Big law firms take on big cases, and even bigger transactions.  One might read about a $ 50 Million dollar loan concerning a hospital.  One might have seen "Margin Call" and thought about how the sale of those securitized mortgages really takes place, and who checks the paperwork.  In Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft, LLP.  we see what happens when things go wrong.

Nomura sued Cadwalader for its failure "to properly advise and represent " NACC and ASC in connection with the securitization of a pool of commercial mortgages and the issuance of a legal opinion stating that the resulting trust would qualify for federal income tax purposes as a real estate mortgage investment conduit (REMIC)"  Now, summary judgment has been denied to Cadwalader.

At issue was a $ 50 million loan made to Doctor’s Hospital of Hyde Park, Chicago.  "When the hospital subsequently went into bankruptcy and Nomura was sued by the trustee to force a repurchase of the loan, Nomura claims it was forced to settle the trustee’s lawsuit for millions of dollars and alleges that it would not have suffered these damages but for Cadwalader’s legal malpractice."

An appraisal of the hospital was performed, but the Cadwalader tax partner did not review the appraisal before signing the opinion letter.  Bankruptcy Court later determined that the hospital was insolvent on the date of the appraisal which valued it at $ 68 million.

Nomura settled cases against itself for $ 68 million and went on to sue Cadwalader.  After this latest round of motion practice, the remaining claims alleged that Cadwalader committed legal malpractice by failing to advise plaintiffs that appraisals of the collateral securing the mortgage loans had to separately value real property, and that there was a failure of due diligence.