Knights of Columbus Seek Damages from Bank of New York Mellon

On August 16, 2011, the Knights of Columbus amended their complaint against Bank of New York Mellon in New York state court to seek damages from BNY Mellon as trustee of 18 RMBS trusts serviced by Countrywide Financial Corp. In an initial complaint filed in May, the Knights of Columbus sought an accounting for the 18 trusts. Alleging that information obtained after the filing of that complaint demonstrates that BNY Mellon has violated its contractual and other obligations, the amended complaint seeks to preserve plaintiff’s claims against BNY Mellon for breach of contract, breach of fiduciary duty, negligence, and unfair trade practices to the extent that those claims survive Bank of America’s proposed $8.5 billion settlement of Countrywide Financial Corp. representations and warranties claims. Complaint.

New York Attorney General and Other Parties Move to Intervene in the Bank of America and Bank of New York Mellon Settlement

On August 4, 2011, New York Attorney General Eric T. Schneiderman moved to intervene in the June 29, 2011 settlement between Bank of America and Bank of New York Mellon (“BNYM”), the trustee for 530 trusts created by Countrywide entities. The Attorney General argued that the settlement should not be approved because it was negotiated by BNYM and Bank of America, without input from other beneficiaries who would also be bound by the settlement. According to the Attorney General, he moved to intervene to protect the marketplace, the interests of New York investors, and the Attorney General’s own ability to pursue claims against BNYM, Countrywide, Bank of America, and affiliated entities. NYAG Motion to Intervene.

The Attorney General also attached a proposed pleading to his motion to intervene that described the proposed settlement as “unfair” and included counterclaims against BNYM for breach of fiduciary duty and violations of state anti-fraud statutes, including the Martin Act. These causes of action arise out of BNYM’s alleged failure to properly transfer loans from Countrywide to the trusts and its failure to notify certificateholders of Countrywide’s delivery of incomplete mortgage files. NYAG Proposed Pleading in Intervention.

A few days earlier, on August 2, 2011, Cranberry Park, who allegedly owns securities in 28 of the 530 trusts at issue, also moved to intervene, arguing that BNYM may not adequately represent its interests in the settlement. If the judge grants these motions to intervene, the Attorney General and Cranberry Park will become parties to the settlement proceedings before the New York Supreme Court. Cranberry Park Motion to Intervene.

Investor Group Sues Countrywide to Enforce Contractual Buy-Back Provision

On February 23, 2011, a group of holders of RMBS certificates represented by Plaintiffs’ lawyer David Grais filed a breach of contract claim against Countrywide Home Loans (now part of Bank of America) in New York State court, alleging that they were defrauded into purchasing over $1 billion in RMBS. The plaintiffs, who allege that they collectively own more than 25% of the voting rights in the issuer, sue derivatively on behalf of the Trustee, the Bank of New York Mellon, which is named as a nominal defendant. Plaintiffs ask the court to enforce a buyback provision in the Pooling and Servicing agreement or alternatively to award damages. Complaint.