Posted Jun 06, 2012 10:38 pm CDT
A former client of Stradley Ronon Stevens & Young sued the Philadelphia-based law firm on Monday, contending that errors in documenting some $200 million in loans to a subprime lender cost a bank involved in making the loans millions of dollars.
After the subprime lender, Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 bankruptcy in 2009, the law firm’s client, Sovereign Bank, sought to recover as much as it could of $175 million in secured loans to Taylor Bean. But because of Stradley Ronon errors, the bank’s Philadelphia Common Pleas Court suit contends, some servicers that should have been obligated to Sovereign under security agreements weren’t. Two lenders that invested in the transaction were allegedly omitted from a list of servicers.
That lack of documentation led to objections by the creditors committee in the bankruptcy case and a lower payout to Sovereign than the bank might otherwise have received, Reuters reports.
However, chairman Bill Sasso of Stradley Ronon said in a written statement to Reuters that Sovereign was at fault, not his 205-attorney law firm.
Stradley Ronan had recently filed a declaratory judgment action in federal court in Philadelphia to try to resolve the issue, he noted.
“As stated in our complaint, we believe that the only party negligent in the transaction was Sovereign,” Sasso said. “Their complaint is totally without merit.”