Motions to Dismiss

Court Grants, in Large Part, Motions to Dismiss in Allstate’s Lawsuit Against Countrywide

On October 21, 2011, Judge Pfaelzer of the U.S. District Court for the Central District of California issued an order largely granting motions by Countrywide, various of its officers and directors, and Bank of America to dismiss various federal securities and state law claims asserted by Allstate arising out of Allstate’s investments in 25 Countrywide RMBS. Judge Pfaelzer found the federal claims time-barred, holding that Allstate brought its action more than three years after it was put on notice of its claims, and that the three-year period was not tolled by an earlier-filed action in which the plaintiff had standing to sue only as to different Countrywide RMBS. Certain of the state law claims, involving certificates purchased prior to December 27, 2005, also were held to be time-barred. As to later-purchased certificates, the court found that Allstate adequately alleged claims under New York and Illinois law for common law fraud arising out of alleged misrepresentations in the offering documents of those certificates concerning Countrywide’s origination and underwriting practices and the characteristics of the loans in the collateral pools. The court dismissed, without prejudice, additional claims for aiding and abetting fraud and for negligent misrepresentation, finding as to the former that Allstate had not alleged scienter on the part of the alleged aiders and abettors, and as to the latter that Allstate had not alleged sufficient privity between it and the Defendants. The court also dismissed, without prejudice, Allstate’s claim for successor liability against Bank of America. Decision.

FHLBP Claims Dismissed In Part

On November 29, 2010, Judge R. Stanton Wettick Jr. of the Court of Common Pleas of Allegheny County, in Pittsburgh, Pennsylvania, decided motions to dismiss three RMBS actions in which the Federal Home Loan Bank of Pittsburgh (FHLBP) alleged misrepresentations by various J.P. Morgan and Countrywide affiliates and three rating agencies (Moody’s, S&P and Fitch). The court dismissed all claims asserted against the rating agencies except for state law fraud claims. The court sustained a variety of claims against the J.P. Morgan and Countrywide defendants, however, and rejected their argument, relying on the Fifth Circuit’s decision in Lone Star Fund V (U.S.) v. Barclays Bank, PLC, 594 F.3d 383 (5th Cir. 2010), that the offering documents’ disclosure of a sole “repurchase or cure” remedy for non-conforming mortgage loans demonstrated that there was no misrepresentation. Decision.