O’Melveny has acted as OneWest Bank’s national coordinating counsel for its lender-placed-insurance litigation, including numerous putative nationwide class actions. O’Melveny has obtained critical rulings in the cases, including rulings dismissing putative nationwide class claims as preempted by federal law, which we have leveraged into favorable resolutions in the cases.
These litigation successes have allowed OneWest to avoid classwide lender-placed insurance settlements, unlike many of its competitors. O’Melveny secured a victory for client OneWest in a declaratory judgment action brought against HSBC USA. The dispute between the parties concerned whether OneWest could comply with its obligation under the federal HAMP program to modify mortgages without indemnifying HSBC against potential RMBS investor liability. The seminal issue in the case arose out of an apparent conflict in the language of the documents governing the relevant trusts in which the mortgages were held. OneWest sought a declaration from the court as to which of the documents controlled and whether OneWest could modify borrower loans without creating investor liability for HSBC as Trustee. Relying on a novel argument from unrelated ERISA law, O’Melveny successfully argued that the language of the investor-facing Prospectus Supplement, which contemplated modification, superseded the master servicing document that is not publicly available.