Case Information
‐ ‐ cv Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n
In the
United States Court of Appeals
for the Second Circuit A UGUST T ERM No. ‐ ‐ cv
N ATIONAL C REDIT U NION A DMINISTRATION B OARD , U.S. Central Federal Credit Union, Western
Corporate Federal Credit Union, Members United Corporate Federal
Credit Union, Southwest Corporate Federal Credit Union, Constitution Corporate Federal Credit Union, N ATIONAL C REDIT U NION A DMINISTRATION B OARD Behalf Trusts, G RAEME W. B USH , Separate Trustee, Plaintiffs ‐ Appellants ,
U.S. B ANK N ATIONAL A SSOCIATION ,
B ANK OF A MERICA N ATIONAL A SSOCIATION , Defendants ‐ Appellees G UARANTEED N OTES T RUST ‐ R1, G UARANTEED N OTES T RUST ‐ R2, G UARANTEED N OTES T RUST ‐ R3, G UARANTEED N OTES T RUST ‐ R1, G UARANTEED N OTES T RUST R2, *2 NCUA G UARANTEED N OTES T RUST ‐ R3, G UARANTEED N OTES T RUST ‐ R4, G UARANTEED N OTES T RUST ‐ R5, G UARANTEED N OTES T RUST ‐ R6, G UARANTEED N OTES T RUST ‐ M1, Nominal Defendants
On Appeal from United States District Court for Southern District New York.
A RGUED : M ARCH 8, D ECIDED : A UGUST
Before: C ABRANES C ARNEY Circuit Judges C APRONI , Judge. [*]
Plaintiff Appellant National Credit Union Administration
Board manages National Credit Union Administration (together, “NCUA”), independent federal agency responsible regulating insuring federal credit unions. liquidated five corporate credit unions succeeded ownership their assets. These assets included certificates they held *3 residential mortgage ‐ backed securities trusts (“RMBS Trusts”). NCUA then entered into series of agreements resecuritize certificates and transferred most certificates into newly created independent statutory trusts. late early NCUA brought contractual, common law, statutory claims against trustees RMBS Trusts, Defendants Appellees U.S. Bank National Association (“U.S. Bank”) Bank America, National Association (“Bank America”; jointly, “Defendants”). Where had placed RMBS Trust certificate into statutory trust, it brought derivative claims on behalf statutory trust.
The United States District Court for Southern District New York (Katherine B. Forrest, Judge ) twice dismissed derivative claims. District Court subsequently denied NCUA’s motion for leave supplement its Second Amended Complaint. Judgment was entered March
On appeal, argues that Court (1) erroneously determined lacks derivative standing (2) abused discretion when it denied NCUA’s motion leave supplement Second Complaint. Following plain language contracts under transferred certificates, we conclude Court correctly found lacks bring based those certificates. We also conclude did abuse discretion when denied NCUA’s motion leave supplement.
Accordingly, we AFFIRM Court’s judgment.
D AVID C. F REDERICK Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, DC (Scott K. Attaway and Frederick Gaston Hall, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, DC; George A. Zelcs and John A. Libra, Korein Tillery LLC, Chicago, IL, brief ), for Plaintiffs ‐ Appellants. F RED A. R OWLEY Munger, Tolles & Olson LLP, Los Angeles, CA (James C. Rutten, Jacob S. Kreilkamp, Wesley T.L. Burrell, Adam P. Barry, Munger, Tolles & Olson LLP, Los Angeles, CA; David F. Graham, Sidley Austin LLP, Chicago, IL; Isaac S. Greaney Daniel Gimmel, Sidley Austin LLP, New York, NY, brief ), Defendant ‐ Appellee Bank America,
National Association.
David F. Adler, Louis A. Chaiten, Amanda R. Parker, Jones Day, Cleveland, OH, Defendant Appellee U.S. Bank
National Association.
J OSÉ A. C ABRANES Circuit Judge :
The Plaintiff ‐ Appellant National Credit Union Administration Board manages National Credit Union Administration (together, “NCUA”), an independent federal agency responsible for regulating and insuring federal credit unions. In and 2010, liquidated five corporate credit unions and succeeded their assets, including certificates they held residential mortgage ‐ backed securities trusts (“RMBS Trusts”). then entered into series agreements resecuritize certificates transferred most certificates into newly created independent statutory trusts. late early brought contractual, common law, statutory claims against trustees RMBS Trusts, Defendants Appellees U.S. Bank National Association (“U.S. Bank”) Bank America, National Association (“Bank America”; jointly, “Defendants”). Where had placed certificate into statutory trust, brought derivative behalf statutory trust.
The United States Court Southern New York (Katherine B. Forrest, Judge ) twice dismissed claims. subsequently denied NCUA’s motion leave supplement Second Complaint. Judgment was entered March
On appeal, NCUA argues that District Court (1) erroneously determined NCUA lacks derivative standing and (2) abused discretion when it denied NCUA’s motion for leave to supplement Second Amended Complaint. Following plain language contracts under transferred certificates, we conclude District Court correctly found lacks to bring based those certificates. We also conclude did abuse discretion when denied NCUA’s motion leave supplement.
