During its latest earnings call, Old Republic Insurance Co. announced that it had settled a suit it brought in December 2008 in Circuit Court in Cook County, Illinois, initially against Countrywide Bank FSB, seeking rescission of various credit indemnity policies.
During the call, an analyst asked whether a $107 million cost the company recorded included a perceived settlement cost for the outstanding litigation that is now against Bank of America.
“Yes, we can say categorically that, that has been settled,” Old Republic Chairman and CEO Al Zucaro. “It’s a matter of public record. What we cannot speak to is the terms and the conditions of it all, right, as I’m sure you can understand. But that certainly – that case was the big megillah in our situation and it’s gone now. And we think we’ve put our arms around, as I tried to say before, any remaining residual issues, small cases that we have here and there. We think we’ve really got our arms – we would be very surprised if we have this kind of discussion again of blaming a poor quarter or a poor year on the sins of the past. I think it’s over.”
The terms of the settlement could not be disclosed, but court documents noted that the case was voluntarily dismissed Oct. 18.
According to a recent SEC filing, Old Republic filed the suit Dec. 19, 2008, against Countrywide Bank FSB, Countrywide Home Loans Inc., and Bank of New York Mellon, BNY Mellon Trust of Delaware, “seeking rescission of various credit indemnity policies issued to insure home equity loans and home equity lines of credit which Countrywide had securitized or held for its own account, a declaratory judgment and money damages based upon systemic material misrepresentations and fraud by Countrywide as to the credit characteristics of the loans or by the borrowers in their loan applications.
“Countrywide filed a counterclaim alleging a breach of contract, bad faith and seeking a declaratory judgment challenging the factual and procedural bases that Old Republic had relied upon to deny or rescind coverage for individual defaulted loans under those policies, as well as unspecified compensatory and punitive damages. The court ruled that Countrywide does not have standing to counterclaim with respect to the policies insuring the securitized loans because those policies were issued to BNYM. In response, Countrywide and BNYM jointly filed a motion asking the court to allow an amended counterclaim in which BNYM would raise substantially similar allegations as those raised by Countrywide and make substantially similar requests but with respect to the policies issued to BNYM. The court dismissed their motion, with leave to re-plead the counterclaim. BNYM’s subsequent attempt to re-plead was granted by the court and BNYM has re-pleaded its counterclaim.”
Before the settlement was entered into, a multi-phase trial was set to begin Sept. 25. The law firm representing the defendants declined to comment on the settlement.