Court Denies CIFG’s Attempt to Refile CDO Suit Against J.P. Morgan

On September 23, Justice Marcy S. Friedman of the New York Supreme Court for New York County denied CIFG’s motion to amend its complaint against J.P. Morgan in a case the Court previously dismissed in June.  CIFG had originally brought suit claiming two causes of action against J.P. Morgan: 1) that J.P. Morgan had made material misrepresentations to induce CIFG to issue insurance on credit default swaps guaranteeing two collateralized debt obligations, and 2) for common-law fraud.  In its June dismissal order, the Court dismissed the first cause of action but allowed CIFG to attempt to replead its fraud claim.  CIFG’s proposed amended complaint included two causes of action, the first of which the Court held was identical in all material respects to the previously dismissed first cause of action.  As to the proposed second cause of action for common law fraud, the Court noted that while CIFG had added additional allegations to attempt plead the action with particularly, it had failed to address whether a common law fraud claim could be maintained based on alleged misrepresentations made by non-insured Bear Stearns about the collateral underlying the CDOs.  The Court granted CIFG leave to amend to attempt to cure this issue.  Order.

NY Appellate Court Holds CIFG and Syncora Lack Standing in $1.8 Billion MBS Suit

On April 25, the First Department of the Appellate Division of the New York Supreme Court affirmed an order barring monoline insurers CIFG and Syncora from suing GreenPoint Mortgage Funding for alleged violations of representations and warranties concerning loans backing $1.8 billion in RMBS securitizations.  The order upheld the lower court’s denial of the insurers’ motion to file a third amended complaint, and held that the insurers could not directly assert claims against GreenPoint because they were neither parties to the relevant agreements nor intended third party beneficiaries.  Decision.

CIFG Sues JP Morgan Over Two Bear Stearns CDO Portfolios

 On November 26, CIFG sued JP Morgan in Supreme Court for the State of New York for alleged losses stemming from its insurance of credit default swaps on two Bear Stearns RMBS-backed CDOs.  CIFG alleges that instead of being selected and managed by independent collateral managers, the CDO portfolios were actually selected by Bear Stearns in order to unload its own risk.  CIFG alleges it suffered more than $100 million in losses when the two CDOs defaulted.  The complaint’s causes of action are for material misrepresentation in the inducement of an insurance contract and fraud.  Complaint.

CIFG Sues Bank of America Over RMBS Insurance Policies

 On November 20, CIFG sued Bank of America in Supreme Court for the State of New York concerning five financial guaranty policies issued in connection with two structured transactions backed by 22 RMBS.  CIFG alleges that Bank of America knowingly repackaged securities backed by poor quality mortgage loans into two new securitizations.  CIFG alleges that it was induced to insure the securitizations by misrepresentations about the quality of the underlying mortgage loans.  CIFG alleges fraudulent inducement, misrepresentation in violation of New York Insurance law, negligent misrepresentation, and breach of contract.  CIFG seeks payment of past, current, and future claims or rescissionary damages, reimbursement for its losses, and punitive damages.  Complaint.

GreenPoint Mortgage Sued For Fraud By CIFG

On October 1, CIFG Assurance North America filed a summons with notice against GreenPoint Mortgage Funding Inc. in the Supreme Court for the State of New York, New York County.  The monoline insurer alleges that GreenPoint misrepresented the quality and characteristics of $58 million in residential mortgage loans in the pool backing $277 million in RMBS partially insured by CIFG.  CIFG further alleges that GreenPoint has failed to comply with its contractual obligations to repurchase the allegedly defective loans.  The insurer’s claims are for fraud, breach of contract, and specific performance.  Summons with Notice.