Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
4Activity
0 of .
Results for:
No results containing your search query
P. 1
MBIA Fraud Discovery Letter

MBIA Fraud Discovery Letter

Ratings: (0)|Views: 74 |Likes:
Published by Isaac Gradman
Letter from MBIA to Judge Bransten regarding alleged discovery abuses by Countrywide and Bank of America.
Letter from MBIA to Judge Bransten regarding alleged discovery abuses by Countrywide and Bank of America.

More info:

Published by: Isaac Gradman on Mar 28, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

12/30/2012

pdf

text

original

 
51 Madison Avenue, zand Floor, New York, New York
10010
I
TEL 212-849-7000 FAX 212-849-7100
WRITER'S DIRECT DIAL No.
(212) 849-7156
WRITER'S EMAIL ADDRESS
jonoblak@quinnemanuel.com
March 8, 2012
VIA ELECTRONIC MAIL
The Honorable Eileen Bransten
New York State Supreme Court
Commercial Division60 Centre Street, Room 442
New York, NY 10007
Re:
BIA Insurance Corp. v. Countrywide Home Loans, Inc., et. al., No. 08-602825
Dear Justice Bransten:
We represent Plaintiff MBIA Insurance Corporation ("MBIA") in the above-captioned
action. We write concerning continuing discovery abuses by Defendants, the repetition andseverity of which warrant sanctions. Over the course of the last three weeks, Bank of America("BAC") has produced
nearly 170,000 pages
of new, relevant, successor liability documents.
These productions, which are continuing, have forced the postponement of a number ofsuccessor liability depositions and compelled MBIA to agree to a brief extension of the successor
liability discovery schedule. This is just the latest conduct by BAC to sabotage the discovery
schedule and cause MBIA significant prejudice, and is part of an indefensible pattern of delayand discovery abuses by
both
the BAC and Countrywide Defendants. As reflected in MBIA'srecent motion to compel, Countrywide has failed to produce - or even reveal the existence of-
numerous documents concerning suspicions of fraud (and confirmed fraud) relating to loans inthe Countrywide Securitizations, and has engaged in sharp practice that has interfered with
discovery. This includes withholding important categories of documents on specious grounds
and then selectively producing certain of such documents that it believes are favorable on the eve
of(or during) depositions. Although the Court has given Defendants the benefit of the doubt asto previous discovery failings, MBIA believes that, as a result of what has become a pattern of
conduct, sanctions against both the BAC and Countrywide Defendants are appropriate, and seeksleave of the Court to file a motion seeking such relief.
BAC's Discovery Misconduct
BAC has engaged in a pattern of conduct throughout the course of discovery that has
consistently led to the same result - delay. Having failed to obtain a stay of MBIA's successor
thrn emanueo
umuhan
&
sImvl,
11111
LOS ANGELES
565 South Figueroa Street, ioth Floor, Los Angeles, California 90017
1
TEL
213-443-3000
FAX
213-443-3100
SAN FRANCISCO
50 California Street, 22nd Floor, San Francisco, California 94111
1
TEL
415-875-6600
FAX
415-875-6700
SILICON
VALLEY
555 Twin Dolphin Drive, 5th Floor, Redwood Shores, California 94065
I
TEL
650-801-5000
FAX
650-801-5100
CHICAGO
soo West Madison Street, Suite 2450, Chicago, Illinois 60661
I
TEL
312-705-7400
FAX
312-705-7401
LON0ON
16 Old Bailey, London EC4M 7EG, United Kingdom
I
TEL
+44 (o) 20 7653-2000
FAX
+44
(0)
20 7653-2100
TOKYO
I
NBF Hibiya Bldg., 25F, 1-1-7 Uchisaiwai-cho, Chiyoda-ku, Tokyo
100-0011,
Japan
I
TEL
+81 (o) 3 5510-1711
FAX
+81 (o) 35510-1712
MANNHE1M
I
Erzbergerstrafle 5, 6816 Mannheim, Germany
I
TEL
+49 (o) 621 43298-6000
FAX
+49 (o) 621 43298-6100
 
