CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DAVID H. LUTHER et al.,
Plaintiffs and Appellants,
COUNTRYWIDE FINANCIAL CORPORATION et al.,
Defendants and Respondents.
(Los Angeles County
Super. Ct. No. BC380698)
From Yahoo News…
LOS ANGELES – An appeals court has overturned the dismissal of a class-action lawsuit brought by investors against mortgage giant Countrywide Financial Corp.
The move by a panel of the California 2nd District Court of Appeal reverses the decision by a Superior Court judge in Los Angeles last year. That court threw out the complaint on grounds that a state court had no jurisdiction to hear the case, citing the U.S. Securities Act.
In the ruling issued Wednesday, the appeals court disagreed, concluding such a complaint could be heard in state court.
From the opinion…
This case presents a single issue of statutory interpretation. The federal Securities Act of 1933 (“the 1933 Act”), as amended by the Securities Litigation Uniform Standards Act (“SLUSA”), provides for concurrent jurisdiction for cases asserting claims under the 1933 Act, except as specifically provided with regard to certain class actions.
Defendants contend, and the trial court found, that the exception includes this case, which is, in the parlance of the statute, a “covered class action” bringing causes of action under federal law in connection with “non-covered” securities. Plaintiffs argue to the contrary. We agree with plaintiffs, and thus reverse the judgment.
Factual and Procedural Summary
The case, and its procedural history, can be briefly described. Plaintiffs and appellants are David Luther and a number of pension funds and other institutional investors. Defendants are Countrywide Financial Corporation and several of its subsidiaries, several individuals, and several financial institutions.1 The complaint alleged that defendants issued, and plaintiffs bought, mortgage-backed securities, between 2005 and 2007. These securities were subject to the rules and regulations promulgated under the 1933 Act, but were not listed on a national exchange.
The complaint brought causes of action under the Securities Act of 1933, and importantly, included no state law causes of action. Factual allegations included allegations of false and misleading registration statements and prospectus supplements.
The action was brought on behalf of all persons and entities who bought those securities from defendant in that time period.
Defendants demurred on the ground that the state court had no jurisdiction under the 1933 Act, as amended by the SLUSA. Those demurrers were sustained, and the case dismissed.
Full opinion below…