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DIRECTORY AND CAPABILITIES

S&P Near $1 Billion Mortgage Ratings Settlement With U.S.

January 14, 2015 — Tom Schoenberg and Edvard Pettersson – Bloomberg
Standard & Poor’s is close to a settlement of about $1 billion with the U.S. for allegedly misleading investors about its ratings of mortgage-backed securities before the subprime crisis, a person familiar with the matter said. The McGraw Hill Financial Inc. (MHFI) unit and the Justice Department may agree to settle the case as early as this quarter, according to the person, who asked not to be identified because the negotiations are confidential. The Justice Department has secured settlements worth tens of billions of dollars during the past two years from mortgage lenders and banks it blamed for the 2008 financial crisis. Those companies generated unprecedented amounts of shoddy mortgages that were packaged and sold to investors as securities, many of which turned out to be worthless despite their investment-grade ratings. Mr. Schoenberg may be contacted at tschoenberg@bloomberg.net; Mr. Pettersson may be contacted at epettersson@bloomberg.net Read the court decision
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Reprinted courtesy of Tom Schoenberg and Edvard Pettersson, Bloomberg

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Texas Supreme Court Cements Exception to “Eight-Corners” Rule Through Two Recent Rulings

March 06, 2022 — Jeremy S. Macklin - Traub Lieberman Insurance Law Blog
The Texas “eight corners” rule precludes insurers from disclaiming a defense obligation based on facts not alleged in the underlying pleadings. Texas federal and appellate courts have been issuing rulings addressing exceptions to the eight corners rule and recently sought guidance from the Texas Supreme Court on whether Texas law recognizes such exceptions to the “eight corners” rule. The Texas Supreme Court has now spoken on the issue. Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp., 65 Tex. Sup. Ct. J. 440 (2022). In Monroe, David Jones contracted with 5D Drilling & Pump Services in the summer of 2014 to drill a 3,600-foot commercial irrigation well on his farmland. In 2016, Jones sued 5D for breach of contract and negligence relating to 5D’s drilling operations on Jones’s property. Jones’s pleading was silent as to when the damage flowing from 5D’s alleged acts of misconduct occurred. BITCO and Monroe stipulated that 5D’s drill struck a bore hole during 5D’s drilling operations in or around November 2014. Read the court decision
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Reprinted courtesy of Jeremy S. Macklin, Traub Lieberman
Mr. Macklin may be contacted at jmacklin@tlsslaw.com

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Local Government’s Claims on Developer Bonds Dismissed for Failure to Pursue Administrative Remedies

March 22, 2017 — David R. Cook - Autry, Hanrahan, Hall & Cook, LLP
The Georgia Court of Appeals recently affirmed a trial court’s dismissal of a county’s claim on developer bonds based on its failure to exhaust administrative remedies. Douglas County v. Hamilton State Bank, — Ga. App. –, A16A1708 (Mar. 16, 2017). Specifically, because the bank was under FDIC receivership, the County was required to pursue administrative remedies under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (the “Act”). Read the court decision
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Reprinted courtesy of David R. Cook, Autry, Hanrahan, Hall & Cook, LLP
Mr. Cook may be contacted at cook@ahclaw.com

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Real Estate & Construction News Roundup (5/8/24) – Hotel Labor Disputes, a Congressional Real Estate Caucus and Freddie Mac’s New Policies

June 04, 2024 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, nonresidential construction increases, Redfin settles lawsuits, overseas real estate becomes more lucrative than domestic real estate, and more!

• High inflation and a disappointing report on economic growth — followed by a sudden drop in stocks late last month — show similar signs to the 1970s when the housing market stagnated, and the decade itself became synonymous with stagflation. (Gabriella Cruz-Martinez, Yahoo)
• American investors have figured out that buying property overseas can be both affordable and lucrative, with some countries offering “golden visas” to foreign investors who make large real estate investments in their country. (Jordan Rosenfeld, Yahoo)
• Nonresidential construction spending ticked up 0.2% in March to a seasonally adjusted annual rate of $1.19 trillion. (Sebastian Obando, Construction Dive)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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SEC Approves New Securitization Risk Retention Rule with Broad Exception for Qualified Residential Mortgages

