National Credit Union Administration Suits Put on PauseAndrew Harris and Dan Margolies
Eight lawsuits by the National Credit Union Administration Board aimed at recouping losses on mortgage-backed securities were halted by a federal judge pending an appeals court ruling.
U.S. District Judge John Lungstrum in Kansas City, Kansas, today put the litigation on hold until the U.S. Court of Appeals in Denver rules on a challenge by RBS Securities Inc. to another judge’s decision last year denying its request to dismiss a lawsuit by the board.
NCUA, an Alexandria, Virginia-based federal agency responsible for recovering losses to minimize costs to its industry-funded stabilization fund, sued units of Royal Bank of Scotland Plc, JPMorgan Chase & Co., Barclays Plc and other banks, claiming they used misleading documents to sell the securities to credit unions that later failed.
“The court concludes that a stay is appropriate in each of these cases,” Lungstrum said in his order today.
RBS is appealing a July 2012 ruling by U.S. District Judge Richard D. Rogers in Topeka, Kansas. Lungstrum’s order today cited Rogers’s grounds for allowing RBS to take its appeal mid-case to support his decision.
“The appeal may materially advance the ultimate termination of expensive and complex litigation,” Lungstrum said.
A second, related appeal is also before the Denver-based court.
Depending on how the appellate court rules, some defendants may ultimately have all of the claims against them dismissed, he said.
Lungstrum did allow the parties in the cases to finish filing papers involving any pending bids to dismiss the lawsuits. On April 8 the judge narrowed the issues in a case NCUA brought against Credit Suisse Securities (USA) LLC.
The case is National Credit Union Administration Board v. RBS Securities Inc., 11-cv-02340, U.S. District Court, District of Kansas (Kansas City).