Countrywide securities ruling may cut other claims
* Ruling could impact investors with billions in claims
* Investors thought claims were protected
By Tom Hals
WILMINGTON, Del., March 17 (Reuters) - Countrywide Financial Corp (BAC.N) won the dismissal of an investor lawsuit in a ruling that could dent other cases that collectively seek billions of dollars related to soured mortgage-backed bonds.
U.S. District Judge Kevin Castel in Manhattan did not rule on the merits of the case in a decision issued on Thursday. Instead, he said investors waited too long to bring their lawsuit against Countrywide, whose executives allegedly hid details about the poor-quality loans backing the bonds.
Two hedge funds, Footbridge Limited Trust and OHP Opportunity Limited Trust, had argued they had the right to bring the case because they opted out of a Countrywide class-action lawsuit that was filed within the legal time frame.
The complaint also named Bank of America, which bought Countrywide in 2008, and three Countrywide executives.
"Investors who thought their claims were protected are finding they are not," said Daniel Brockett, an attorney from law firm Quinn Emanuel Urquhart Oliver & Hedges LLP who represents the funds. "It potentially impacts lots of institutional investors because judges are making exceptions way after the fact."
In a summary judgment ruling, Castel cited a three-year limit for bringing the lawsuit.
The investors' complaint was filed on Jan. 15, 2010, more than three years after the funds purchased $43 million of mortgage-backed bonds at the center of dispute.
The related class-action case was filed in a California court in November 2007.
"It's an odd ruling," said Adam Pritchard, a professor at the University of Michigan Law School. He said a timely class-action case generally protects claims of investors who choose later to bring their own lawsuit.
"I would appeal," he said.
Castel in September dismissed another lawsuit against Countrywide by the two funds, which are managed by Old Hill Partners of Darien, Connecticut. In that ruling, he said there was not sufficient evidence for the case to proceed.
The case is Footbridge Limited Trust and OHP Opportunity Limited Trust v Countrywide Financial Corp et al, U.S. District Court, Southern District of New York, No. 10-367. (Reporting by Tom Hals; Editing by Tim Dobbyn)
- Housing, jobs data weaken, but overall economic picture still upbeat
- U.S. diplomats, but not prosecutors, seek to quell India dispute |
- Last-minute Obamacare exemption for those with canceled plans
- Target cyber breach hits 40 million payment cards at holiday peak |
- New York Mayor-elect's reputation for lateness parodied on Twitter