March 15, 2012
In a major development in multidistrict litigation over failed mortgage-backed securities issued by Countrywide Financial, the Firm defeated a motion to dismiss fraud claims of its client Western and Southern Life Insurance Company under the two-year limitations periods of the federal Securities Exchange Act and the Ohio Securities Act. Judge Marianna R. Pfaelzer had previously granted in related cases numerous motions to dismiss under the two-year Exchange Act period. In her Western & Southern ruling, however, Judge Pfaelzer focused on the complaint’s detailed allegations of misrepresentations as to proper transfer of title of loans underlying Countrywide mortgage-backed securities, and found that notice of these misrepresentations arose substantially later than notice of widely alleged misrepresentations as to loan underwriting standards. The decision noted in particular the unique nature of the transfer of title allegations submitted by the Firm on behalf of its client: “Unlike previous allegations the Court has considered, these claims do not address the risk that an underlying loan will default, but rather the consequences a loan defaults.” (Countrywide Financial Corporation Mortgage-Backed Securities Multidistrict Litigation, No. 2:11-ML-02265-MRP (C.D. Cal., decided March 9, 2012)).
A copy of the decision is available below.