Jr.

Second Circuit Ruling Applied to Revive MBS Claims

On May 1, Judge Harold Baer, Jr. of the U.S. District Court for the Southern District of New York reinstated previously dismissed claims in two class actions brought by several pension fund plaintiffs against Royal Bank of Scotland Group PLC and Residential Capital LLC, among others.  Judge Baer had previously dismissed claims under the Securities Act of 1933 as to certain RMBS for lack of standing.  In light of a recent Second Circuit decision, NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012), Judge Baer reconsidered his prior orders and held that the plaintiffs had standing to assert claims on behalf of purchasers of all RMBS issued under the same shelf registrations that were backed by mortgages originated by the same lenders that originated the mortgages backing the certificates purchased by the named plaintiffs.  The court’s order revived claims with respect to a total of 49 offerings across both cases that previously had been dismissed.  Order.

Court Limits Assured Guaranty’s Claims Against UBS

On August 15, Judge Harold Baer, Jr. of the federal district court for the Southern District of New York granted in part and denied in part UBS’s motion to dismiss claims asserted by Assured Guaranty Municipal Corporation in connection with three RMBS securitizations insured by Assured Guaranty.  Judge Baer held that Assured Guaranty did not have the contractual right to bring claims for breach of the relevant Pooling and Servicing Agreements’ repurchase remedies and that its claims for a declaration that UBS had failed to comply with its repurchase obligations should be dismissed as duplicative of its claim for breach of those obligations.  The court permitted Assured Guaranty to proceed, however, with other contract claims including its claim for breach of certain representations and warranties in the PSAs, concluding that the PSAs’ “no-action clauses” do not apply to Assured Guaranty as insurer and that a contractual “sole remedy” provision “may not apply to Assured,” a factual issue to be determined at a later stage of the case.  Decision.