Seamen's Bank for Savings v. Superior Court

We issued an alternative writ of mandate to review the trial court’s order overruling demurrers by the Seamen’s Bank for Savings to cross-complaints filed by Eileen J. Smith, Beverly E. Hegg and John W. Smythe. We have now concluded a peremptory writ of mandate should issue directing the trial court to sustain the demurrers.

Facts and Proceedings Below

1. Background

The National Mortgage Equity Corporation (NMEC) marketed mortgage pass-through certificates to institutional investors including the Seamen’s Bank for Savings (Seamen’s). The certificates represented undivided interests in pools of secured real estate loans. Each certificate represented a number of individual loans collected into a pool by NMEC and sold to institutional investors for a price equal to the aggregate principal balances of the loans in the pool. The institution buying the certificate received a fixed rate of interest stated in the certificate.

Bank of America acted as escrow agent and trustee in connection with NMEC’s issuance and marketing of the certificates. Nineteen institutions, including Seamen’s, purchased over $233 million in certificates.

Several years after Bank of America undertook…