Lehman Brothers Holdings, Inc. v. Evergreen Moneysource Mortgage Co.
793 F. Supp. 2d 1189
W.D. Wash.2011Background
- LBHI sues Evergreen for breach of contract and breach of express warranty under an LPA and Seller's Guide arising from Evergreen's sale of loans to LBB.
- Stiffler loan was originated by Evergreen (April 24, 2003) and purchased by LBB (May 12, 2003); LBHI later acquired LBHIs rights via assignment.
- LBHI alleges Evergreen's loan-file misrepresentations included Stiffler's income and property appraisal values.
- LBHI filed suit January 28, 2010; LBHIs only later February 24, 2011 assignment to LBHI of LBB's rights under the LPA and Seller's Guide.
- Applicable New York contract statute of limitations is six years; accrual began May 12, 2003, the date LBB acquired the loan.
- LBHI sought to invoke Bankruptcy Code §108(a)(2) to extend the limitations period, but the February 2011 assignment postdates LBHI's bankruptcy filing (Sept. 15, 2008).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract claims are time-barred by the statute of limitations. | LBHI contends accrual date is Nov. 7, 2009 (demand-based) delaying accrual. | Accrual occurred at purchase date (May 12, 2003); six-year period expired May 12, 2009. | Yes; claims are time-barred; accrual date was May 12, 2003. |
| Whether the Bankruptcy Code §108(a)(2) extends the limitations period for prepetition claims. | LBHI argues §108(a)(2) extends period to Sept. 15, 2010. | Extension does not apply because assignment occurred after LBHI's bankruptcy; no prepetition claim saved. | No; §108(a)(2) does not save these prepetition claims; extension not applicable. |
| Whether the February 24, 2011 assignment from LBB to LBHI relates back to the complaint filing date to avoid dismissal. | LBHI claims the assignment relates back, saving claims. | Post-filing assignment is ineffective to revive time-barred claims; no earlier prepetition assignment shown. | No; post-filing assignment cannot save time-barred claims; no proven earlier assignment. |
| Whether the assignment occurred prior to LBHI's bankruptcy filing, which could toll the period. | Argued earlier assignment existed per the Assignment's recitals. | No evidence of an earlier, effective assignment; recitals do not prove execution. | No; evidence insufficient to establish a prepetition assignment; tolling fails. |
| Whether Evergreen waived or should be barred from raising statute of limitations late in the proceedings. | LBHI argued prejudice from late raising should prevent summary judgment. | No prejudice; LBHI could have responded and discovery could have been pursued; assignment timing was controlling. | No prejudice shown; Evergreen properly raised the defense when moving for summary judgment. |
Key Cases Cited
- National Urban Ventures, Inc. v. City of Niagara Falls, 78 A.D.3d 1525 (N.Y. App. Div. 2010) (accrual begins at first breach for contract actions)
- Hernandez v. Bank of Nova Scotia, 908 N.Y.S.2d 45 (N.Y. App. Div. 2010) (limitations run from date bank provided false information)
- United States ex rel. Wulff v. CMA, Inc., 890 F.2d 1070 (9th Cir. 1989) (assignment after filing cannot revive time-barred claims)
- In re Soporex, Inc., 446 B.R. 750 (Bankr.N.D.Tex. 2011) (bankruptcy case judicial notice; §108 extensions not universal)
- Ognenovski v. Wegman, 275 A.D.2d 1013 (N.Y. App. Div. 2000) (statute of frauds and oral assignments; related considerations)