In order to prevail in an insurance coverage suit against Bank of America’s Countrywide Financial unit, bond insurers MBIA Insurance Corp. and Syncora Guarantee Inc. must prove only that misrepresentations by Countrywide persuaded them to insure billions of dollars of mortgage-backed securities, not that those misrepresentations directly led to losses they had to cover on those securities, a Manhattan commercial division judge has ruled.
Justice Eileen Bransten (See Profile) handed down a pair of rulings on Tuesday in MBIA v. Countrywide, 602825/08, and Syncora v. Countrywide, 650042/09, granting summary judgment to the insurers. In both decisions, using the same language, she held that it was “without basis in case law to require” the insurers “to provide a causal link between the alleged misrepresentations and payments made pursuant to the policies.”
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