Justia Government & Administrative Law Opinion Summaries

The Fourth Corner Credit Union applied for a master account from the Federal Reserve Bank of Kansas City. The Reserve Bank denied the application, effectively crippling the Credit Union’s business operations. The Credit Union sought an injunction requiring the Reserve Bank to issue it a master account. The district court dismissed the action, ruling that the Credit Union’s stated purpose, providing banking services to marijuana-related businesses, violated the Controlled Substances Act. The Tenth Circuit vacated the district court’s order and remanded with instructions to dismiss the amended complaint without prejudice. By remanding with instructions to dismiss the amended complaint without prejudice, the Court’s disposition effectuated the judgment of two of three panel members who would allow the Fourth Corner Credit Union to proceed with its claims. The Court denied the Federal Reserve Bank of Kansas City’s motion to strike the Fourth Corner Credit Union’s reply-brief addenda. View "Fourth Corner Credit Union v. Federal Reserve Bank of Kansas" on Justia Law

Appellants were minority stockholders in First Community Bank of Crawford County (FBC). After First Bank reached an agreement to merge with FCB, First Bank filed an application with the Arkansas State Banking Board. The Board subsequently approved the merger. Appellants filed a complaint seeking review of the Board’s decision, arguing (1) the Board did not adequately fulfill its duties under administrative law in reaching its decision, and (2) the statues and regulations followed by the Board unconstitutionally infringe on the due process and property rights of minority stockholders. The circuit court concluded that Appellants failed to preserve their substantive objections due to their failure to present these objections before the Board. The Supreme Court affirmed the dismissal of Appellants’ claims, holding that Appellants’ arguments were not preserved for judicial review. View "Booth v. Franks" on Justia Law

Under the Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654, the Federal Housing Finance Agency (FHFA) became the conservator of Fannie Mae and Freddie Mac. In 2012, FHFA and Treasury adopted the Third Amendment to their stock purchase agreement, which replaced the fixed 10% dividend with a formula by which Fannie and Freddie just paid to Treasury an amount (roughly) equal to their quarterly net worth. Plaintiffs, Fannie Mae and Freddie Mac stockholders, filed suit alleging that FHFA's and Treasury's alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A). The court held that plaintiffs' statutory claims are barred by the Recovery Act's strict limitation on judicial review; the court rejected most of plaintiffs' common law claims; insofar as the court has subject matter jurisdiction over plaintiffs' common-law claims against Treasury, and Congress has waived the agency's immunity from suit, those claims are also barred by the Recovery Act's limitation on judicial review; in regard to claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, and others failed to state a claim upon which relief could be granted; and, as to the remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, the court remanded for further proceedings. View "Perry Capital LLC v. Mnuchin" on Justia Law

Builders Bank is insured and regulated by the Federal Deposit Insurance Corporation (FDIC), which conducts a “full‐scope, on‐site examination” every 12-18 months, 12 U.S.C. 1820(d). After a 2015 examination, the FDIC assigned the Bank a rating of four under the Uniform Financial Institutions Rating System, which has six components: capital, asset quality, management, earnings, liquidity, and sensitivity (CAMELS). The highest rating is one, the lowest five. The Bank claims that its rating should have been three and that the lower rating was arbitrary and capricious. The Seventh Circuit vacated the district court’s dismissal. The presence of capital as one of the CAMELS components does not necessarily mean that the rating as a whole is committed to agency discretion for the purposes of 5 U.S.C. 701(a)(2). The FDIC has discretion to set appropriate levels of capital for each institution, 12 U.S.C. 3907(a)(2), but the Bank argued that it takes the FDIC’s capital requirements as given and challenged only its application of the “asset quality, management, earnings, liquidity, and sensitivity” factors. The court did not determine whether other components of a CAMELS rating may be committed to agency discretion. View "Builders Bank v. Federal Deposit Insurance Corp." on Justia Law

Plaintiff-Appellant Federal Deposit Insurance Corporation (FDIC) sought to recover on a financial institution crime bond and appealed the district court’s grant of summary judgment in favor of Defendant-Appellee Kansas Bankers Surety Co. (KBS) and the subsequent denial of reconsideration. The district court held that the underlying bank, the New Frontier Bank of Greeley, Colorado, (Bank) had failed to submit a timely and complete proof of loss, thereby barring FDIC’s recovery on the bond. Finding no error in the district court's decision, the Tenth Circuit affirmed. View "FDIC v. Kansas Bankers Surety Company" on Justia Law

In the Dodd-Frank Act of 2010, 12 U.S.C. 5491, Congress established a new independent agency, the Consumer Financial Protection Bureau (CFPB), an independent agency headed not by a multi-member commission but rather by a single Director. PHH is a mortgage lender that was the subject of a CFPB enforcement action that resulted in a $109 million order against it. PHH seeks to vacate the order, arguing that the CFPB’s status as an independent agency headed by a single Director violates Article II of the Constitution. The court concluded that CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decisionmaking and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency. The court noted that this new agency lacks that critical check and structural constitutional protection, yet wields vast power over the U.S. economy. The court concluded that, in light of the consistent historical practice under which independent agencies have been headed by multiple commissioners or board members, and in light of the threat to individual liberty posed by a single-Director independent agency, Humphrey’s Executor v. United States cannot be stretched to cover this novel agency structure. Therefore, the court held that the CFPB is unconstitutionally structured. To remedy the constitutional flaw, the court followed the Supreme Court’s precedents and simply severed the statute’s unconstitutional for-cause provision from the remainder of the statute. With the for-cause provision severed, the court explained that the President now will have the power to remove the Director at will, and to supervise and direct the Director. Because the CFPB as remedied will continue operating, the court addressed the statutory issues raised by PHH and agreed with PHH that Section 8 of the Act allows captive reinsurance arrangements so long as the amount paid by the mortgage insurer for the reinsurance does not exceed the reasonable market value of the reinsurance; CFPB’s order against PHH violated bedrock principles of due process; and the CFPB on remand still will have an opportunity to demonstrate that the relevant mortgage insurers in fact paid more than reasonable market value to the PHH-affiliated reinsurer for reinsurance, thereby making disguised payments for referrals in contravention of Section 8. Accordingly, the court granted the petition for review, vacated the order, and remanded for further proceedings. View "PHH Corp. v. CFPB" on Justia Law

