Darren S. Teshima

Partner

San Francisco


Read full biography at www.orrick.com

Darren Teshima, Leader of Orrick's Complex Litigation and Dispute Resolution practice, helps clients intelligently manage risk and assert their rights through litigation. To safeguard clients from both anticipated and unforeseen dangers, Darren ensures each client’s litigation strategy and insurance coverage align with its business objectives.

Specializing in the technology and finance sectors, Darren litigates high stakes commercial disputes, focusing on insurance coverage disputes. He has successfully handled litigation related to residential mortgage-backed securities (RMBS), directors & officers (D&O) coverage and cyber insurance for some of the largest data breaches in history. For example, he recently defended Credit Suisse at trial in a case brought by monoline insurer MBIA, one of the few post-financial crisis RMBS cases to go to trial.

Darren also helps clients avoid litigation by crafting innovative strategies that address cutting-edge cyber, data and cryptocurrency concerns; as well as D&O and professional liability. Whether assisting a startup focused on rapid growth, or a global corporation expanding into the digital future, Darren tailors his strategy to each client’s unique business model and objectives.

Darren also co-chairs the firm's Automotive Technology & Mobility group where he applies his risk management strategies to forward thinking companies changing the future of transportation.

He has been recognized for his work by Legal 500, which lists Darren as a recommended lawyer in the Insurance: Advice to Policyholders category. Darren has been named a Law360 Rising Star, one of the "Best Lawyers Under 40" by the National Asian Pacific American Bar Association (NAPABA), and is a fellow of the American Bar Foundation.

Darren is also passionate about his pro bono work and community involvement. The Legal Services for Children has given him its Pro Bono Advocate Award twice. His pro bono work includes administrative trials and hearings on behalf of asylum seekers and low-income tenants, and litigation advice to nonprofit organizations. He is the Chair of the board of directors of Asian Americans Advancing Justice | Asian Law Caucus, and serves on the boards of the Center for Gender & Refugee Studies and Legal Services for Children.

Posts by: Darren S. Teshima

NY Intermediate Appellate Court Reverses Dismissal of HSBC RMBS Suit Against Deutsche Bank

 

HSBC, the trustee of two securitizations at issue, successfully appealed the 2018 dismissal of its complaint alleging that DB Structured Products Inc. (DBSP), the sponsor of the two securitizations at issue, breached Mortgage Loan Purchase Agreements and Pooling and Servicing Agreements by securitizing loans in breach of representations and warranties and subsequently failing to disclose its discovery of those breaches. The trial court granted a motion to dismiss without leave to amend because it interpreted the contract language as providing that DBSP had no obligation to inform HSBC when it discovered loan-level breaches due to language in the governing agreements that DBSP notify itself of breaches. A split panel of the New York Appellate Division, First Department, reversed the trial court decision, finding that the contract was ambiguous because of the nonsensical nature of the notice provision, which required DBSP to provide notice to itself and granted HSBC leave to amend its complaint.

SDNY Dismisses FDIC Claims for Lack of Standing Again

 

The Federal Deposit Insurance Corporation (FDIC) as receiver for Guaranty Bank brought claims against The Bank of New York Mellon, U.S. National Bank Association, and Citibank, N.A. alleging breach of contract, violation of the Streit Act, and violation of the Trust Indenture Act for allegedly failing to carry out their duties as trustees. Judge Carter dismissed the same claims in September of 2016 for lack of subject matter jurisdiction, holding that the FDIC lacked standing to sue because the FDIC had sold its ownership of the certificates at issue in 2010 to Wilmington Trust Co., as owner trustee, with Citibank acting in as indenture trustee. The Court had held that after that sale, the plaintiff’s claims had travelled with the securities to the resecuritized trust and thus the plaintiff no longer had standing to bring the claims it asserted. The Court had granted leave to amend the complaint to permit FDIC to resolve the standing issues by seeking ratification of the claims by the trust pursuant to FRCP 17(a)(3). After the 2016 dismissal, Wilmington Trust ratified the claims, but Citibank refused to ratify the claims without indemnity from FDIC. As a result, the standing issues remained unresolved, and the court dismissed the claims once again for lack of subject matter jurisdiction without prejudice. Decision.

