Judge Rules Goldman Sachs Must Face New York Breach of Contract Claims
Posted on Jan 01, 2016
On Thursday, May 3, 2012, New York State Supreme Court Justice O. Peter Sherwood denied the request by Goldman Sachs Group, Inc., to dismiss three claims brought against it for breach of contract. The claims were brought by CIFG Assurance North America, Inc., over $275 million in mortgage-backed securities that it insured. The lawsuit was filed in August.
In its lawsuit, CIFG alleges that Goldman knowingly sold risky mortgage bonds. CIFG further claims that Goldman sold the bonds in order to remove the risk from its own books. Goldman had purchased the subprime mortgages from six different originators. Additionally, CIFG asserts that Goldman fraudulently induced it to provide insurance on over 6,000 subprime residential mortgage loans by misrepresenting their quality and origin.
The breach of contract claims were not dismissed because Justice Sherwood held that CIFG did not need to make “specific representations as to each of the individual loans.” Instead, CIFG can provide a statistical sampling to show pervasive breaches in the underlying loans.
While Justice Sherwood denied Goldman’s request to dismiss the breach of contract claims, it did rule in favor of the company with regard to the fraudulent inducement assertion. In his ruling, Justice Sherwood found that if CIFG had conducted “proper due diligence prior to writing the insurance,” it would have uncovered the alleged misrepresentations.
CFIG is seeking compensation for its breach of contract claims. It is also seeking buy-backs of non-performing loans.
For more information on contract law and your options when someone has failed to fulfill their obligations toward you, contact a New York breach of contract lawyer at (888) 497-3410.