Tom Kidera guides clients through crisis. A Chambers-ranked litigator (General Commercial Litigation, New York (Band 6)), Tom brings a dogged dedication and creative energy to his clients and their needs. His clients attest that he applies "a real cerebral approach to whatever it is we're trying to accomplish," and that "you can tell he has gone down all the potential paths and thought through them."
A partner in the firm's Complex Litigation and Dispute Resolution group, and the Head of Orrick's New York Office, Tom represents the Firm's energy and infrastructure, financial services, and professional services clients in complex commercial litigations, arbitrations, and regulatory proceedings.
He is particularly sought-after on issues regarding force majeure and catastrophic market disruption, having served on a team of Orrick lawyers whose force majeure-related victory on behalf of long-time client, Hemlock Semiconductor LLC, was declared a Top 10 Business Case of 2010-2019 by the Michigan Bar Journal.
Tom represents Orrick's renewable energy and infrastructure clients in a vast array of commercial, warranty, and construction litigation matters throughout the U.S. and around the globe, previously having served as a member of the Orrick team that represented Hemlock Semiconductor (a leading producer of solar-grade polycrystalline silicon) in a host of litigations and proceedings arising from the breach of its long-term supply agreements by counterparties. His practice touches all types of renewable energy disputes from PPA litigation, to development and construction claims, to component supply and performance disputes, and everything in between.
In addition to representing his clients in courts and confidential arbitrations, Tom regularly provides pre-litigation counseling to Orrick's renewable energy and infrastructure clients, helping them manage their enterprise liability and pursue and defend claims through mediation and pre-dispute procedures, often resolving matters amicably before they devolve into full litigation or arbitration.
Tom also has litigated structured finance issues for his entire career, representing securitization sponsors and loan servicers in an array of litigations from securities fraud and loan repurchase disputes to ERISA and consumer class actions, also consulting and advising on the interpretation of securitization documents and events of default.
In addition, Tom represents audit firms and accountants in regulatory proceedings commenced by the SEC and the PCAOB along with related civil litigations. He has experience managing and conducting large scale internal investigations, liaising with regulators, remediating problems, and managing risk and liability in delicate circumstances.
Tom maintains an active pro bono practice representing asylum seekers and U.S. veterans seeking discharge status upgrades.
On February 5, 2016, the Bank of New York Mellon (“BNY Mellon”), in its capacity as trustee of 530 RMBS trusts, filed an Article 77 petition with the Supreme Court of the State of New York requesting instruction as to how it should distribute proceeds from an upcoming $8.5 billion settlement payment from Bank of America Corporation. The settlement payment relates to a 2011 settlement of claims arising from representations and warranties made by Countrywide Financial Corporation and Countrywide Home Loans, Inc. in connection with the 530 RMBS trusts at issue.
The petition highlights a dispute among Certificateholders in the 530 trusts regarding how settlement proceeds should most fairly be disseminated to investors. Among other consideration, the petition concerns the application of “write up” provisions—by which the principal balance on previously written-down certificates is increased—and how these provisions could affect the allocation of proceeds in over-collateralized trusts. The petition states that the distribution process may create the artificial appearance that a trust’s overcollateralization target was hit, resulting in the unintended “leakage” of settlement proceeds to subordinated Certificateholders, at the expense of the senior tranches.
Petitioners request the court clarify whether BNY Mellon must: (a) pay disbursements first and subsequently adjust the overcollateralization calculation to prevent leakage; (b) pay disbursements first and make no adjustment to the overcollateralization calculation, thereby permitting leakage; or (c) change its settlement disbursement operations to “write up first and pay second.” As BNY Mellon puts it: “the resolution of this question has significant consequences . . . affecting the distribution of potentially billions of dollars.” Verified Petition.
