Justia Securities Law Opinion Summaries

Plaintiff Antoinette Rossetta appealed the dismissal of her second amended complaint after the trial court sustained a demurrer by defendants CitiMortgage, Inc. (CitiMortgage) and U.S. Bank National Association as Trustee for Citicorp Residential Trust Series 2006-1 (2006-1 Trust). The complaint asserted multiple causes of action sounding in tort, and unlawful business practices in violation of the Unfair Competition Law arising from loan modification negotiations spanning more than two years. Rossetta also appealed the trial court’s dismissal of a cause of action for conversion that appeared in an earlier iteration of the complaint to which CitiMortgage and the 2006-1 Trust (collectively, CitiMortgage, unless otherwise indicated) also successfully demurred. After review, the Court of Appeal concluded: (1) the trial court erred in sustaining the demurrer to the causes of action for negligence and violations of the Unfair Competition Law; (2) the trial court properly sustained the demurrer to the causes of action for intentional misrepresentation and promissory estoppel, but should have granted leave to amend to give Rossetta an opportunity to state a viable cause of action based on an alleged oral promise to provide her with a Trial Period Plan (TPP) under the Home Affordable Mortgage Program (HAMP) in April 2012; and (3) the trial court properly sustained the demurrer to the causes of action for negligent misrepresentation, breach of contract, intentional infliction of emotional distress and conversion without leave to amend. View "Rossetta v. CitiMortgage, Inc." on Justia Law

Appointing a registered agent under Wis. Stat. 180.1507 does not signify consent to general personal jurisdiction in Wisconsin.Plaintiffs filed this suit against Defendant, alleging that Defendant fraudulently misrepresented the quality of mortgages underlying certain securities. Defendant moved to dismiss the complaint for lack of personal jurisdiction. The circuit court dismissed the complaint, concluding that Wisconsin courts could not exercise general jurisdiction over Defendant. The court of appeals reversed, holding that by maintaining a Wisconsin agent to receive service of process, Defendant subjected itself to the general jurisdiction of Wisconsin courts and actually consented to personal jurisdiction. The Supreme Court reversed, holding that Defendant’s compliance with section 180.1507 did not, on its own, confer general jurisdiction in Wisconsin. View "Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, Inc." on Justia Law

The FHFA filed a summons with notice in state court asserting breach of contractual obligations to repurchase mortgage loans that violated representations and warranties and then Quicken removed the action to federal court. Plaintiff, as trustee of the subject residential mortgage‐backed securities trust, took control of the litigation and filed the complaint. Quicken moved to dismiss the suit. The court affirmed the district court's conclusion that (1) the statute of limitations ran from the date the representations and warranties were made; (2) the extender provision of the Housing and Economic Recovery Act,12 U.S.C. 4617(b)(12), did not apply to the Trustee’s claim; and (3) the Trustee’s claim for breach of the implied covenant of good faith and fair dealing was duplicative. View "Deutsche Bank Nat'l v. Quicken Loans" on Justia Law

Mortgage-backed securities, known as the MASTR Pass-Through Certificates, Series 2007-3, were offered to the public in 2007. UBS, the sponsor of the Certificates, purchased the underlying loans from originators, including Countrywide Home Loans and IndyMac Bank, then sold the loans to MASTR, which placed the loans into the MASTR Adjustable Rate Mortgages Trust, the issuer of the Certificates. UBS Securities, the underwriter, sold the Certificates to investors. The Certificates were issued pursuant to a Securities and Exchange Commission (SEC) Form S-3 Registration Statement filed in 2005 and an SEC Form 424B5 Prospectus Supplement filed in 2007. Those documents assured investors that the underlying loans were originated pursuant to particular underwriting policies and in compliance with federal and state laws and regulations. The district court dismissed a purported class action by investors, alleging violations of the Securities Act of 1933, 15 U.S.C. 77, for failure to plead compliance with the one-year statute of limitations and dismissed an amended complaint as untimely under an inquiry notice standard. The Third Circuit affirmed, holding that a Securities Act plaintiff need not plead compliance with Section 13 and that Section 13 establishes a discovery standard for evaluating the timeliness of Securities Act claims, but the claims were, nonetheless, untimely. View "Pension Trust Fund for Operating Eng'rs v. Mortg. Asset Securitization Transactions, Inc." on Justia Law

