Bank of America 2012 Annual Report Download - page 234

232 Bank of America 2012
to permit immediate interlocutory appeal of the court’s orders on
standing, tolling of the statute of limitations and successor liability.
On October 12, 2011, upon stipulation by the parties, the court
certified a class consisting of eight subclasses, one for each of
the eight MBS tranches at issue.
On November 17, 2010, Western Conference of Teamsters
Pension Trust Fund (Western Teamsters) filed a putative class
action against the same defendants named in the Maine Action
in California Superior Court, Los Angeles County, entitled Western
Conference of Teamsters Pension Trust Fund v. Countrywide
Financial Corporation, et al. Western Teamsters’ complaint asserts
that Western Teamsters and other unspecified investors
purchased MBS issued in the 428 offerings that were also at issue
in the Luther Action and asserts substantially the same allegations
as the Luther Action. Western Teamsters has been coordinated
with the Luther Action. Western Teamsters seeks unspecified
compensatory and/or rescissory damages and other unspecified
relief. 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.
On January 27, 2011, Putnam Bank filed a putative class action
lawsuit against Countrywide, the Corporation and several related
entities, among others, in the U.S. District Court for the District
of Connecticut, entitled Putnam Bank v. Countrywide Financial
Corporation, et al. Putnam Bank’s complaint asserts certain MBS
Claims in connection with alleged purchases in eight MBS offerings
issued by Countrywide subsidiaries between 2005 and 2007.
Putnam Bank seeks rescission of its purchases or a rescissory
measure of unspecified damages and/or compensatory damages
and other unspecified relief. On August 15, 2011, the case was
transferred to the Countrywide RMBS MDL. On March 9, 2012,
the court dismissed the complaint in Putnam Bank v. Countrywide
Financial Corporation, et al., as time-barred, with prejudice. On May
23, 2012, the court denied Putnam Bank’s motion to seek
immediate interlocutory appeal of the court’s order dismissing
the case, in its entirety and with prejudice, as time-barred.
Regulatory Investigations
The Corporation has received a number of subpoenas and other
requests for information from regulators and governmental
authorities regarding MBS and other mortgage-related matters,
including inquiries, investigations and potential proceedings
related to a number of transactions involving the Corporation’s
underwriting and issuance of MBS and its participation in certain
CDO offerings. These inquiries and investigations include, among
others, an investigation by the SEC related to Merrill Lynch’s risk
control, valuation, structuring, marketing and purchase of CDOs,
and an investigation by the New York State Attorney General
concerning the purchase, securitization and underwriting of
mortgage loans and MBS. The Corporation has provided
documents and testimony and continues to cooperate fully with
these inquiries and investigations.
Bank of America, Merrill Lynch and Countrywide may also be
subject to contractual indemnification obligations in the MBS
matters discussed above.
Mortgage Repurchase Litigation
TMST, Inc. Litigation
On April 29, 2011, the Chapter 11 bankruptcy trustee for TMST,
Inc. (formerly known as Thornburg Mortgage, Inc.) and for certain
affiliated entities (collectively, Thornburg), along with Zuni
Investors, LLC (ZI), filed an adversary proceeding in the U.S.
Bankruptcy Court for the District of Maryland entitled In Re TMST,
Inc., f/k/a Thornburg Mortgage, Inc. against CHL and the
Corporation. Plaintiffs filed an amended complaint on July 29,
2011, in which they allege, among other things, that CHL sold
residential mortgage loans to Thornburg pursuant to two
agreements, and that CHL allegedly breached certain
representations and warranties contained in those agreements
concerning property appraisals, prudent and customary loan
origination practices, accuracy of mortgage loan schedules and
occupancy status. The complaint further alleges that those loans
were deposited by Thornburg into a securitization trust, that ZI
purchased certificates issued by that trust, and that the
securitization trustee subsequently assigned to ZI and the
bankruptcy trustee the right to pursue representation and warranty
claims. Plaintiffs seek a court order requiring CHL to repurchase
the mortgage loans at issue, or alternatively, unspecified damages
for alleged breach of contract. CHL and the Corporation filed
motions to dismiss the case, to withdraw the reference to the
Bankruptcy Court, and for transfer of venue to the United States
District Court for the Central District of California. On July 12, 2012,
the case was transferred to the U.S. District Court for the District
of Maryland, which on August 21, 2012, granted CHL’s and the
Corporation’s motions to transfer venue to the United States
District Court for the Central District of California. That court heard
argument on CHL’s motion to dismiss on November 27, 2012. On
February 26, 2013, the parties agreed to settle the case for an
amount not material to the Corporation’s results of operations.
The agreement is subject to, among other things, approval by the
bankruptcy court overseeing the Thornburg bankruptcy. On
February 26, 2013, the bankruptcy trustee filed a motion to
approve the settlement. The motion is tentatively scheduled to be
heard on March 20, 2013.
U.S. Bank Litigation
On August 29, 2011, U.S. Bank, National Association (U.S. Bank),
as trustee for the HarborView Mortgage Loan Trust 2005-10 (the
Trust), a mortgage pool backed by loans originated by CHL, filed a
complaint in New York Supreme Court, New York County, in a case
entitled U.S. Bank National Association, as Trustee for HarborView
Mortgage Loan Trust, Series 2005-10 v. Countrywide Home Loans,
Inc. (dba Bank of America Home Loans), Bank of America
Corporation, Countrywide Financial Corporation, Bank of America,
N.A., and NB Holdings Corporation. U.S. Bank asserts that, as a
result of alleged misrepresentations by CHL in connection with its
sale of the loans, defendants must repurchase all the loans in the
pool, or in the alternative that it must repurchase a subset of those
loans as to which U.S. Bank alleges that defendants have refused
specific repurchase demands. U.S. Bank asserts claims for breach
of contract and seeks specific performance of defendants’ alleged
obligation to repurchase the entire pool of loans (alleged to have
an original aggregate principal balance of $1.75 billion) or
alternatively the aforementioned subset (alleged to have an
aggregate principal balance of “over $100 million”), together with
reimbursement of costs and expenses and other unspecified
relief. Defendants removed the case to the U.S. District Court for