Skadden obtained a significant appellate ruling on behalf of Merrill Lynch when the New York State Appellate Division, First Department, dismissed claims brought by monoline insurer MBIA alleging that Merrill had fraudulently misrepresented the quality of CDOs with a notional value of approximately $5.7 billion.
In a unanimous ruling on February 1, a five-judge panel affirmed the lower court’s April 2010 dismissal of the fraud-based claims and reversed its denial of the motion to dismiss MBIA’s breach of contract cause of action. In so doing, the case was dismissed in its entirety.
This is the second case in the past three years in which Skadden has prevailed on behalf of Merrill Lynch in suits brought by MBIA seeking to get out from under the terms of their credit default swap contracts.