Reuters: Financial Services and Real Estate: Goldman loses bid to dismiss CIFG breach of contract claims

Reuters: Financial Services and Real Estate Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Goldman loses bid to dismiss CIFG breach of contract claims May 4th 2012, 02:41 Thu May 3, 2012 10:41pm EDT * Bond insurer sued Goldman in August * Claims Goldman sold mortgage bonds to rid itself of risk * Judge dismisses fraud claim * Breach of contract claims remain in case By Karen Freifeld NEW YORK, May 3 (Reuters) - Goldman Sachs Group Inc. failed to win dismissal of breach of contract claims in a lawsuit brought by CIFG Assurance North America Inc over $275 million in mortgage-backed securities that it insured. CIFG sued Goldman in August, claiming the investment bank knowingly sold shaky mortgage bonds to get the risk off its books. In a ruling made public Thursday, New York state Supreme Court Justice O. Peter Sherwood dismissed some claims against Goldman, including fraudulent inducement, but refused to toss out claims for breach of contract. CIFG claimed in its lawsuit that Goldman fraudulently induced it to provide insurance on the portfolio of over 6,000 subprime residential mortgage loans by misrepresenting their quality and origination. The judge granted Goldman's motion to dismiss that claim. "Had CIFG conducted proper due diligence prior to writing the insurance, it would have uncovered the alleged misrepresentations about which it now complains," Sherwood wrote in his decision. However, the judge let stand three breach of contract claims based on CIFG's providing a statistical sampling that showed pervasive breaches in the underlying loans. The judge ruled the insurer did not need to make "specific representations as to each of the individual loans." Goldman bought the subprime mortgages from six originators, including Buffalo-bsaed M&T Bank, which also was a defendant in the suit. In the decision, the judge also dismissed claims against M&T Bank. CIFG's suit seeks compensation for claims as well as buy- backs of non-performing loans. Michael Duvally, a spokesman for Goldman, had no immediate comment. The case is CIFG Assurance North America, Inc., v. Goldman Sachs & Co., 652286/2011, New York state Supreme Court (New York County). Link this Share this Digg this Email Reprints

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