Kyla Asbury Nov. 14, 2014, 9:55am

SAN FRANCISCO (Legal Newsline) - A federal appeals court has ruled that under Florida law, no reasonable jury could find that EverBank acted in bad faith when it exercised its discretion to close WorldCurrency CDs to limit losses to itself and customers.


The three-judge panel affirmed in part and reversed in part the U.S. District Court for the Northern District of California's summary judgment brought by a class of EverBank customers who purchased EverBank WorldCurrency CDs denominated in Icelandic krona, according to an opinion filed Oct. 31 in the U.S. Court of Appeals for the Ninth Circuit.



Circuit judges Alex Kozinski, Diarmuid F. O'Scannlain and Mary H. Murguia voted in the majority, with Murguia authoring the opinion.


The panel also held that a reasonable jury could find that the terms and conditions were silent with respect to the currency conversion rate that applied when the WorldCurrency CD were closed and the prceeds from the CDs returned to the class members.


Ek Vathana and a certified class of EverBank customers purchased WorldCurrency CDs in Icelandic krona that matured between Oct. 8, 2008, and Dec. 31, 2008, according to the opinion.


Vathana filed his class action lawsuit in 2009. On March 9, 2012, the federal court granted EverBank's motion for summary judgment on their breach of contract action. Vathana appealed this decision.


"We agree with the district court that Vathana failed to introduce evidence sufficient for a reasonable jury to find that EverBank breached the terms and conditions by exercising its bad faith," the opinion states.


It is undisputed that, had EverBank rolled over the WorldCurrency CDs without entering into forward contracts, and had Icelandic currency continued to lose value, that EverBank could have been exposed to up to $12 million in losses, according to the opinion.


"It is also undisputed that, if EverBank had continued to offer ISK-denominated WorldCurrency CDs, it would have had to charge the CD-holders interest, rather than pay them interest," the opinion states.


The panel ruled that no reasonable jury could find EverBank acted in bad faith. However, a reasonable jury could find that the terms and conditions could have been breached.


"We reverse the district court's entry of summary judgment on this ground," the opinion states. "We remand to the district court to resolve whether EverBank breached the terms and conditions when it returned the value of the WorldCurrency CDs to the class members."



Vathana and the class members are represented by Michael Millen of the Law Office of Michael Millen.


EverBank, EverBank Financial Corp. and EverBank World Markets are being represented by Deborah S. Birnbach, Robert B. Bader and William M. Jay of Goodwin Procter LLP.

U.S. Court of Appeals for the Ninth Circuit case number: 12-15587

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