GE 2014 Annual Report Download - page 138

118 GE 2014 FORM 10-K
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS
There are 15 lawsuits relating to pending mortgage loan repurchase claims in which WMC, our U.S. mortgage business that
we sold in 2007, is a party. The adverse parties in these cases are securitization trustees or parties claiming to act on their
behalf. While the alleged claims for relief vary from case to case, the complaints and counterclaims in these actions generally
assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase)
and/or monetary damages. Beginning in the fourth quarter 2013, WMC entered into settlements that reduced its exposure on
claims asserted in certain securitizations, and the claim amounts reported herein reflect the effect of these settlements.
Five WMC cases are pending in the United States District Court for the District of Connecticut. Four of these cases were
initiated in 2012, and one was initiated in the third quarter 2013. Deutsche Bank National Trust Company (Deutsche Bank) is
the adverse party in four cases, and Law Debenture Trust Company of New York (Law Debenture) is the adverse party in one
case. The Deutsche Bank complaints assert claims on approximately $4,300 million of mortgage loans and seek to recover
damages in excess of approximately $1,800 million. The Law Debenture complaint asserts claims on approximately $800
million of mortgage loans, and alleges losses on these loans in excess of approximately $425 million. On March 31, 2014, the
District Court denied WMC’s motions to dismiss these cases.
Four WMC cases are pending in the United States District Court for the District of Minnesota against US Bank National
Association (US Bank), one of which was initiated by WMC seeking declaratory judgment. Three of these cases were filed in
2012, and one was filed in 2011. The Minnesota cases involve claims on approximately $800 million of mortgage loans and do
not specify the amount of damages sought. In September 2013, the District Court granted in part and denied in part WMC’s
motions to dismiss or for summary judgment in these cases. On September 8, 2014, US Bank filed a petition for instructions
in the administration of trusts in Minnesota state court seeking authorization and instruction for US Bank to implement the
terms of a settlement agreement reached with WMC to compromise, settle, and release all claims arising out of the
securitizations at issue in these four lawsuits. In February 2015, two bondholders filed objections to the proposed settlement,
and in response the court has scheduled an evidentiary hearing for June 2015. In light of the state court action seeking
approval of the proposed settlement, the District Court has entered orders on September 18, 2014 staying further proceedings
in the four cases until April 15, 2015.
Four cases are pending against WMC in New York State Supreme Court, all of which were initiated by securitization trustees
or securities administrators. These cases involve, in the aggregate, claims involving approximately $4,559 million of mortgage
loans. One of these lawsuits was initiated by Deutsche Bank in the second quarter 2013 and names as defendants WMC and
Barclays Bank PLC. It involves claims against WMC on approximately $1,000 million of mortgage loans and does not specify
the amount of damages sought. The second case, in which the plaintiff is The Bank of New York Mellon (BNY), was initiated in
the fourth quarter 2012 and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase
Bank, N.A. BNY asserts claims on approximately $1,300 million of mortgage loans, and seeks to recover damages in excess
of $650 million. The third case was initiated by BNY in November 2013 and names as defendants WMC, J.P. Morgan
Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. In this case, BNY asserts claims on approximately $1,300
million of mortgage loans, and seeks to recover damages in excess of $600 million. The fourth case was filed in October 2014
and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. The
plaintiff, BNY, asserts claims on approximately $959 million of mortgage loans and seeks to recover damages in excess of
$475 million.
Two cases are pending against WMC in the United States District Court for the Southern District of New York. One case, in
which the plaintiff is BNY, was filed in the third quarter 2012. In the second quarter 2013, BNY filed an amended complaint in
which it asserts claims on approximately $900 million of mortgage loans, and seeks to recover damages in excess of $378
million. In September 2013, the District Court denied WMC’s motion to dismiss. On September 18, 2014, the District Court
issued an order directing the parties to participate in settlement discussions before a private mediator or the assigned