Federal Housing Finance Agency v. UBS Americas, Inc.
858 F. Supp. 2d 306
S.D.N.Y.2012Background
- FHFA sues UBS Americas and affiliates for misrepresentations in RMBS offerings bought by Fannie Mae and Freddie Mac (2005–2007).
- FHFA pursues claims under Sections 11, 12(a)(2), and 15 of the Securities Act, plus state-law claims and negligent misrepresentation.
- Securities offerings at issue were issued under seven Shelf Registration Statements; offering documents allegedly contained false statements and omissions about underwriting and collateral quality.
- FHFA contends HERA § 1367(b)(12) sets a three-year or longer limitations period for FHFA's actions as conservator, superseding Section 13's repose.
- Defendants move to dismiss on timeliness and other grounds; the court discusses accrual, limits, and FHFA standing.
- FHFA’s conservatorship began September 6, 2008, placing the agency in a position to sue within the HERA timeframe
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does HERA displace Section 13's statute of repose for FHFA Securities Act claims? | FHFA argues HERA provides comprehensive time limits for any action by the conservator. | Defendants contend HERA does not alter the three-year repose under Section 13. | Yes; HERA governs timeliness, including repose, for FHFA actions. |
| What accrual standard applies to FHFA Securities Act claims? | Merck/City of Pontiac standard applies; discovery with diligence triggers accrual. | Accrual should align with prior Second Circuit practice? | Merck's discovery rule applies; accrual occurred before conservatorship and was timely open. |
| Does FHFA have standing and is the Acting Director appointment valid under the Appointments Clause? | FHFA contends Congress validly appointed acting leadership consistent with HERA. | Challenges to Lockhart’s appointment as Acting Director taint DeMarco’s tenure. | FHFA has standing; Appointments Clause challenge fails. |
| Are FHFA’s Securities Act claims adequately pleaded for LTV, owner-occupancy, and underwriting statements? | Survey data shows material misstatements and omissions; appraisals were knowingly overstated. | Statements are opinions or disclosed; due diligence defenses apply; some issues remain factual. | Claims plausibly pleaded; LTV/owner-occupancy/underwriting representations actionable; some defenses noted. |
| Do the negligent misrepresentation claims survive? | N/A | New York choice-of-law; claims arise from misrepresentations in offering materials. | Negligent misrepresentation claims dismissed under New York law. |
Key Cases Cited
- Stolz v. Daum, 355 F.3d 92 (2d Cir. 2004) (distinguishes statutes of limitations vs. repose)
- Merck & Co. v. Reynolds, 130 S. Ct. 1784 (U.S. 2010) (discovery rule does not automatically trigger accrual; diligence matters)
- City of Pontiac Gen. Emps. Ret. Sys. v. MBIA, Inc., 637 F.3d 169 (2d Cir. 2011) (discovery standard for accrual under Securities Act claims)
- In re Morgan Stanley Info. Fund Secs. Litig., 592 F.3d 347 (2d Cir. 2010) (discussion of due diligence and third-party statements)
- In re Bear Stearns Mortgage Pass-Through Certs. Litig., 851 F.Supp.2d 746 (S.D.N.Y. 2012) (consistent with Merck on accrual and discovery)