A former SNR Denton client claims that the law firm dropped the ball when filing papers with the U.S. Securities and Exchange Commission and that it is therefore liable for a $7 million mortgage-backed securities deal gone awry.
Impac Secured Assets Corp. filed suit on September 20 in U.S. District Court in Los Angeles, claiming that SNR Denton dragged its feet in correcting a mistake in a 2007 SEC filing. That delay, Impac claims, led to a lawsuit filed last year by Citigroup against Impac.
Impac’s suit against SNR Denton alleges that in 2007 Impac hired attorney Richard Simonds, who at the time practiced at now-dissolved Thacher Proffitt & Wood, to submit to the SEC some documents pertaining to the sale of its mortgage-backed securities.
The lawsuit alleges that in 2007, Simonds, who is not a named defendant in Impac’s action, failed to include in the documents a provision outlining how the debt securities ultimately would be paid out. It alleges that in January 2010, Impac discovered an SEC filing error in an unrelated matter and asked Simonds, then at SNR Denton, to check into the 2007 filing.
Simonds and SNR Denton discovered the missing provision in the 2007 filing, and in March 2010 told Impac about it, the lawsuit alleges. In April 2010, SNR Denton and Simonds advised Impac to amend the filing, which it did at that time, according to the suit.
However, Citigroup had purchased about $7 million in Impac’s mortgage-backed securities in March 2010 — which, because of the faulty SEC filings, allegedly resulted in a loss of millions of dollars for Citigroup.
Seeking damages for those losses, Citigroup sued Impac in May 2011. In May 2012, it won summary judgment on most of its claims.
Impac’s lawsuit against SNR Denton seeks indemnity against Citigroup’s claims. Impac alleges negligence and breach of contract, and seeks a declaration from the court that SNR Denton is responsible to Citigroup.
SNR Denton responded to questions about the lawsuit through a spokesman. “We stand behind the advice and counsel provided in this matter and look forward to a successful resolution of the case.”
Representing Impac is Mark Eisenhut, a partner at Call & Jensen in Newport Beach, Calif. He declined to comment on lawsuit.
Contact Leigh Jones at firstname.lastname@example.org.