On September 8, 2015, Bank of America NA and Midland Loan Services settled Bank of America’s lawsuit seeking a declaratory judgment that it did not breach the representations and warranties in connection with a CMBS securitization and, consequently, did not need to repurchase loans from the securitization. As a result of the settlement, the lawsuit was dismissed with prejudice. The terms of the settlement were not disclosed. Dismissal Order.
Jennifer Lee is a Partner in Orrick’s San Francisco office who focuses her practice on complex commercial litigation in the financial services industry. She defends investment banks, corporations and financial services companies and has deep knowledge of the structured finance and mortgage servicing industries, having spent nearly a decade representing financial institutions in million and billion-dollar cases arising from the fallout of the 2009 financial crisis.
Jennifer defends her clients in federal and state litigation across the country that allege fraud, breach of contract, or securities law violations. She is a key member of an Orrick trial team that has shaped the legal landscape of RMBS litigation after the 2009 financial crisis, delivering out-of-the box arguments and innovative solutions for her clients, from initial receipt of pre-litigation demands through expert work, summary judgment and trial.
Jennifer's mortgage-backed securities litigation experience, which spans the last decade, includes:
Jennifer defends her clients in federal and state litigation across the country that allege fraud, breach of contract, or securities law violations. She is a key member of an Orrick trial team that has shaped the legal landscape of RMBS litigation after the 2009 financial crisis, delivering out-of-the box arguments and innovative solutions for her clients, from initial receipt of pre-litigation demands through expert work, summary judgment and trial.
Jennifer's mortgage-backed securities litigation experience, which spans the last decade, includes:
- Representing Credit Suisse Securities in multiple million and billion-dollar actions across the country brought by monoline insurers, trustees, and regulators alleging breaches of representations and warranties, fraud, and securities violations. Recent highlights include conducting direct examination of an expert witness in a trial in February 2023, and securing partial dismissal of claims in December 2023 after arguing a motion to dismiss.
- Representing Goldman Sachs in two RMBS putback actions pending in the Southern District of New York alleging that Goldman breached representations and warranties regarding the characteristics of the deal loans.
- Representing Nationstar in a breach of contract dispute alleging that Nationstar failed to properly service and made misrepresentations regarding thousands of early buy-out loans.
- Representing Ocwen Mortgage Servicing in a consumer class action in the Eastern District of California alleging numerous claims including RICO, California consumer protection statutes and fraud.
- Representing Pipe Technologies, Inc. in multiple commercial disputes regarding payment of services.
- Representing a large financial services platform in multiple subpoenas issued for production of documents.
Jennifer is dedicated to pro bono work, including asylum claims, a cause close to her heart as a child of immigrants. Prior to joining Orrick, she held a fellowship position in the Law Reform Unit at the Legal Aid Society of New York, litigating both individual cases as well as class actions.
Jennifer is a leader and advocate for diversity and inclusion initiatives in the legal profession. She leads Orrick's Diversity, Equity and Inclusion Committee in San Francisco. She has served as a fellow for the Leadership Council on Legal Diversity, and is active in the California Minority Counsel Program.
Posts by: Jennifer Lee
Goldman Sachs Wins Summary Judgment In CDO Class Action
On September 8, 2015, the Southern District of New York granted summary judgment in favor of Goldman Sachs Group, Inc. in a class action lawsuit concerning the sale of two collateralized debt obligations. The court had previously dismissed plaintiffs’ fraud claims on all grounds but one—whether Goldman was aware of “singularly prohibitive risks” associated with the CDOs but failed to completely and accurately disclose those risks. At summary judgment, it held that plaintiffs had not shown sufficient evidence to prove Goldman’s knowledge of such risks. In particular, the court rejected plaintiffs’ reliance on inflammatory emails, which merely “show, at most, that some Goldman employees, based on the same information available to Plaintiffs, were bearish on the RMBS market.” The court also found insufficient evidence that Goldman knew the CDOs would perform poorly and intended for them to perform poorly. Order.
