November 24, 2009: SNYDER LAW FIRM PREVAILS AGAINST BANK OF AMERICA IN JURY TRIAL OF COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) REPURCHASE CASE
Snyder Law Firm has prevailed against Bank of America in what is believed to be the very first commercial mortgage-backed securities (CMBS) repurchase case to be tried to a jury. The case involved two multifamily loans with collateral properties in Ohio and Maine. LaSalle Bank National Association (later acquired by Bank of America) originated and securitized the loans into a CMBS pool known as 2006-MF2, which originally contained approximately $500 million in commercial loans.
After the two loans at issue went into default, special servicer Crown NorthCorp, Inc. determined that LaSalle breached a number of representations and warranties in originating and securitizing the loans, and demanded that LaSalle repurchase the loans under the parties’ Pooling and Servicing Agreement (PSA). When LaSalle refused, Crown initiated the repurchase litigation in the Southern District of Ohio on behalf of MF2 Trustee Wells Fargo Bank, N.A. alleging numerous breaches of representations and warranties by LaSalle.
On November 24, 2009, following a three-week trial, a unanimous jury concluded that LaSalle breached multiple representations and warranties that materially and adversely affected the loans or the investors’ interests in the loans. Specifically, the jury found that LaSalle failed to originate the loans in accordance with customary industry standards, and that the loans were already in default under the terms of the mortgage documents at the time they were securitized. The jury also found that, in the context of the representations and warranties, the word “origination” includes underwriting activities.
Plaintiff is now entitled to recover the “Purchase Price” for each loan, which includes the unpaid principal loan balance, interest, legal fees, and other amounts as set forth in the parties’ Pooling and Servicing Agreement (PSA).
Paul D. Snyder of Snyder Law Firm, who is national counsel for Plaintiff, and Ohio counsel Dianne F. Marx of Sebaly Shillito + Dyer, P.A. in Dayton, Ohio represented Plaintiff at trial. Bank of America was represented by Cadwalader, Wickersham & Taft LLP in New York City, and Kegler, Brown, Hill and Ritter in Columbus, Ohio. The case citation is Wells Fargo Bank, N.A. v. LaSalle Bank National Association, Case No. 3:07-cv-0449 (S.D. Ohio).
This information is not intended to create an unjustified expectation of results that this law firm can achieve. Past results afford no guarantee of future results. Every case is different and must be judged on its own merits.