One of the biggest civil lawsuits in state history – the New Jersey attorney general’s claim that Credit Suisse was part of a $10 billon mortgage fraud scheme – has been going on for more than eight years, but with just a month to go before the trial starts, the case is without a judge.
Timothy Lydon’s resignation from the Superior Court last week to become the new executive director of the Senate Majority Office could delay the start of the September 12 trial.
So far, the matter remains on the judiciary schedule – at least until Lydon’s replacement as presiding judge of the general equity division is selected.
“The trial is still scheduled for next month. No decisions have been made,” said Peter McAleer, a spokesman for the New Jersey Administrative Office of the Courts. “The incoming presiding judge will decide on a new judge and whether the trial will be adjourned.”
The new presiding judge will be named by Chief Justice Stuart Rabner in consultation with the Mercer County Assignment Judge, Robert Lougy.
The Credit Suisse lawsuit is hugely complicated, and one attorney who deals in complex litigation says it will be challenging to find a judge who can be brought up to speed in time to keep the September 12 start date intact.
“It’s highly unlikely, I think, given my over 30 years’ experience as a trial lawyer,” said the attorney, who spoke on the condition of anonymity. “This is as sophisticated a case as I’ve seen.”
The sudden judicial vacancy comes at a time when the New Jersey courts are already understaffed – more than 15% of Superior Court judgeships are vacant – and the bench already has a significant backlog.
The case is has already had 42 motion hearings and 17 case management conferences. It involves some of the biggest law firms in the region.
The lawsuit is now on its fifth attorney general – Christopher Porrino, who was director of the Division of Law and supervised the litigation when the case was first filed, is still the lawyer; the state hired Porrino’s firm, Lowenstein Sandler, as outside counsel – and Lydon was the fourth judge on the case.
Lougy was acting attorney general after acting Attorney General John J. Hoffman, who initially brough the action, left office. He was also the judge on the Credit Suisse lawsuit for a time. The current acting attorney general, Matt Platkin has recused himself since he was a partner at Lowenstein.
In December 2013, Hoffman announced a lawsuit against Credit Suisse Securities USA alleging that the global investment bank and financial services firm offered more than $10 billion of residential mortgages guaranteed by securities trusts for sale while “misrepresenting the risks of the investments.
Hoffman accused Credit Suisse of failing to disclose “that numerous loan originators had poor track records of defaults and delinquencies, and some had even been suspended from doing business with Credit Suisse.”
“The kind of conduct described in this lawsuit is the kind of conduct that helped put the nation in financial crisis, with loan originators and investment banking firms abandoning prudent lending guidelines in order to generate quick profits,” Hoffman said at the time.