100 F.4th 362
2d Cir.2024Background
- This appeal involves Residential Mortgage-Backed Securities (RMBS) cases originating from the collapse of the subprime mortgage market in the late 2000s.
- Plaintiff Commerzbank, an RMBS certificateholder, sued U.S. Bank (USB), as a trustee, alleging failure to fulfill duties under Pooling and Servicing Agreements (PSAs) for 56 RMBS trusts.
- At issue are three main procedural and substantive matters: the effect of "No Action Clauses" in certain trust agreements, the timeliness of claims related to certificates held through German entities, and whether Commerzbank can bring claims involving certificates it sold to third parties.
- Multiple district court orders either dismissed or granted summary judgment on these claims, largely in favor of USB, except for certain "No Action Clause" issues.
- The Second Circuit consolidated the appeals and reviewed whether to affirm, vacate, or remand the lower court's decisions based on contract interpretation, timeliness, and rights to bring claims post-sale.
- The panel affirmed most district court rulings but vacated and remanded the dismissal relating to "No Action Clause" trusts for further findings regarding conflicted parties.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Contractual bar from "No Action Clauses" | No Action Clauses should not bar claims if pre-suit demand futile | Clauses require pre-suit demands, which plaintiff failed to make | Vacated and remanded; failure excusable if notice parties presented sufficient conflicts |
| Timeliness of claims for German Certificates | Claims timely; district court misapplied statute of limitations | German statute controls, making claims untimely | Affirmed district; German statute of limitations applies, rendering claims untimely |
| Claims on certificates sold to third parties | Commerzbank retained rights to sue for breaches pre-sale | Rights transferred to buyers under New York law | Affirmed district; New York law applied, so Commerzbank cannot bring claims post-sale |
| Reconsideration based on Ohio law amendment | Change in Ohio law warrants reconsideration | Motion to reconsider was untimely | Affirmed district; denial of reconsideration not abuse of discretion |
Key Cases Cited
- Cruden v. Bank of New York, 957 F.2d 961 (2d Cir. 1992) (no action clauses do not bar investor claims against RMBS trustees when it would be futile to require them to sue themselves)
- W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100 (2d Cir. 2008) (plaintiff must have legal title to, or a proprietary interest in, the claim to sue)
- Taylor v. First Resolution Inv. Corp., 72 N.E.3d 573 (Ohio 2016) (determining choice of law and where economic claims accrue for borrowing statute purposes)
- Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352 (2d Cir. 2016) (distinguishing between cause of action and standing for purposes of motion to dismiss)