California MBS suit against Countrywide allowed to proceed in state court
A California appellate court reversed a 2010 state court decision that dismissed claims against Countrywide Financial Corp. on the grounds of a jurisdiction dispute. The ruling allows the case to proceed in state court. Investor David Luther, a number of pension funds and other institutions sued Countrywide alleging the lender issued mortgage-backed securities between 2005 and 2007 with false and misleading statements as stipulated under the federal Securities Act of 1933. The act was designed to provide investors with full disclosure of material information concerning these offerings. But Countrywide argued the state court had no jurisdiction under the law. The argument was sustained and the case was dismissed in 2010. But on appeal, Emilie Elias, an appellate judge in California, found the lower trial court misinterpreted the act, ruled the investors had the ability to file a class action in state court and allowed the class action to proceed on the state level. Securities law firm Kessler Topaz Meltzer & Check is co-lead counsel for the investors and expects the court of appeals to send the case back to Los Angeles County Superior Court to proceed with the litigation. Write to Jon Prior. Follow him on Twitter @JonAPrior.