Business Law Commercial Transaction Committee

The California Court of Appeal determined that expanding a bank’s duties to include investigating and disclosing possible fraudulent activity was not warranted and that nonsuit in favor of the bank was properly granted. Kurtz-Ahlers, LLC v. Bank of America (Cal. Ct. App. May 8, 2020). Read more

The high-profile Chapter 11 of Sears produced another decision involving the high-profile Mall of America (“Mall”). MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.), 2020 WL 2319194 (S.D.N.Y. May 11, 2020). Read more

Perez v. Mortgage Electronic Registration Services, 2020 WL 2312867 (9th Cir. May 11, 2020) follows a line of California appellate cases which hold that the owner of mortgaged property may not sue to stop a foreclosure based on a claim that the trust deed was not validly assigned to the foreclosing beneficiary. The case is another nail in the coffin of pre-foreclosure challenges based on the sometimes sloppy or unperfected transfers of mortgage documents. While that coffin may be closed, lenders still must peer into the very open casket of California’s Homeowner Bill of Rights, from whence such injunctions will rise again! Read more

In Richards v. PAR, Inc., 2020 WL 1451906, the Seventh Circuit ruled that under the Fair Debt Collection Practices Act courts must look to state law to determine whether a repossession company has a present right to possess the property at the time it was seized. Read more

In a case of first impression, perhaps anywhere in the country, interpreting provisions of the Uniform Commercial Code, the Court of Special Appeals of Maryland ruled that the discovery rule does not apply to toll the statute of limitations to enforce a note payable on demand as set forth in UCC § 3-118(b). Read more

The Supreme Court of Hawaii, over a strong dissent, altered the procedure and proof necessary to establish the amount of a deficiency judgment after a foreclosure sale due to default on a mortgage. Rather than establishing the amount of deficiency by subtracting the foreclosure sale price from the balance due on the mortgage, the majority adopted the approach favored by a majority of other jurisdictions and the Restatement (Third) of Property, in which the greater of the fair market value as of the date of the foreclosure sale or the sale price of the property is deducted from the amount due. Read more

The Bankruptcy Appellate Panel for the Eighth Circuit has held that contractual default interest provision is not subject to a liquidated damages analysis under Missouri or bankruptcy law and therefore is allowed as part of a secured claim. Read more

In a case of first impression, the United States Court of Appeals for the Ninth Circuit held recently that a trust created by an individual for tax and estate planning purposes is entitled to receive all state and federal consumer disclosure protections for a consumer credit transaction. Read more

The Supreme Court of Kentucky, relying on provisions in the Kentucky version of the Uniform Commercial Code, ruled that a promissory note was a “negotiable instrument” even though it referenced the possibility of another agreement when defining indebtedness and default. Read more

In a case of first impression, the Texas Supreme Court upheld the right of parties to contract for conditions precedent to preclude the unintentional formation of a partnership without an explicit waiver of the conditions. Read more