BRADENTON, Fla. — A New York Supreme Court judge late Tuesday rejected JPMorgan’s motion to dismiss two lawsuits brought earlier this year by Syncora Guarantee Inc. and Assured Guaranty.
The insurers’ suits allege that the investment bank fraudulently induced them to provide insurance coverage for Jefferson County, Ala.’s nearly $3.2 billion of failed variable- and auction-rate sewer warrants.
Judge James Yates also dismissed counterclaims brought by Jefferson County, which is a defendant in Syncora’s suit. The county alleged that Syncora was negligent, breached its contract, and fraudulently omitted information about its investments and insurance of collateralized debt obligations and residential mortgage-backed securities.
“The county has been unable to point to a single fact or piece of circumstantial evidences that indicates that the plaintiff knew or had reason to know prior to 2004 that its existing exposure to CDOs or RMBSs was risky,” the judge wrote. “Judging by the all-encompassing nature of the credit crisis, which affected the financial industry in 2008, plaintiff was not alone in this ignorance.”
