According to a press release dated June 30, 2009, a class action lawsuit was filed on behalf of a class of persons or entities that hold a derivative interest as of June 10, 2009 in bonds issued by the California Infrastructure and Economic Development Bank, referred to as Refunding Revenue Bonds, Series 2007A and Series 2007B (COPIA: The American Center for Wine, Food & The Arts Project), issued pursuant to a certain Indenture dated May 1, 2007, between the California Infrastructure and Economic Development Bank and The Bank of New York Trust Company, N.A. (the "2007 Copia Bonds").
Specifically, the complaint alleges that the Prospectus for the 2007 Copia Bonds was false and misleading in that it was affirmatively represented in the Prospectus that the 2007 Copia Bonds had been issued for the express purpose of defeasance of a prior 1999 bond issue (the "1999 Bonds") on or before September 7, 2007. The Complaint alleges that the representation was false in that, in order for the prior 1999 Bonds to have been defeased, a written opinion of counsel was required by Section 10.03(4) of the 1999 Bonds Indenture, which was not provided as required. Therefore, the 1999 Bonds have never been made the subject of any proper or legal defeasance and could never have been made the subject of any proper or legal defeasance. The Complaint alleges that the misrepresentation and failure to disclose the lack of any proper or legal defeasance respecting the prior 1999 Bonds and the 2007 Copia Bonds allowed what would have been otherwise unmarketable bonds to be issued and sold. The Complaint alleges that the holders of a derivative interest in the 2007 Copia Bonds suffered substantial losses as a result.
The action names as defendants Infrastructure and Economic Development Bank; The Bank of New York Mellon Trust Company, N.A., ACA Financial Guaranty Corporation ("ACA"), and Orrick, Herrington & Sutcliffe, LLP. Defendants are charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and ACA also is charged with insurance bad faith.
On September 11, 2009, Judge Garland E. Burrell, Jr., signed the tentative ruling approving William George's motion to be appointed lead plaintiff and further approving his selection of McGrane Greenfield, LLP, and Kershaw, Cutter & Ratinoff, LLP, as lead counsel. On October 20, 2009, the lead plaintiff filed a Consolidated Complaint For Violation Of Section 10(b) Of The Securities Exchange Act Of 1934 And Of Rule 10b-5 Promulgated Thereunder. On December 4, 2009, defendant Orrick, Herrington & Sutcliffe, LLP filed a motion to dismiss. On December 28, 2009, a First Amended Consolidated Complaint was filed. One of the defendants responded by filing a motion to dismiss the First Amended Consolidated Complaint on February 5, 2010. On June 10, 2010, Judge Garland E. Burrell, Jr. granted the defendants’ motion to dismiss. The plaintiff is granted leave to file an amended complaint within 14 days.
On July 9, 2010, the lead plaintiff filed a Second Amended Consolidated Class Action Complaint. On August 13, 2010, the defendants responded by filing a motion to dismiss the Second Amended Consolidated Class Action Complaint. On March 9, 2011, Judge Garland E. Burrell, Jr., signed the Order dismissing the action with prejudice. Judgment was entered the same day, and the case is now closed.
On April 8, 2011, the plaintiffs filed a Notice of Appeal in the Ninth Circuit Court of Appeals as to the Judgment. The appeal was later voluntarily dismissed.