Apparently a little “mayhem” has caught up with Northbrook, Ill.-based Allstate Insurance Co.

In its quest to recoup losses after having purchased $700 million worth of mortgage-backed securities from a Countrywide Financial in the years leading up to the financial crisis, Allstate’s case took an undesired turn when a New York judge granted a motion by Countrywide to move the case to the Western Division of the Central District of California.

The move is significant given similar, ongoing litigation over similar issues have been brought before the California court since January 2010.

According to a ruling by U.S. District Judge Alvin K. Hellerstein, the coordination of Allstate’s suit with a class-action case filed by the Maine State Retirement System will maximize the efficiency of judicial resources and prevent any potential inconsistencies from having the same litigation before differing courts and judges.

Allstate sued Countrywide in New York federal court last December, alleging that the company had misrepresented the $700 million in mortgage-backed securities that Allstate had purchased between March 2005 and June 2007. At the time of purchase, the mortgage-backed securities market was soaring.

The insurer said that the excessively high default rates on the underlying loans proves that Countrywide ignored its underwriting guidelines to “match the worst features of mortgage products” that were offered by its competitors.

“Whereas Allstate was made to believe it was buying highly rated, safe securities backed by pools of loans with specifically-represented risk profiles, in fact the [Countrywide executives] knew the loans they offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties and, thus were highly likely to default,” according to the original complaint.

Countrywide’s lawyers had asked Hellerstein earlier this year to dismiss the complaint. They claimed the suit mimics unsubstantiated allegations from other lawsuits regarding its loan origination practices, and that the insurer had been given all necessary information to accurately assess the credit risk of the securities.

Bank of America bought Countrywide for $4.2 billion in July 2008, and assumed most of its liabilities at the time.

Allstate also filed a suit against J.P. Morgan Chase & Co. in February for similar practices.