Footbridge Limited Trust v. Countrywide Financial Corp.
770 F. Supp. 2d 618
S.D.N.Y.2011Background
- Funds allege violations of Sections 11, 12(a)(2) and 15 of the Securities Act arising from two Countrywide MBS securitizations (SPS1 and SPS2).
- Plaintiffs purchased SPS1 SPS2 certificates in 2006; registration statements and prospectus supplements were filed in 2006.
- A prior related action under the Securities Exchange Act was dismissed in 2010; the Court assumes familiarity with that background.
- SPS1/SPS2 offerings are alleged to contain untrue statements or omissions of material fact in the registration statements and prospectus supplements.
- Defendants move for summary judgment on the ground that the claims are barred by the statute of repose under Section 13 of the ’33 Act (three-year repose).
- The Court grants defendants’ summary judgment motion, concluding the claims are time-barred by the statute of repose and American Pipe tolling does not apply to the ’33 Act repose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sections 11/12(a)(2) claims are barred by the statute of repose | Footbridge argues tolling applies | Repose is absolute and not tollable | Yes; claims barred by three-year repose |
| Whether American Pipe tolling applies to toll the Section 13 repose | American Pipe tolling should toll the repose period | Section 13’s 'in no event' language forbids tolling | No; tolling does not apply to the repose |
| Whether Section 12(a)(2) claims are time-barred under repose | Same as above for 12(a)(2) | Sale occurred in 2006; repose runs in 2006-2007 | Yes; barred by three-year repose |
Key Cases Cited
- Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 597 F.3d 84 (2d Cir. 2010) (one-year discovery-based limitations and three-year repose interplay)
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991) (repose not subject to equitable tolling)
- Anixter v. Home-Stake Prod. Co., 939 F.2d 1420 (10th Cir.1991) (repose outside tolling; authoritative on absolute repose)
- P. Stolz Family P'ship v. Daum, 355 F.3d 92 (2d Cir.2004) (defines statute of repose as absolute and time-limited)
- Jackson Nat. Life Ins. Co. v. Merrill Lynch & Co., Inc., 32 F.3d 697 (2d Cir.1994) (discusses three-year repose framework)
- Finkel v. Stratton Corp., 962 F.2d 169 (2d Cir.1992) ( Sale definition under Section 12(a)(2))
- Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385 (7th Cir.1990) (tolling versus repose interpretation)
- Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983) (American Pipe tolling expansion context)