MBIA v. Countrywide Home Loans, et al.
ndex No. 60282512008
Page 2
liability claims - from this Court or the First Department - BAC has successfully interposed itsown delay by twice making enormous supplemental productions of documents on the eve of thecommencement of depositions, notwithstanding its previous repeated representations that its
document production was complete.
As the Court is aware, BAC disclosed, just before depositions were to commence inFebruary, that it had identified a purported "coding error" that had resulted in responsivedocuments being identified as non-responsive, and thus withheld from production. MBIA optednevertheless to continue with scheduled depositions and receive supplemental productions fromBAC on a rolling basis. To MBIA's surprise, what followed was a flood of new documents,which has not abated. BAC has produced 170,000 pages of new documents in total, 115,000 ofwhich were produced in just over the last week and a half. BAC's productions typically includedseveral thousand pages per custodian and took place only days before a witness was to bedeposed. Given the volume and timing, it was impossible to review these document productionsmeaningfully prior to the custodians' depositions. As a result, all five of the successor liabilitydepositions conducted to date have been held open. Ultimately, it became clear that there was nopoint in continuing with depositions when BAC was producing thousands of pages per witnessthat could not be adequately analyzed in advance of the witnesses' depositions.Incredibly, although BAC agreed to suspend and reschedule those depositions set to takeplace over a two week period (between March
5
and 16), it complained that MBIA had sufficienttime to review BAC's deluge of new documents and that MBIA was seeking to review thisdeluge at a "leisurely pace." Not only does this turn the facts on their head, but BAC has noteven completed its production of these documents, despite having told the Court at the February9 hearing that it would do so in two to three weeks. MBIA has not received supplementalproductions for at least five scheduled witnesses. In addition, BAC has revealed that there is also
a
further collection
of successor liability documents to be produced relating to agreed-upondocument custodians who have not been noticed for deposition. Thus, notwithstanding theproduction of 170,000 pages of new documents, BAC's supplemental productions will continue,at this stage indefinitely.
1
Importantly, this is not BAC's first eleventh-hour document dump. As the Court is well aware, inNovember and late December of 2011, BAC produced more than 160,000 pages of new documents thathad been improperly withheld as privileged, again as MBIA was preparing to commence successorliability depositions. That production came about only after MBIA repeatedly questioned BAC as to whyits privilege logs - then including 20,000 entries - identified no redacted documents, suggesting that BAChad improperly withheld documents that could have been redacted and produced in part. Only afterMBJA complained to the Court did BAC acknowledge this issue and commence review of its entireprivilege log, which resulted in BAC producing 160,000 pages of new documents, a substantial portion ofwhich had no redaction at all, reflecting that they should not have been withheld in the first place. BAChas never explained how it could have - inadvertently or otherwise - assembled such a massive privilegelog without establishing a procedure for redacting documents that could be produced in part. Indeed, it is
(footnote continued)
 
MBIA v. Countrywide Home Loans, et al.
ndex No. 60282512008
Page 3
Whatever BAC's explanation for these purported "errors," none has been provided, and
errors of this magnitude should not be excused without a full explanation. BAC's productions
over the last three months have put it on pace to
double
the total size of its production ofsuccessor liability documents. As a result, MBIA has twice been prepared to commence
depositions only to have BAC make massive supplemental document productions that have notonly caused delay but required MBIA to bear considerable expense in reconstituting teams of
lawyers to review and analyze large volumes of documents in short periods of time. MBIAshould not be forced to bear the prejudice such extraordinary conduct has imposed. BAC's
repeated delays and obstructionist conduct warrant sanctions.
Countrywide's Discovery Misconduct
Countrywide's conduct has been even more egregious than BAC's, and has involved
apparently willful and contumacious disregard of its discovery obligations and of the Court'sscheduling orders and other discovery directives.
1.
Countrywide's Withholding of Whistleblower Documents and Selective EleventhHour Productions
Countrywide has failed to produce numerous documents relating to four formerCountrywide employees who "blew the whistle" on fraudulent loan origination practices at
Countrywide, three of whom were subsequently terminated. Countrywide has repeatedly
delayed scheduling depositions of these "whistleblowers," and withheld documents relating to
them which are clearly both highly relevant and responsive to MBIA's document requests.
Moreover, Countrywide has cherry-picked documents most favorable to its own case for use in
preparing for the whistleblowers' depositions, and then produced these documents just prior to orduring depositions, all the while denying MBIA the majority of the documents to which it is
entitled.
2.
Countrywide's Abusive Questioning of Whistleblower Witness
Countrywide's counsel harassed and bullied one of the whistleblowers - who wasunrepresented by counsel at her deposition - to such an extent that she eventually felt compelledto adjourn her deposition until her counsel could be present. In a transparent attempt to
intimidate and control the unrepresented witness and to prevent her from giving testimonyharmful to Countrywide, counsel adopted a disrespectful, bullying and unprofessional manner,asked inappropriate, irrelevant and repetitive questions, and made repeated improper objections.
Among other things, counsel repeatedly suggested that the witness was wrong to acceptcompensation from Countrywide if she knew the company was fraudulently originating loans-an ironic position given that her job was to investigate fraud, and she was fired for reporting
difficult to believe that such an omission could be inadvertent given that redacting tools and protocols are
a basic feature of electronic review platforms used for large scale document review projects.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->