Syncora Guarantee

In Syncora Guarantee, 36 Misc 3d at 343 (citing Gotham Partners, L.P. v. Hallwood Realty Patners, L.P., 855 A2d 1059, 1072 (Del. Ch. 2003), Syncora alleged that it was induced into issuing guarantee insurance policies on a series of bonds based on material misrepresentations by Countrywide as to the quality of the assets (there, residential mortgage loans) underlying the bonds. 36 Misc 3d at 330-331. Syncora moved on summary judgment for a declaration that rescissory damages were an appropriate basis for damages, and the court agreed. Informed by New York Insurance Law sections 3105 and 3106, the court said that rescission was "warranted, but impractical" because rescinding the policies would harm the policies' direct beneficiaries, the noteholders, and in light of a clause contained in the insurance agreement there (similar to one contained in the Insurance Agreements here) that Syncora "shall unconditionally and irrevocably pay" under the policies. Id. at 344. The court concluded that "rescissory damages are appropriate in this instance under the persuasive case law and this court's power to award relief." Id. (citing CPLR 3017(a)). In that case, Syncora also argued that it was not required in proving its claim to show that "... any loans have defaulted, any connection between a misrepresentation and a subsequent loan default, or provide any evidence of any event subsequent to the misrepresentation." Id. at 336-337. The court again agreed, declaring that Syncora need not demonstrate that the misrepresentations at issue caused any payments under the policies in order to recover such damages. Id. at 340-42. (noting that Syncora "seeks damages for all payments it has or will make pursuant to the insurance policies" ).