Justia Virginia Supreme Court Opinion SummariesArticles Posted in Banking
Arch Insurance Co. v. FVCbank
The Supreme Court affirmed the judgment of the circuit court striking Arch Insurance Company's conversion and unjust enrichment claims, holding that the circuit court did not err in concluding that Arch was incapable of demonstrating a priority right to the disputed funds at issue in this case as a matter of law.FVCbank provided Dominion Mechanical Contractors, Inc. with a revolving line of credit. Arch, a surety company, issued contract surety bonds for some of Dominion's projects. Due to Dominion's later financial troubles, FVCbank froze Dominion's accounts. Arch and Dominion sued, claiming conversion and unjust enrichment. The circuit court granted FVCbank's motion to strike Arch's claims, finding that because FVCbank had a priority interest in Dominion's accounts, there was no legal claim for unjust enrichment or conversion. The circuit court affirmed, holding that the circuit court (1) correctly concluded that FVCbank's interest in Dominion's deposit accounts took priority over Arch's interest as a matter of law; and (2) properly dismissed the claims with prejudice. View "Arch Insurance Co. v. FVCbank" on Justia Law
Stahl v. Stitt
The Supreme Court affirmed the judgment of the circuit court concluding that Plaintiff lacked standing to enforce the "midnight deadline" rule set forth in section 4-302 of the Uniform Commercial Code (UCC), as adopted by Va. Code 8.4-302 and W. Va. Code 46-4-302, holding that there was no error.In her second amended complaint, Plaintiff alleged that MCNB Bank and Trust Company (MCNB) violated the midnight deadline rule adopted from the UCC and, therefore, MCNB was strictly liable for the payment of a check in the amount of $245,271.25. The circuit court granted summary judgment for MCNB, concluding that Plaintiff lacked standing to pursue her claim because she did not have any right to rely on the prompt payment of the check at issue. The Supreme Court affirmed, holding that the circuit court did not err when it granted MCNB’s motion for summary judgment based on Plaintiff's alleged lack of standing to enforce the midnight deadline rule. View "Stahl v. Stitt" on Justia Law
Futuri Real Estate, Inc. v. Atlantic Trustee Services, LLC
The Supreme Court affirmed the judgment of the circuit court adopting the partial subordination rule to construe the subordination agreement in this case, determining that the agreement was not ambiguous and dismissing Futuri Real Estate Inc.'s cross-claim with prejudice, holding that Futuri's assignments of error were without merit.Landowners owned real property encumbered by three separate lines of credit. A subordination agreement was recorded providing that Walls Fargo Bank agreed to subordinate the lien of the original security instrument to the lien of the subsequent security instrument. The property later went into foreclosure, and the trustee sold the property to Futuri. A dispute then arose between Futuri and Wells Fargo concerning the disbursal of the surplus fund. Futuri filed a cross-claim against Wells Fargo seeking a declaratory judgment that the subordination agreement ousted the Wells Fargo lien from its first priority position. The circuit court concluded that the agreement was a partial subordination agreement and dismissed Futuri's claim. The Supreme Court affirmed, holding that the circuit court did not err in (1) not adopting the complete subordination rule of construction, and (2) finding that the agreement was not ambiguous. View "Futuri Real Estate, Inc. v. Atlantic Trustee Services, LLC" on Justia Law
RMBS Recovery Holdings I, LLC v. HSBC Bank USA, N.A.
The Supreme Court affirmed in part and reversed in part the judgment of the circuit court in this action, holding that the circuit court properly denied a motion to dismiss based on the doctrine of forum non conveniens but erred in dismissing the case based on forum selection clauses.RMBS Recovery Holdings I, LLC and others (collectively, Funds) filed suit against HSBC Bank USA, National Association (HSBC) asserting that HSBC served as an indenture trustee of three trusts in which the Funds had invested and that the trusts were filled with defective mortgage loans. Based on HSBC's failure to act to have sponsors of the trusts repurchase the deficient loans or to file suit against the sponsors, the Funds claimed breach of contract, breach of fiduciary duty, and other causes of action. The circuit court denied HSBC's motion to dismiss for forum non conveniens but granted HSBC's motion to dismiss based upon forum selection clauses in confidentiality and indemnification agreements between the parties. The Supreme Court reversed in part, holding that HSBC's delay in asserting the forum selection clauses, while actively continuing litigation, resulted in a waiver of the right to rely upon that contractual provision. View "RMBS Recovery Holdings I, LLC v. HSBC Bank USA, N.A." on Justia Law
Chamberlain v. Marshall Auto & Truck Center, Inc.
