1/1/2016Following the collapse of the United States housing market, many lawsuits based upon various causes of action have arisen in courts throughout the country. These lawsuits continue today, as the nation attempts to rebuild following the collapse of the housing market that followed to thousands of risky mortgage-backed investments.
In a recent example, U.S. District Court Judge William Pauley has ruled in Manhattan that Bank of New York Mellon must face claims that it breached its fiduciary duty as trustee of 26 investment trusts. The trusts are alleged to have contained risky Countrywide Financial Corp. mortgage loans. The claims include an allegation that the plaintiff bondholders suffered more than $9 billion in losses or delinquencies.
Under New York law, breach of fiduciary duty claims are often difficult to prove. New York contract law establishes the categories of relationships that qualify as fiduciaries. Similarly, in order to prevail in their claim against Bank of New York Mellon, the bondholders in that lawsuit will have to prove that the Bank not only was acting as a fiduciary in its role as trustee, but also that it breached its duties under that role.
Bondholders in the Bank of New York Mellon action will likely point to the following as evidence in support of their claims:
- The defendant served as trustee of the 26 investment trusts containing the alleged bad mortgages.
- The defendant had a fiduciary duty as trustee of the trusts to the investors.
- The defendant failed to notify investors that Countrywide had defaulted on some of its obligations as either a servicer or a mortgage lender.
To learn more about the legal principles at work here, contact a New York breach of fiduciary duty lawyer today at (888) 497-3410.
The facts and circumstances in every claim of this nature vary. If you suspect that you may have a claim, it is vital that you seek the guidance of a New York business litigation attorney.