In two companion lawsuits involving alleged Bad Faith, it appears that Bank of America allegedly gave guarantees, and issued Insurance, that it would indemnify the Plaintiffs if they were victims of Bad Faith when the Plaintiffs invested their money in entities engaged in buying and selling Mortgages.
The Plaintiffs were investors in Ocala Funding, LLC located in Ocala, Florida. Ocala was a "financing vehicle" for an entity, Taylor Bean and Whitaker Mortgage Corporation (also located in Ocala, Florida), which bought and sold Mortgages. (If this was easy to understand, it might not have happened or, if it happened anyway, it might not have gone on for as long as it apparently went on.)
BOA allegedly gave guarantees of -- or Insurance for -- Good Faith and Fair Dealing with the Plaintiffs-investors. The general background is well summarized, and in understandable terms, by Gretchen Morgenson, "Fair Game/Get Ready, Get Set, Point Fingers" p. 1, col. 5 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, December 13, 2009).
The allegations in the first-filed Complaint were made against BOA by BNP Paribas Mortgage Corporation. BNPP alleged three Claims or Causes of Action, two for alleged Breach of Contract and the third for "Indemnification". The Relief sought by BNPP included Damages with Interest, Attorney's Fees, and Costs. The gist of BNPP's Complaint is that BOA breached various contractually assumed obligations to indemnify BNPP for Bad Faith, or for lack of Good Faith:
40. Bank of America agreed to indemnify BNPP [Plaintiff BNP Paribas Mortgage Corporation] against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments, and any other costs, fees and expenses BNPP may sustain to the extent attributable to the collateral agent's negligence, fraud, bad faith or willful misconduct in the performance of its duties under the Security Agreement. See Security Agreement, § 8.05.
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44. Bank of America agreed to indemnify BNPP against any and all claims, losses, liabilities, obligations, damages, payments, costs and expenses resulting from the Custodian's negligence, lack of good faith or willful misconduct in the performance of or breach of its obligations under the Custodial Agreement. See Custodial Agreement, § 17.
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47. Under the terms of the Depositary Agreement (§ 8(g)), Bank of America agreed to "indemnify and hold harmless the Secured Parties" against any and all claims and losses "that the Issuer may sustain to the extent attributable to the Depositary's negligence, fraud, bad faith or willful misconduct in the performance of its duties hereunder."
[Emphasis added.] A copy of BNPP's Complaint is available through this link, here: Download Complaint BNP v BOA SDNY Case No 09 CV 9783.Filed 112509.
The Plaintiff in the second lawsuit is Deutsche Bank. Its Complaint was filed on the same day as BNPP's, and it contains similar allegations with at least one significant addition:
Alleged Breaches of "Swap Agreements" to which DB was allegedly a party.
DB's Complaint is available through this link: Download Complaint DB v. BOA SDNY Case No 09 CV 9784.Filed 11 25 09.
As of the date that this post is written, the time has not yet come for BOA's responsive pleadings to be filed in either lawsuit.
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