Accordingly, we AFFIRM Court’s judgment. I. BACKGROUND A. Overview is independent federal agency managed Board. It responsible for, among other things, chartering regulating federal credit unions, operating and managing
credit union insurance stabilization funds. Two NCUA’s capacities are relevant here: (1) act as liquidating agent failing failed credit unions (“NCUA Agent”), (2) act as *7 guarantor of debts (“NCUA Guarantor”). this litigation NCUA alleges these are “distinct capacit[ies],” [3] and other litigation has represented they are “separate legal entit[ies].” [4] Where appropriate, we distinguish between these two “capacities” or “entities.” Liquidating Agent. When insured credit union
danger of failing, Liquidating Agent may close credit union and appoint itself liquidating agent. [5] Upon liquidation, Liquidating Agent “succeed[s] . . all rights, titles, powers, privileges credit union, member, accountholder, officer, director such credit union respect credit union assets credit union.” [6] thereafter can “collect all obligations money due credit union,” [7] may “realize upon assets credit union.” [8] Guarantor. Guarantor acts agency of executive branch, and can provide guarantee, backed full faith and credit United States, timely repayment debts.
B. Liquidates Credit Unions and Succeeds Certificates in Residential Mortgage ‐ Backed Securities and placed five failing corporate credit unions (jointly, “the CCUs”) into conservatorship and involuntary liquidation. At time their liquidation, CCUs held investment securities, commercial mortgages, and other “securitized” assets (the “Legacy Assets”). Those Legacy Assets included certificates ninety eight residential mortgage ‐ backed securities trusts (“RMBS Trusts”). Each RMBS Trust consisted hundreds individual residential mortgage loans were pooled together and securitized investors. The RMBS certificates entitled CCUs fixed principal interest payments, derived from income streams generated borrowers made monthly payments mortgage loans Trusts. The *9 CCUs purchased the certificates a combined original face value approximately $6.8 billion.
On liquidation, NCUA Liquidating Agent succeeded the Legacy Assets, including certificates in ninety eight RMBS Trusts. also succeeded CCUs had certificateholders RMBS Trusts.
C. NCUA’s Resecuritization RMBS Trust Certificates *10 NGN Indenture Agreement, and (3) NGN Guaranty Agreement. [11] The NGN Agreements [12] were executed same day. [13] NGN Trust Agreements
The NGN Trust Agreements established each NGN Trust “a ‘statutory trust’ under Delaware Statutory Trust Act,” [14] and are governed by Delaware law. [15] As Delaware statutory trusts, NGN are “separate legal entit[ies].” [16] Trust Agreements appointed Wells Fargo Delaware Trust Company, N.A. (“Wells *11 Fargo”) Owner Trustee. [17] NCUA Liquidating Agent was designated “Seller.” [18]
In Trust Agreements’ Conveyance Clause, (or “Seller”) agreed “contribute, transfer, convey and assign to, and deposit with, [NGN] Trust[s], without recourse, all [NCUA’s] right, title and interest and . . . Trust Estate,” included Trust certificates. [19] The Trust Agreements further provided conveyance “is absolute intended parties, other than federal, state local income franchise tax purposes, constitute sale . . . Trust.” [20] exchange, received Notes Owner Trust Certificates Trust Estate. Wells Fargo, Owner Trustee, agreed “hold Trust Estate . . trust exclusive *12 use benefit all present future Certificateholders of Trust Estate.”
The Notes, were subsequently sold to investors, entitle investors to cash flows from Trust Estate. The Owner Trust Certificates are retained Liquidating Agent. The Owner Trust Certificates entitle to a final distribution NGN Trusts’ remaining assets after Trusts have satisfied discharged all outstanding obligations, including obligations to holders Notes. NGN Indenture Agreements
After receiving Agent’s interests Estate, Trusts entered into NGN Indenture Agreements The Bank New York Mellon (“BNYM”) to fund Notes. The Agreements appointed Indenture *13 Trustee, [26] and expressly stated they were be governed New York law. [27] party Indenture Agreements. [28] Indenture Agreements, however, define “Guarantor” “NCUA in capacity as Agency Executive Branch United States” ( i.e. Guarantor). [29] each Indenture Agreement, granted BNYM Trustee, “for benefit Holders Notes and Guarantor, all [NGN Trusts’] right, title and interest in and to” various assets, including Trust certificates Estate. [30] That grant expressly included “all present future claims, demands, causes choses action respect of” assets. [31]
BNYM, part, agreed hold assets “in trust exclusive use benefit all present future Noteholders Guarantor.” [32] also assumed duty “to institute . . suit *14 or other proceeding . . . to protect the interests the Noteholders Guarantor.”
Under Indenture Agreements, Noteholders have right institute judicial proceedings respect to Indentures, but only if each certain conditions have been satisfied. These include: “the Guarantor has consented,” Noteholder has given BNYM prior written notice “Event Default” underlying anticipated suit, “Event Default . . occurred [is] continuing.” The Indenture Agreements do not, their face, grant NGN right compel any party initiate judicial proceedings.
