All items from Florida Banking Law Blog

Authored by Janet C. Owens and Scott J. Kennelly and Janet C. Owens and Scott J. Kennelly of Rogers TowersFollowing a foreclosure sale, a lender may seek to obtain a deficiency judgment against the borrower and guarantors for the difference between the amount of the debt (as listed in the foreclosure judgment) and the value of the property.  As part of this effort, a lender may also be able to recover certain costs.
As a general rule, costs that predate the foreclosure judgment are not recoverable in a deficiency proceeding, absent some sort of fraud or collusion.  However, certain costs secured by the terms of the mortgage or note and specifically reserved by the terms of the foreclosure judgment for future determination may be recoverable.



Posted 1 week 1 day ago

Authored by Edward L. Kelly and Karl R. Gruss and Edward L. Kelly and Karl R. Gruss of Rogers TowersIn a previous article, we provided an overview of the basic procedures judgment creditors must follow when serving writs of garnishment on banks and the obligations of financial institutions that are served with writs.  We also suggested that complications may arise when judgment creditors pursue bank accounts that include more than one party as the account holder.  A recent case out of Florida’s Fourth District Court of Appeals, Branch Banking and Trust Company v. ARK Development/Oceanview, LLC,  makes clear that when a third party named on the account claims ownership of the account’s funds, a judgment creditor’s success hinges on proving that the garnished funds belong solely to the judgment debtor.
Judgment Debtor’s Status on the Account



Posted 2 weeks 1 day ago

Authored by Adam B. Brandon of Rogers TowersAs part of a coordinated, multi-agency initiative known as “Operation Choke Point,” the Federal Deposit Insurance Corporation (FDIC) has warned financial institutions that they might be liable for maintaining banking relationships with certain “high risk” businesses and customers.  Specifically, the FDIC expressed concern about relationships between banks and payment processors who use their deposit accounts to process payments for third-party merchant clients.  If these merchant clients are involved in money laundering or consumer fraud, then the banks could be liable for facilitating illegal activity.  However, critics of Operation Choke Point contend that the regulators are actually seeking to deny access to credit markets for legitimate industries that  are  politically unpopular.
FDIC Guidance and Clarification



Posted 3 weeks 5 days ago

Authored by Armando Nozzolillo and Michael S. Waskiewiczand Armando Nozzolillo and Michael S. Waskiewicz of Rogers TowersGarnishments are one of the most effective tools at a creditor’s disposal for collection purposes.  The rules and requirements for initiating a garnishment action are laid out in Chapter 77, Florida Statutes.  Garnishment actions are generally ancillary to the main action brought by a creditor to establish a debt.  However, Garnishment proceedings are still treated as separate and distinct from the main action, and thus, garnishees are not treated as agents of debtors.
This point played a significant role in the outcome of a recent case out of the 4th D.C.A.  In Watson v. Stewart Tilghman Fox & Bianchi, P.A., a judgment creditor initiated a garnishment action against a judgment debtor’s bank accounts, which were in the possession of a garnishee bank (the “Bank”).  The judgment creditor served the motion for writ of garnishment and the writ itself on the Bank by certified mail.  The Bank filed a timely answer notifying the judgment creditor that it possessed roughly $11,000 in debtor’s name.



Posted 4 weeks 1 day ago

Authored by Scott J. Kennelly and Janet C. Owens and Scott J. Kennelly and Janet C. Owens of Rogers TowersWhen a lender “willfully” charges interest in excess of statutory limits, civil usury penalties may apply.  However, Florida’s usury statutes provide for two exceptions to the application of civil usury penalties.
The first exception applies to purchasers or transferees of a loan purchased prior to its maturity date.  In that case, purchasers or transferees will not be liable for civil penalties unless the usurious nature of the loan document is apparent on its face, or unless the purchaser or transferee had actual notice of the usurious nature of the document before it was purchased.  Of course, a purchaser or transferee would be liable if it took any usurious action after its purchase of the loan.



