National Credit Union Administration Board v. RBS Securities, Inc.
900 F. Supp. 2d 1222
D. Kan.2012Background
- NCUAB, as conservator/liquidating agent for U.S. Central, sues under federal and state securities laws for alleged misrepresentations in 29 MBS offerings from 2006–2007.
- Consolidated cases include RBS as seller/underwriter and multiple issuer defendants; Saxon and Fremont entities have been dismissed or stayed.
- Allegations center on offering documents falsely claiming adherence to underwriting standards and on claims that originators abandoned underwriting guidelines, causing higher risk and downgrades.
- Court reviews motions to dismiss under Rule 12(b)(6), taking judicial notice of documents and considering extender statutes and repose provisions for timeliness.
- Court holds extender statute applies to federal/state statutory claims and to the repose period, granting partial dismissal and allowing an amended complaint; some certificates’ claims are dismissed while others survive.
- Plaintiff granted leave to amend within 30 days; credit-enhancement-related claims are dismissed without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Extent of extender statute’s reach | Extender applies to all actions | Extender covers only tort/contract claims | Extender applies to statutory claims as well as tort/contract claims |
| Extender statute and repose period | Extender covers the §13 repose | Ambiguity about applying to repose | Extender applies to the repose period as well |
| Plausibility/timeliness of pleading | Pleadings show plausible claim; discovery will reveal supporting evidence | Some certificates are implausible or untimely | Not dismissing Timeliness broadly; Fremont certificates largely dismissed; others survive upon plausibility |
| Materiality of misrepresentations | Allegations linking underwriting deviations to misrepresentations are plausible | Public risk disclosures and general industry warnings render claims immaterial | Materiality viable for most certificates; materiality issues reserved for later summary judgment on certain claims (credit enhancement) |
| Judicial notice at 12(b)(6) stage | Judicial notice helpful to assess notice and timeliness | Judicial notice improper for certain factual inferences | Judicial notice allowed; informs timeliness analysis; not a vehicle to grant summary judgment now |
Key Cases Cited
- In re Morgan Stanley Information Fund Securities Litigation, 592 F.3d 347 (2d Cir. 2010) (establishes §11/§12(a)(2) liability for misstatements in offering documents)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (requires plausibility, not just conceivable entitlement to relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (clarifies plausibility standard and ruling on pleadings)
- Jones v. Bock, 549 U.S. 199 (U.S. 2007) (holds statute-of-limitations defenses can be raised on motions to dismiss if clear on face of complaint)
- Staehr v. Hartford Financial Services Group, Inc., 547 F.3d 406 (2d Cir. 2008) (permits judicial notice to determine inquiry notice without converting to summary judgment)
- Stichting Pensioenfonds ABP v. Countrywide Financial Corp., 802 F. Supp. 2d 1125 (C.D. Cal. 2011) (pleading standards for claims tied to underwriting practices under §11/§12(a)(2))