EMC Mortgage LLC v. Century Mortgage Company
3:16-cv-00416
W.D. Ky.Sep 14, 2017Background
- Century Mortgage (Kentucky) sold mortgage loans to EMC Mortgage (Delaware/Texas) under a 2005 Mortgage Loan Purchase Agreement (MLPA) that incorporated a Seller Guide containing representations, warranties, repurchase and indemnification obligations.
- EMC resold or securitized the loans to RMBS trusts and GSEs under Third-Party Agreements that contained materially identical representations and repurchase/indemnity obligations.
- Third parties later discovered alleged breaches; EMC repurchased loans or compensated third parties, incurring over $1 million in losses.
- EMC demanded indemnification from Century between 2013 and 2015; Century did not pay. EMC sued Century in June 2016 seeking contractual indemnity.
- Century moved to dismiss, arguing the indemnity claim is time-barred; EMC sought oral argument on the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EMC's indemnity claim is time-barred | EMC pleaded a plausible indemnity claim and is not required at the motion-to-dismiss stage to negate an affirmative statute-of-limitations defense | Century contends the claim accrued earlier and the suit is barred by the applicable statute of limitations | Denied dismissal: court held statute-of-limitations is an affirmative defense inappropriate for resolution on Rule 12(b)(6) before discovery |
| Whether oral argument on the motion to dismiss is warranted | EMC requested oral argument | Century opposed (implicitly) | Denied: court found oral argument unnecessary |
Key Cases Cited
- Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430 (6th Cir.) (court must presume complaint facts true on motion to dismiss)
- Great Lakes Steel v. Deggendorf, 716 F.2d 1101 (6th Cir.) (reasonable inferences drawn for nonmoving party)
- Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep’t of Educ., 615 F.3d 622 (6th Cir.) (Twombly plausibility standard applied)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct.) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct.) (plausibility standard and inference rules)
- Michalak v. LVNV Funding, LLC, [citation="604 F. App'x 492"] (6th Cir.) (affirmative defenses like statute of limitations not generally resolved on Rule 12(b)(6) before discovery)
- Cole v. Mileti, 133 F.3d 433 (6th Cir.) (contractual choice-of-law clauses govern substantive law but not procedural statutes of limitations)