When Notes have been satisfied, BNYM Trustee must return Trust certificates other remaining assets NGN Trusts. NGN Trusts, turn, must reconvey those assets holder Owner Trust Certificates NGN Trusts. NGN Guaranty Agreements
Finally, Guarantor, NGN Trusts, entered into Guaranty Agreements. Under these Agreements, *15 NCUA “absolutely . . guarantee[d]” timely payment principal interest due Notes administered Indenture Trustee, BNYM. [37]
D. NCUA Guarantor Assigns Claims to NCUA Liquidating Agent Makes Demand BNYM January 2015, NCUA Guarantor NCUA Liquidating Agent entered into agreement in NCUA Guarantor consented NCUA Liquidating Agent pursuing RMBS certificate ‐ related claims (“Claims”). [38] Guarantor also assigned “any rights, under law, contract, equity, may now or future have connection Claims related litigation.” [39]
That same day, Guarantor issued direction letter BNYM, directing Trustee “take action assert” against trustees Trusts. Guarantor also notified writing would *16 assert prosecute those claims behalf Trusts if BNYM would not do so itself. [41]
In February 2015, BNYM responded to direction letter, stating it did “not intend to pursue claims,” but Guarantor had a right pursue claims itself. [42] later submitted declaration stating it “takes a neutral position respect challenge NCUA’s standing” assert claims. [43]
E. Procedural History December 2014, Liquidating initiated this action against Defendants. A First Amended Complaint was filed February 2015. Agent’s stem from Defendants’
service as trustees for ninety ‐ eight CCUs held certificates. alleged that, as *17 trustees, Defendants had contractual, common law, and statutory duties to address and correct problems underlying mortgage loans, and to protect RMBS Trusts’ and certificateholders’ interests. According to Liquidating Agent, Defendants breached their duties by, among other things, failing to take full conservator liquidating agent CCUs survived after NCUA placed CCUs’ assets . . into new, independent trusts.” The Court cautioned NCUA Liquidating Agent would have only “a single opportunity to replead,” instructed Agreements “should be included part proposed amendment.”
2. The Court dismisses Second Amended Complaint
NCUA Liquidating Agent used its Second Complaint to allege derivative claims based on certificates eighty nine RMBS Trusts direct claims based on nine certificates nine Trusts. Liquidating based derivative assignment rights from Guarantor to Agent, direction letter Guarantor sent BNYM, BNYM’s refusal bring claims itself, BNYM’s decision not object suit brought behalf. again dismissed derivative
two principal reasons. First, did stand “in direct line assert claim” because *19 had themselves conveyed claims to BNYM. [48] Liquidating Agent, in other words, was “twice removed” from claims. [49] Second, Agreements’ Granting Clause “effected a complete transfer all rights including explicitly right sue,” precluded NGN Trusts, transferor, from bringing any derivative claims. [50] Because Liquidating Agent was one step further removed from than NGN Trusts, Liquidating Agent likewise could bring derivative claims.
3. denies NCUA’s motion supplement Second Amended Complaint Following Court’s dismissal part Second Amended Complaint lack standing, attempted yet again remedy defects, this time “through two ‐ prong maneuver.” [51] First, moved supplement Second Complaint under Federal Rule Civil Procedure 15(d) add new allegations regarding December 2015 “winding up” one April 2016 appointment Graeme W. Bush *20 “Separate Trustee.” Second, Liquidating Agent sought substitute Bush real party interest under Federal Rule Civil Procedure 17(a)(3). May District Court denied Liquidating
Agent’s motion, “principally basis amendment pleadings untimely.” The Court stated it had already “entertained several complaints,” having “made it perfectly clear year ago [NCUA Liquidating Agent’s] assertions derivative standing were legally infirm [having] allowed one final amendment address deficiencies.” Court also faulted Liquidating Agent invoking Rule before it dismissed claims, “[sitting] silently” instead notifying it unwinding one Trust. Finally, found amendment pleadings would be futile because lacked Article III at time first brought action. thereafter voluntarily dismissed
remaining direct prejudice. This appeal followed.
II. DISCUSSION
We consider, first, whether NCUA Liquidating Agent has derivative bring claims on behalf of the NGN Indenture Trustee. We conclude it does not. Second, we address whether the District Court abused its discretion when it denied NCUA Liquidating Agent’s motion supplement the Second Complaint. We hold Court did abuse its discretion. Accordingly, we affirm judgment of Court.
A. Whether Liquidating Agent Has Derivative Standing Liquidating Agent seeks recover losses Defendants allegedly caused when they breached their duties trustees Trusts. Liquidating Agent brought these claims derivatively behalf nominal defendants, Trusts. On appeal, argues erred when it dismissed lack standing. We disagree. Under clear and unambiguous language Trust Indenture Agreements, *22 lacks derivative standing sue behalf of either BNYM.
1. Standard of review
We review de novo Court’s dismissal of a complaint under Federal Rule of Procedure Civil 12(b)(6). [57] as We “accept[ ] true factual allegations of complaint draw[ ] inferences based upon these allegations light most favorable plaintiffs.” [58] To survive a motion dismiss, complaint must “contain[ ] *23 sufficient factual matter, accepted true, to state claim to relief plausible on face.” Whether NCUA Liquidating Agent has derivative
standing to sue on behalf the NGN Trusts Liquidating Agent lacks to bring claims behalf the NGN Trusts the simple reason the NGN Trusts themselves do not have claims to bring. To the contrary, the NGN conveyed the RMBS Trust certificates—and any claims based those certificates—in their entirety to the Trustee, BNYM. We reach this conclusion following transfer RMBS Trust certificates from CCUs Liquidating Agent, Trusts, finally BNYM.
