9672. MBIA INSURANCE CORPORATION, Plaintiff-res-ap, v. COUNTRYWIDE HOME LOANS, INC. Defendants-Appellants-res, BANK OF AMERICA CORP., def — THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION AND THE ASSOCIATION OF FINANCIAL GUARANTY INSURERS, AMICI CURIAE. Simpson Thacher & Bartlett, New York (Barry R. Ostrager of counsel), for appellants-res — Quinn Emanuel Urquhart & Sullivan, LLP, New York (Philippe Z. Selendy of counsel), for res-res — ORRICK, HERRINGTON & SUTCLIFFE LLP, NEW YORK (JOHN ANSBRO AND BARRY S. LEVIN OF THE BAR OF THE STATE OF CALIFORNIA, ADMITTED PRO HAC VICE, OF COUNSEL), FOR THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION, AMICI CURIAE. AXINN, VELTROP & HARKRIDER LLP, NEW YORK (DONALD W. HAWTHORNE OF COUNSEL), FOR THE ASSOCIATION OF FINANCIAL GUARANTY INSURERS, AMICUS CURIAE.—Order, Supreme Court, New York County (Eileen Bransten, J.), entered January 3, 2012, which granted plaintiff MBIA Insurance Corporation’s motion for partial summary judgment to the extent of concluding that: (1) pursuant to Insurance Law §§3105 and 3106, plaintiff was not required to establish causation in order to prevail on its fraud and breach of contract claims; and (2) plaintiff was entitled to rescissory damages; and denied the motion to the extent it sought a finding that the parties’ repurchase agreement required defendants Countrywide Home Loans, Inc., Countrywide Securities Corp., Countrywide Financial Corp., Countrywide Home Loans Servicing, L.P. and Bank of America to repurchase loans that were not in default, unanimously modified, on the law, that portion of the motion seeking summary judgment on the claim for rescissory damages denied, summary judgment on the issue of the repurchase obligation granted, and otherwise affirmed, without costs.
Contrary to defendants’ arguments, the motion court was not required to ignore the insurer/insured nature of the relationship between the parties to the contract in favor of an across the board application of common law (see Insurance Law §§3105 and 3106). Although the Insurance Law provides for “avoid[ing]” an insurance policy (or rescission), it also mentions “ defeating recovery thereunder” (id.), which, logically, means something other than rescission. Neither defendants, nor the federal cases on which they rely (see GuideOne Specialty Mut. Ins. Co. v. Congregation Adas Yereim, 593 F Supp2d 471, 486 [EDNY 2009], Gluck v. Exec. Risk Indem., Inc., 680 F Supp2d 406, 418 n 9 [EDNY 2010]), explain why “defeating recovery thereunder” cannot refer to the recovery of payments made pursuant to an insurance policy without resort to rescission. Moreover, both cases, which are from the Eastern District of New York, are flatly contradicted by two from the Southern District of New York (see Syncora Guar. Inc. v. EMC Mortg. Corp., 874 F Supp 2d 328, 337 [SDNY 2012] [citing the Supreme Court's opinion in this case (34 Misc 3d 895 [Sup Ct, NY County 2012]) regarding sections 3105 and 3106 approvingly and finding that “[t]he same reasoning applie[d] in th[at] case”]; Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, 2012 WL 4373327 at *4-5, 2012 US Dist LEXIS 138296, at *10-11 [SDNY 2012] [agreeing with Syncora]).
