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Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles)

Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles)

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Published by Jeff Boyd
Dismissal order on class action against Countrywide

http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=71595&fid=7202213
Dismissal order on class action against Countrywide

http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=71595&fid=7202213

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Categories:Business/Law
Published by: Jeff Boyd on Nov 08, 2010
Copyright:Attribution Non-commercial

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04/16/2013

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 LINKS: 145, 146, 149, 152, 156, 158
UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIAMAINE STATE RETIREMENTSYSTEM, Individually and On Behalf of All Others Similarly SituatedPlaintiff,v.COUNTRYWIDE FINANCIALCORPORATION, et al.Defendants.Case No. 2:10-cv-00302-MRP-MANxORDER RE: MOTIONS TO DISMISSAMENDED CLASS ACTIONCONSOLIDATED COMPLAINTI. INTRODUCTION AND BACKGROUND
 From 2005 to 2007, Countrywide was the nation’s largest residential mortgagelender. AC ¶ 4. During that period, Countrywide originated and purchased residentialmortgages and home equity lines of credit (“HELOC”) through its subsidiaryCountrywide Home Loans (“CHL”).
 Id 
. at ¶ 28. Between 2005 and 2007, CHLoriginated or purchased a total of approximately $1.4 trillion in mortgage loans.
See
 Countrywide Fin. Corp. 2007 SEC Form 10-K (filed Feb. 29, 2008) at 29.
1
 Countrywide’s core business was to originate and purchase residential mortgage loans,which it then sold into the secondary market, principally to make up pools of mortgage-backed securities (“MBS”).
1
The Court takes judicial notice of public documents filed with the Securities ExchangeCommission.
 Dreiling v. Am. Express Co.
, 458 F.2d 942, 946 n.2 (9th Cir. 2006).
Case 2:10-cv-00302-MRP -MAN Document 222 Filed 11/04/10 Page 1 of 14 Page ID#:9534
 
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Plaintiffs filed this putative class action individually and “on behalf of a class of all persons or entities who purchased or otherwise acquired beneficial interests in” certainMBS in the form of certificates issued in 427 separate offerings (the “Offerings”)between January 25, 2005 and November 29, 2007 “pursuant and/or traceable to theOffering Documents” and were damaged thereby. AC ¶¶ 1, 186. The claims are broughtagainst the Countrywide Defendants
2
pursuant to Sections 11, 12 and 15 of the SecuritiesAct of 1933. Plaintiffs contend the Countrywide Defendants made materially untrue ormisleading statements or omissions regarding Countrywide’s loan origination practices inpublic offering documents associated with 427 separate offerings. Also named asdefendants are Bank of America, Countrywide special-purpose issuing trusts, severalcurrent or former Countrywide officers and directors, and a number of banks that servedas underwriters on one or more of the offerings at issue.On May 14, 2010, the Court appointed Iowa Public Employees’ RetirementSystem (“IPERS”) as Lead Plaintiff in this action because it had the greatest financialinterest. Docket No. 120. On July 13, 2010, IPERS and three other institutions
3
, which joined as named plaintiffs (collectively, “Plaintiffs”), filed an Amended ConsolidatedClass Action Complaint (“AC”). Docket No. 122. All defendants filed motions todismiss the AC. After the motions were fully briefed, the Court heard extensive oralargument on October 18, 2010. The Court DISMISSES the action without prejudice onthe basis of standing and the statute of limitations. Plaintiffs will have thirty (30) days toamend their pleading. Although there are many other flaws in the AC, the Court reserves judgment on the remaining issues until after Plaintiffs have cured the chief pleadingdeficiencies which are potentially dispositive of this action.
2
The operative complaint refers to Countrywide Financial Corporation (“CFC”), CountrywideSecurities Corporation (“CSC”), Countrywide Home Loans (“CHL”), Countrywide CapitalMarkets (“CCM”) as the “Countrywide Defendants.” Plaintiffs also purport to include Bank of America, and NB Holdings Corp. in this category.
3
The additional named plaintiffs are the General Board of Pension and Health Benefits of theUnited Methodist Church, Orange County Employees’ Retirement System, and Oregon PublicEmployees’ Retirement System.
Case 2:10-cv-00302-MRP -MAN Document 222 Filed 11/04/10 Page 2 of 14 Page ID#:9535
 
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II. THE STATE LITIGATION
This action was commenced on January 14, 2010, nearly five years after theearliest challenged Offering and more than two years after the last challenged Offering.Docket No. 1. The plaintiffs and law firms that filed this action in federal court hadpreviously litigated a separate case, involving the same group of Offerings, in CaliforniaSuperior Court. That case,
 Luther v. Countrywide Home Loans Servicing LP
, No. BC380698 (Cal. Super. Ct.) was dismissed with prejudice on January 6, 2010, when theSuperior Court sustained a demurrer to the complaint. The Superior Court held that theSecurities Litigation Uniform Standards Act of 1998 (“SLUSA”) gave the federal courtsexclusive subject matter jurisdiction over class action claims under the Securities Act of 1933. A week later, the plaintiffs filed this action in federal court and now argue that theexistence of the first state court putative class action lawsuit tolled the statute of limitations for this action under the
 American Pipe
4
 
tolling doctrine.At the time that
 Luther 
was dismissed, the state court case was a consolidation of the original
 Luther 
action, which was filed on November 14, 2007, CountrywideDefendants’ Request for Judicial Notice (“CW RJN”) Exh. 25, and a separate suit,
Washington State Plumbing and Pipefitting Pension Trust v. Countrywide FinancialCorp. et al.
, No. BC 392571 (Cal. Super. Ct.) filed on June 12, 2008, CW RJN Exh. 27.The
 Luther 
complaint had been amended on September 9, 2008. CW RJN Exh. 26.
 Luther 
and
Washington State
were consolidated on October 16, 2008 when aconsolidated complaint was filed which encompassed the same 427 Offerings at issue inthis case. CW RJN Exh. 28. During the process of amendment and consolidation of these two cases, parties and claims were dropped and added. Plaintiffs have offered noexplanation of precisely how the state litigation has preserved their claims before thisCourt, nor has it offered any explanation of how the parties named in this case areindividually affected by the amendments in the state case.
4
 
 American Pipe & Construction Co. v. Utah
, 414 U.S. 538 (1974).
Case 2:10-cv-00302-MRP -MAN Document 222 Filed 11/04/10 Page 3 of 14 Page ID#:9536

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