Posted 4 weeks 6 days ago

Authored by Edward L. Kelly and Karl R. Gruss and Edward L. Kelly and Karl R. Gruss of Rogers TowersWrits of garnishment provide judgment creditors (i.e., the party in whose favor the judgment was entered) access to money that belongs to debtors but is possessed or controlled by third parties, typically financial institutions.  Chapter 77 of the Florida Statutes details the State’s procedures for properly obtaining and executing writs of garnishment, and Florida courts have devoted significant attention to interpreting the legislature’s statutory scheme.  This article discusses some of the basic procedures judgment creditors must follow to successfully garnish the property of a judgment debtor and the obligations of garnishee financial institutions served with a writ.
Property or Funds Subject to Garnishment
Writs of garnishment allow judgment creditors to reach particular kinds of property or property rights of a judgment debtor, including:



Posted 5 weeks 1 day ago

Authored by Edward L. Kelly and Karl R. Gruss and Edward L. Kelly and Karl R. Gruss of Rogers TowersFlorida law recognizes, and most banks offer, multiple forms of account designation to meet the desires and needs of individual customers.  Keep in mind, however, that the standard demand deposit account agreement (whether checking or savings), is primarily, and understandably, designed to guide and instruct the bank with respect to the payment of checks drawn upon, or withdrawals made from, such accounts.  A depository institution does not want to become entangled with issues regarding the ownership of the funds on deposit in accounts designated in the names of multiple parties and to which there may be competing interests. Chapter 655 of the Florida Banking Code includes a number of provisions primarily designed to govern and protect the financial institution in establishing and maintaining checking and savings accounts (including, in most cases, certificates of deposit) in the names of multiple parties, but those same provisions may also have adverse consequences for the uninformed depositor.
Multiparty Bank Accounts Available in Florida



Posted 6 weeks 1 day ago

Authored by Jon Sacks and Heather S. Nasonand Jon Sacks and Heather S. Nason of Rogers TowersWhen a closely-held entity applies for a loan, the financial institution usually requires the entity’s owner(s) to guaranty the loan.  If the owner is married, the financial institution may also require the owner(s) spouse(s) to guaranty to improve the likelihood that loan will be repaid if the borrower defaults.  This seems like a logical credit request when structuring a loan since spouses often hold jointly owned assets.
The Equal Credit Opportunity Act (the “ECOA”) makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction…on the basis of…marital status.”  The ECOA defines “applicant” in part as “any person who applies to a creditor directly for an extension, renewal, or continuation of credit”.  Under the ECOA’s implementing Regulation B, the Federal Reserve Board (now under the Consumer Financial Protection Bureau) the term “applicant” is defined to include guarantors.  Regulation B contains a provision that is sometimes referred to as the “spouse-guarantor rule,” which prohibits a creditor from requiring an applicant’s spouse to guarantee a credit instrument.
Is a spouse-guarantor an “applicant” for credit for purposes of asserting protections under the ECOA?  This issue was recently addressed by two federal appeals courts, resulting in two different conclusions.
Sixth Circuit



Posted 7 weeks 1 day ago

Authored by Scott J. Kennelly and Scott St. Amand and Scott J. Kennelly and Scott St. Amand of Rogers TowersThe advent of social media has brought about many changes in the world of litigation, not the least of which is the availability of information that previously would have been impossible to discover.  It is hardly an exaggeration that between Facebook, Instagram, Twitter and other social media platforms, millions of people post their every move online.  In fact, there are “apps,” such as Foursquare, that update a user’s location in real time.  With this potentially unlimited record of a litigant’s daily behavior, practitioners are chomping at the bit to acquire such information.
Because the discovery of social media in litigation is so new, there is limited case law on the subject.  As the case law emerges, however, one of the leading questions revolves around what information can be considered “public” and what information is “private”.  Is a Facebook post public if the user has selected privacy settings which allow only a limited group of friends to read the post or see his or her pictures?



Posted 7 weeks 6 days ago

Authored by Scott St. Amand and J. Ellsworth Summers, Jr. and Scott St. Amand and J. Ellsworth Summers, Jr. of Rogers TowersAs we mentioned in our previous posts regarding document preservation, establishing a written document retention and destruction policy is essential to any company, large or small.  As with the Pradaxa case out of the Southern District of Illinois, a recent case out of the Northern District of New York, Research Foundation of SUNY v. Nektar Therapeutics, exemplifies the pivotal role such a policy has in the event of litigation.  RF SUNY brought complex breach of contract and breach of the implied duty of good faith and fair dealing actions against Nektar, but it was the defendant, Nektar which filed the instant spoliation motion.
Nektar alleged that the RF SUNY was grossly negligent for failing to preserve documents which “may have been relevant to future litigation” as well as being grossly negligent “in its efforts to preserve documents.” Nektar also alleged that RF SUNY failed to “to timely issue written litigation-hold notices,” “preserve all relevant backup-tape data,” and “suspend its auto-delete practices.”



Posted 8 weeks 1 day ago