REED SMITH LLP MUNGER, TOLLES & OLSON...

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DEFTS. SUPP. MEM. ISO MOT. TO DISMISS

CLAIMS; CASE NO. 11-CV-10549-MRP (MANx)

James L. Sanders (SBN 126291) [email protected] David M. Halbreich (SBN 138926) [email protected] REED SMITH LLP 355 South Grand Avenue, Suite 2900 Los Angeles, California 90071 Tel: 213-457-8000 Fax: 213-457-8080 Amy J. Greer (pro hac vice) [email protected] Jennifer L. Achilles (pro hac vice) [email protected] REED SMITH LLP 599 Lexington Avenue New York, New York 10022 Tel: 212-521-5400 Fax: 212-521-5450 Attorneys for Defendants Countrywide Financial Corporation; Countrywide Capital Markets LLC; Countrywide Home Loans, Inc.; Countrywide Securities Corporation; CWABS, Inc.; CWALT, Inc.; CWHEQ, Inc.; and CWMBS, Inc.

Marc T.G. Dworsky (SBN 157413) [email protected] Stephen M. Kristovich (SBN 82164) [email protected] Richard C. St. John (SBN 202560) [email protected] MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Floor Los Angeles, California 90071 Tel: 213-683-9100 Fax: 213-687-3702 David H. Fry (SBN 189276) [email protected] MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco, California 94105 Tel: 415-512-4000 Fax: 415-644-6982 Attorneys for Defendants Bank of America Corporation; Banc of America Securities LLC; Bank of America, National Association; NB Holdings Corporation; Merrill Lynch & Co., Inc.; and Merrill Lynch, Pierce, Fenner & Smith Incorporated

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

IN RE COUNTRYWIDE FINANCIAL CORP. MORTGAGE- BACKED SECURITIES LITIGATION

Case No. 11-ML-02265-MRP (MANx)

AMERICAN INTERNATIONAL GROUP, INC. et al.,

Plaintiffs,

vs. BANK OF AMERICA CORPORATION et al.,

Defendants.

Case No. 11-CV-10549-MRP (MANx) REDACTED PURSUANT TO PROTECTIVE ORDER DATED MARCH 4, 2013 DEFENDANTS’ SUPPLEMENTAL MEMORANDUM IN SUPPORT OF MOTION TO DISMISS CLAIMS ASSIGNED TO MAIDEN LANE II LLC

Case 2:11-cv-10549-MRP-MAN Document 251 Filed 03/28/13 Page 1 of 31 Page ID #:16086

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF CONTENTS

Page

-i-DEFTS. SUPP. MEM. ISO MOT. TO DISMISS

CLAIMS; CASE NO. 11-CV-10549-MRP (MANX)

I. INTRODUCTION ............................................................................................. 1

II. PROCEDURAL HISTORY .............................................................................. 3

III. THE CIRCUMSTANCES SURROUNDING THE EXECUTION OF THE APA AND THE PURPOSES OF THE PARTIES IN ENTERING INTO THE CONTRACT. ................................................................................. 4

A. AIG Was In Crisis—Its Survival Was At Stake. .................................... 4

B. Maiden Lane II Was Structured to “De-Risk” AIG While Still Protecting Taxpayers. .............................................................................. 7

1. The Structure of Maiden Lane II .................................................. 7

2. .......... 8

C. .......... 9

D. The Competing Understandings of the Term “All Right, Title and Interest in and to the Related Instruments.” ................................... 12

1. ........... 13

2. ................. 16

E. AIG Received Far More than It Could Have Obtained Selling the RMBS in the Market. ............................................................................ 17

IV. ARGUMENT .................................................................................................. 19

A. AIG Bears the Burden of Establishing Jurisdiction. ............................. 19

B. AIG Cannot Meet Its Burden of Showing that It Owns the Claims. .................................................................................................. 20

1. The Circumstances of the Execution of the APA and the Purposes of the Parties Support the FRBNY’s Reading of the Contract. ................................................................................ 20

2. The Language of the APA Cannot Be Reconciled With AIG’s Reading. ........................................................................... 22

