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 At a hearing on Wednesday, Justice Saliann Scarpulla of New York
State Supreme Court ordered the judgment by her predecessor in the
case, Barbara Kapnick, to be officially recorded.
"It's very straightforward," Scarpulla told lawyers for AIG, which
was one of the investors in the mortgage securities. "Judge Kapnick
issued the order. ... If you don't like it, your remedy is to
appeal."
Kapnick approved the settlement on January 31, her last day
overseeing the case before she was elevated to a state appeals
court, and ordered a five-day delay before her approval was
officially recorded. AIG on February 4 asked Scarpulla, the new
judge on the case, to delay recording of the judgment, saying
Kapnick had left some matters unresolved.
"Judge Kapnick told me the five-day stay she put in was merely a
convenience to the parties," Scarpulla said on Wednesday. "She had
no intention of leaving anything open."
AIG said in a statement it will appeal Kapnick's decision if
necessary.
Bank of America agreed to the settlement in June 2011 to resolve
claims by investors who bought mortgage-backed securities issued by
Countrywide Financial before the U.S. housing crisis. The investors
said Countrywide, acquired by Bank of America in 2008,
misrepresented the quality of the underlying home mortgages, which
went sour in the crisis.
Twenty-two institutional investors, including BlackRock Inc <BLK.N>,
Allianz SE's Pimco <ALVG.DE> and Metlife Inc <MET.N>, signed on to
the settlement. AIG opposed the deal, saying there was no evidence
it provided adequate compensation for losses.
"AIG's announced strategy of imposing indefinite delay was defeated
today," Kathy Patrick, a lawyer for the investor group supporting
the decision, told Reuters.
Lawrence Grayson, a spokesman for Bank of America, declined to
comment.
Kevin Heine, a spokesman for Bank of New York Mellon, the trustee
overseeing the securities, said it was pleased the court will enter
the judgment, "which overwhelmingly vindicated the trustee's
actions."
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Bank of New York Mellon and other supporters of the deal have
accused AIG of holding the settlement "hostage."
In her January 31 ruling, Kapnick said Bank of New York Mellon
acted with mostly reasonable judgment in entering into the
settlement. She made one exception, withholding approval relating to
certain loans that had been modified. She said the trustee should
not have settled those claims without investigating their potential
worth.
AIG said Wednesday it will try to get Kapnick's decision vacated by
pursuing a motion it filed Tuesday to reargue the case before
Scarpulla.
In the motion, AIG said Kapnick overlooked disputed and unresolved
issues, applied the wrong standard to the trustee's actions and
failed to adequately explain her decision.
"We are pleased that the court intends to address AIG's motion for
re-argument," AIG said in its statement. "If necessary, AIG also
looks forward to pressing ahead with its appeal at the appropriate
time."
Scarpulla said during the hearing she would hear arguments on the
motion but did not set a date.
The case is In re Bank of New York Mellon, New York State Supreme
Court, New York County, No. 651786/2011.
(Reporting by Karen Freifeld; editing by
Leslie Adler and Chizu Nomiyama)
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