Citing New York’s “liberal” discovery standard, a state judge has ordered Standard & Poor’s and Moody’s to turn over to MBIA Insurance Corp. internal communications that led to ratings of 15 securitizations issued by Countrywide Home Loans Inc. “MBIA has adequately asserted that the requested documents directly pertain to Countrywide’s alleged misrepresentations, MBIA’s own due diligence toward the securizations and the reasonableness of MBIA’s reliance on Countrywide’s representations regarding the quality of the loans underlying the securitizations,” Manhattan Supreme Court Justice Eileen Bransten wrote in a three-page order in MBIA Insurance Corp. v. Countrywide Home Loans Inc., 60282508.
The decision is the culmination of a two-year effort by MBIA’s attorneys at Quinn Emanuel Urquhart & Sullivan to subpoena the rating agencies in MBIA’s fraud suit against Countrywide, which survived appellate review last week (NYLJ, July 1). While only a lower court decision, it could impact other mortgage-backed securities litigation in New York by monoline insurers such as Ambac Assurance Corporation and Syncora Guarantee, as the judges in those cases have tended, with some exceptions, to follow each others’ lead.
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