California Court of Appeal

California Appellate Court Directs Dismissal of Homeowner-Borrowers’ Fraudulent Concealment Claim Against Countrywide In Connection With Sale of RMBS

On August 24, 2011, the California Court of Appeal directed the dismissal of claims against Countrywide Financial Corp. brought by a group of homeowner-borrowers. The complaint alleges that Countrywide fraudulently concealed a scheme to sell RMBS at inflated values that caused the plaintiffs’ home values to drop when the real estate bubble burst. The trial court had overruled the demurrers to this claim, and Countrywide sought a writ of mandamus. The court found the broad-based decline in home values was not causally related to the alleged fraud, and that Countrywide did not have a duty to disclose any intent to commit fraud to the homeowners. Decision.

California Appellate Court Reinstates Class Action On Behalf of RMBS Purchasers

On May 18, 2011, the California Court of Appeal, Second Appellate District, reversed an earlier Superior Court decision to dismiss the securities class action suit against Countrywide Financial Corp. and other defendants allegedly involved in the sale of RMBS between 2005 and 2007. Although the complaint alleges only claims under the federal Securities Act of 1933, the state court found that the state court has concurrent jurisdiction over the securities class action because the RMBS at issue are not “covered securities” under SLUSA. Decision.