Potential Damages in RMBS Suit Against WMC Mortgage Drastically Reduced
On August 18, 2015, Judge Denise Cote of the federal district court for the Southern District of New York addressed the appropriate measure of potential damages in an action by Bank of New York Mellon (BoNY), as RMBS trustee, against WMC Mortgage, LLC and GE Mortgage Holding, L.L.C. In that action, BoNY seeks repurchase of a number of allegedly defective loans as trustee for the GE-WMC Mortgage Securities Trust 2006-1. Judge Cote previously held that where repurchase is unavailable, the trustee may be entitled to damages. On defendants’ motion to exclude the testimony of the trustee’s damages expert, the court held that the trustee’s potential damages are limited to the repurchase price for liquidated loans, as defined in the relevant agreements. One component of that measure is the stated principal balance of the loan; the agreements define the stated principal balance of liquidated loans as “zero.” The trustee’s damages expert had not used this measure. As a result, Judge Cote struck the report of the trustee’s damages expert. The decision reduces potential damages on liquidated loans from $379 million (as calculated by the trustee’s expert) to $13.3 million (the maximum calculated by the defense expert). Order.
FDIC Sues BNY Mellon For Alleged Failure As Trustee of RMBS
On August 19, 2015, the Federal Deposit Insurance Corp., acting as receiver for Guaranty Bank, filed suit against Bank of New York Mellon Corp. in New York federal court, alleging that BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates. The trusts were sponsored by Countrywide Home Loans and EMC Mortgage Corp. The FDIC alleges that BNY breached its contractual obligations by failing to provide notice of representation and warranty violations and demand Countrywide and EMC to replace or buy back the noncompliant loans, provided false regulatory certifications and remittance reports, and failed to take possession of complete mortgage files. The FDIC asserts claims for breach of contract, the federal Trust Indenture Act, and the New York Streit Act. Complaint.
Union Pension Fund Requests Approval of Settlement With Goldman Sachs in RMBS Litigation
On August 13, 2015, union pension fund NECA-IBEW Health & Welfare (“NECA”) and the Police and Fire Retirement Systems of the City of Detroit (“PFRS”), acting on behalf of proposed classes of institutional and individual investors, requested preliminary approval for a $272 million settlement with Goldman Sachs Group Inc. The proposed settlement would conclude lawsuits in which NECA and PFRS alleged that Goldman Sachs had made numerous misstatements about the loans underlying $6 billion in RMBS offerings. Stipulation and Agreement of Settlement. Memorandum ISO Preliminary Approval.
New York Appellate Court Upholds ACA’s Fraud Suit Against Goldman Sachs
On August 18, 2015, the New York Appellate Division’s First Department held that ACA Financial Guaranty Corp. adequately pled its fraud suit against Goldman Sachs Group Inc. A four-judge panel held that ACA sufficiently alleged that Goldman Sachs’ allegedly false statements about hedge fund Paulson & Co.’s short position on the Abacus collateralized debt obligation transaction were material, that the statements were made with the requisite intent, and that ACA would not have provided the financial guaranty for the deal had it known the truth. The case had been remanded from the New York Court of Appeals, which had overturned the First Department’s prior decision to grant Goldman Sachs’ motion to dismiss. Order.
Judge Cote Grants Partial Summary Judgment in RMBS Suit
On July 10, 2015, Judge Denise Cote of the Southern District of New York granted partial summary judgment in favor of defendants WMC Mortgage LLC and GE Mortgage Holding LLC in an action filed by Trustee Bank of New York Mellon (“BoNY”) in connection with the sale of over $900 Million in RMBS. Judge Cote dismissed BoNY’s failure to repurchase claim against WMC, citing ACE v. DB Structured Products, which held that a failure to repurchase claim is not a separately enforceable right that gives rise to a separate breach of contract claim independent of a claim for breach of representations and warranties. Judge Cote also dismissed BoNY’s indemnification claims against both defendants as duplicative of BoNY’s claim for breach of the representations and warranties in the Mortgage Loan Purchase Agreements (“MLPAs”). BoNY’s primary claim, for breach of representations and warranties, was not a subject of the motion for partial summary judgment. Opinion and Order.
