NEW YORK, May 28 /PRNewswire/ — The law firm of Whatley Drake & Kallas, LLC announced today that Judge Dana M. Sabraw of the federal district court for the Southern District of California (San Diego) has denied Countrywide Financial Corp.’s motion to dismiss a consolidated class action complaint against the lender, with the exception of the claims of a single plaintiff whose claims were dismissed due to lack of standing. The plaintiffs in the multidistrict litigation have accused Countrywide of steering borrowers into risky and inappropriate subprime mortgages irrespective of their suitability to borrowers in order to maximize profits.

Judge Sabraw, who is overseeing the litigation against Countrywide entitled In Re Countrywide Financial Corp Mortgage Marketing and Sales Practices Litigation, case number 08-md-01988, sustained all of plaintiffs’ claims except those of a plaintiff who filed for bankruptcy and failed to substitute his bankruptcy trustee as a plaintiff. The claims of plaintiffs in the consolidated actions Levas v. Bank of America Corp., Jackson v. Countrywide Financial Corp. and White v. Countrywide Financial Corp. include violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), conspiracy to violate RICO, violation of California’s unfair competition and false advertising statutes, and unjust enrichment.

Judge Sabraw rejected Countrywide’s argument that the RICO enterprise the plaintiffs had alleged among independent mortgage brokers and Countrywide was not valid because the plaintiffs had not alleged connections between the independent mortgage brokers. In a previous motion to dismiss, the defendants had argued that the so-called “hub-and-spoke” structure of that enterprise was invalid under RICO. Judge Sabraw had previously rejected that argument on a prior motion to dismiss, noting that the Ninth Circuit does not require a specific organizational structure for RICO enterprises, and stated in his May 18 decision that the court found “no reason to depart from its previous conclusion.”

“We are pleased that we are helping the ultimate victims of the mortgage scheme that has nearly destroyed our economy,” said Joe R. Whatley of the firm Whatley Drake & Kallas, LLC, co-lead interim class counsel in the multidistrict litigation. He added, “We intend to continue to prosecute this action until those who obtained subprime mortgages from Countrywide are adequately compensated.”

Countrywide had also requested that the court reconsider its decision on an earlier motion to dismiss wherein it sustained an alternative RICO enterprise the plaintiffs had alleged, the “Countrywide Enterprise,” consisting solely of Countrywide and its subsidiaries. Countrywide argued that the court had previously misapplied the law concerning RICO enterprises among parents and subsidiaries, but Judge Sabraw stated that he found Countrywide’s arguments on this point “unpersuasive.”

Judge Sabraw also denied Countrywide’s motion to strike an allegation of unfair conduct under California state law, pursuant to Federal Rule of Civil Procedure 12(f), which permits the striking of “any redundant, immaterial, impertinent or scandalous matter.” Judge Sabraw noted that it appeared that the motion was actually directed at the legal sufficiency of the allegations under Rule 12(b)(6), but concluded that the allegations were both sufficient under 12(b)(6) and proper under 12(f), and thus denied the motion to strike.

About WDK: Whatley, Drake & Kallas, LLC is a national law firm with offices in Birmingham, New York City, and Boston. WDK practices extensively in the areas of complex class action and derivative litigation, including securities, ERISA, 401k, healthcare, insurance, antitrust, mass tort and consumer litigation. WDK also remains devoted to its longstanding representation of unions and workers throughout the United States and represents several Taft-Hartley plans.

CONTACT: Joe R. Whatley Jr. (212-447-7011)

Website: http://www.wdklaw.com

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