On February 14, 2023, the Texas Court of Appeals reversed awards totaling $63 million entered against Credit Suisse after a jury trial and bench trial for Claymore Holdings, LLC, the assignee of a lender-investor. The case stems from a 2007 refinancing in which Credit Suisse allegedly induced Claymore’s assignor to contribute $250 million in a Lake Las Vegas golf course development based on an appraisal that Credit Suisse allegedly knew was inflated and unreasonable. After investing in the refinancing, the investor purchased additional Lake Las Vegas debt on the secondary market. When housing prices dropped, the property’s value plummeted, the borrower defaulted on the refinancing, and the lender-investor lost nearly all of its investment. Claymore sued Credit Suisse for fraudulent inducement.
After a jury trial, the trial court awarded the investor $40 million in fraud damages, and after a bench trial, the court awarded $23 million in damages, accounting for the investor’s secondary market purchases, plus pre- and post-judgment interest. The appellate court reversed. First, the court vacated the trial court’s $23 million award for the investor’s secondary market purchases because the record supported only a causation finding against Credit Suisse for the investor’s primary investment in the Lake Las Vegas property, not its subsequent secondary market purchases. Second, the court reduced the $40 million fraud award to zero after giving Credit Suisse credit for various settlements Claymore had reached with other parties. Because all tortfeasors were “subject to liability for damages for the same injury,” the court found that Credit Suisse was entitled to credit. And because the settlement credit amount exceeded the trial court’s $40 million fraudulent inducement award, the appeals court issued a take-nothing judgment in the investor’s favor.
The case is Credit Suisse AG v. Claymore Holdings, LLC, No. 05/21/00649-CV (Tex. App. Feb. 14, 2023). The investor is represented by Reid Collins & Tsai LLP. Credit Suisse is represented by Baker Botts LLP and Tillotson Law. The opinion is available here.
