There was a very favorable development recently in one of my buyback cases. The federal district court in Miami issued a final order that has great potential application to other buyback suits, whether already pending or merely threatened at this point. The ruling is not something that other courts are required to follow, but it can potentially have significant influence on the thinking of other judges. As one client has already noted, this is quite possibly a “true game-changer.”
In a case brought by Lehman Brothers Holdings against one of my clients, Judge King of the Southern District of Florida issued an order dismissing claims against my client. The key elements of the order are that:
1. The facts pertinent to each of the eight loans about which Lehman was suing are so clearly different from one loan to another that they must be adjudicated as eight different suits;
2. Judge King therefore has now dismissed all claims related to seven of the eight loans, granting Lehman leave to re-file them as seven separate suits, each focused on one loan only (a clear disincentive for Lehman to continue to pursue its claims). Each re-filed case will be randomly assigned to one of the district court judges in Miami;
3. The order makes clear that this ruling stems from the fact that each loan requires separate and distinct proof as to liability, and separate and distinct proof of damage. Note that the exact same thing is true of all other loan buyback demands; and
4. Any new cases cannot be consolidated with one another;
We have always felt that we had a number of very strong defenses to aggregators’ claims. We now have a major “procedural” weapon as well.
