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Paul, Weiss Achieves Trial Victory for Aurora Commercial Corp.
- Client News
- March 5, 2014
Paul, Weiss achieved a major victory for our client Aurora Commercial Corp., formerly known as Aurora Bank, FSB (Aurora), when the District Court of Denver County, Colorado rejected all of the claims of plaintiff Allonhill, LLC (Allonhill), and ruled in Aurora's favor on its breach of contract and fraud counterclaims against Allonhill, awarding Aurora approximately $26 million, plus interest.
In the aftermath of reports of improper foreclosure activities by mortgage loan servicers, Aurora's federal regulator, the Office of the Comptroller of the Currency (OCC), ordered Aurora, along with other leading servicers, to retain "independent consultants" to conduct reviews of the servicers' foreclosure practices. Aurora retained Allonhill, a Denver-based consulting firm, as its "independent consultant." Approximately one year into the engagement-during which time Allonhill made very little progress in its review of Aurora's foreclosure practices-the OCC determined that Allonhill lacked "independence" because of prior and ongoing engagements with Fannie Mae and Freddie Mac pursuant to which Allonhill was also required to conduct reviews of Aurora-serviced loans, and directed that Aurora terminate Allonhill as its "independent consultant." Nonetheless, Allonhill, represented by Williams & Connolly, sued Aurora in Colorado State Court in Denver, seeking $22.5 million in remaining, unpaid fees. Aurora counterclaimed for fraud and breach of contract, based on, among other things, contractual representations as to Allonhill's "independence," seeking the return of the $24 million in fees it had already paid Allonhill, plus other damages. Trial was held over a two week period in December 2013. On March 5, the Denver District Court issued a 69-page opinion in which it: (1) denied all of Allonhill's claims for additional fees, (2) found for Aurora on its fraud and breach of contract counterclaims, and (3) awarded Aurora the return of the $24 million it had paid Allonhill, as well as an additional $1.8 million in compensatory damages, plus prejudgment interest.
The Paul, Weiss team included litigation partners Allan Arffa and Liza Velazquez.