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Justice Schweitzer Refuses To Accept Cadwalader’s Request To End Law Suit Regarding Decade Old Loan Advice
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Cadwalader Wickersham & Taft gave advice to a securities company in Japan in the 1990s regarding the safety of commercial loan investments. According to a state judge, this legal malpractice claim may end up moving forward. Despite the fact that a decade and a half has passed since the incident, justice may still be seen for those victim to this malpractice.

Cadwalader motioned to dismiss the claim, but it was rejected by Melvin L. Schweitzer, the acting Supreme Court Justice. Cadwalader stated that factual, triable issues still remain regarding the handling by the firm of several commercial loans, totaling nearly $1.8 billion, in 1997.

Justice Schweitzer said, “From a REMIC standpoint, Cadwalader had in its files a document that contained certain information about the DHT, [the hospital], particularly the $40.6 million cost based value which brought the loan perilously close to the 80 percent test, and which indeed could be viewed as a red flag that this loan needed to be further securitized for REMIC-eligibility.”

  
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The judge added that a jury may come to the conclusion that, under the circumstances, the loan was prudent. Regardless of the outcome, the questions is an issue that a jury needs to decide. Ignoring this fact would not allow for justice to be served. Therefore, regardless of all the time that has passed, a jury will come together and hear the evidence brought forth in this case.

Cadwalader contended that in 1997 is was universal practice for the firm to solely rely on its attorneys to scrutinize and set appraisals for properties. The lender, according to Cadwalader’s contention, did this instead of directly hiring a law for to counsel its clients about the investment.

This contention was rejected by Justice Schweitser. He found that the testimony contradicted itself regarding the obligations a firm has on the advisement of clients, and about the REMIC’s guideline adherence to securitizing. The Justice said, “When all of this evidence is viewed in the light most favorable to Nomura, there is no doubt that triable issues of fact have been raised requiring that a jury view all of this and come to its own conclusion.

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David R. Mariott, a Cadwalader represenative from Cravath, Swaine & Moore, shared his disappointment of the ruling. However, he refused to comment any further, including any statement about the firm’s possibility of appeal.

Nomura’s attorney, Amianna Stovall of Constantine Cannon, declined to comment.



A status hearing has been scheduled by Justic Schweitzer for February 7.



 

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