dismissal

Orrick Obtains Dismissal of Ambac’s Fraud Claim Against Credit Suisse

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Ambac Assurance Corp. v. DLJ Mortgage Capital, Inc./ Credit Suisse, No. 600070/2010 (Sup. Ct. N.Y. Apr. 7, 2011) (Kornreich, J.)

Justice Shirley Kornreich of the Supreme Court of the State of New York dismissed Ambac Assurance Corp.’s claim that it was fraudulently induced to insure a Credit Suisse RMBS issuance. Among other things, the Court found that an allegedly fraudulent representation that the loans at issue conformed to underwriting guidelines was not actionable because Ambac had access to all relevant information and failed to investigate, and because Ambac failed to obtain a contractual representation or warranty. Other aspects of the fraud claim were dismissed as duplicative of Ambac’s contract claim, which alleges that certain loans did not meet applicable representations and warranties. Orrick represents Credit Suisse in this matter. Decision.

Federal Appellate Court Affirms Dismissal of AIG Derivative Suit

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On March 17, 2011, the Second Circuit Court of Appeals affirmed a district court’s dismissal of plaintiff Louisiana Municipal Police Employees Retirement System’s derivative action on behalf of American International Group (“AIG”) and certain of its current and former directors and officers for breaches of fiduciary duty, waste of corporate assets, unjust enrichment and contribution, as well as violations of the Securities and Exchange Act Sections 20(a) and 10(b). Plaintiff’s Complaint alleged that current and former AIG directors and officers failed to properly oversee the company’s credit default swap transactions, particularly as they related to RMBS-backed CDOs, and made misstatements concerning the company’s financial health and risk management. The Second Circuit panel affirmed the trial court’s dismissal of the case for failure to make a demand on AIG’s Board, finding that plaintiffs had not met the burden for demonstrating demand futility, and noting that “directors are entitled to a presumption that they were faithful to their fiduciary duties.” 2nd Circuit Order. SDNY Order.