U.S. District Judge Mariana Pfaelzer in Los Angeles gave investors who brought the complaint 30 days to revise it. After they refile the complaint, the court “will consider further the other grounds” in the bank’s motion to dismiss it, Pfaelzer wrote in yesterday’s ruling.
Pfaelzer said in her ruling that investors didn’t sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims. Those failings must be addressed in the new complaint, she said.
Bank of America said that, because the judge’s ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion, according to an e-mailed statement.
The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn’t follow the lender’s own guidelines.
“The court’s ruling demonstrates the strict legal hurdles plaintiffs face in bringing these sorts of claims,” said Brian E. Pastuzinski, an attorney at Goodwin Procter LLP in Boston representing Bank of America.
Christina Royce, a lawyer representing the investors, declined to comment.
The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).
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