3. AIG’s Reliance on the Draft Term Sheet Is Misplaced. ............. 25


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF CONTENTS (continued)

Page

-ii-DEFTS. SUPP. MEM. ISO MOT. TO DISMISS


V. CONCLUSION ............................................................................................... 25


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF AUTHORITIES

Page(s)

-iii-DEFTS. SUPP. MEM. ISO MOT. TO DISMISS


FEDERAL CASES

Banque Arabe et Internationale D’Investissement v. Maryland Nat. Bank, 57 F.3d 146 (2d Cir. 1995) ................................................................................. 24

Cobalt Multifamily Investors I, LLC v. Bridge Capital (USVI), LLC, 2007 WL 2584926 (S.D.N.Y. Sept. 7, 2007) ..................................................... 24

Compania Embotelladora del Pacifico, S.A. v. Pepsi Cola Co., 607 F. Supp. 2d 600 (S.D.N.Y. 2009) ................................................................ 24

Gruppo, Levey & Co. v. ICOM Info. & Commc’ns, 2003 WL 21511943 (S.D.N.Y. July 1, 2003)..................................................... 22

In re Delta Air Lines, Inc., 608 F.3d 139 (2d Cir. 2010) ............................................................................... 20

Kingman Reef Atoll Investments, L.L.C. v. United States, 541 F.3d 1189 (9th Cir. 2008) ............................................................................ 19

Lowenson v. London Market Companies, 351 F.3d 58 (2d Cir. 2003) ................................................................................. 24

Pittsburgh Coke & Chem. Co. v. Bollo, 421 F. Supp. 908 (E.D.N.Y. 1976) ..................................................................... 20

Thornhill Pub. Co., Inc. v. General Tel. & Elecs. Corp., 594 F.2d 730 (9th Cir. 1979) .............................................................................. 19

White v. Lee, 227 F.3d 1214 (9th Cir. 2000) ............................................................................ 19

STATE CASES

Aron v. Gillman, 309 N.Y. 157 (1955) ....................................................................................... 3, 20

Citibank, N.A. v. 666 Fifth Avenue Ltd. Partnership, 2 A.D.3d 331 (2003) ........................................................................................... 20


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF AUTHORITIES (continued)

Page(s)

-iv-DEFTS. SUPP. MEM. ISO MOT. TO DISMISS


Cromwell Towers Redevelopment Co. v. City of Yonkers, 41 N.Y.2d 1 (1976) ............................................................................................. 20

Lawyers’ Fund for Client Protection v. Bank Leumi Trust Co., 94 N.Y.2d 398 (2000) ......................................................................................... 23

Shadlich v. Rongrant Assocs., 66 A.D.3d 759 (2009) ......................................................................................... 20

Two Guys From Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 63 N.Y.2d 396 (1984) ......................................................................................... 22

FEDERAL RULES

Rule 12(b)(1) ............................................................................................................ 19


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-1-DEFTS. SUPP. MEM. ISO MOT. TO DISMISS


I. INTRODUCTION

In its January 30, 2013 Order, the Court found that the Asset Purchase

Agreement (“APA”) between AIG and Maiden Lane II LLC was ambiguous with

respect to whether AIG’s tort claims were being sold to Maiden Lane II. The Court

also noted that “the evidence submitted by the parties does not include sufficient

factual material to determine the intent of the parties, since it does not ‘give due

consideration to the circumstances surrounding’ the execution of the Asset Purchase

Agreement, or ‘to the purpose of the parties in making the contract.’” Dkt. No. 208

at 2; see also Dkt. No. 222 at 1. At the Court’s direction, the parties have now taken

discovery concerning the formation of the APA and the resulting evidence strongly

supports the understanding of the Federal Reserve Bank of New York’s

(“FRBNY”)—reflected in the sworn declaration of James Mahoney—that AIG

transferred to Maiden Lane II all transferrable or assignable benefits, including

litigation claims, associated with the RMBS.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



This is precisely the sort of contract interpretation that New York courts routinely

reject as “insupportable.”