November 26, 2014 — Neil P. Casey & Lori S. Smith – White and Williams LLP
The Securities and Exchange Commission (SEC) and five other federal agencies recently approved a joint rule (the “Risk Retention Rule”) mandating that sponsors of certain types of securitizations retain a minimum level of credit risk exposure in those transactions and prohibiting such sponsors from transferring or hedging against that retained credit risk.[i]The final Risk Retention Rule will be effective one year after its publication in the Federal Register for securitizations of residential mortgages, and two years after publication for securitizations of all other asset types. The SEC vote was 3-2, with sharp dissents from Commissioners Gallagher and Piwowar concluding that the adopting agencies had missed a prime opportunity to rein in risky mortgage lending practices that had precipitated the 2008 financial crisis. Background Following the meltdown of the securitization markets in 2007 (particularly subprime residential mortgage-backed securities), and the resulting global financial crisis, the Dodd-Frank Act mandated that the U.S. federal banking, securities and housing agencies adopt and implement rules to require sponsors of most new securitizations to retain not less than five percent of the credit risk of any assets that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party. It was thought that requiring securitization sponsors to keep “skin in the game” would align the interests of the sponsors with the interests of investors and thereby incentivize the sponsors to ensure the quality of the assets underlying the securitization through appropriate due diligence and underwriting procedures when selecting assets for securitization. Although the Dodd-Frank Act explicitly exempted securitizations of certain types of mortgage loans called “qualified residential mortgages” (or “QRMs”) from this risk retention requirement, it invited the rulemaking agencies to define that key term, provided that their definition could be no broader than the definition of “qualified mortgage”adopted by the Consumer Financial Protection Bureau (CFPB) pursuant to the Truth in Lending Act.[ii] In considering how to define QRM, the rulemaking agencies were directed by the Dodd-Frank Act to take into consideration “underwriting and product features that historical loan performance data indicate result in a lower risk of default.”[iii] Reprinted courtesy of Neil P. Casey, White and Williams LLP and Lori S. Smith, White and Williams LLP Mr. Casey may be contacted at caseyn@whiteandwilliams.com; Ms. Smith may be contacted at smithl@whiteandwilliams.com Read the court decision
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Massachusetts Judge Holds That Insurer Breached Its Duty To Defend Lawsuit After Chemical Spill

October 16, 2018 — Lawrence J. Bracken, II & Alexander D. Russo - Hunton Insurance Recovery Blog
A District Court Judge for the District of Massachusetts recently ruled that Ace Property and Casualty Insurance Co. breached its duty to defend its insured in a lawsuit brought by Plaistow Project, LLC, after a family owned laundromat leaked chemicals onto Plaistow Project’s property. Plaistow Project, LLC v. ACE Prop. & Cas. Ins. Co., No. 16-CV-11385-IT, 2018 WL 4357480, (D. Mass. Sept. 13, 2018). Plaistow Project sued State Line Laundry Services in state court, and ACE denied coverage under the pollution exclusion in State Line Laundry’s insurance policy. Plaistow Project then settled with State Line Laundry. Under the settlement terms, Plaistow Project was assigned State Line Laundry’s rights against ACE. In the subsequent coverage litigation, Plaistow Project alleged that ACE had breached its duty to defend State Line Laundry under its insurance policy. ACE argued that (1) the burden was on the policyholder to demonstrate that the policy’s “sudden and accidental” exception applied to the policy’s pollution exclusion; and (2) the policyholder could not show the “sudden and accidental” exception applied based on the complaint. Reprinted courtesy of Lawrence J. Bracken, II, Hunton Andrews Kurth and Alexander D. Russo, Hunton Andrews Kurth Mr. Bracken, may be contacted at lbracken@HuntonAK.com Mr. Russo may be contacted at arusso@HuntonAK.com Read the court decision
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The Regulations on the Trump Administration's Chopping Block

August 02, 2017 — Pam Radtke Russell - Engineering News-Record
The Trump administration's next big step toward repealing the controversial Waters of the U.S. (WOTUS) rule is official, with a proposal to rescind the Obama-era regulation appearing in the Federal Register on July 27, setting off a relatively short comment period that will end Aug. 28. Read the court decision
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Reprinted courtesy of Pam Radtke Russell, ENR
Mr. Russell may be contacted at Russellp@bnpmedia.com

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Colorado Supreme Court Issues Decisions on Statute of Limitations for Statutory Bad Faith Claims and the Implied Waiver of Attorney-Client Privilege

July 11, 2018 — Jennifer Arnett-Roehrich - Gordon & Rees Insurance Coverage Law Blog
The Colorado Supreme Court has been busy the past two weeks, issuing a couple rulings that should be of interest to the insurance industry:

Statute of Limitations for Bad Faith Statute: In Rooftop Restoration, Inc. v. American Family Mutual Insurance Co., 2018 CO 44 (May 29, 2018), the Colorado Supreme Court held that the one-year statute of limitations that applies to penalties, does not apply to claims brought under C.R.S. 10-3-1116, Colorado’s statutory cause of action for unreasonable delay or denial of benefits. Section 10-3-1116 provides that a first-party claimant whose claim for payment of benefits has been unreasonably delayed or denied may seek to recover attorney fees, costs, and two times the covered benefit, in addition to the covered benefit. A separate Colorado statute, CRS 13-80-103(1)(d) provides a one-year statute of limitations for “any penalty or forfeiture of any penal statutes.” To arrive at the conclusion that the double damages available under section 10-3-1116 is not a penalty, the Court looked at yet another statutory provision, governing accrual of causes of action for penalties, which provides that a penalty cause of action accrues when “the determination of overpayment or delinquency . . . is no longer subject to appeal.” The Court stated that because a cause of action under 10-3-1116 “never leads to a determination of overpayment or delinquency . . . the claim would never accrue, and the statute of limitations would be rendered meaningless.” Para. 15. Presumably, the default two-year statute of limitations, provided by CRS 13-80-102(1)(i), will now be found to apply to causes of action seeking damages for undue delay or denial of insurance benefits.

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Reprinted courtesy of Jennifer Arnett-Roehrich, Gordon & Rees Scully Mansukhani
Ms. Arnett-Roehrich may be contacted at jarnett-roehrich@grsm.com

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