Another Subprime Suit Survives Renewed Dismissal Motion

Another Subprime Suit Survives Renewed Dismissal Motion - 11/4/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Another Subprime Suit Survives Renewed Dismissal Motion
Kevin LaCroix

The D & O Diary. November 4, 2009
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EXCERPT: As a result of a November 2, 2009 ruling by Northern District of California Judge Susan Illston, the PMI Group securities class action lawsuit is the latest subprime-related securities suit to survive a renewed motion to dismiss following plaintiffs’ filing of an amended complaint after the motion to dismiss their initial complaint had been granted. As was the case with respect to the recent ruling in the Washington Mutual subprime-related securities class action lawsuit, the PMI Group lawsuit plaintiffs overcame the shortcomings of their initial pleading with an amended complaint reliant upon added confidential witness allegations. […] The PMI Group, a residential mortgage insurer that also owns a controlling interest in bond insurer Financial Guaranty Insurance Corporation, as well as certain of PMI’s directors and officers, were first sued in a securities class action lawsuit in March 2008 […]. As discussed here, on July 1, 2009, Judge Illston granted in part and denied in part the defendants’ motion to dismiss the plaintiffs’ consolidated complaint. In her July 1 order, Judge Illston held that the plaintiffs had adequately alleged material misrepresentation and loss causation, but she granted the motion with leave to amend on the grounds that the consolidated complaint did not adequately allege scienter. Among other things, Judge Illston observed that the complaint "falls short of showing that the defendants were aware that the statements were false and misleading when made." On July 24, 2009, the plaintiffs filed their first amended complaint and the defendants renewed their dismissal motions. In her November 2 decision, Judge Illston denied the renewed dismissal motion. She noted that the plaintiffs’ amended complaint "differs from the original complaint in a number of ways." Among other things, she noted that the plaintiffs had "supplemented their allegations regarding previous confidential witnesses and added three new confidential witnesses."

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