Royal Park and Wells Fargo Reach Settlement in RMBS Litigation

 

On January 14, U.S. District Judge Katherine Polk Failla of the Southern District of New York granted a joint request from plaintiff certificateholder Royal Park Investments SA/NV and defendant trustee Wells Fargo Bank NA to dismiss Royal Park’s remaining claims against Wells Fargo. The dismissal follows a settlement that resolves the litigation brought by Royal Park accusing Wells Fargo of breaching its contractual duties as trustee of two RMBS trusts, including the alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties. The settlement also resolves a separate suit brought by Royal Park, which accused Wells Fargo of improperly financing its defense using money from two RMBS trusts. Wells Fargo maintained that it was entitled to reimbursement pursuant to the trusts’ governing agreements. Details of the settlement agreement were not disclosed as a stipulation of the voluntary dismissal.

Deutsche Bank Settles Two BlackRock RMBS Suits

 

Deutsche Bank settled with BlackRock and other RMBS investors in New York federal (BlackRock Balanced Capital Portfolio (Fi) v. Deutsche Bank National Trust Company, S.D.N.Y., No. 1:14-cv-09367) and California state (BlackRock Balanced Capital Portfolio (Fi) v. Deutsche Bank Trust Company Americas, Orange County Superior Court, No. 2016-00843062) suits that argued Deutsche Bank failed to fulfill its obligations as trustee of over 500 RMBS trusts valued at more than $570 billion. The settlement comes after the investors repeatedly failed to certify the cases as class actions. The settlement amount was not disclosed.

Judge Grants Stay in U.S. Bank Fee Suit

 

S.D.N.Y. Judge Victor Marrero granted a stay in a proposed class action that alleges that U.S. Bank as trustee improperly used money from trusts to fund its defense in an RMBS suit. Royal Park Investments filed the underlying RMBS trustee suit in 2014 (Royal Park Investments SA/NV v. U.S. Bank National Association, No. 1:14-cv-02590), alleging that U.S. Bank breached its duties as trustee. While the suit was pending, Royal Park Investments filed another suit against U.S. Bank in 2017 (Royal Park Investments SA/NV v. U.S. Bank National Association, No. 1:17-cv-06778) for misuse of trust funds to fund the underlying suit. U.S. Bank contends that indemnification clauses in the trusts’ governing documents allow it to reimburse itself for these legal expenses. Royal Park counters that legal fees are not recoverable if the relevant litigation is the result of U.S. Bank’s gross negligence. Because this gross negligence is a “central factual question” in both suits, Judge Marrero granted the stay to resolve the claim first in the underlying RMBS suit.

New York Appellate Court Dismisses Two Deutsche Bank RBMS Suits Under California’s Four-Year Statute Of Limitations

 

On December 5, 2017, the First Department of the Appellate Division of the Supreme Court of New York unanimously overturned a New York Supreme Court holding that California’s statute of limitations did not bar Plaintiff’s claims.  Trustee Deutsche Bank National Trust Company (“DBNTC“) had brought suit against Barclays Bank PLC and HSBC (collectively, the “Defendants“).  The Defendants had moved to dismiss on the grounds that New York’s borrowing statute, CPLR 202, requires out-of-state plaintiffs to bring cases within the timeframes set forth in statutes of limitations established under both New York law and under the place “where the cause of action accrued.”  Defendants argued that the suits brought by DBNTC, whose principal place of business is California, were thus barred by California’s four-year statute of limitations for contract actions.  DBNTC argued that the New York choice-of-law clauses of the underlying contracts should determine the applicable statute of limitations.  The First Department held that “because these provisions do not expressly incorporate the New York statute of limitations, they cannot be read to encompass that [six-year] limitation period.”  Rather, “in cases where (as here) the alleged injury is purely economic,” the cause of action is deemed “to have accrued in the jurisdiction of the plaintiff’s residence.”  Decision.

