Judge Denies Countrywide’s Motion To Dismiss

Posted by Orb Staff on May 29, 2009 No Comments
Categories : Residential Mortgage

Diego judge has denied Countrywide's motion to dismiss a consolidated class action complaint against the lender, with the exception of the claims of a single plaintiff, whose claims were dismissed due to lack of standing. Judge Dana M. Sabraw of the federal district court for the Southern District of California, who is overseeing the litigation against Countrywide in which the company is accused of steering borrowers into inappropriate subprime mortgages, made the ruling, according to law firm Whatley Drake & Kallas LLC. Sabraw rejected Countrywide's argument that the Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise the plaintiffs had alleged among independent mortgage brokers and Countrywide was not valid because the plaintiffs had not alleged connections between the independent mortgage brokers. In a previous motion to dismiss, the defendants had argued that the so-called ‘hub-and-spoke’ structure of that enterprise was invalid under RICO. Sabraw had previously rejected that argument on a prior motion to dismiss, noting that the Ninth Circuit does not require a specific organizational structure for RICO enterprises, according to a statement by Whatley Drake & Kallas. ‘We are pleased that we are helping the ultimate victims of the mortgage scheme that has nearly destroyed our economy,’ says Joe R. Whatley, co-lead interim class counsel in the multidistrict litigation. ‘We intend to continue to prosecute this action until those who obtained subprime mortgages from Countrywide are adequately compensated.’ Sabraw also denied Countrywide's motion to strike an allegation of unfair conduct under California state law, pursuant to Federal Rule of Civil Procedure 12(f), which permits the striking of ‘any redundant, immaterial, impertinent or scandalous matter.’ SOURCE: Whatley Drake &

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