June 19, 2013 4th Circuit published opinions

Federal Insurance Deposit Corporation v Cashion

Cashion defaulted on a loan and the lender sued for payment. FDIC subsequently closed the bank, substituted as plaintiff, removed the case to federal court and moved for summary judgment. Cashion opposed summary judgment arguing FDIC had to produce the original note and disprove assignment or discharge and the debt was forgiven as per a form 1099-C. The district court struck Cashion’s surreply and an accompanying affidavit and granted judgment to FDIC. The panel, 2-1, affirmed. The majority held that the district court did not abuse its discretion in striking the surreply as it was not allowed under local rules and the affidavit was not sworn by an expert. As to the note, the panel held that North Carolina law allowed proof of a note’s existence by submitting a true copy as was done here. The panel finally held that the form 1099-C did create a material question of fact as the plain language of the statute and IRS interpretations state the form is not evidence of forgiveness of debt. Acknowledging a split in authority, the panel explained that the majority position adopted here was more consistent with the text of the statute and the inherent ambiguity of the issuance of a form 1099-C. The majority emphasized that the ruling was narrow as there was no other evidence in the record besides the form to prove forgiveness or cancelation. The dissent argued that the 1099-C and Cashion’s initial affidavit created a factual dispute as to whether the debt had been discharged. Thus, while expressing skepticism about the validity of the 1099-C in this case, the dissent would remand for trial.

United States v Otuya

Otuya was convicted of conspiracy, bank fraud and indentify theft arising from fraudulent deposits on f credit card courtesy checks. The panel affirmed his convictions and sentence. It held the district court properly allowed evidence taken form Otuya’s backpack involving a different fraudulent scheme as the evidence was either intrinsically related to his ongoing targeting of bank of America or relevant to the identity and modus operandi of the perpetrator. The panel also held that no one has lawful authority to consent to the use of their identity n the commission of a crime and the identity theft conviction must therefore stand. As to Otuya’s sentence, the panel held that the district court properly found the intended loss was greater than $200,000 as the actual losses relied upon exceeded that amount, that more than fifty people had mail stolen and thus the 50 victim enhancement was properly applied and Otuya directed others by ordering them to deposit checks and withdraw money. Thus, Otuya’s sentence was reasonable and was affirmed.

United States v Smalls

Smalls moved for a second sentence reduction based on the new lower crack cocaine guidelines. The sentencing judge lowered his sentence to the top of the new guideline range. Smalls argued on appeal that the sentencing judge erred by failing to make an individualized determination on the record. The panel affirmed. It held that 4th Circuit precedent does not require any individualized statement. It also rejected all of small’s arguments to depart from precedent as precedent dealt with the exact issue in this appeal, Small’s case is factually indistinguishable from the key 4th Circuit case and more recent United States Supreme Court precedent has not created an individualized determination requirement in sentence reduction context.


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