Judge Rejects Morgan Stanley’s Motion to Dismiss Suit Over $600M in Toxic Loans
Kasowitz Benson Torres LLP secured a significant win on August 12, 2014 when New York Supreme Court Justice Eileen Bransten refused to dismiss lawsuits brought by securitization trusts against Morgan Stanley over $600 million worth of toxic mortgage loans used for residential mortgage-backed securities. The lawsuit was filed in May 2012 when U.S. Bank NA, as trustee, sued Morgan Stanley claiming that the trust bought certain mortgages from Morgan Stanley believing that the loans were in good standing, only to have many of the mortgage loans rapidly go into default or become delinquent, leading to more than $153 million in losses for the trust.
Although Morgan Stanley argued that trustee failed to give proper detailed notice of the poor-performing loans, Justice Bransten upheld plaintiff’s claims. In an article published by Law360, Kasowitz partner Marc Kasowitz said that the firm looks forward to bringing these cases to trial, and that the firm is “pleased by Judge Bransten’s decisions, which were well, well reasoned.”
View the Law360 article, entitled “Morgan Stanley Stuck With Suits Over $600M In Toxic Loans.”