Bloomberg News

Walnut Place Asks Appeals Court to Revive Bank of America Suit

April 03, 2012

The dismissal of a lawsuit against Bank of America Corp. (BAC:US) was appealed by investors seeking the repurchase of defective loans underlying more than $1 billion in securities.

New York State Supreme Court Justice Barbara Kapnick last week dismissed the complaint filed last year by Walnut Place LLC and related entities, saying the lawsuit was “premature,” according to a decision dated March 28. Walnut Place appealed, according to a court filing yesterday.

Bank of America’s Countrywide Financial unit was accused of making false representations and warranties about the loans backing the bonds, according to the complaint. Walnut Place owns about $1.4 billion in face value of the securities at issue, it said in court papers.

Walnut Place had said in court papers that it was suing because Bank of New York Mellon Corp. (BK:US), as trustee for bondholders, “unreasonably failed” to sue Bank of America to enforce the obligation to repurchase loans.

In her decision, Kapnick said the lawsuit was “premature under the circumstances” because it came just days after BNY Mellon said it needed more time to evaluate the matter. Walnut Place had directed BNY Mellon to sue Countrywide over the loans.

In addition, BNY Mellon “did, in fact, act upon” Walnut Place’s complaints, as demonstrated by an $8.5 billion settlement with Bank of America and a group of institutional investors over Countrywide mortgage bonds, the judge wrote. That settlement, which Walnut Place has challenged, awaits court approval.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the appeal.

The case is Walnut Place LLC v. Countrywide Home Loans Inc., 650497-2011, New York State Supreme Court (Manhattan).

To contact the reporters on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $16.82 USD
    • -0.23
    • -1.37%
  • BK
    (Bank of New York Mellon Corp/The)
    • $38.22 USD
    • -0.51
    • -1.33%
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