We begin Liquidating Agent’s succession CCUs’ claims. When liquidated five CCUs, it “succeed[ed] . . all rights, titles, powers, privileges” CCUs had certificateholders RMBS Trusts. Those rights included claims CCUs might have had against trustees RMBS Trusts, who are Defendants here.
But did retain certificates, inhered. Instead, entered into *24 Trust Agreements, in which agreed “contribute, transfer, convey and assign to, and deposit with, the [NGN] Trust[s], without recourse, all [NCUA Agent’s] right, title and interest in and to” the Trust Estate, including the RMBS Trust certificates. And the Trust Agreements expressly stated conveyance was “ absolute . . other than federal, state and local income and franchise tax purposes.”
The NGN Trusts then conveyed their interests in the RMBS Trust certificates BNYM in Indenture Agreements. That too was complete transfer: NGN Trusts granted BNYM “ all [their] right, title and interest in and to” Trust Estate, including “ all present future claims demands, causes choses action respect of” assets Trust Estate.
BNYM did further convey Trust Estate, includes RMBS Trust certificates. BNYM therefore currently holds Trust certificates claims based those certificates. And will continue hold claims until Indenture Notes are satisfied NGN dissolve. Because BNYM—not *25 NGN Trusts—currently possesses the claims, NCUA Liquidating Agent cannot bring the claims derivatively on behalf of the NGN Trusts. Liquidating Agent’s invocations Delaware
Statutory Act (“DSTA”) do not disturb this conclusion. It argues DSTA authorizes trust beneficiaries bring derivative actions on behalf trust, it satisfied Delaware’s demand requirements, DSTA retains historical distinction between legal equitable title trust property, all result Liquidating Agent, beneficiary NGN Trusts, is entitled sue enforce trusts. These assertions Delaware law may all be correct, but they are beside point. Because NGN themselves do hold claims, whether Delaware law permits Liquidating bring claims on their behalf irrelevant. Whether has bring
claims on behalf If Agent, then, cannot bring claims behalf Trusts, can bring behalf *26 Indenture Trustee, BNYM? The Indenture Agreements are unambiguous; cannot.
As Indenture Trustee, BNYM holds the Trust Estate, including the claims, “in trust the exclusive use and benefit all present and future Noteholders and the Guarantor.” Reflecting beneficiary status, the Indenture Agreements authorize BNYM “to institute, appear in or defend any suit or other proceeding . . protect the interests the Noteholders and the Guarantor .” And the event fails adequately protect Noteholders’ interests, the Agreements provide Noteholders with limited right institute judicial proceedings themselves.
But Indenture Agreements do not authorize NGN Trusts institute judicial proceedings. NGN and are beneficiaries under Indenture Agreements. Only Noteholders Guarantor are beneficiaries, thus only they might—if they complied requirements Indenture Agreements— exercise control over judicial proceedings.
*27 Nor would be appropriate us to read into the Indenture Agreements a right of the NGN Trusts NCUA Liquidating Agent to institute judicial proceedings. Applying “the standard canon of contract construction expressio unius est exclusio alterius,” we presume the express grant the right to institute proceedings to Noteholders entails the denial such a right to others, including Liquidating Agent. Adopting any other reading would contravene intent parties. That intent plainly was to identify circumscribe circumstances under a beneficiary could compel BNYM institute judicial proceedings. question then becomes whether Guarantor, a beneficiary under Indenture Agreements, can compel institute proceedings. Notably, does not argue Indenture Agreements authorize Guarantor institute proceedings. This is good reason. does not identify, we do not find, provision Agreements authorizing Guarantor initiate—or *28 compel initiate—judicial proceedings under facts alleged in Second Complaint. makes several attempts create a
beneficial interest for itself under Indenture Agreements, but these all miss mark. First, makes much a clause “Tax Administration” section providing “that, federal, state local income franchise tax purposes . . Certificates [held by NCUA] be treated beneficial ownership interests Trust Estate.” But qualification “for federal, state local income franchise tax purposes” makes clear, this provision concerns only desired allocation tax liability on Trust Estate. It does not, its plain terms, create beneficial interest other purposes. also invokes Delaware Statutory Act’s codification “the longstanding historical distinction between legal title equitable title, recognizing trustee does not act on its own behalf but rather behalf trust beneficiaries.” Delaware law, however, does govern Indenture Agreements; New York law does. And New York law requires we give effect plain meaning Indenture Agreements’ unambiguous terms. We *29 must therefore enforce provisions the Indenture Agreements requiring that Indenture Trustee hold Trust Estate exclusive benefit Noteholders Guarantor, not NGN Trusts or Liquidating Agent. alternatively argues we should read Indenture Trust Agreements as single contract because they were
executed same time are related same subject matter. Application this canon contract construction does not change our conclusion. unambiguous terms individual Agreements remain unambiguous when they are read together.
