Commercial Banking, Collections, and Bankruptcy

Dist. Ct. erred in dismissing on jurisdictional grounds plaintiff-Bank’s appeal of defendant’s rating of said Bank under Uniform Financial Institutions Rating System. While Dist. Ct. found that it lacked jurisdiction because defendant’s assignment of rating is committed to agency discretion under 5 USC section 701(a)(2), Ct. of Appeals found that Dist. Ct. could resolve questions as to whether defendant’s final rating was arbitrary or whether defendant properly calculated capital rating of plaintiff’s Bank. As such, case was remanded to Dist. Ct. for determination of plaintiff’s appeal on its merits.

Dist. Ct. did not err in granting defendant-bank’s motion for summary judgment in plaintiffs-homeowners’ RESPA action, alleging that defendant failed to supply them with sufficient information regarding their mortgage escrow account, when dispute arose regarding defendant’s payment of home insurance premium from said escrow account to wrong insurance company. Erroneous payment of insurance premium was caused by plaintiffs’ failure to inform defendant that they had changed insurance company, and information supplied by defendant, that included detailed accounting of loan’s payment history, as well as breakdown of principal, interest and escrow payments, sufficiently complied with RESPA. Fact that defendant did not identify insurance company that had received erroneous escrow payment or provide reasons for holding plaintiffs’ mortgage payment “in suspense” did not require different result where defendant had previously supplied such information to plaintiffs. Ct. further rejected plaintiffs’ claim that they could recover emotional damages associated with dissolution of their marriage as result of instant alleged RESPA violation.

Dist. Ct. did not err in reversing Bankruptcy Ct. order that found that defendant’s lawsuit against non-filing spouse of debtor in Chapter 13 proceeding violated co-debtor stay provisions of Bankruptcy Code (11 USC section 1301(a)), where said lawsuit sought to collect on spouse’s credit card debt. In order for co-debtor stay of legal proceedings to apply: (1) there must be action to collect on consumer debt; (2) consumer debt must be debtor’s; and (3) action to collect on debt must be against individual that is liable on such debt with debtor. Here, credit card debt of spouse was not “consumer debt of the debtor” so as to trigger co-debtor stay provisions since said debt was only spouse’s debt. Ct. rejected debtor’s claim that Wisconsin’s marital law converted her husband’s debt into her own since mere fact that non-filing spouse happens to have shared property interests with filing spouse, without more, does not make debts involved in lawsuit debts of filing spouse.

Dist. Ct. did not err in finding in instant Chapter 13 bankruptcy proceeding that debtor could properly designate as exempt her interest in marital home that was originally purchased as “tenants by the entirety” with her husband, but was subsequently conveyed to trust of debtor’s husband, with language in trust stating that “beneficial interest” in trust was held by debtor and husband as “tenants by the entirety.” While creditor argued that transfer of home to trust effectively destroyed tenancy in the entirety status of said home, relevant Illinois statute (Joint Tenancy Act, 765 ILCS 1005/1c) allowed debtor and her husband to transfer their interest in home to trust without destroying home’s tenancy in the entirety status. Moreover, creditor conceded that home was exempt property in bankruptcy proceeding as long as it retained tenancy by entirety status.

Dist. Ct. did not err in granting defendant’s motion for summary judgment in action alleging that defendant violated Texas law when it terminated its dealership agreement with plaintiff without good cause. Record showed that plaintiff purchased assets of entity that had dealership agreement with defendant, and relevant Texas statute allowed defendant to terminate dealership agreement, where, as here, there was “sale or other closeout of substantial part of dealer’s assets related to [its] business.” As such, instant termination meant that defendant had no further business relations with prior entity, and plaintiff had no “shoes” to step into so as to support its claim that it was authorized dealer of defendant’s products. Fact that defendant had initially filled orders made by plaintiff did not require different result.

Dist. Ct. erred in granting defendant’s motion for summary judgment in action by plaintiff seeking to recover $1.6 million in payments owed to it under contract that also required plaintiff to pay defendant $900,000. While Dist. Ct. found that plaintiff could not prevail in instant action since it had failed to fulfill its own payment obligations under subject contract, Ct. of Appeals found that defendant could not point to plaintiff’s lack of performance, when it too had failed to perform on said contract. Ct. further noted that plaintiff was entitled to some recovery under relevant New York state law, where defendant had continued to use plaintiff’s railroad cars pursuant to terms of contract while insisting that instant contract could not be enforced. As such, Ct. directed Dist. Ct. on remand to net out difference in amount of money owed to each party under terms of contract and to award balance to party to whom it was due.