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



In short, the circumstances under which the contract was made, the purposes

of the parties in entering into the transaction, and the language the parties used all

point to the same conclusion: the APA gave Maiden Lane II all assignable rights

that AIG possessed relating to these securities, including its litigation claims.

II. PROCEDURAL HISTORY

On October 7, 2012, Defendants moved to dismiss the Amended Complaint,

arguing that, as a matter of law, AIG had assigned the bulk of its claims to Maiden

Lane II. Dkt. No. 163 at 14-16. On November 27, 2012, AIG filed its opposition,

arguing that Defendants construction of the APA was incorrect as a matter of law,

but alternatively that an exchange of correspondence with the FRBNY undermined

Defendants’ reading of the contract. Dkt. No. 177 at 7-18. On December 21, 2012,

Defendants filed their reply, renewing their argument that the APA unambiguously

transferred the claims, but also submitting evidence refuting AIG’s contention that

the FRBNY shared its understanding of the contract. Dkt. Nos. 189, 191.

The Court heard argument on the motion to dismiss on January 29, 2013. On

January 30, 2013, the Court issued an order finding that it could not, as a matter of

law, state either that the APA did or did not transfer tort claims from AIG to Maiden

Lane II. Dkt. No. 208. The Court noted that New York law permits consideration

of extrinsic evidence to determine the meaning of an ambiguous contract and that

the parties had submitted some extrinsic evidence, but that the evidence submitted

did not “‘give due consideration to the circumstances surrounding’ the execution of

the Asset Purchase Agreement or ‘to the purpose of the parties in making the

contract.’” Id. at 2 (quoting Aron v. Gillman, 309 N.Y. 157, 163 (1955)).

Following the Court’s direction, the parties and the FRBNY engaged in a

limited period of discovery between February 4, 2013 and March 21, 2013. In

response to a subpoena from AIG, the FRBNY produced 17,498 pages of

documents. Two FRBNY witnesses, Steven Manzari and James Mahoney, were

deposed on March 15 and March 18, respectively. AIG produced 3,644 pages of


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



documents in response to an informal document request by Defendants. AIG also

selected one of its in-house lawyers, Ronald Edward Holmes, and a former AIG

executive, Christopher Swift, as its witnesses in connection with this issue and they

were deposed on March 19 and March 21, respectively.

The Court has requested briefing on the “circumstances surrounding’ the

execution of the [APA]” and “the purpose of the parties in making the contract,” and

Defendants accordingly have directed this memorandum to those topics.

Notwithstanding the Court’s directives, AIG has pursued discovery far beyond the

circumstances surrounding formation of the APA and Defendants anticipate that

AIG’s brief will similarly exceed the issue identified in the Court’s January 30, 2013

Order. Defendants of course are prepared to address any issues concerning events

subsequent to the execution of the APA and request the opportunity to do so if the

Court determines any such events merit examination.

III. THE CIRCUMSTANCES SURROUNDING THE EXECUTION OF THE APA AND THE PURPOSES OF THE PARTIES IN ENTERING INTO THE CONTRACT.

A. AIG Was In Crisis—Its Survival Was At Stake.

As AIG itself explained in its 2008 Annual Report, the company “faced an

acute liquidity crisis” in September 2008. Declaration of David H. Fry (“Fry

Decl.”) Ex. 5 at 1. The principal sources of this liquidity crisis were: (1) collateral

calls relating to AIG Financial Product’s (“AIGFP”) portfolio of multi-sector CDO

credit default swaps (“CDS”); and (2) AIG’s securities lending portfolio. Id. at 40.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



AIG’s liquidity issues came to a head on September 15, 2008, when the rating

agencies downgraded AIG’s debt. Fry Decl. Ex. 5 at 4 (of Form 10-K). These

downgrades “trigger[ed] additional collateral calls and cash requirements in excess

of $20 billion.” Id. at 1.

By late in the day on September 16,

2008, when “it was clear that AIG had no viable private sector solution to its

liquidity issues,” AIG’s Board of Directors approved borrowing from the FRBNY.

