Bank of America 2012 Annual Report Download - page 233

Bank of America 2012 231
District Court for the Southern District of New York. On February
7, 2012, the JPML transferred the matter to the Countrywide RMBS
MDL. On April 5, 2012, the court denied the FHFA’s motion to
remand the FHFA Countrywide Litigation to New York Supreme
Court. On October 18, 2012, the court dismissed as untimely
FHFA’s Section 11 claims as to 24 of the 86 MBS allegedly
purchased by FNMA and FHLMC, but otherwise denied the motion
to dismiss on statute of limitations and statute of repose grounds.
Also on September 2, 2011, the FHFA, as conservator for FNMA
and FHLMC, filed complaints in the U.S. District Court for the
Southern District of New York against the Corporation and Merrill
Lynch related entities, and certain current and former officers and
directors of these entities. The actions are entitled Federal Housing
Finance Agency v. Bank of America Corporation, et al. (the FHFA
Bank of America Litigation) and Federal Housing Finance Agency
v. Merrill Lynch & Co., Inc., et al. (the FHFA Merrill Lynch Litigation).
The complaints assert certain MBS Claims relating to MBS issued
and/or underwritten by the Corporation, Merrill Lynch and related
entities in 23 MBS offerings and in 72 MBS offerings, respectively,
between 2005 and 2008 and allegedly purchased by either FNMA
or FHLMC in their investment portfolio. The FHFA seeks among
other relief, rescission of the consideration paid for the securities
or alternatively damages allegedly incurred by FNMA and FHLMC,
including consequential damages. The FHFA also seeks recovery
of punitive damages in the FHFA Merrill Lynch Litigation. The FHFA
Bank of America Litigation and the FHFA Merrill Lynch Litigation,
along with 14 other cases filed by the FHFA against other financial
institutions, have been coordinated before a single judge in the
U.S. District Court for the Southern District of New York. One action,
FHFA v. UBS Americas, Inc., et al. (the UBS Action), was designated
the lead action with respect to allegations and claims common to
the pending FHFA cases. On May 4, 2012, the court denied in part
and granted in part a motion to dismiss in the UBS Action. The
court subsequently denied motions to dismiss in the FHFA Merrill
Lynch Litigation and the FHFA Bank of America Litigation on
November 8, 2012 and November 28, 2012, respectively. On
August 14, 2012, the U.S. Court of Appeals for the Second Circuit
granted the UBS defendants’ application for an interlocutory
appeal of the district court’s ruling pertaining to the statute of
repose on the federal and state securities law claims and the
statute of limitations on the federal securities law claims asserted
in the UBS Action. The FHFA has asserted similar claims in the
FHFA Merrill Lynch Litigation and the FHFA Bank of America
Litigation.
Federal Home Loan Bank Litigation
On January 18, 2011, the Federal Home Loan Bank of Atlanta
(FHLB Atlanta) filed a complaint asserting certain MBS Claims
against the Corporation, Countrywide and other Countrywide
entities in Georgia State Court, Fulton County, entitled Federal
Home Loan Bank of Atlanta v. Countrywide Financial Corporation,
et al. FHLB Atlanta seeks rescission of its purchases or a
rescissory measure of damages, unspecified punitive damages
and other unspecified relief in connection with its alleged purchase
of 16 MBS offerings issued and/or underwritten by Countrywide-
related entities between 2004 and 2007.
On March 15, 2010, the Federal Home Loan Bank of San
Francisco (FHLB San Francisco) filed an action in California
Superior Court, San Francisco County, entitled Federal Home Loan
Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al.
FHLB San Francisco’s complaint asserts certain MBS Claims
against BAS, Countrywide and several related entities in
connection with its alleged purchase of 51 MBS offerings and one
private placement issued and/or underwritten by those defendants
between 2004 and 2007 and seeks rescission and unspecified
damages. FHLB San Francisco dismissed the federal claims with
prejudice on August 11, 2011. On September 8, 2011, the court
denied defendants’ motions to dismiss the state law claims.
Luther Litigation and Related Actions
On November 14, 2007, David H. Luther and various pension funds
(collectively, the Luther Plaintiffs) commenced a putative class
action against Countrywide, several of its affiliates, MLPF&S and
certain former officers of these in California Superior Court, Los
Angeles County, entitled Luther v. Countrywide Financial
Corporation, et al. (the Luther Action). The Luther Plaintiffs’
complaint asserts certain MBS Claims in connection with MBS
issued by subsidiaries of Countrywide in 429 offerings between
2005 and 2007. The Luther Plaintiffs certified that they collectively
purchased securities in 63 of 429 offerings for approximately $216
million. The Luther Plaintiffs seek compensatory and/or rescissory
damages and other unspecified relief. On January 6, 2010, the
court granted Countrywide’s motion to dismiss with prejudice due
to lack of subject matter jurisdiction. On May 18, 2011, the
California Court of Appeal reversed the dismissal and remanded
to the Superior Court. On June 12, 2012, the Countrywide
defendants removed the case from the California Superior Court
to the U.S. District Court for the Central District of California. On
August 31, 2012, the U.S. District Court for the Central District of
California denied the plaintiffs’ motion to remand to the California
Superior Court.
Following the previous dismissal of the Luther Action on January
6, 2010, the Maine State Retirement System filed a putative class
action in the U.S. District Court for the Central District of California,
entitled Maine State Retirement System v. Countrywide Financial
Corporation, et al. (the Maine Action). The Maine Action names the
same defendants as the Luther Action, as well as the Corporation
and NB Holdings Corporation, and asserts substantially the same
allegations regarding 427 of the MBS offerings that were at issue
in the Luther Action. Plaintiffs in the Maine Action (Maine Plaintiffs)
seek compensatory and/or rescissory damages and other
unspecified relief.
On November 4, 2010, the court granted Countrywide’s motion
to dismiss the amended complaint in its entirety and held that the
Maine Plaintiffs only have standing to sue over the 81 offerings in
which they actually purchased MBS. The court also held that the
applicable statute of limitations could be tolled by the filing of the
Luther Action only with respect to the offerings in which the Luther
Plaintiffs actually purchased MBS. As a result of these standing
and tolling rulings, the number of offerings at issue in the Maine
Action was reduced from 427 to 14. On December 6, 2010, the
Maine Plaintiffs filed a second amended complaint that relates to
14 MBS offerings. On April 21, 2011, the court dismissed with
prejudice the successor liability claims against the Corporation
and NB Holdings Corporation. On May 6, 2011, the court held that
the Maine Plaintiffs only have standing to sue over the specific
MBS tranches that they purchased, and that the applicable statute
of limitations could be tolled by the filing of the Luther Action only
with respect to the specific tranches of MBS that the Luther
Plaintiffs purchased. As a result of these tranche-specific standing
and tolling rulings, the Maine Action was further reduced from 14
offerings to eight tranches. On June 6, 2011, the Maine Plaintiffs
filed a third amended complaint that related to eight MBS tranches.
On June 15, 2011, the court denied the Maine Plaintiffs’ motion