New York Court Dismisses Royal Park’s RMBS Cases for Lack of Standing

 

On April 12, 2017, Judge Charles E. Ramos of the New York State Supreme Court for New York County dismissed Royal Park’s RMBS lawsuits alleging fraud and other tort causes of action against Morgan Stanley, Deutsche Bank, Credit Suisse and UBS due to lack of standing. Royal Park had acquired the RMBS certificates from another entity via a portfolio transfer agreement (“PTA“), which transferred the “right, title and interest in and to” the certificates. The defendants argued that New York procedural law governed the issue of standing and that under New York law, the right to bring tort claims would not automatically transfer with the certificates absent an outward expression of an intent to do so. Royal Park argued that the court should apply Belgium procedural law to the standing issue because Belgium law governed the PTA. The court held that New York law governed the issue of standing and that since the PTA unambiguously only transferred the “right, title and interest in and to” the certificates, it did not expressly assign the right to bring tort claims, and Royal Park thus lacked standing to bring its claims. Order.

Summary Judgment Denied in Monoline Insurer Lawsuit Against J.P. Morgan

On June 6, 2016, Justice Alan D. Scheinkman of the New York Supreme Court for Westchester County denied J.P. Morgan’s motion for summary judgment on MBIA’s fraudulent concealment claim. The court had previously granted summary judgment in favor of J.P. Morgan on MBIA’s fraud claim, but permitted MBIA to amend its complaint to add a fraudulent concealment claim that J.P. Morgan failed to disclose complete and accurate third-party due diligence results regarding the collateral underlying the securitization. First, Scheinkman rejected J.P. Morgan’s argument that it did not owe MBIA an affirmative duty to disclose the results of the due diligence review. The Court held that the bid letter between J.P. Morgan and MBIA evinced a contractual relationship between the parties, and that even in the absence of such a relationship, J.P. Morgan was acting as an agent for the deal’s sponsor, who was obligated to share the due diligence results with MBIA.  Second, Scheinkman held that issues of fact precluded summary judgment on actual reliance, because withholding, disguising the significance, and delivering an altered version of due diligence results may have thwarted MBIA’s ability to protect itself.  Last, the Court held that whether MBIA justifiably relied on J.P. Morgan’s failure to disclose the due diligence results is a question for the jury.  Decision & Order.

New York Court Orders BlackRock to Seek Discovery from Former Certificateholders and Produce That Information in Suit Against RMBS Trustee

On June 3, 2016, Judge Sarah Netburn of the U.S. District Court for the Southern District of New York ordered BlackRock, an RMBS certificateholder that has sued the RMBS trustee, HSBC, to identify and serve document subpoenas on the former owners of BlackRock’s RMBS certificates. BlackRock’s lawsuit against HSBC (which we previously discussed here) asserts several causes of action arising out of HSBC’s alleged failure to fulfill its contractual, statutory, and fiduciary obligations as Trustee. HSBC argued in its motion to compel production that the requested documents from the former owners are directly relevant to proving HSBC’s affirmative defenses and showing that BlackRock lacks standing to assert the litigation rights of the prior certificateholders.  The Court agreed, holding that BlackRock cannot assert the litigation rights of the prior certificateholders without assuming the corresponding discovery obligation.  Order.

FDIC Settles RMBS Litigation for $190 Million with U.S. Financial Institutions

On May 26, 2016, the FDIC reached a $190 million settlement of RMBS claims against eight financial institutions, including Barclays Capital Inc.; Deutsche Bank Securities Inc.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC. The settlement resolves six separate suits brought in 2011 and 2012 in California and Alabama alleging misrepresentations within the defendant underwriters’ RMBS offering documents.  The FDIC, as a receiver, will distribute the settlement funds among five failed bank receiverships.  FDIC Settlement Agreement.