UPDATE 2-BofA seeks to oust AIG law firm from $10 bln case
* AIG, Quinn Emanuel law firm see no reason to disqualifyBy Jonathan StempelOct 18 (Reuters) - Bank of America Corp urged a
judge to disqualify the law firm representing insurer American
International Group Inc in its $10 billion mortgage
fraud lawsuit against the bank, alleging a conflict of interest
by one of the firm’s partners.The bank said Quinn Emanuel Urquhart & Sullivan should be
removed because the partner had defended Merrill Lynch & Co and
its First Franklin Financial Corp unit against similar charges
that they made and sold defective mortgage loans. Bank of
America bought Merrill on Jan. 1, 2009.While the partner, Marc Becker, is no longer working on the
case following the bank’s objection, his earlier involvement is
a “flouting of the ethical rules” and put him in position to
use his former clients’ confidential information, Bank of
America said.”Becker’s involvement in this case has already tainted
these proceedings,” wrote Marc Dworsky, a partner at Munger,
Tolles & Olson, which represents Bank of America and employed
Becker until 2008, in a filing on Monday evening with the U.S.
District Court in Manhattan.”Quinn cannot be in a position to use defendants’
confidential information against them in the future —
particularly in a case of this magnitude,” Dworsky added.The challenge raises the stakes in one of the biggest
lawsuits stemming from the global financial and credit crises.AIG obtained $182.3 billion of federal bailout and remains
owned largely by taxpayers. It accused Bank of America and its
Countrywide and Merrill units of misrepresenting the quality of
about $28 billion of mortgage-backed securities it bought, and
lying to credit-rating agencies about the underlying loans.Gregory Joseph, a lawyer for Quinn Emanuel, in an email
called Bank of America’s motion a tactical effort to remove the
firm from the case. The firm is one of the largest specialists
in mortgage-securities litigation.”They know perfectly well that he would not share any
confidential information, and he never did,” Joseph said,
referring to Becker. “Its motion never even addresses the
governing standard — whether there is any risk of trial taint
— because of course there isn’t.”AIG spokesman Mark Herr called the Bank of America motion
“simply an attempt to distract from the merits of the case.”CONFLICT?James Cohen, a Fordham University law professor and legal
ethics specialist, said Becker’s earlier work likely did not
warrant Quinn Emanuel’s disqualification from the AIG case.”I don’t think there is a conflict,” he said. “They are
unrelated matters and his representation of Merrill and First
Franklin is more than two years in the past. The mere claim
that a lawyer developed a strategy for defending this kind of
lawsuit does not mean the lawsuits are significantly related.”Cohen said it could prove “problematic” if presiding judge
Barbara Jones decided Becker was not screened fast enough, but
that an effective screen could address this issue.He added: “It is of high value for a party to have the law
firm of choice.”Becker now works in London. He did not immediately return a
call seeking a comment.Quinn Emanuel’s other cases include most of the 18 Federal
Housing Finance Agency lawsuits against Bank of America, other
banks and at least 131 individuals to recover losses on $200
billion of soured mortgage debt held by Fannie Mae
and Freddie Mac .The FHFA is the conservator for the mortgage financiers.The case is American International Group Inc v. Bank of
America Corp et al, U.S. District Court, Southern District of
New York, No. 11-06212.