Fry Decl. Ex. 5 at 5 (of Form 10-K). AIG took out an $85 billion loan from the

FRBNY, which AIG later said “was essential to prevent an AIG bankruptcy, which

would have caused incalculable damage to AIG, our economy and the global

financial system.” Fry Decl. Ex. 6 at Ex. 99.2. That loan was for two years and had

an interest rate of LIBOR plus 850 basis points (8.5%). Fry Decl. Ex. 7.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



In fact, AIG’s third quarter loss ended up being even larger—more than $24

billion. Fry Decl. Ex. 6 at Ex. 99.1, p. 1.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



The Treasury Department and the Federal Reserve devised a four-part

program to address these challenges: (1) using funds from the Troubled Asset

Relief Program (“TARP”), the Treasury would purchase $40 billion in preferred

shares of AIG stock; (2) the $85 billion loan would be reduced to $60 billion, the

term would be extended from 2 years to 5 years, and the rate would be reduced from

LIBOR plus 850 basis points to LIBOR plus 300 basis points; (3) using funds

loaned by the FRBNY, a special purpose vehicle (which became Maiden Lane II

LLC) would purchase the RMBS held by AIG’s securities lending business,

allowing that business to be terminated; and (4) another special purpose vehicle

(Maiden Lane III LLC) would purchase the CDOs that AIGFP had insured under its

CDS program, allowing AIG to terminate the CDS contracts. Fry Decl. Ex. 11.

The restructuring plan was announced on November

10, 2008, at the same time AIG announced its third quarter earnings report. Fry

Decl. Exs. 6, 11.

B. Maiden Lane II Was Structured to “De-Risk” AIG While Still Protecting Taxpayers.

1. The Structure of Maiden Lane II

The Maiden Lane II transaction fundamentally did two things to address

AIG’s crisis—it provided AIG with cash to repay its securities lending

counterparties (including amounts owed to the FRBNY under its securities lending

facility) and it removed a large portfolio of RMBS from AIG’s balance sheet, so the

company was no longer subject to mark-to-market losses on those securities. The

basic structure of the transaction was as follows:

• Maiden Lane II LLC was created, with the FRBNY as its sole member; 2


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



• The FRBNY loaned Maiden Lane II $19.8 billion, at an interest rate of one-month LIBOR plus 100 basis points (the “Senior Loan”).

• AIG transferred to Maiden Lane II a portfolio of RMBS (along with “all right, title and interest in and to all Related Instruments”);

• AIG received the right to be paid $1 billion plus interest at one-month LIBOR plus 300 basis points after the Senior Loan had been fully repaid (the “Fixed Deferred Purchase Price”);

• After the Senior Loan and Fixed Deferred Purchase Price (including interest) had been paid, AIG and the FRBNY would split any residual profits of Maiden Lane II, with AIG receiving 1/6th and FRBNY receiving 5/6th.

Fry Decl. Ex. 5 at 41-42, Ex. 12 at 29, 31.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



3


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



4


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



D. The Competing Understandings of the Term “All Right, Title and Interest in and to the Related Instruments.”


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



5 AIG pointedly chose not to depose any lawyer who represented the FRBNY in connection with the APA, while at the same time it did choose an in-house AIG lawyer as one of its two AIG witnesses.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



6


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



E. AIG Received Far More than It Could Have Obtained Selling the RMBS in the Market.

AIG has repeatedly asserted that it could not have been transferring its

litigation claims because it received no consideration for them—only the “market”

price of the RMBS. That assertion is wrong on every level.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



The Maiden Lane II transaction

would have made no sense if AIG could have sold the portfolio in the market at the

same price. If AIG could have done that, it would have gotten just as much cash to

pay out to its securities lending counterparties, would still have removed the

securities’ mark-to-market volatility from its balance sheet, and would have done so

without any risk to the taxpayers.