Plaintiffs, purchasers of condominiums in the Hard Rock Hotel San Diego, filed a putative class action suit under the Securities Exchange Act of 1933, 15 U.S.C. 78a et seq., and California state law, against the Hotel's developer and others. At issue on appeal was whether plaintiffs have alleged the sale of a security based on their purchase of the condominiums. The court affirmed the judgment of the district court, holding that plaintiffs have not adequately alleged facts showing that they were offered the real-estate and rental-management contracts as a package. Plaintiffs did not allege facts showing that they were induced to buy the condominiums by the rental-management agreement. Accordingly, plaintiffs have not alleged the sale of a security and plaintiffs' claims were properly dismissed. View "Salameh v. Tarsadia Hotel" on Justia Law

Plaintiffs appeal from the district court's order denying their motion for remand to state courts. This is an interlocutory appeal of a question certified by the district court, calling for interpretation of the jurisdictional provisions of the Edge Act, 12 U.S.C. 632. Whether the district court's denial of remand was proper turns on whether the dispute falls within section 632. The court concluded that the dispute did not fall within section 632's grant of jurisdiction so that removal from state to federal court was not authorized by the statute. Therefore, the court vacated the district court's order denying remand. View "AIG v. Bank of America" on Justia Law

FHFA, as conservator of Fannie Mae and Freddie Mac, sued UBS for fraud and misrepresentation in connection with the marketing and sale of mortgage-backed securities. The district court denied UBS's motion to dismiss and certified its decision for interlocutory appeal. The court held that the "extender statute" in section 4617(b)(12) of the Housing and Economic Recovery Act of 2008 (HERA), Pub. L. No. 110-289, 122 Stat. 2654, applied to this action, and thus concluded that the district court correctly denied UBS's motion to dismiss for untimeliness. The court further held that FHFA had standing to bring this action and the district court correctly denied UBS's motion to dismiss for lack of standing. View "Federal Housing Fin. Agency v. UBS Americas Inc." on Justia Law

Plaintiff owned a rental center and retained defendants, who provide investment banking services to the equipment rental industry, to help him obtain an investor or buyer. Defendants’ advice culminated in sale of a majority of plaintiff’s stock for about $30 million. Defendants billed plaintiff $758,675. Plaintiff paid without complaint but later sued for return of the entire fee on the ground that defendants lacked a brokerage license required by Wis. Stats. 452.01(2)(a), 452.03. The district court dismissed, finding the parties equally at fault. The Seventh Circuit affirmed, declining to definitively answer whether a license was required under the circumstances that a negotiated sale of assets fell through in favor of a sale of stock. Plaintiff is not entitled to relief even if there was a violation. Referring to the classic Highwayman’s Case, the court rejected claims of in pari delicto and unclean hands; plaintiff was not equally at fault. To bar relief, however, is not punishing a victim. Plaintiff did not incur damages and is not entitled to restitution. Plaintiff sought compensation for spotting a violation and incurring expenses to punish the violator, a bounty-hunter or private attorney general theory, not recognized under Wisconsin law. The voluntary-payment doctrine is inapplicable. View "Schlueter v. Latek" on Justia Law

MGIC provides private insurance on mortgage loans and incurred large losses in the financial crunch that began with the decline of prices of securities based on packages of mortgage loans. Class-action suits filed under the Securities Exchange Act of 1934 were consolidated and were dismissed when the judge concluded that the complaint did not meet the standard set by the Private Securities Litigation Reform Act, 15 U.S.C. 78u–4(b). A single plaintiff appealed, based on fraud that allegedly occurred during MGIC's quarterly earnings call on July 19, 2007. The Seventh Circuit affirmed, holding that the complained-of statement was true and that the complaint failed PSLRA's requirement for pleading scienter. At most plaintiff could allege that MGIC’s managers should have seen the looming problem, and establish negligence rather than the state of mind required for fraud. MGIC's managers did not have any private information that they could have revealed. View "Fulton Cty Emp. Ret. Sys. v. MGIC Inv. Corp." on Justia Law

Plaintiff Commonwealth Property Advocates, LLC, acquired title to three pieces of real property in Utah from three defaulting borrowers. Plaintiff then filed three suits in diversity against various Defendants which held interests in the property, seeking to prevent foreclosure. Plaintiff argued Defendants had no authority to foreclose because the notes in each case had been securitized and sold on the open market. Because the security followed the debt, Plaintiff argued once Defendants sold the security they could not foreclose absent authorization from every investor who had purchased an interest in the securitized note. Defendants in all three cases filed motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), and the district court granted those motions. Upon review, the Tenth Circuit found that Plaintiff's diversity jurisdiction claims had no legal basis under Utah law, and as such, the district court properly dismissed all three complaints. View "Commonwealth Prop. Advocates v. Mortgage Elec. Reg. Sys." on Justia Law