On October 19, Judge Mariana R. Pfaelzer of the Central District of California dismissed with prejudice four cases against Countrywide Financial Corp., and related entities, pursuant to stipulations among the parties. Landesbank Baden-Wurttemberg, Dexia SA, Sealink Funding Ltd., and Thrivent Financial for Lutherans, had each pursued separate but similar claims against Countrywide alleging that Countrywide had concealed underwriting failures and misrepresented the quality of the loans to ratings agencies in order to receive better ratings for its RMBS. The plaintiffs, combined, had sought relief in connection with alleged misrepresentations that affected more than $2 billion RMBS bought between 2005 to 2007. The stipulations did not reveal any terms other than that each party would shoulder its own attorneys fees and costs. Stipulations.
Landesbank Baden-Wurttemberg
Second Circuit Upholds Dismissal of $37 Million CDO Suit Against Goldman Sachs
On April 19, 2012, the United States Court of Appeals for the Second Circuit affirmed a lower court’s dismissal of a lawsuit brought by Landesbank Baden-Wurttemberg (“Landesbank”) lawsuit against Goldman Sachs & Co. (“Goldman Sachs.”) Landesbank asserted claims for fraud, negligent misrepresentation, and unjust enrichment, alleging that Goldman Sachs misstated the quality of the mortgages underlying the collateral that backed a CDO and secretly took a position to profit from the CDO’s failure. In affirming the lower court, the Second Circuit determined that Landesbank failed to allege a specific motive for Goldman to commit fraud and failed to allege the existence of any special relationship between Goldman and Landesbank sufficient to support a negligent misrepresentation claim. Order.
Landesbank Baden-Wuttenberg Files $455 Million RMBS Suit Against Countrywide
On March 29, 2012, German bank Landesbank Baden-Wurttemberg (“LBW”) filed a suit against Countrywide Financial Corp. and related entities in the Supreme Court of the State of New York alleging that Countrywide misrepresented the underwriting standards and appraisals for the loans underlying $455 million of RMBS allegedly purchased by LBW in eleven offerings between 2005 and 2007. LBW further alleges that Countrywide misrepresented information to credit rating agencies resulting in faulty ratings, misrepresented that the issuing trusts possessed good title to the underlying loans, and ignored underwriting deficiencies by other originators whose loans it purchased. LBW alleges claims for fraud, aiding and abetting fraud, negligent misrepresentation, successor and vicarious liability, and violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. LBW seeks unspecified money damages and rescission. Complaint.
German Banks Sue Bank of America, JP Morgan and Others for Over $4.5 Billion
On September 29, 2011 two German banks, Landesbank Sachsen AG and Landesbank Baden-Wurttemberg, and the banks’ Irish asset manager, Sealink, filed three suits in New York state court. Plaintiffs name Bank of America Corp., JP Morgan, Countrywide Financial Corp., Bear Stearns, Washington Mutual, and certain Countrywide executives in claims for fraudulent and negligent misrepresentation, aiding and abetting, and vicarious and successor liability. Plaintiffs allege that the defendants concealed the risks of the underlying mortgages through alleged misstatements as to originator underwriting practices and allegedly overstated appraisals. Plaintiffs seek compensatory, rescissory, and punitive damages. Index No. 652680/2011. Index No. 652681/2011. Index No. 652679/2011.