In a separate decision, also issued on July 10, Judge Cote denied the defendants’ request for a jury trial, holding that the Trustee’s remaining claims, for breaches of the MLPAs and Pooling and Servicing Agreement seek equitable remedies. Opinion and Order.
RMBS Suit Against WMC Mortgage LLC Dismissed as Time-Barred
On July 10, 2015, Judge Alvin Hellerstein of the Southern District of New York granted defendant WMC Mortgage LLC’s motion for judgment on the pleadings in an action brought by the Federal Housing Financial Agency (“FHFA”) and Deutsche Bank National Trust Co. (“DBNTC”), in its capacity as Trustee of the SABR 2006-WM4 Trust. Judge Hellerstein held that the action was time-barred under New York’s six-year statute of limitations, citing the New York Court of Appeals’ decision in ACE Securities Corp., Home Equity Loan Trust, Series 2006-SL2 v. DB Structured Products, Inc. Judge Hellerstein concluded that the date on which the statute of limitations began to run was the signing date of the Pooling and Servicing Agreement, as opposed to the closing date, because the signing date was the point at which “all the right, title and interest” to the mortgage loans were transferred to the Trustee, and when all misrepresentations were made. Order.
Goldman Sachs’s Motion to Dismiss Mostly Denied in $73M RMBS Suit
On June 29, 2015, Justice Eileen Bransten of New York Supreme Court granted Goldman Sachs Group Inc.’s (“Goldman”) motion to dismiss a cause of action for negligent misrepresentation but denied Goldman’s motion to dismiss causes of action for fraud. IKB Deutche Industriebank AG (“IKB”) had sued Goldman over losses that IKB suffered after it purchased $73.2 million in RMBS. IKB filed the suit in September 2012, alleging that Goldman fraudulently induced IKB to purchase the RMBS by providing offering materials for the RMBS that misrepresented or omitted details about underwriting standards, loan-to-value ratios, occupancy rates of the mortgaged properties, and credit ratings. Goldman sought dismissal on the grounds that IKB’s claims were time-barred, that IKB lacked standing to sue, and that IKB’s allegations failed to state a claim.
Justice Bransten found that it would be premature to determine whether IKB was a proper party before conducting discovery. She rejected Goldman’s argument that IKB filed the case after the three-year German statute of limitations for fraud had run, finding that the claims accrued in Luxembourg, not Germany. Accordingly, Justice Bransten determined that New York’s six-year statute of limitations—not Germany’s—applied and that Goldman had not argued that the claims were time-barred under that longer period. Justice Bransten dismissed IKB’s claim for negligent misrepresentation, finding that IKB’s allegations did not describe the necessary special relationship between the parties, but rather an ordinary arms-length relationship. Finally, Justice Bransten held that IKB had sufficiently pleaded its fraud claims. Order.
U.S. Bank Sues Countrywide for $178M in RMBS Losses
On June 25, 2015, U.S. Bank, in its capacity as Trustee for the LXS 2007-7N Trust, filed a summons with notice in New York Supreme Court against Countrywide Home Loans (“CHL”), Countrywide Home Loans Servicing LP (“Countrywide Servicing”), and others, seeking to recover $178 million in losses over alleged breaches of representations and warranties made about the sold to the Trust. U.S. Bank alleges that, despite receiving repurchase demands in connection with allegedly breaching loans, CHL failed to cure or repurchase the loans, or indemnify the Trust for the resultant losses. U.S. Bank also claims that Countrywide Servicing failed to notify the Trustee when it discovered breaches, and failed to force CHL to repurchase or substitute such breaching loans. U.S. Bank seeks specific performance, declaratory relief, damages, indemnification, and prejudgment interest. Summons with Notice.