Marshall Auto & Truck Center, Inc. executed a promissory note in favor of Middleburg Bank. Charles Chamberlain executed a guaranty of that Note. Marshall failed to make payments to Middleburg, and the Bank withdrew funds from Chamberlain’s account to satisfy Marshall’s obligations under the Note. Chamberlain filed a complaint against Marshall claiming that, pursuant to Va. Code 49-27, he was entitled to judgment against Marshall upon Marshall’s default and seizure of collateral by the Bank. Marshall argued that Code 49-27 did not apply because Chamberlain executed the Guaranty as a gift. The circuit court ruled that Chamberlain recover nothing from Marshall. The Supreme Court reversed, holding that because there was no evidence in the record that Chamberlain made a gift or waived his statutory rights under section 49-27, he was entitled to judgment. Remanded. View "Chamberlain v. Marshall Auto & Truck Center, Inc." on Justia Law
SunTrust Bank v. PS Business Parks, LP
PS Business Parks, LP obtained a judgment against Deutsch & Gilden, Inc. PS Business filed a garnishment summons naming Deutsch & Gilden, Inc. as the judgment debtor and SunTrust Bank as the garnishee. SunTrust processed a legal order debit against an account titled to Deutsch ending in 95497 and filed a check drawn from an account ending in 61663. The circuit court quashed the garnishment of account 61663 and ordered payment to PS Business of $15,050, the amount of the check drawn on account 95497. The Supreme Court reversed the order of payment from account 95497, finding that SunTrust’s indebtedness to Deutch exceeded $15,050. On remand, the circuit court found that Deutsch was indebted to PS Business in the amount of $706,755, and that SunTrust was indebted to Deutsch in the amount of $1.2 million. SunTrust appealed, arguing that the circuit court erred by placing the burden of proof on SunTrust, the garnishee, instead of on PS Business, the judgment creditor. The Supreme Court reversed, holding (1) during the garnishment proceeding, the circuit court improperly shifted the burden of persuasion to SunTrust; and (2) the circuit court’s finding that SunTrust was indebted to Deutsch in the sum of $1.2 million during the garnishment period was plainly wrong. View "SunTrust Bank v. PS Business Parks, LP" on Justia Law
Posted in: Banking
Parrish v. Fed. Nat’l Mortgage Ass’n
In 2014, the trustee under a deed of trust conveyed the Parrish property to the Federal National Mortgage Association (Fannie Mae), which sent the Parrishes a notice to vacate and filed a summons for unlawful detainer in the general district court. The Parrishes alleged that the foreclosure was invalid because their deed of trust incorporated 12 C.F.R. 1024.41(g), which, they asserted, prohibits foreclosure if a borrower submitted a completed loss mitigation application more than 37 days before the foreclosure sale. They alleged that they had submitted such an application. The court awarded Fannie Mae possession. On appeal, Fannie Mae argued that the court should exclude any defense contesting the foreclosure’s validity because the lower court lacked subject matter jurisdiction to try title in a proceeding on unlawful detainer. Fannie Mae contended that because the circuit court’s subject matter jurisdiction on appeal from the general district court was derivative of the general district court’s jurisdiction, the circuit court also lacked jurisdiction. The court awarded Fannie Mae possession. The Supreme Court of Virginia vacated, restoring the parties to their status quo before the unlawful detainer proceeding. Courts not of record lack power to try title unless expressly conferred by the General Assembly. The court cited Code sections 16.1-77(3) and 8.01-126 and acknowledged the practical implications of its holding. View "Parrish v. Fed. Nat'l Mortgage Ass'n" on Justia Law
Hampton Roads Bankshares, Inc. v. Harvard
Scott Harvard was a former senior executive officer of Shore Bank and Hampton Roads Bankshares (HRB). During the 2008 financial crisis, HRB elected to participate in the federal Troubled Assets Relief Program (TARP). The TARP agreement required HRB to comply with the limits on executive compensation set forth in the Emergency Economic Stabilization Act (EESA) and its implementing regulations. In 2009, Harvard terminated his employment. Thereafter, Harvard filed a breach of contract action against Shore Bank and HRB alleging that HRB breached the parties’ employment agreement by refusing to make a “golden parachute payment” pursuant to the agreement. HRB filed a plea in bar, arguing that the prohibition on golden parachute payments in EESA section 111, as implemented by the June Rule, barred it from paying Harvard pursuant to the employment agreement. The circuit court rejected HRB’s argument and awarded Harvard $655,495 plus interest. The Supreme Court reversed and vacated the award of damages in favor of Harvard, holding that EESA section 111, as implemented by the June Rule, prohibited the golden parachute payment under the circumstances of this case. View "Hampton Roads Bankshares, Inc. v. Harvard" on Justia Law
Wooten v. Bank of Am., N.A.
Gary Wooten purchased property before marrying Iracy Wooten. Gary subsequently executed a deed of trust to secure a loan. Thereafter, Gary conveyed the property to himself and Iracy as tenants by the entirety. Approximately two weeks later, the lender recorded the deed of trust executed solely by Gary. Five years later, the lender filed suit against Gary and Iracy seeking a judicial reformation of the deed of trust to include Iracy as grantor or to declare her interest in the property to be encumbered by the deed of trust. Iracy responded that she knew nothing of the deed of trust or the loan and first learned of them during divorce proceedings with Gary. Meanwhile, a final divorce decree was entered ordering that the property be sold and any remaining proceeds be divided equally between the parties. In the lender’s proceeding, the lender argued that Iracy was judicially estopped from denying that her interest was subject to Gary’s deed of trust and that the divorce decree justified this conclusion. The circuit court granted summary judgment in favor of the lender. The Supreme Court reversed, holding that the circuit court erred in applying the doctrine of judicial estoppel based solely upon the divorce decree. Remanded. View "Wooten v. Bank of Am., N.A." on Justia Law
Synchronized Constr. Servs., Inc. v. Prav Lodging, LLC
Construction Manager subcontracted with Subcontractor to do work on a construction project. After the project was substantially complete, Subcontractor recorded a mechanic’s lien for unpaid work on the project. Subcontractor then filed a complaint against Construction Manager as the general contractor of the project, the owner of the property (Landowner), and the bank that financed the project (Bank) to enforce its mechanic’s lien. Construction Manager did not enter an appearance in the case. The circuit court subsequently granted an application filed by Landowner and Bank and released the real estate that had been subject to Subcontractor’s mechanic’s lien. Bank filed a motion to dismiss the mechanic’s lien claim on the basis that Subcontractor failed to timely serve Construction Manager, who it alleged to be a necessary party to the mechanic’s lien enforcement action. The circuit court agreed and dismissed the mechanic’s lien claim with prejudice. The Supreme Court reversed, holding that Construction Manager, as the general contractor, was not a necessary party to Subcontractor’s mechanic’s lien enforcement action. Remanded. View "Synchronized Constr. Servs., Inc. v. Prav Lodging, LLC" on Justia Law