Snyder Law Firm Wins Second Jury Trial Against Bank of America in Commercial Mortgage-Backed Securities (CMBS) Repurchase Case
OKLAHOMA CITY, OK – June 14, 2011 – For the second time, Snyder Law Firm LLC has won a major trial victory in a CMBS repurchase case against Bank of America. The federal court case in Oklahoma involved three multifamily loans with collateral properties in Oklahoma and South Carolina. LaSalle Bank National Association (later acquired by Bank of America) originated and securitized the loans into two CMBS pools known as 2006-MF2 and 2006-MF3, worth approximately $500 million each.
After the 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. When Bank of America refused to repurchase the loans, Crown initiated this litigation in the Western District of Oklahoma on behalf of MF2/MF3 Trustee Wells Fargo Bank, N.A.
On June 14, 2011, following a month-long trial, a unanimous jury concluded that LaSalle breached multiple representations and warranties with respect to two of the loans at issue. Among these breaches, the jury determined that LaSalle failed to originate the loans in accordance with customary industry standards, the loans were already in default when they were securitized, and the loans were not supported by FIRREA-compliant appraisals. The jury also found that the breaches materially and adversely affected the value of the loans, related mortgaged properties, or the interests of the investors in the loans. In addition, Plaintiff put on evidence at trial of numerous systemic flaws in LaSalle’s commercial loan program that materially and adversely impacted all loans that LaSalle made, including the loans at issue.
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). The court will conduct a bench trial to determine the final Purchase Prices, but the unpaid principal balances and interest alone exceed $6 million.
Paul D. Snyder and Brad Mirakian of Snyder Law Firm LLC, which is national counsel for Plaintiff, represented Plaintiff at trial along with Oklahoma co-counsel Kiran A. Phansalkar and Crystal A. Johnson of Conner & Winters, LLP in Oklahoma City. 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. 5:08-cv-1125-C (W.D. Okla.).
This is the second victory that Snyder Law Firm LLC has achieved against Bank of America concerning the LaSalle securitizations. The firm previously prevailed at trial in a separate repurchase action in the Southern District of Ohio concerning two other MF2 loans. Wells Fargo Bank, N.A. v. LaSalle Bank National Association, Case No. 3:07-cv-0449 (S.D. Ohio).