States' Countrywide lawsuits shift to federal court

Legal News Line Aug. 23, 2008, 11:39am

Lisa Madigan (D-Ill.)

Jerry Brown (D-Calif.)

Mark Aguirre

SPRINGFIELD, Ill. (Legal Newsline)-Illinois Attorney General Lisa Madigan says its lawsuit against Countrywide Financial Corp. should not be lumped with others filed by California Attorney General Jerry Brown and San Diego City Attorney Mark Aguirre, as the lender requested.

The Illinois attorney general's office confirmed on Friday that its legal team will join Aguirre and, presumably representatives from California's attorney general's office, at Harvard University on Sept. 25. That's the date a U.S. Judicial Panel on Multidistrict Litigation will decide which federal court to assign the case to, or if it will be returned to the state and city levels.

Meanwhile, the Illinois attorney general's office has also filed a lawsuit in the Illinois federal court asking that the case be returned to the state level.

"We have filed a motion to remand our case to state court, where we think it should be," Debbie Hagen, chief of the Illinois attorney general's consumer protection division, told Legal Newsline on Friday. "We don't believe there are any grounds for removal."

Aguirre told Legal Newsline on Friday that he will be at the hearings, and is working with the Illinois attorney general's office to convince the court that the lawsuits should remain in the separate jurisdictions at the state level.

Bank of America, parent company of Countrywide, has asked the federal judicial panel to consolidate six cases, including those filed by Madigan, California Attorney General Jerry Brown and Aguirre.

According to Hagen, the request automatically goes into effect until the panel conducts its hearing.

The legal maneuver also effectively stalled attempts to seek a preliminary injunction that would block Countrywide from foreclosing on homes until the legal situation could be resolved. Aguirre had already committed to seeking such an injunction and Hagen said her office was considering it among other strategies.

"We were exploring that when we were in state court," Hagen said. "But now we have to resolve this issue of where we're going to be litigating our case."

Illinois and California were the first states to sue Countrywide. They were followed by Florida, the City of San Diego, Connecticut and West Virginia, which filed last week.

Despite the similarities in several of these cases - West Virginia is believed to have used the same legal language from previous attorneys general filings - Aguirre and Hagen believe the case should not become a federal case.

"I would hope that our judges in state court, knowing what's going on with foreclosures in the city of Chicago and the surrounding areas, would give this a high priority," Hagen said.

"The state is the proper forum," Aguirre said.

Christine Gasparac, spokeswoman for the California attorney general's office said she was unaware of the Sept. 25 hearing, but, "We're trying to keep the case in California."

Gasparac said there was nothing new to report about Brown's negotiations with Bank of America officials. Hagen said Illinois has also had negotiations with Charlotte, N.C.-based Bank of America.

"There is a litigation track and a negotiation track," she told LNL. "We are sitting down, like we always do, and talking to see if there is a way to resolve this short of litigation."

Hagen would not explain specifics about Illinois' negotiations with Bank of America except to say mitigating foreclosures remains the top priority.

"Attorney General Lisa Madigan's primary concern is to deal with the foreclosures right now," Hagen said. "Our primary goal currently would be to stop the foreclosures in a way to keep as many people as possible in their homes. That's the overarching goal in any talks with Bank of America."

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