Ordinarily, there's not much reason to get excited about a state
intermediate appeals court upholding a procedural ruling by a trial court
judge. But in the litigation between bond insurers and mortgage-backed
securities issuers, decisions are not only magnified by the tens of billions of
dollars at stake, but also by the paucity of precedent. Almost every ruling is
groundbreaking, which means that decisions have an impact far beyond a single
case.
With that in mind, there
are two reasons why a ruling Thursday by the New York Appellate Division, First
Department, is a setback for Bank of America: timing and authority.
Without
much comment, the state appeals court affirmed two rulings by New York State
Supreme Court Justice Eileen Bransten, who last fall denied
motions by Bank of America to sever and consolidate successor liability claims
against the bank in four bond insurer cases against Countrywide. "The
court properly exercised its discretion in denying defendant's motion to sever
plaintiffs' successor liability claims from the primary claims and to
consolidate them, for purposes of discovery, in a single action," the
appellate decision said. "The successor liability actions are at
completely different stages of discovery, and consolidation would result in
undue delay."
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