BANK OF NEW YORK MELLON v. Walnut Place LLC
819 F. Supp. 2d 354
S.D.N.Y.2011Background
- BNYM serves as trustee for hundreds of mortgage securitization trusts; Walnut Place intervened in the New York Article 77 proceeding.
- BNYM initiated an Article 77 proceeding in state court to seek approval of an $8.5 billion settlement with Countrywide and Bank of America on behalf of 530 trusts; 63 trusts were excluded from the settlement.
- Walnut Place sought to intervene; the state court granted intervention and removal to federal court under CAFA mass action provisions.
- BNYM argues the case seeks only equitable relief; Walnut Place argues the action involves monetary relief and should be remanded.
- Key procedural posture: an ex parte Article 77 petition was filed; the case was removed to federal court and disputed whether CAFA applies and whether securities exemptions apply.
- The court must decide if removal is proper under CAFA, considering timeliness, mass action elements, and securities-related exceptions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| timeliness of removal | Walnut Place timely after intervention; | BNYM contends timing improper or waived; no adverse party earlier. | Removal timely; no waiver. |
| whether CAFA mass action applies | Article 77 proceeding satisfies 100+ persons, monetary relief, common questions. | Not a mass action; argues lack of monetary relief and numerosity. | Procedurally removable as CAFA mass action. |
| securities exception to CAFA | Securities exception may bar CAFA removal when enforcing rights under PSAs. | Securities exception applies if claims arise solely under PSAs; here NY common law governs duties; exception not applicable. | Securities exception does not apply; removal remains proper. |
| Walnut Place's capacity to remove as intervenor | Intervenors can remove when adversarial to petitioner. | Only defendants can remove; intervenors lack standing. | Intervenors may remove if properly aligned as defendants and adverse to petitioner. |
Key Cases Cited
- Greenwich Fin. Servs. Distressed Mortg. Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23 (2d Cir. 2010) (securities exception source-of-law test for CAFA removal)
- Cardarelli v. Cardarelli, 527 F.3d 127 (2d Cir. 2008) (securities exception limits on enforcement of rights under instruments creating securities)
- Ackert v. Ausman, 217 F.Supp.934 (S.D.N.Y. 1963) (intervenors may remove when adverse; alignment matters)
- Heifetz v. Tugendrajch, 542 F.Supp.1207 (E.D.N.Y. 1982) (special proceedings may be removable; alignment as defendants)
- Irving Trust Co. v. Century Export & Import, S.A., 464 F.Supp.1232 (S.D.N.Y. 1979) (timeliness and intervention principles in removal)