7 Importantly, it was a portfolio (in fact, a very large portfolio) that AIG was selling, not individual securities. The “market” price at which any one of those securities might have traded is simply irrelevant because that is not what AIG was selling.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



IV. ARGUMENT

A. AIG Bears the Burden of Establishing Jurisdiction.

“Unless the jurisdictional issue is inextricable from the merits of a case, the

court may determine jurisdiction on a motion to dismiss for lack of jurisdiction

under Rule 12(b)(1).” Kingman Reef Atoll Investments, L.L.C. v. United States, 541

F.3d 1189, 1195 (9th Cir. 2008). Where, as here, the jurisdictional question is

distinct from the merits, the Court may hear evidence and resolve factual disputes as

necessary. Id.; Thornhill Pub. Co., Inc. v. General Tel. & Elecs. Corp., 594 F.2d

730, 733 (9th Cir. 1979). The plaintiff bears the burden of establishing that

jurisdiction exists and no presumption of truthfulness applies to plaintiff’s

allegations.8 Thornhill Pub., 594 F.2d at 733; see also Kingman Reef, 541 F.3d at

1195. In short, the Court is the finder of fact on this motion and AIG bears the

burden of proof. AIG cannot meet that burden.

8 The standard and procedure here are different than if this were a “facial” challenge to jurisdiction, where no evidence is presented and the Court must assume the truth of the plaintiff’s allegations. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



B. AIG Cannot Meet Its Burden of Showing that It Owns the Claims.

1. The Circumstances of the Execution of the APA and the Purposes of the Parties Support the FRBNY’s Reading of the Contract.

When construing ambiguous contract terms, New York courts “give due

consideration to the circumstances surrounding its execution, to the purpose of the

parties in making the contract, and, if possible, . . . give to the agreement a fair and

reasonable interpretation.” Aron v. Gillman, 309 N.Y. 157, 163 (1955). Where the

parties to a contract dispute what certain language was intended to do, the court may

look to the context in which the contract was formed to determine which party’s

view is more reasonable.9 Id.; see also In re Delta Air Lines, Inc., 608 F.3d 139,

146-49 (2d Cir. 2010); Pittsburgh Coke & Chem. Co. v. Bollo, 421 F. Supp. 908,

928-29 (E.D.N.Y. 1976); Cromwell Towers Redevelopment Co. v. City of Yonkers,

41 N.Y.2d 1, 6 (1976). Here, the circumstances strongly favor reading the APA as

transferring from AIG to Maiden Lane II any rights and benefits AIG could

transfer—including litigation claims.

By late 2008, AIG was in critical condition. As its CEO said, government

intervention was “essential to prevent an AIG bankruptcy, which would have caused

incalculable damage to AIG, our economy and the global financial system.” Fry

Decl. Ex. 6 at Ex. 99.2, p. 1. By October, discussions with the rating agencies had

made clear that AIG faced a potentially devastating downgrade when it announced

its monumental third quarter losses. AIG needed more government help

immediately. One of the principal sources of AIG’s difficulties was the securities

lending business—which required huge amounts of cash to repay securities lending

counterparties, but could not raise enough money itself because the bulk of its 9 Ambiguities in the APA should not be construed against either party as the drafter, as both parties were commercially sophisticated, represented by counsel, and cannot show that they “had no voice in” the terms of the agreement. Citibank, N.A. v. 666 Fifth Avenue Ltd. Partnership, 2 A.D.3d 331, 331 (2003); see also Shadlich v. Rongrant Assocs., 66 A.D.3d 759, 760 (2009).


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



remaining assets were illiquid RMBS. Manifestly, one purpose of the APA was to

alleviate AIG’s liquidity crisis.

A second manifest purpose of the APA was to provide the FRBNY with

collateral to ensure its nearly $20 billion loan to Maiden Lane II would be repaid.

10


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



Due to its concern about the risk of loss, the FRBNY wanted the most

complete transfer of rights relating to the securities that AIG could provide

To the extent there is any ambiguity in the APA concerning whether it

transferred AIG’s litigation claims to Maiden Lane II, therefore, the agreement

should be construed to do so. The parties intended to give the FRBNY as much

protection as they could consistent with de-risking AIG and that would be

accomplished by giving Maiden Lane II all transferable and assignable benefits that

AIG possessed relating to the securities, including its litigation claims.