Finally, contends Defendants themselves lack standing challenge actions BNYM took Indenture Trustee because “a trustee’s actions may not be challenged by non ‐ beneficiaries.” But Defendants are challenging actions taken trustee. They are simply relying on Trust Agreements demonstrate NGN Trusts assigned their claims BNYM. short, correctly held lacks bring based certificates behalf BNYM.
*30 B. Denial of Motion for Leave Supplement Second Amended Complaint
Following Court’s dismissal part of Second Complaint for lack of standing, [78] moved leave (1) supplement complaint add new allegations under Federal Rule of Civil Procedure 15(d), (2) substitute a newly appointed Separate Trustee, Graeme W. Bush, plaintiff under Federal Rule of Civil Procedure 17(a)(3). denied motion “principally on basis amendment pleadings is untimely under Rule 15.” [79] On appeal, argues this denial constituted reversible error. We disagree.
1. Standard review We review Court’s denial a motion under Rules 17(a)(3) “abuse discretion.” Under this deferential standard, we will reverse district court only “if based ruling erroneous view law clearly erroneous assessment evidence, or rendered a decision cannot be located within range permissible decisions.” [81]
Rule 15(d) provides in part: “On motion reasonable notice, court may , just terms, permit a party to serve a supplemental pleading setting out transaction, occurrence, or event happened after date pleading be supplemented.” [82] Although language Rule 15(d) is plainly permissive, we have held “[a]bsent undue delay, bad faith, dilatory tactics, undue prejudice party be served proposed pleading, or futility, [a Rule 15(d)] motion should be freely granted.” [83] Rule 17(a)(3) provides a “court may not dismiss an action failure prosecute name real party interest until, after objection, a reasonable time has been allowed real party interest ratify, join, be substituted into action.” A district court may deny a Rule 17(a) motion untimely if is filed “within ‘reasonable time’ after objection raised.” Whether the District Court abused its discretion Whether a district court “abused its discretion” is a case ‐ specific often fact ‐ intensive inquiry. [85] We must therefore examine District Court’s denial leave supplement NCUA’s Second Amended Complaint in light facts case, including events preceding denial decision. Upon such review, we conclude that District Court acted within discretion. [86] In May 2015, Court dismissed claims in NCUA’s First Complaint. well reasoned Opinion Order, Court aptly identified “core issue”: “whether what extent NCUA’s broad powers conservator liquidating agent CCUs survived after placed CCUs’ assets . . . into new, independent trusts.” [87] Finding had failed plead facts establishing that “it specifically retained . . right assert behalf [the Trusts],” advised “[i]f such facts exist, they should be *33 pled.” [88] “In absence such facts,” District Court continued, “the Court left with fact are Delaware statutory trusts, are separate legal entities with their own indenture trustee.” [89]
Having thus identified relevant inquiry, Court advised it would have only “a single opportunity replead.” [90] Court also observed had “not provided Court copies NGN/BNY Indentures,” [91] instructed Indenture Agreements must be included “as part proposed amendment.” [92] At this point, was fully apprised stakes involved filing second amended complaint. It had received “a definitive ruling” deficiencies initial theory standing, [93] guidance how remedy them. It was told this would be last chance amend. And knew would consider contents Agreements.
*34 Represented, it was, able counsel, also knew, should have known, one other fact: contrary to what the had reasonably assumed, the NGN Trusts no longer possessed the claims. Rather, the NGN Trusts had transferred the claims to BNYM in the Indenture Agreements. To establish derivative standing, would therefore have to show not only that it specifically retained the right to assert the claims that it transferred to NGN Trusts , but also it specifically retained right to assert claims NGN subsequently transferred other words, disclosure Agreements would make even more difficult establish standing. nevertheless decided use its final amendment double down already ‐ dismissed theory standing. It must now live with consequences decision. When plaintiff was aware “of deficiencies in his complaint when he first amended,” he “clearly has no right second amendment [even if] proposed second amended complaint fact cures defects first.” *35 Simply put, “a busy district court need not allow itself to be imposed upon by the presentation theories seriatim.” We are not persuaded by NCUA’s arguments to the contrary. First, identifies a possible legal error one District Court’s proffered rationales for denying motion. Specifically, contends that District Court erroneously conflated Article III standing with derivative standing. That conflation, it argues, led District Court to incorrectly conclude it lacked subject matter jurisdiction colored its entire analysis merits motion. Although we agree Court committed asserted legal error, overstates its effect decision deny NCUA’s request again amend complaint. When district court offers several alternative independent rationales for denying motion leave supplement, does abuse its discretion just because one independent reasons denying motion flawed. Here, alternative rationales independently support Court’s decision denying leave supplement, we see no indication court’s error regard Article III infected other aspects analysis. Accordingly, we *36 conclude that District Court’s articulation an alternative, independent, purportedly erroneous rationale denying motion to supplement did not constitute abuse discretion in decision deny NCUA’s request to file yet another amended complaint.
next argues that abused discretion because it did provide a definitive ruling derivative standing theory before warning it had only one final opportunity replead. This misrepresents Court’s Opinion Order dismissing in part First Complaint. Opinion Order, Court, benefit full briefing from both sides, identified precise defects in NCUA’s pleadings “made perfectly clear . . [NCUA’s] assertions derivative standing were legally infirm.” This stands in stark contrast our decision Loreley relies so heavily, where a district court merely identified pleading defects remarks made a conference held before defendants had even filed a motion dismiss.
