Lawsuits Against, By New Century Dismissed

New Century Financial Corp. announced Tuesday that it’s subsidiary, New Century Mortgage Corp., settled a lawsuit it had filed against Encore Credit Corp. — “an entity formed by certain former employees” of New Century. The release said Encore agreed to a settlement after New Century rested its case.

But Encore vice president and general counsel Jon Daurio said this statement was not accurate.

“There was no settlement,” Daurio said in a phone interview. “There is not a single penny we paid them. They dropped their case and we decided to drop ours.”

“We can’t say anything in the press release that isn’t in the settlement,” a New Century spokeswoman said in a phone interview. The company, which reported $3 billion in August production, is one of the largest subprime lenders in the country.

New Century originally filed its complaint against Encore during March 2002 in the Orange County Superior Court. The company alleged misappropriation of trade secrets, breach of contract, intentional interference with prospective economic advantage, unfair competition, conversion and breach of fiduciary duties, according to its annual report.

Encore sued New Century seven months later alleging unfair competition, unfair business practice, intentional interference with prospective economic advantage, breach of contract, trade libel and defamation, the report said.

Daurio said that in addition to the lawsuits filed on each other’s companies, New Century sued six individuals and Encore sued one.

Furthermore, New Century said in its press release that Encore agreed to dismiss an additional lawsuit filed by one of Encore’s subsidiaries, Sprint Funding.

But Daurio, who is also the chairman and chief executive officer of Sprint Funding, stated Encore “does not own one piece” of Sprint and that particular case is “still alive, its ongoing.”

The victory also seems to be disputed among the companies.

“New Century has demonstrated that it will vigorously defend its franchise,” said the company’s CEO.

On the other hand, Daurio pointed out that New Century initiated accusations and was also first to dismiss the case; therefore, “Encore had a major victory.”