A federal district court rejected Chase Manhattan Mortgage Corp.'s claims of fraud and negligent misrepresentation by Advanta Corp.
Advanta announced Monday the rulings by the U.S. District Court for the District of Delaware regarding the complaint Chase filed against it four years ago.
The court denied all of Chase's claims Friday for damages of over $88 million plus interest, except for one contract claim of $17.5 million plus interest, according to the announcement.
The complaint stemmed from Chase's acquisition of substantially all of Advanta's mortgage business on Feb. 28, 2001, for over $1 billion. The JPMorgan Chase mortgage unit sought to have the deal revoked or to be awarded unspecified damages because Advanta allegedly had violated federal securities laws by concealing significant losses and making its business appear more profitable than it actually was, according to a Reuters article. Chase accused Advanta and 12 of its affiliates of fraud, misrepresentation, and breach of contract.
Spring House, Pa.-based Advanta also said it will receive $8.75 million as a result of a settlement with Chase regarding contract claims and counterclaims they both raised in separate 2004 litigation relating to the 2001 transaction.
Chase declined to comment on the matters.
Advanta said it expects to record a third quarter after tax charge to discontinued operations of between $0.41 and $0.44 per diluted share for Class A and Class B shares combined as a result of both the court's decision and the settlement.
Chase Sues Advanta
Advanta Corp. announced Friday that Chase Manhattan Mortgage Corp., a subsidiary of J.P. Morgan Chase & Co., filed a complaint against Advanta and certain of its subsidiaries relating to the sale of the mortgage business to Chase which closed effective February 28, 2001. In its press release, Advanta said that the Complaint was completely unexpected since Chase never engaged in a substantive discussion with Advanta about the issues it is raising in the lawsuit.
July 30, 2001