Nor did face true “Hobson’s choice” between abandoning theory requesting appoint separate trustee. could have proceeded under both theories simply alleging separate trustee was willing *37 acquiesce NCUA’s suit. If Court had concluded that separate trustee had direct standing NCUA had derivative standing, could have done then what it says it would do on remand here: “request that undo Separate Trustee Agreement so may proceed derivatively.” [101] At worst, might have found appointment separate trustee defeated NCUA’s standing, required separate trustee to litigate claims. hypothetical scenario, would have achieved what it sought to do by supplementing its Second Complaint.
NCUA’s reliance on Rule 17 fares no better. waited over a year after Defendants challenged standing appoint Separate Trustee. This was “reasonable time after [the] objection [was] raised.”
Finally, Court’s October order advising it would accept “no more paper this motion [to dismiss] from either party” precluded from alerting court new factual developments. This excuse rings hollow. order— handwritten Defendants’ motion leave file sur ‐ rebuttal NCUA’s sur ‐ reply—referred plain terms only further *38 briefing on motion. Indeed, how interpreted order time: February after “no more paper” order was issued, filed supplemental authority letter. sum, we conclude Court did not abuse its discretion when it denied NCUA’s motion leave supplement its Second Amended Complaint.
III. CONCLUSION
To summarize, we hold follows:
(1) lacks bring Second Amended Complaint behalf Trustee; (2) did abuse discretion when denied NCUA’s motion leave supplement Second Complaint. For foregoing reasons, we AFFIRM Court’s judgment.
[*] Judge Valerie Caproni, United States Southern New York, sitting designation.
[1] On review Court’s decision granting motion dismiss, we take true facts set forth complaint. Horowitz S. Emerson Assocs. LLC F.3d n.1 (2d Cir. 2018). facts recited this section are thus stated alleged NCUA’s Second Complaint documents attached it.
[2] U.S.C. § 1752a(a).
[3] Second Am. Verified Derivative Compl. (“SAC”) 6, Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n No. 1:14 ‐ cv ‐ 9928 (S.D.N.Y. July 2015), ECF No. 92 (“Second Complaint”).
[4] Reply Mem. Law Pls.’ Obj. Mot. Substitute National Credit Union Administration Board, New London Security Federal Credit Union, Place Pls. 4–5, Goldblatt Wells Fargo Advisors LLC No. 3:10 cv ‐ (D. Conn. Jan. 2011), ECF No.
[5] U.S.C. § 1787(a)(1)(A).
[6] U.S.C. § 1787(b)(2)(A)(i).
[7] U.S.C. § 1787(b)(2)(B)(ii).
[8] U.S.C. § 1787(b)(2)(E).
[9] five CCUs were U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, Constitution Corporate Federal Credit Union.
[10] Securitization process converting assets “into negotiable securities resale financial market, allowing issuing financial institution remove assets from books, thereby improve capital ratio liquidity, make new loans security proceeds if so chooses.” Securitize Black’s Law Dictionary (10th ed. 2014).
Board created Guaranteed Notes (“NGNs”) Program liquidate resecuritize Legacy Assets. Under program, transferred certain Legacy Assets, including most Trust certificates, into trusts (the “NGN Trusts”). NGN then issued approximately $28.3 billion NGNs, holders would receive payment from Legacy Assets’ cash flows. Guarantor provided guaranty timely repayment all principal interest investors NGNs. Each NGN Trust issued NGNs pursuant set three key agreements (“Agreements”): (1) Agreement, (2) an
[11] Each NGN Trust entered into own separate NGN Agreements. In Second Amended Complaint, represented sets Agreements “are substantially similar” one another, and attached “[r]epresentative examples.” Second Complaint at 9 n.4. Because those documents were incorporated reference into complaint, we may consider them when reviewing Court’s decision here. DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 111 (2d Cir. 2010).
[12] this opinion, we use following pairs terms interchangeably: “NGN Agreements” “Agreements”; “NGN Agreements” “Trust Agreements”; “NGN Agreements” “Indenture Agreements”; “NGN Guaranty Agreements” “Guaranty Agreements.”
[13] Opinion & Order at 8, Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 ‐ cv ‐ (S.D.N.Y. Feb. 25, 2016), ECF No. (“May Order”).
[14] SAC, Ex. C 4, § 2.06, id. No. 1:14 ‐ cv ‐ (S.D.N.Y. July 17, 2015), ECF No. (“Trust Agreement”).
[15] Id. § 10.13.
[16] Del. Code Ann. tit. § 3801(g).
[17] Trust Agreement at 4, § 2.04.
[18] Id. at 1, para.
[19] Id. at 8, § 3.01. Board nevertheless allegedly retained some interests relevant here. See Appellants’ Opening Br. n.5.
