643 F. App'x 14
2d Cir.2016Background
- Lehman XS Trust (Lehman) sued Greenpoint Mortgage Funding, Inc. for breach of the Flow Mortgage Loan Purchase and Warranties Agreement (MLPA), alleging breaches of representations and warranties and seeking repurchase/cure of defective loans.
- The MLPA closed in 2006 and contained an accrual provision tying the right to sue to discovery/notice and failures to cure or repurchase after demand.
- Lehman filed suit in 2013, more than six years after the 2006 closing.
- The district court dismissed Lehman’s breach-of-contract claims as time-barred under New York’s six-year statute of limitations.
- Lehman appealed, arguing (1) accrual did not occur until the cure/repurchase opportunity expired, and (2) each failure to repurchase created a new breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did Lehman’s breach claims accrue for statute-of-limitations purposes? | Accrual delayed until Seller’s opportunity to cure or repurchase expired (per MLPA accrual clause). | Accrual occurred when representations and warranties became effective at closing (2006); demand for remedy was available then. | Accrual occurred at closing when representations/warranties became effective; claims filed in 2013 are time-barred. |
| Does the MLPA repurchase provision create a continuing breach (new accruals) each time Seller fails to repurchase? | Each failure to repurchase constitutes a separate breach, restarting the limitations period. | The repurchase clause is a procedural demand mechanism, not a substantive condition precedent; it does not create new accruals. | Repurchase provision does not delay accrual or create separate breaches; it prescribes a remedy mechanism. |
Key Cases Cited
- ACE Secs. Corp. v. DB Structured Prods., Inc., 26 N.Y.3d 581 (New York Court of Appeals 2015) (contracts guaranteeing facts as of a date accrue when those representations become effective)
- Deutsche Bank Nat. Trust Co. v. Quicken Loans, Inc., 810 F.3d 861 (2d Cir. 2015) (MLPA accrual/repurchase clause did not delay accrual; representations accrue at closing)
- Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399 (New York Court of Appeals 1993) (six-year limitations period for breach of contract runs from time of breach)