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Latest NY appeals ruling is bad news for BofA in monoline cases

Latest NY appeals ruling is bad news for BofA in monoline cases


Alison Frankel-

Ordinarily, there’s not much reason to get excited about a state intermediate appeals court upholding a procedural ruling by a trial court judge. But in the litigation between bond insurers and mortgage-backed securities issuers, decisions are not only magnified by the tens of billions of dollars at stake, but also by the paucity of precedent. Almost every ruling is groundbreaking, which means that decisions have an impact far beyond a single case.

With that in mind, there are two reasons why a ruling Thursday by the New York Appellate Division, First Department, is a setback for Bank of America: timing and authority.

Without much comment, the state appeals court affirmed two rulings by New York State Supreme Court Justice Eileen Bransten, who last fall denied motions by Bank of America to sever and consolidate successor liability claims against the bank in four bond insurer cases against Countrywide. “The court properly exercised its discretion in denying defendant’s motion to sever plaintiffs’ successor liability claims from the primary claims and to consolidate them, for purposes of discovery, in a single action,” the appellate decision said. “The successor liability actions are at completely different stages of discovery, and consolidation would result in undue delay.”

[REUTERS ON THE CASE]

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Ambac v Countrywide | NY App Div., 1st Dept. “denying defendant’s motion to sever plaintiffs’ successor liability claims”

Ambac v Countrywide | NY App Div., 1st Dept. “denying defendant’s motion to sever plaintiffs’ successor liability claims”


Decided on April 5, 2012
Gonzalez, P.J., Tom, Catterson, Renwick, Richter, JJ. 7286N- 7287N- 7288N- 7289N & M-664- M-665-
651612/10 602825/08 650736/09 650042/09 -745

[*1]Ambac Assurance Corp., et al., Plaintiffs-Respondents,

v

Countrywide Home Loans, Inc., et al., Defendants, Bank of America Corp., Defendant-Appellant.

MBIA Insurance Corporation, Plaintiff-Respondent,

v

Countrywide Home Loans, Inc.,et al., Defendants, Bank of America Corp., Defendant-Appellant.

Financial Guaranty Insurance Co., Plaintiff-Respondent,

v

Countrywide Home Loans, Inc.,et al., Defendants, Bank of America Corp., Defendant-Appellant.

Syncora Guarantee, Inc., Plaintiff-Respondent,

v

Countrywide Home Loans, Inc.,et al., Defendants, Bank of America Corp., Defendant-Appellant.

O’Melveny & Myers LLP, New York (Jonathan Rosenberg of
counsel), for appellant.
Patterson Belknap Webb & Tyler LLP, New York (Robert P.
LoBue of counsel), for Ambac Assurance Corp. and The
Segregated Account of Ambac Assurance Corporation, respondents.
Quinn Emanuel Urquhart & Sullivan, LLP, New York (Peter
E. Calamari of counsel), for MBIA Insurance Corporation,
respondent.
Kutak Rock LLP, New York (Robert A. Jaffe of counsel), for
Financial Guaranty Insurance Co., respondent.
Allegaert Berger & Vogel LLP, New York (David A. Berger of
counsel), for Syncora Guarantee, Inc., respondent.

Orders, Supreme Court, New York County (Eileen Bransten, J.), entered October 31, 2011 and November 2, 2011, which, among other things, denied defendant Bank of America Corp.’s motions to sever and consolidate plaintiffs’ successor liability claims for purposes of discovery, and held in abeyance defendant’s motion to consolidate the successor liability claims for purposes of trial, unanimously affirmed, with costs.

This is a consolidated appeal involving four related but separate claims by monoline insurers for primary liability against the Countrywide defendants in connection with financial guarantee insurance covering mortgage-backed securities. The actions also involve successor liability against defendant Bank of America. The court properly exercised its discretion in denying defendant’s motion to sever plaintiffs’ successor liability claims from the primary claims and to consolidate them, for purposes of discovery, in a single action. The successor liability actions are at completely different stages of
discovery, and consolidation would result in undue delay (see Barnes v Cathers & Dembrosky, 5 AD3d 122 [2004]).

M-664 –Syncora Guarantee Inc. v Countrywide Home Loans, Inc., et al. and Bank of America Corp.

M-665 –MBIA Insurance Corporation v Countrywide Home Loans, Inc., et al. and Bank of America Corp.

M-745 –MBIA Insurance Corporation, et al. v Countrywide Home Loans, Inc., [*2]et al. and Bank of America Corp.

Motions to supplement the record on appeal (M-664, M-665) granted; cross motion to strike the supplemental record and reply brief, or for leave to supplement the record in the event the motion (M-665) is granted (M-745), granted to the extent of granting leave to supplement the record.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: APRIL 5, 2012

CLERK

[ipaper docId=88657343 access_key=key-1i7t2yobucg5b3s5zqos height=600 width=600 /]

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Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem

Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem


The Subprime Shakeout-

The Principal – Agent Problem: Part I – RMBS Data Integrity

Back near the dawn of time when I was in business school, and the faculty was hard-pressed to find topics to fill up the curriculum, they introduced the Principal – Agent Problem.  As future corporate managers and agents of the stockholders, I suppose they wanted to explain to us that our economic interests were not identical to those of the owners.  This wasn’t exactly the most shocking news we had ever received, but that was all that was said about the issue, back then.

Of course, there is considerably more to this multi-faceted problem. According to Wikipedia, “The principal–agent problem arises when a principal compensates an agent for performing certain acts that are useful to the principal and costly to the agent, and where there are elements of the performance that are costly to observe,” primarily due to asymmetric information, uncertainty and risk.

Let’s look at the relationship between the RMBS bondholder

[THE SUBPRIME SHAKEOUT]

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NYSC Denies MTD “Fraud, Breach of Contract, Securitization” | MBIA v. MORGAN STANLEY, SAXON MORTGAGE

NYSC Denies MTD “Fraud, Breach of Contract, Securitization” | MBIA v. MORGAN STANLEY, SAXON MORTGAGE


MBIA INSURANCE CORPORATION

against

MORGAN STANLEY, MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS, SAXON MORTGAGE SERVICES INC.

[ipaper docId=56545204 access_key=key-20p0si7ej7oidnaif5xb height=600 width=600 /]

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JPMorgan Said to Face SEC Subpoena Along With Credit Suisse

JPMorgan Said to Face SEC Subpoena Along With Credit Suisse


BLOOMBERG-

JPMorgan Chase & Co. (JPM) received a subpoena from the U.S. Securities and Exchange Commission over failed mortgages, a person familiar with the investigation said, as the agency probes banks including Credit Suisse Group AG (CS) for allegedly failing to share refunds from sellers of faulty debt.



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SEC Subpoenas Credit Suisse Over Mortgages: MBIA

SEC Subpoenas Credit Suisse Over Mortgages: MBIA


BLOOMBERG:

“Credit Suisse is now the subject of an investigation by the Securities and Exchange Commission, which issued a subpoena this week seeking the same types of documents as MBIA seeks with this motion,” the bond insurance unit of Armonk, New York-based MBIA Inc. (MBI), said in the filing in New York State Supreme Court. The document, dated April 29, was filed today.


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