Bank of America 2009 Annual Report Download - page 177

Superior Court. On June 15, 2009, the Superior Court entered an order
staying the state court proceeding and directing the plaintiffs to file suit in
Federal Court. On August 24, 2009, the plaintiffs filed a complaint in the
U.S. District Court for the Central District of California seeking a declara-
tory judgment that the Superior Court had subject matter jurisdiction over
their claims. The District Court dismissed the declaratory judgment
action. On January 6, 2010, the Superior Court lifted the stay entered on
June 15, 2009 and dismissed plaintiffs’ consolidated complaint with
prejudice for lack of subject matter jurisdiction. On January 14, 2010, one
of the plaintiffs in the Luther case, the Maine State Retirement System,
filed a new putative class action complaint in the U.S. District Court for
the Central District of California entitled Maine State Retirement System
v. Countrywide Financial Corporation, et al. The complaint names CFC,
certain other Countrywide entities, certain former CFC officers and direc-
tors, as well as BAS and MLPF&S as defendants. Plaintiff’s allegations,
claims and remedies sought are substantially similar and concern the
same offerings of MBS at issue in the Luther case that was dismissed by
the Superior Court.
On August 15, 2008, a complaint, entitled New Mexico State Invest-
ment Council, et al. v. Countrywide Financial Corporation, et al., was filed
in the First Judicial Court for the County of Santa Fe against CFC, certain
other CFC entities and certain former officers and directors of CFC by
three New Mexico governmental entities that allegedly acquired certain of
the MBS also at issue in the Luther case. The complaint initially asserted
claims under the Securities Act of 1933 and New Mexico state law and
seeks unspecified compensatory damages and rescission. On March 25,
2009, the court denied the motion to dismiss the complaint. The
individual defendants were dismissed based on lack of personal juris-
diction. On November 13, 2009, plaintiffs voluntarily dismissed the New
Mexico state law claims. Trial is scheduled for October 2010.
On October 13, 2009, the Federal Home Loan Bank of Pittsburgh
(FHLB Pittsburgh) filed a complaint, entitled Federal Home Loan Bank of
Pittsburgh v. Countrywide Securities Corporation et al., in the Court of
Common Pleas of Allegheny County Pennsylvania against CFC, Country-
wide Securities Corporation (CSC), Countrywide Home Loans, Inc.,
CWALT, Inc. and CWMBS, Inc., among other defendants, alleging viola-
tions of the Securities Act of 1933 and the Pennsylvania Securities Act of
1972, as well as fraud and negligent misrepresentation under Pennsylva-
nia common law in connection with various offerings of MBS. The com-
plaint asserts, among other things, misstatements and omissions
concerning the credit quality of the mortgage loans underlying the secu-
rities and the loan origination practices associated with those loans and
seeks unspecified damages and rescission, among other relief. The
Countrywide defendants moved to dismiss the complaint on February 26,
2010.
On December 23, 2009, the Federal Home Loan Bank of Seattle
(FHLB Seattle) filed three complaints in the Superior Court of Washington
for King County alleging violations of the Securities Act of Washington in
connection with various offerings of MBS and makes allegations similar
to those in the FHLB Pittsburgh matter. The complaints seek rescission,
interest, costs and attorneys’ fees. The case, entitled Federal Home Loan
Bank of Seattle v. Banc of America Securities LLC, et al., was filed
against CFC, CWALT, Inc., BAS, Banc of America Funding Corporation, and
the Corporation. The case, entitled Federal Home Loan Bank of Seattle v.
Countrywide Securities Corporation, et al., was filed against CFC, CSC,
CWALT, Inc., Merrill Lynch Mortgage Investors, Inc., and Merrill Lynch
Mortgage Capital, Inc. The case, entitled Federal Home Loan Bank of
Seattle v. UBS Securities LLC, et al., was filed against CFC, CWMBS, Inc.,
CWALT, Inc., and UBS Securities LLC.
Data Treasury Litigation
The Corporation and BANA were named as defendants in two cases filed
by Data Treasury Corporation (Data Treasury) in the U.S. District Court for
the Eastern District of Texas. In one case filed on June 25, 2005 (Ballard),
Data Treasury alleged that defendants “provided, sold, installed, utilized,
and assisted others to use and utilize image-based banking and archival
solutions” in a manner that infringed United States Patent Nos.
5,910,988 and 6,032,137. In the other case filed on February 24, 2006
(Huntington), Data Treasury alleged that the Corporation and BANA, along
with LaSalle Bank Corporation and LaSalle Bank, N.A., were “making,
using, selling, offering for sale, and/or importing into the United States,
directly, contributory, and/or by inducement, without authority, products
and services that fall within the scope of the claims of” United States
Patent Nos. 5,265,007; 5,583,759; 5,717,868; and 5,930,778. The
Huntington case also claimed infringement against the LaSalle defendants
of the patents at issue in the Ballard case. The Ballard and Huntington
cases are now consolidated in the Data Treasury Corporation v. Wells
Fargo, et al., action, although the claims related to the Huntington patents
are currently stayed. Data Treasury seeks significant compensatory dam-
ages and equitable relief in the Ballard case and unspecified compensa-
tory damages and injunctive relief in the Huntington case. The District
Court has scheduled the Ballard case for trial in October 2010.
Enron Litigation
On April 8, 2002, Merrill Lynch and MLPF&S were added as defendants in
a consolidated class action, entitled Newby v. Enron Corp. et al., filed in
the U.S. District Court for the Southern District of Texas on behalf of cer-
tain purchasers of Enron’s publicly traded equity and debt securities. The
complaint alleges, among other things, that Merrill Lynch and MLPF&S
engaged in improper transactions that helped Enron misrepresent its
earnings and revenues. On March 5, 2009, the District Court granted
Merrill Lynch and MLPF&S’s motion for summary judgment and dismissed
the claims against Merrill Lynch and MLPF&S with prejudice. Sub-
sequently, the lead plaintiff, Merrill Lynch and certain other defendants
filed a motion to dismiss and for entry of final judgment. The District
Court granted the motion on December 2, 2009 and dismissed all claims
against Merrill Lynch and MLPF&S with prejudice.
Heilig-Meyers Litigation
In AIG Global Securities Lending Corp., et al. v. Banc of America Secu-
rities LLC, filed on December 7, 2001 and formerly pending in the U.S.
District Court for the Southern District of New York, the plaintiffs pur-
chased ABS issued by a trust formed by Heilig-Meyers Co., and allege
that BAS, as underwriter, made misrepresentations in connection with the
sale of those securities in violation of the federal securities laws and New
York common law. The case was tried and a jury rendered a verdict
against BAS in favor of the plaintiffs for violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 and for common law
fraud. The jury awarded aggregate compensatory damages of $84.9 mil-
lion plus prejudgment interest totaling approximately $59 million. On
May 14, 2009, the District Court denied BAS’s post trial motions to set
aside the verdict. BAS has filed an appeal in the U.S. Court of Appeals for
the Second Circuit.
IndyMac Litigation
On January 20, 2009, BAS and MLPF&S, in their capacity as under-
writers, along with IndyMac MBS, IndyMac ABS, and other underwriters
and individuals, were named as defendants in a putative class action
complaint, entitled IBEW Local 103 v. Indymac MBS et al., filed in the
Superior Court of the State of California, County of Los Angeles, by pur-
chasers of IndyMac mortgage pass-through certificates. The complaint
Bank of America 2009 175