crum" on Justia Law

After the magistrate judge concluded, on remand, that defendants met the remaining requirements to foreclose on their mortgage under Texas law, the Fifth Circuit reversed and rendered judgment in favor of Deutsche Bank. The court held that the magistrate judge defied a previous mandate and contravened the law of the case doctrine by concluding that the court's prior opinion was clearly erroneous and that failure to correct the error would result in manifest injustice. In this case, the magistrate judge found no impediment to foreclosure other than a supposed defect in the assignment, and any such imperfection did not change the fact that MERS and its successors and assigns were entitled to foreclose on defendants' property. View "Deutsche Bank National Trust Co. v. Burke" on Justia Law

Shareholders challenged a 2012 agreement between the FHFA, as conservator to Fannie and Freddie, and the Treasury Department. Under the agreement, Treasury provided billions of taxpayer dollars in capital and, in exchange, Fannie and Freddie were required to pay Treasury quarterly dividends equal to their entire net worth (net worth sweep exchange). The Fifth Circuit found the FHFA acted within its statutory authority by adopting the net worth sweep, and thus held that the Shareholder's Administrative Procedure Act claims were barred by 5 U.S.C. 706(2)(A). The court also found that the FHFA was unconstitutionally structured and violated the separation of powers. Accordingly, the court reversed in part and affirmed in part. On remand, the court instructed the district court to enter judgment declaring the "for cause" limitation on removal of the FHFA's Director in 12 U.S.C. 4512(b)(2) violates the Constitution's separation-of-powers principles. View "Collins v. Mnuchin" on Justia Law

The Fifth Circuit reversed the district court's grant of summary judgment for Wilmington Trust, holding that the lender was not entitled to foreclosure because it failed to prove that it provided adequate notice of intent to accelerate. The court held that Texas common law imposes notice requirements before acceleration that is clear and unequivocal. In this case, Wilmington Trust failed to meet its burden to show clear and unequivocal notice of intent to accelerate prior to filing suit. View "Wilmington Trust, N.A. v. Rob" on Justia Law

The Fifth Circuit affirmed the district court's judgment against Midwest in an action alleging that the Bank was liable under Mississippi statutory and common law for its participation in a scheme involving fraudulent checks. The court held that Midwest lacked a cause of action under Mississippi Code 75-3-404(d); the Bank did not owe a duty of reasonable care to Midwest, a non-customer; Midwest failed to allege the existence of a civil conspiracy; Midwest failed to plausibly allege a conversion claim under Mississippi Code 75-3-420; and the district court did not abuse its discretion by dismissing as moot Midwest's motion for sanctions. View "Midwest Feeders, Inc. v. Bank of Franklin" on Justia Law

The Fifth Circuit affirmed the district court's judgment against Midwest in an action alleging that the Bank was liable under Mississippi statutory and common law for its participation in a scheme involving fraudulent checks. The court held that Midwest lacked a cause of action under Mississippi Code 75-3-404(d); the Bank did not owe a duty of reasonable care to Midwest, a non-customer; Midwest failed to allege the existence of a civil conspiracy; Midwest failed to plausibly allege a conversion claim under Mississippi Code 75-3-420; and the district court did not abuse its discretion by dismissing as moot Midwest's motion for sanctions. View "Midwest Feeders, Inc. v. Bank of Franklin" on Justia Law

The Williams Parties brought suit against Fannie Mae and Wells Fargo, asserting claims against defendants for breach of contract premised on a violation of the notice terms in a Deed of Trust, violations of the Texas Property Code, and wrongful foreclosure. On appeal, the Williams Parties appealed the dismissal of their breach of contract claims against Fannie Mae and the grant of summary judgment in favor of Wells Fargo. The court held that the district court did not err in holding that Wells Fargo was not liable for breach of the Deed of Trust where the competent summary judgment evidence reflected that Wells Fargo was never a party to or an assignee of the Deed of Trust. Therefore, Wells Fargo had no liability and summary judgment for Wells Fargo was appropriate. The district court did not abuse its discretion by granting a motion for reconsideration and, on the merits, Fannie Mae's agreement in the deed of trust to give notice of foreclosure was independent of the Williams Parties' agreement under the note to pay monthly installments to satisfy the debt. Therefore, the court affirmed as to Wells Fargo, reversed as to the claim that Fannie Mae breached the deed of trust by failing to give notice, and remanded the claim against Fannie Mae for further proceedings. View "Williams v. Wells Fargo Bank, N.A." on Justia Law

The Fifth Circuit affirmed the district court's dismissal of appellants' respective claims against U.S. Bank and Ocwen. The court held that there was complete diversity of citizenship among the parties and affirmed the district court's denial of SGK and Katz's motion to remand; because there was no genuine dispute of material fact concerning U.S. Bank's authority to collect on the Note and enforce the Deed of Trust, the court affirmed the district court's grant of U.S. Bank's motion for summary judgment; the court affirmed the district court's denial of Weinreb's standing challenge; Weinreb's fraudulent representation claim was properly dismissed; and for the same reasons the court affirmed the summary judgment dismissal of SGK and Katz's original claims and the dismissal of Weinreb's fraudulent misrepresentation claim, the court held that SGK and Katz's attempts to pursue these claims would have been futile and the district court did not abuse its discretion by disallowing the amendment. View "SGK Properties, LLC v. U.S. Bank National Assoc." on Justia Law