Aug. 13 (Bloomberg) -- Syncora Guarantee Inc.’s lawsuit accusing JPMorgan Chase & Co. of making false and misleading statements in connection with a mortgage-backed securities transaction was dismissed by an appeals court that ruled the case has to stay in federal court where it began.
The bond insurer sued JPMorgan Securities LLC, a unit that was formerly Bear Stearns & Co., in New York state Supreme Court in Manhattan in June 2011 over the transaction, known as GreenPoint Mortgage Funding Trust 2007-HE1. The transaction, underwritten by Bear Stearns and insured by Syncora, suffered more than $400 million in losses at the time the suit was filed and the insurer has paid more than $320.2 million in claims.
JPMorgan sought to dismiss the complaint, arguing Syncora had already tried to litigate the claims in U.S. District Court. Justice Charles Ramos in May 2012 declined, saying the state-law claims in the suit aren’t in the jurisdiction of the U.S. court.
An appeals court in Manhattan today reversed Ramos’s ruling and dismissed the case, saying Bermuda-based Syncora is bound by its decision to first file the claims in federal court. The insurer sued Bear Stearns’s EMC Mortgage unit, the sponsor of the transaction, in March 2009 in federal court in Manhattan and later attempted to add Bear Stearns, a move rejected by a judge in March 2011.
“Here, both actions arise out of the same transaction, involve the same allegations concerning Bear Stearns’s and EMC’s concerted actions in the ‘mortgage-loan-securitization chain’ and seek the same recovery for the same alleged injuries -- that is, recovery of ‘claims payments made and to be made’ under the policy,” Justice Karla Moskowitz wrote.
JPMorgan spokeswoman Jennifer Zuccarelli didn’t respond to an e-mail seeking comment on the ruling. Syncora’s policy is not to comment on litigation beyond what is disclosed in financial statements and other public documents, spokesman Michael Corbally said in an e-mail.
The case is Syncora Guarantee Inc. v. JPMorgan Securities LLC, 651566/2011, New York state Supreme Court (Manhattan).
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