| ECC Capital Corporation Subsidiary Receives Favorable Jury Verdict |
IRVINE, Calif., June 2 /PRNewswire-FirstCall/ -- ECC Capital Corporation (NYSE: ECR), a mortgage finance real investment trust that originates and invests in residential mortgage loans, today announced that following a five week jury trial in the civil action entitled Daurio et al. v. Lappi in the Orange County Superior Court in Santa Ana, California, a twelve-person jury issued a verdict in favor of co-plaintiffs Encore Credit Corp. (a wholly owned subsidiary of ECC Capital), Sprint Funding Corporation (formerly known as Park Place Capital Corporation), ECC Capital Chairman and Co-CEO Steven Holder, and ECC Capital stockholder and former executive Jon R. Daurio. The civil jury awarded total damages to the co-plaintiffs of more than $11.4 million. The complaint in the action was originally filed in July 2003 by Jon R. Daurio and Sprint Funding. Encore and Steven Holder were added as plaintiffs in the action in March 2004. In the verdict, issued May 25, the jury found that the defendant, Sprint Funding's former Chief Information Officer, conspired with one of Encore's competitors, New Century Mortgage Corporation (a wholly owned subsidiary of New Century Financial Corporation), and New Century's attorneys, Morrison & Foerster LLP, to commit the torts of conversion, trespass, invasion of privacy and acts in civil violation of California Penal Code Sections 496 (receipt or concealment of stolen property) and 502 (computer crimes) regarding the unauthorized electronic accessing of the co-plaintiffs' confidential data on the Park Place computer back-up disks in connection with a prior litigation matter that was settled between Encore and New Century. New Century and Morrison & Foerster LLP were previously released and dismissed from this lawsuit in 2003 as part of their settlement of the earlier litigation with Encore based on mutual releases with no payment made by either party. When trial commenced in April 2005, the lawsuit proceeded only against the former employee. However, the former employee was defended in this action at the expense of New Century under a written indemnification agreement that provided for New Century to indemnify the defendant from all claims related to his retention and disclosure of the back-up disks, and from any breach of any confidentiality agreements with Park Place. New Century and Morrison & Foerster LLP were not participants in this trial, because of the prior settlement, although they did appear as witnesses. The jury found that the former employee aided and abetted New Century and Morrison & Foerster LLP and issued verdicts against the former employee for damages arising from findings of conspiracy, trespass, invasion of privacy and civil violations of the two penal code provisions. The jury also awarded treble damages against the former employee under Penal Code Section 496 as to a portion of the monetary damages, and found that the former employee breached his contractual obligations. No final judgment has been entered. Post-trial motions, appellate proceedings, and the written indemnification agreement may impact recovery of any judgment. The co-plaintiffs were represented by The Sall Law Firm of Laguna Beach, California. The lead counsel was Robert K. Sall, who was assisted at trial by Lara A. S. Callas. About ECC Capital Corporation ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage finance real estate investment trust that originates and invests in residential mortgage loans. Through its wholesale and retail subsidiaries, ECC Capital offers a series of mortgage products to borrowers, with a particular emphasis on "nonconforming" borrowers who generally do not satisfy the credit, collateral, documentation or other standards required by conventional mortgage lenders and loan buyers. ECC Capital is structured to qualify as a real estate investment trust (REIT) by managing a portfolio of nonconforming loans it originates or acquires. As a REIT, ECC Capital's principal business objective is to generate net income for distribution to stockholders from the spread between the interest income on its assets in its portfolio and the costs of capital to finance its acquisition of these assets. Safe Harbor Regarding Forward-Looking Statement Certain statements contained in this press release, such as statements regarding the recovery of any judgment, may be deemed to be forward-looking statements under federal securities laws and ECC Capital intends that such forward-looking statements be subject to the safe-harbor created thereby. These forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties, which could affect ECC Capital's future plans. ECC Capital cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. You should also be aware that all information in this news release is as of June 2, 2005. ECC Capital undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in ECC Capital's expectations.
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