Claimants-Appellants appealed an award of summary judgment which forfeited to the United States various claimants’ interests in multiple properties, including a 36‐story office building located at 650 Fifth Avenue in Manhattan, real properties in Maryland, Texas, California, Virginia, and New York, and the contents of several bank accounts. Also at issue is the September 9, 2013 order denying a motion to suppress evidence seized from the Alavi Foundation’s and the 650 Fifth Avenue Company’s office. The court vacated the judgment as to Claimants Alavi Foundation and the 650 Fifth Ave. Co., of which Alavi is a 60% owner because there are material issues of fact as to whether the Alavi Foundation knew that Assa Corporation, its partner in the 650 Fifth Ave. Co. Partnership, continued after 1995, to be owned or controlled by Bank Melli Iran, which is itself owned or controlled by the Government of Iran, a designated threat to this nation’s national security; the district court erred in sua sponte considering and rejecting claimants’ possible statute of limitations defense without affording notice and a reasonable time to respond; in rejecting claimants’ motion to suppress evidence seized pursuant to a challenged warrant, the district court erred in ruling that claimants’ civil discovery obligations obviate the need for any Fourth Amendment analysis; and the district court erred in its alternative ruling that every item of unlawfully seized evidence would have been inevitably discovered. Accordingly, the court vacated and remanded for further proceedings. View "In re 650 Fifth Avenue and Related Properties" on Justia Law

Plaintiff filed a qui tam action under the New York False Claims Act (NYFCA), N.Y. Stat Fin. Law 187 et seq., on behalf of the State and the City against Wells Fargo for fraudulent avoidance of New York tax obligations. The district court dismissed for failure to state a claim. The court concluded that, with no special state interest, and with no indication of congressional preference for state-court adjudication, the exercise of federal jurisdiction in this case is fully consistent with the ordinary division of labor between federal and state courts. The court also concluded that the complaint did not plausibly allege that the Wells Fargo trusts were not qualified to be treated as Real Estate Mortgage Investment Conduits (REMICs). Therefore, the complaint failed to state a claim on which relief could be granted under the NYFCA for any false statement or record affecting the trusts' entitlement to exemption from income tax under the New York tax laws. Accordingly, the court affirmed the judgment. View "State of New York ex rel. Jacobson v. Wells Fargo" on Justia Law

Relators filed a qui tam action under the False Claims Act (FCA), 31 U.S.C. 3729(a)(1)(A), alleging that Wells Fargo defrauded the government within the meaning of the FCA by falsely certifying that they were in compliance with various banking laws and regulations when they borrowed money at favorable rates from the Federal Reserve’s discount window. The district court granted defendants’ motion to dismiss. The district court held that the banks’ certifications of compliance were too general to constitute legally false claims under the FCA and that relators had otherwise failed to allege their fraud claims with particularity. The court agreed, concluding that it has long recognized that the FCA was not designed to reach every kind of fraud practiced on the Government. Even assuming relators’ accusations of widespread fraud are true, they have not plausibly connected those accusations to express or implied false claims submitted to the government for payment, as required to collect the treble damages and other statutory penalties available under the FCA. Accordingly, the court affirmed the dismissal of the suit. View "Bishop v. Wells Fargo" on Justia Law

U.S. Bank participates in an FHA-backed mortgage insurance program that encourages lending to high-risk borrowers. U.S. Bank had to certify that it would meet certain requirements, and each time it requested an insurance payment, had to certify that it had followed 24 C.F.R. 203.500 requirements, including engaging in “loss mitigation” measures, such as attempting to arrange a face-to-face meeting with the defaulting borrower, before foreclosing. According to ABLE, an Ohio non-profit organization, U.S. Bank did not satisfy the loss mitigation requirement, wrongfully foreclosed on 22,000 homes, and wrongfully collected $2.3 billion in federal insurance benefits. ABLE alleged violation of the False Claims Act, 31 U.S.C. 3729. The Department of Justice declined to intervene. The district court found that ABLE premised its case on information that had already been publicly disclosed, precluding it from bringing suit as a qui tam plaintiff. The Sixth Circuit agreed, noting a 2011 consent order between U.S. Bank and the government, requiring U.S. Bank to implement reforms, including measures “to ensure [that] reasonable and good faith efforts, consistent with applicable Legal Requirements, are engaged in Loss Mitigation and foreclosure prevention for delinquent loans,” and a 2011 foreclosure practices review by three federal agencies, which noted that U.S. Bank had failed to take various mitigation measures. View "ABLE v. U.S. Bank, N.A." on Justia Law