Bank of America 2013 Annual Report Download - page 231

Bank of America 2013 229
Policemen’s Annuity Litigation
On April 11, 2012, the Policemen’s Annuity & Benefit Fund of the
City of Chicago, on its own behalf and on behalf of a proposed
class of purchasers of 41 RMBS trusts collateralized mostly by
Washington Mutual-originated (WaMu) mortgages, filed a proposed
class action complaint against BANA and other unrelated parties
in the United States District Court for the Southern District of New
York, entitled Policemen’s Annuity and Benefit Fund of the City of
Chicago v. Bank of America, N.A. and U.S. Bank National Association.
BANA and U.S. Bank are named as defendants in their capacities
as trustees, with BANA (formerly LaSalle Bank National
Association) having served as the original trustee and U.S. Bank
having replaced BANA as trustee. Plaintiff asserted claims under
the federal Trust Indenture Act as well as state common law claims.
Plaintiff alleged that, in light of the performance of the RMBS at
issue, and in the wake of publicly-available information about the
quality of loans originated by WaMu, the trustees were required to
take certain steps to protect plaintiff’s interest in the value of the
securities, and that plaintiff was damaged by defendants’ failures
to notify it of deficiencies in the loans and of defaults under the
relevant agreements, to ensure that the underlying mortgages
could properly be foreclosed, and to enforce remedies available
for loans that contained breaches of representations and
warranties. Plaintiff sought unspecified compensatory damages
and/or equitable relief, and costs and expenses. On December 7,
2012, the court granted in part and denied in part defendants’
motion to dismiss, and granted plaintiff leave to replead some of
the dismissed claims. The court ruled, among other things, that
plaintiff had standing to pursue claims on behalf of purchasers of
certificates in certain tranches of five trusts, but not on behalf of
purchasers of certificates in the other 36 trusts, in which plaintiff
had not invested. Plaintiffs filed a second amended complaint on
January 13, 2013, which added plaintiffs and asserted claims
concerning 19 trusts in which at least one named plaintiff had
invested. On May 6, 2013, the court denied defendants’ motion
to dismiss the second amended complaint.
On August 23, 2013, the Vermont Pension Investment
Committee and the Washington State Investment Board brought
a new putative class action against BANA and other unrelated
parties in the U.S. District Court for the Southern District of New
York entitled Vermont Pension Investment Committee and the
Washington State Investment Board v. Bank of America, N.A. and
U.S. Bank National Association (Vermont Pension). The Vermont
Pension action was based on similar factual allegations and the
same claims and legal theories as the Policemen’s Annuity action,
but concerned six different RMBS trusts collateralized mostly by
WaMu-originated mortgages for which BANA is the former trustee
and U.S. Bank is the current trustee. As in Policemen’s Annuity,
plaintiffs sought unspecified compensatory damages and/or
equitable relief, and costs and expenses. The case was marked
as related to Policemen’s Annuity and assigned to the same judge.
On October 21, 2013, the court consolidated the two cases
through summary judgment. On October 31, 2013, plaintiffs filed
a consolidated Third Amended Complaint, which asserted
materially identical claims concerning the 25 trusts previously at
issue in the two consolidated cases, as well as 10 new trusts
(also mostly collateralized by WaMu-originated mortgages),
bringing the total number of trusts at issue to 35. The new
complaint also added four new plaintiffs, bringing the total number
of named plaintiffs to 10.