[20] Trust Agreement § 2.14(b).
[21] Guarantor provided guarantee timely repayment these Notes, making them Guaranteed Notes, “NGNs.” post note accompanying text.
[22] Agreement § 3.01.
[23] Id. § 2.14(c).
[24] id. 24–25, § 8.01.
[25] A trust indenture transfers legal title securities a trustee benefit individual bondholders other creditors. The device used settle security interests single entity when would be “impractical have security run group bondholders directly have separate security instrument each bondholder.” Myron Kove et al ., Law Trustees § Westlaw (updated June 2018).
[26] SAC, Ex. B at 5, paras. 1, 6, Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 cv ‐ (S.D.N.Y. July 17, 2015), ECF No. ‐ (“Indenture Agreement”).
[27] Id. at 89, § 10.10.
[28] id. at 5, para. 1.
[29] Id. at 14, para. 4.
[30] Id. para. 6.
[31] Id.
[32] Id. para.
[33] Id. at § 5.01(a)(i).
[34] Id. at § 4.06(i), (ii), (vii).
[35] Id. 38–39, § 3.01(a), (c).
[36] Agreement 24–25, § 8.01(a), (c).
[37] SAC, Ex. D at 2, § 1(a), Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n , No. 1:14 ‐ cv ‐ (S.D.N.Y. July 17, 2015), ECF No. ‐ 4.
[38] SAC, Ex. H at 1, id. ECF No. ‐
[39] Id.
[40] SAC, Ex. F Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 cv ‐ (S.D.N.Y. July 2015), ECF No. ‐ 6; see also id. 1–2.
[41] Id. at 2.
[42] SAC, Ex. G, Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n No. 1:14 ‐ cv ‐ (S.D.N.Y. July 17, 2015), ECF No. ‐ 7.
[43] SAC, Ex. I at 1, para. 5, Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 ‐ cv ‐ (S.D.N.Y. July 2015), ECF No. ‐ 9. Although declaration does expressly distinguish between NCUA’s two capacities entities, it does define “NCUA” “the National Credit Union Administration Board.” Id. para.
[44] According Second Amended Complaint, U.S. Bank currently serves trustee all ninety ‐ eight trusts. Second Complaint n.1. U.S. Bank was originally trustee forty seven trusts; became
possession of original notes and mortgages, failing to review mortgage loan files for irregularities, and failing to take steps to hold parties accountable for repurchase or substitution of defective mortgage loans. At oral argument, counsel for Liquidating stated it believes Defendants’ failures caused “hundreds millions dollars” losses RMBS certificateholders. 1. The District Court dismisses First Amended Complaint On May Court dismissed part Agent’s First Complaint for lack standing. Opinion Order, Court found had failed plead adequate facts establishing it had either direct standing assert Defendants violated their obligations trustees Trusts. also identified what believed be “core issue”: “whether what extent NCUA’s broad powers successor trustee other fifty one trusts through acquisition other trustees appointment. Id. Bank America served trustee some trusts between approximately October December Id.
[45] May Order at (emphasis original).
[46] Id.
[47] Id. n.2.
[48] Opinion & Order at 20, Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n No. 1:14 ‐ cv ‐ (S.D.N.Y. Feb. 25, 2016), ECF No. (“February Order”) (emphasis original).
[49] Id. at
[50] Id. (emphasis original).
[51] Memorandum Decision & Order Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 cv ‐ (May 2016), ECF No. (“May Order”).
[52] Id.
[53] Id. at 2–3.
[54] See id. 3–5.
[55] id. 5–6.
[56] Agreements are governed Delaware New York law, respectively. Under law both jurisdictions, “[w]hen contract is clear unambiguous, we [must] give effect plain meaning contract’s terms provisions.” Osborn ex rel. Osborn v. Kemp A.2d 1159–60 (Del. 2010); see also Vintage, LLC Laws Constr. Corp. N.Y.3d (2009) (“Where agreement unambiguous face, must be enforced accordance plain meaning terms.”).
[57] appeared, at certain points, view dismissal derivative claims as grounded a lack subject matter jurisdiction under Federal Rule Civil Procedure 12(b)(1). See February 2016 Order 14–15; May Order 5–6. But unlike Article III standing, derivative standing does not necessarily present jurisdictional issue. In re Facebook, Inc. Initial Pub. Offering Derivative Litig. , F.3d 148, 156–58 (2d Cir. 2015); cf. Strougo v. Bassini , F.3d 162, 167–68 (2d Cir. 2002) (treating “issue ‘shareholder standing’— whether plaintiff may bring direct against defendants” Rule 12(b)(6) question). We adhere view here, treating Court’s dismissal lack standing premised Rule 12(b)(6). Cf. Byrd v. United States S. Ct. 1518, (2018) (stating Fourth Amendment standing “should not be confused Article III standing, jurisdictional must be assessed before reaching merits”); Lexmark Int’l, Inc. v. Static Control Components, Inc. S. Ct. (2014) (emphasizing “‘prudential’ branch . . [is] derived from Article III”).
[58] Kaliski Bacot ( re Bank N.Y. Derivative Litig. ), F.3d (2d Cir. 2003) (internal quotation marks alterations omitted).
