NEW YORK, Aug 26 (Reuters) - Investors objecting to Bank of
America Corp's proposed $8.5 billion settlement of claims over
losses on mortgage-backed securities are seeking to move the
case to federal court from a New York state court.
In a filing on Friday, investors led by 11 entities sharing
the name Walnut Place said the size of the case qualifies as a
"mass action," giving federal courts jurisdiction.
It wants the case handled in the U.S. District Court in
Manhattan, rather than in the New York State Supreme Court
also located there, where it has been for two months.
The filing may delay final approval of a settlement, which
Bank of America had intended to resolve much of its remaining
legal liability tied to its disastrous 2008 purchase of
mortgage lender Countrywide Financial Corp.
Bank of New York Mellon Corp, as trustee under 530 mortgage
securitization trusts, had negotiated the accord with 22
institutional investors including BlackRock Inc and Allianz
SE's Pimco, covering mortgages with a $174 billion unpaid
Unhappy investors had had until Aug. 30 to intervene in the
case, ahead of a Nov. 17 court hearing to consider whether the
accord is fair. Friday's filing throws that timetable into
The effort by "a small number of objectors" to move the
case "is unsupported by the law and will only serve to delay
the resolution of the proceeding," Bank of New York Mellon
spokesman Kevin Heine said.
Bank of America spokesman Lawrence Grayson called the
filing a "tactical maneuvering" that has no impact on the
underlying merits of the settlement.
David Grais, a lawyer for Walnut Place and some other
intervenors, did not immediately respond to an emailed request
Worries about how much Bank of America will ultimately have
to pay angry mortgage securities investors have driven down the
bank's share price in recent weeks to a nearly 2-1/2-year low.
On Thursday, the bank won a vote of confidence through a $5
billion investment from Warren Buffett's Berkshire Hathaway
The state case is In re: The Bank of New York Mellon, New
York State Supreme Court, New York County, No. 651786/2011.
The federal case is The Bank of New York Mellon et al v.
Walnut Place LLC et al, U.S. District Court, Southern District
of New York, No. 11-05988.
For Walnut Place: David Grais, Owen Cyrulnik and Leanne
Wilson of Grais & Ellsworth.
For New York Mellon: Jason Kravitt, Hector Gonzalez and
Matthew Ingber of Mayer Brown.
(Reporting by Jonathan Stempel and Alison Frankel)