Court Grants in Part and Denies in Part DB Structured Products’ Motion to Dismiss Trustee Repurchase Action

On August 28, Justice Marcy S. Friedman of the Supreme Court of the State of New York granted in part and denied in part DB Structured Products, Inc.’s motion to dismiss repurchase claims brought by HSBC, as Trustee for the Ace Securities Corp. Home Equity Loan Trust, Series 2007-ASAP2.  Relying on her prior decision in Nomura Asset Acceptance Corp. Alternative Loan Trust v. Nomura Credit & Capital, Inc., Justice Friedman held that the relief available to plaintiff is limited by the sole remedy provision of the parties’ contracts and therefore dismissed plaintiff’s claim for rescission.  She also dismissed as duplicative plaintiff’s claim for breach of implied covenant of good faith and fair dealing and rejected plaintiff’s claim for indemnification of attorney’s fees.  However, Justice Friedman declined to dismiss the complaint because of the plaintiff’s failure to serve a timely repurchase demand prior to filing suit, holding the plaintiff sufficiently alleged that DBSP had independently discovered breaches within the six-year limitations period to survive a motion to dismiss. Order.