'Frivolous' MBIA lawsuit against Texas sports authority thrown out

By Caroline Salls

Pittsburgh, April 25 - MBIA's lawsuit against the Harris County-Houston Sports Authority was thrown out by state district judge Elaine Palmer, according to a Harris County-Houston Sports Authority release.

The authority said it purchased bond insurance from MBIA to enhance its ability to finance the sale of construction bonds for local sports stadiums. The lawsuit included the Houston Texans, the Houston Livestock Show and Rodeo and the Harris County Sports and Convention Corp.

The downgrade of MBIA to near junk bond status had a ripple effect across the bond market, triggering the downgrade of many of MBIA's own clients, the release said.

"We have paid them over $25 million in premiums over the last 15 years, and they have never incurred a loss on our behalf," authority chairman J. Kent Friedman said in the release.

"The Sports Authority entered into this agreement in good faith with what it thought was a highly reputable, highly solvent, world-wide bond insurer.

"Yet the reality we have learned is that MBIA has for some time been financially unstable.

"Had the board then serving known that MBIA was concealing its looming financial issues, I am convinced that they would never have bought the insurance from them in the first place.

"I described the suit as frivolous when it was filed, and I believe the judge's ruling today confirms that description."

Armonk, N.Y.-based MBIA Inc. is a holding company whose subsidiaries provide financial guarantee insurance and related reinsurance, advisory and portfolio services for the public and structured finance markets as well as asset management advisory services.

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