Case to be tried in U.S. District Court in Seattle, Washington, on Sept. 17, 2012
(WASHINGTON, D.C. – July 24, 2012) A federal judge on Monday rejected a motion by two former WaMu (Washington Mutual Bank) subsidiaries to escape a class action lawsuit alleging Securities Act violations filed by plaintiffs who purchased mortgage-backed certificates from the savings and loan that in 2008 became the nation’s largest bank failure. The decision paves the way for a Sept. 17, 2012, trial date, according to plaintiffs’ co-lead counsel Steven Toll of Cohen Milstein Sellers & Toll PLLC.
“This is a terrific decision for the plaintiffs. The case is prepared and we are looking forward to trial,” said Toll, whose firm along with Scott + Scott LLP, represent the Boilermakers National Annuity Trust, Doral Bank Puerto Rico, and the Policemen’s Annuity and Benefit Fund of Chicago.
The case involves substantial claims in mortgage-backed certificates issued and underwritten by WaMu and its related entities. The value of the certificates, which were supported by pools of residential mortgage loans, collapsed soon after issuance. The named plaintiffs, representing a court-certified class of investors, allege that loans backing the securities were “fundamentally impaired” and that they were misled as to the quality of the loans’ underwriting.
In denying the defendant’s motion for summary judgment, which sought to dismiss the plaintiffs’ claims before trial, Judge Marsha J. Pechman of the U.S. District Court for the Western District of Washington, in Seattle, wrote, "Plaintiffs have successfully raised a dispute of fact as to whether WaMu systematically deviated from its underwriting guidelines so as to render the statements in the offering documents false or misleading.”
Furthermore, she added, “Plaintiffs have also shown a dispute of fact as to whether the disclosures regarding exceptions were accurately reported to investors.”
Judge Pechman also rejected the defendant’s argument that losses claimed were caused entirely by something other than the disregard for WaMu’s loan underwriting guidelines, and upheld the plaintiffs’ right to include expert testimony from a highly regarded statistician and a loan underwriting expert, as well as from several former WaMu employees whose testimony would be helpful to the plaintiffs’ claims.
A copy of the court order (Case NO. C09-37MJP) is available here.