[59] Irrera Humphreys F.3d (2d Cir. 2017) (internal quotation marks alterations omitted).
[60] U.S.C. § 1787(b)(2)(A)(i).
[61] Trust Agreement at 8, § 3.01 (emphasis added).
[62] Id. at § 2.14(b) (emphasis added).
[63] Agreement para. (emphasis added).
[64] At least one NGN Trust has been dissolved during litigation, held trust have been reconveyed Board. [Blue Br. 3] implications dissolution are discussed below.
[65] See Appellants’ Opening Br. 23–24.
[66] See id. 24–26.
[67] id. 29–32.
[68] Indenture Agreement at 6, para. (emphasis added); see also id. at 5, para. (granting Trusts’ “right, title interest to” Estate “to Trustee, benefit Holders Notes Guarantor”).
[69] Id. at § 5.01(a)(i).
[70] id. 46–47, § 4.06; id. § 4.11.
[71] Croteau v. A.C. & S. ( re N.Y. City Asbestos Litig. ), A.D.3d 299, (N.Y. 1st Dep’t 2007); see also Two Guys from Harrison N.Y., Inc. v. S.F.R. Realty Assocs. , N.Y.2d (1984).
[72] Novak & Co. Travelers Indem. Co. A.D.2d (N.Y. 2d Dep’t 1977) (“Plaintiff among classes listed having direct right action against surety under payment bond. Hence claim have right action, if one exists . . can flow only from performance bond can find no basis language payment bond.”).
[73] Agreement § 6.07(b).
[74] Appellants’ Opening Br.
[75] Vintage, LLC Laws Constr. Corp. N.Y.3d (2009) (“Where agreement unambiguous face, must be enforced accordance plain meaning terms.”).
[76] For this canon construction see Nau Vulcan Rail & Construction Co. N.Y. (1941) (citing, inter alia Restatement Contracts § 235(c) (Am. Law Inst. 1932)).
[77] Appellants’ Opening Br.
[78] Because distinction between NCUA’s various capacities central issues discussed this section, we hereafter refer simply “NCUA.”
[79] May Order
[80] McCarthy v. Dun & Bradstreet Corp. F.3d (2d Cir. 2007) (Rule 15); Commonwealth Pa. Pub. Sch. Emps.’ Ret. Sys. Morgan Stanley & Co. F.3d (2d Cir. 2016) (Rule 17(a)).
[81] re Sims , F.3d (2d Cir. 2008) (internal quotation marks citations omitted).
[82] Fed. R. Civ. P. 15(d) (emphasis added).
[83] Quaratino Tiffany & Co. F.3d (2d Cir. 1995).
[84] Commonwealth Pa. Pub. Sch. Emps. ʹ Ret. Sys. F.3d
[85] Cf. Jones v. Murphy 694 F.3d 225, 241 (2d Cir. 2012).
[86] We note our conclusion this respect does not mean a district court’s grant leave supplement similar situation would be abuse discretion. generally BlackRock Allocation Target Shares: Series S Portfolio Wells Fargo Bank, Nat’l Ass’n Nos. Civ. 9371 (KPF) (SN), 14 Civ. 9764 (KPF) (SN), 14 Civ. (KPF) (SN), Civ. (KPF) (SN), Civ. (KPF) (SN), WL *13–21 (S.D.N.Y. Aug. 2017). Because this discretionary call, two are mutually exclusive.
[87] May Order (emphasis original).
[88] Id.
[89] Id.
[90] Id.
[91] Id. n.2.
[92] Id.
[93] Loreley Fin. (Jersey) No. Ltd. Wells Fargo Sec., LLC F.3d (2d Cir. 2015).
[94] May Order (“[I]t appears buck stops with Trusts.”); see also id. 7–13.
[95] Denny Barber F.2d (2d Cir. 1978) (Friendly, J.); cf. Loos v. Immersion Corp. F.3d 890–91 (9th Cir. 2014) (“Because Plaintiff essentially re pled same facts legal theories his amended complaint, district court did abuse discretion dismissing Plaintiff’s prejudice.” (internal quotation marks omitted)).
[96] State Trading Corp. India Assuranceforeningen Skuld F.2d (2d Cir. 1990) (internal quotation marks alteration omitted).
[97] re Facebook, Inc., Initial Pub. Offering Derivative Litig. F.3d 156–57 (2d Cir. 2015) (distinguishing Article III standing).
[98] emphasized this final rationale, takes issue, was alternative rationale beginning paragraph, “In addition, another problem . . .” May Order
[99] Id.
[100] Loreley Fin. (Jersey) No. Ltd. Wells Fargo Sec., LLC F.3d (2d Cir. 2015).
[101] Appellants’ Opening Br. n.17.
[102] Commonwealth Pa. Pub. Sch. Emps. ʹ Ret. Sys. v. Morgan Stanley & Co. F.3d (2d Cir. 2016) (internal quotation marks omitted).
[103] Order, Nat’l Credit Union Admin. Bd. U.S. Bank Nat’l Ass’n No. 1:14 cv ‐ ‐ (S.D.N.Y. Oct. 2015), ECF No.