2. The Language of the APA Cannot Be Reconciled With AIG’s Reading.

The alternative reading of the APA offered by AIG violates fundamental

principles of contract interpretation and, in any event, makes no sense.

“Every clause in a contract is important and a court must be certain to refrain

from interpreting a contract so as to render a clause in the contract meaningless.”

Gruppo, Levey & Co. v. ICOM Info. & Commc’ns, 2003 WL 21511943, at *6

(S.D.N.Y. July 1, 2003); see also Two Guys From Harrison-N.Y., Inc. v. S.F.R.

11


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



Realty Assocs., 63 N.Y.2d 396, 403 (1984).

This is

insupportable. Lawyers’ Fund for Client Protection v. Bank Leumi Trust Co., 94

N.Y.2d 398, 404 (2000) (“Bank Leumi’s interpretation would render the second

paragraph superfluous, a view unsupportable under standard principles of contract

interpretation.”).

12


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



But, “New York law does not require specific boilerplate language to accomplish

the transfer of causes of action sounding in tort.” Banque Arabe et Internationale

D’Investissement v. Maryland Nat. Bank, 57 F.3d 146, 151 (2d Cir. 1995). As the

Court noted in its January 30, 2013 Order, New York law provides that a transfer of

tort claims must be explicit, but also that a contract which transfers “something

more” than the asset itself constitutes such an explicit transfer. Dkt. No. 208 at 1-2.

AIG cannot, however, escape the consequences of the language actually used

in the APA on the basis of an erroneous understanding of its legal effect. Compania

Embotelladora del Pacifico, S.A. v. Pepsi Cola Co., 607 F. Supp. 2d 600, 603

(S.D.N.Y. 2009) (“CESPA”); Cobalt Multifamily Investors I, LLC v. Bridge Capital

(USVI), LLC, 2007 WL 2584926, at *8 (S.D.N.Y. Sept. 7, 2007); see also Lowenson

v. London Market Companies, 351 F.3d 58, 62 (2d Cir. 2003) (party cannot avoid

consequences of methodology set forth in contract by arguing that methodology was

analytically unsound). In the CESPA case, for instance, the plaintiff contended that

the parties to a distributorship contract that contained no provision addressing its

duration intended it to be perpetual and terminable only for cause. Id. at 602. The

defendant did not agree that the contract was perpetual, but instead contended that it

was at will because it contained no fixed term. Id. The court rejected plaintiff’s

claim on the ground that, in essence, plaintiff “claim[ed] that i[t] misunderstood the

legal effect of the [contract’s] language. In such circumstances, reformation is not

available.” Id. at 604.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



Aside from being legally untenable, AIG’s reading of the APA makes no

sense.

3. AIG’s Reliance on the Draft Term Sheet Is Misplaced.

V. CONCLUSION

For the foregoing reasons, AIG’s claims regarding securities it sold to Maiden

Lane II LLC should be dismissed for lack of jurisdiction.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28



DATED: March 28, 2013 REED SMITH LLP JAMES L. SANDERS

DAVID M. HALBREICH AMY J. GREER JENNIFER L. ACHILLES

By: /s/ Amy J. Greer Attorneys for Defendants

Countrywide Financial Corporation; Countrywide Capital Markets LLC; Countrywide Home Loans, Inc.; Countrywide Securities Corporation; CWABS, Inc.; CWALT, Inc.; CWHEQ, Inc.; and CWMBS, Inc.

DATED: March 28, 2013 MUNGER, TOLLES & OLSON LLP MARC T.G. DWORSKY

STEPHEN M. KRISTOVICH DAVID H. FRY RICHARD C. ST. JOHN

By: /s/ David H. Fry Attorneys for Defendants

Bank of America Corporation; Banc of America Securities LLC; Bank of America, National Association; NB Holdings Corporation; Merrill Lynch & Co., Inc.; and Merrill Lynch, Pierce, Fenner & Smith Incorporated


Date post:	08-Aug-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

REED SMITH LLP MUNGER, TOLLES & OLSON...

Documents