After a stream of successes for lenders in valuation claims against valuers in recent times, the recent success for a valuer in an application for summary judgment in the case of Tiuta International Ltd (in liquidation) v De Villiers Chartered Surveyors Ltd offers some comfort to valuers. It demonstrates the courts’ unwillingness to follow creative attempts by lenders to establish a cause of action by disregarding the established legal principles in respect of causation in valuation claims.  

The recent case of Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2017] EWHC 257 (Ch) (Singularis) is an important decision affecting any institution that handles client payments, including banks. It decided that a stock broker was liable in negligence for having breached its duty of care to its customer, Singularis Holdings Ltd (in liquidation) (Singularis), by paying monies out of its client account on the instruction of one of Singularis' directors and its only shareholder, Mr Al Sanea.

Background

According to the U.S. Bankruptcy Court for the Southern District of New York, a lack of bad faith is no longer a defense to court sanctions for failure to produce documents in a timely manner. That court, in In re A&M Florida Properties II, recently awarded sanctions against both a party and its counsel for the counsel’s failure to become familiar with the client’s email and data-retention policies and systems— despite the absence of any bad faith or willful delay.1

A recent judgment for partial dismissal by the United States District Court for the Middle District of Tennessee reinforces that a bank, when serving as a depository of fiduciary funds, may be shielded from liability for the fiduciary’s misconduct by the powerful protections of Tennessee’s Uniform Fiduciaries Act (the “UFA”).  

INTRODUCTION

GFI Acquisition, LLC v. American Federated Title Corp., 2010 Bankr. LEXIS 1217

An action was brought by the plaintiff alleging that the defendants breached an agreement of purchase and sale by failing to disclose provisions in the agreement which would operate to lock the plaintiffs out of subsequent negotiations to refinance loans on the properties to be assumed on the date of closing.

In a significant development for financial institution directors and officers, the Federal Deposition Insurance Corporation (FDIC) has filed the first lawsuit in the current financial crisis against former officers of a closed financial institution arising from alleged loan losses to the bank. On July 2, 2010, the FDIC filed a complaint in federal court in California against former officers of the homebuilding division of IndyMac Bank for civil money damages. FDIC v. Van Dellen, Case No. 2:10-cv-04915-DSF-SH (C.D. Cal.) (July 2, 2010).

The US Federal Deposit Insurance Corporation (FDIC) estimates that by the end of 2010, more than 300 banks will have failed, and that the cost of resolving these failures may reach $100 billion over the next four years.1

Official Committee of Unsecured Creditors of Allegheny Health, Education and Research Foundation v PricewaterhouseCoopers, LLP(3d Cir No 07-1397, May 28, 2010)

CASE SNAPSHOT

On September 30th, the Sixth Circuit affirmed the dismissal of the bankruptcy trustee's lawsuit against Deloitte & Touche, the debtor's former auditor. The trustee alleged that Deloitte negligently failed to uncover and report unsound related-party transactions by the debtor's sole shareholder and CEO, and aided and abetted the CEO's breach of his fiduciary duty to the debtor. Affirming dismissal, the Court held the trustee failed to allege reliance upon Deloitte's audits and the statute of limitations bars the aiding and abetting claim.