On January 20, trial commenced before Justice Marcy Friedman in New York County Supreme Court to determine whether Deutsche Bank, U.S. Bank, and the other trustees of 330 RMBS trusts acted reasonably when they reached a $4.5 billion settlement of claims against JP Morgan in its capacity as sponsor of those trusts. Under the proposed agreement, JP Morgan would make a $4.5 billion payment to be distributed among the trusts and perform certain mortgage loan servicing improvements in exchange for a release of claims related to mortgage loan representations and warranties and mortgage loan servicing. There are two objectors that have challenged the validity and fairness of the settlement: Ambac, which insured eight of the trusts, and W&L Investments, LLC, a certifcateholder in two of the trusts. The trial is expected to last roughly two weeks. Amended Petition.
On December 10, 2015, the National Credit Union Administration (“NCUA”) announced Morgan Stanley’s agreement to pay $225 million to settle litigation brought in New York and Kansas federal courts by NCUA as liquidating agent of U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union, and Southwest Corporate Federal Credit Union (the “Credit Unions”), all of which failed during the financial crisis. In the settled claims – previously covered here and here – NCUA alleged that Morgan Stanley had materially misrepresented the collateral characteristics of RMBS it sold to the Credit Unions. Morgan Stanley did not admit fault in the settlement. Press release.
On November 16, the Second Circuit Court of Appeals affirmed the District Court’s dismissal of a lawsuit brought by Deutsche Bank National Trust Co. (acting as Trustee for RMBS Trust GSR 2007-OA1) against Quicken Loans, alleging that Quicken breached its obligation to repurchase mortgage loans that violated representations and warranties (“R&Ws”). The court held that because Quicken’s R&Ws only purported to guarantee characteristics of the loans at the time of sale, New York’s six year statute of limitations for breach of contract ran from that date, and had lapsed by the filing date of the action.
Following the New York Court of Appeals’ decision in ACE, the court rejected the Trustee’s argument that the accrual date for its claim was delayed by the repurchase procedures set forth in the transaction documents. The court also rejected the Trustee’s argument that it should be entitled to take advantage of a statutory extension to the applicable limitations period because the FHFA originally filed the lawsuit. It held that FHFA did not “bring” the claims at issue because it only filed the initial summons and notice in the case before abandoning prosecution of the action after realizing it was not the proper plaintiff. Finally, the court upheld the dismissal of the Trustee’s breach of the implied covenant of good faith and fair dealing as duplicative of the breach of contract claim. Order.
On October 27, 2015, Justice Eileen Bransten of the New York Supreme Court issued a Decision and Order granting in part and denying in part cross motions for summary judgment brought by Countrywide and Ambac in an RMBS action brought by Ambac against Countrywide. Justice Bransten’s order addressed numerous issues, including the following.
Justice Bransten held that Insurance Law §3105 does not require Ambac to prove justifiable reliance on an alleged misrepresentation or that the misrepresentation proximately caused Ambac’s harm, but instead only that there was a misrepresentation and that it was material. Justice Bransten also concluded that the contractual repurchase remedy will not be the sole remedy available to Ambac if it can prove breaches of other sections of the Insurance & Indemnity Agreements at trial. Justice Bransten declined to dismiss on timeliness grounds Ambac’s claims with respect to loans that were not the subject of repurchase demands within six years of the relevant securitization’s closing, but held that Ambac would be required to prove at trial that Countrywide discovered those loans breached within the limitations period. Finally, Justice Bransten granted Countrywide’s motion with respect to Ambac’s claims for indemnification and reimbursement, holding that neither is available under the contracts at issue. Order on Summary Judgment.
In this same action, and on the same day, Justice Bransten also ruled on the parties’ motions to strike certain experts. She granted Ambac’s motion to strike portions of the testimony from a Countrywide expert report that addressed legal interpretations of New York Insurance Law on the grounds that the testimony invaded the province of the court. Justice Bransten denied Ambac’s motion to strike several other Countrywide experts and also denied Countrywide’s motion to strike two of Ambac’s experts. Order on Experts.
On October 19, 2015, Barclays PLC and Wachovia Capital Markets LLC agreed to pay $325 million and $53 million, respectively, to settle claims brought by the National Credit Union Administration Board (NCUA), as liquidating agent of five credit unions, regarding residential mortgage backed securities purchased by those credit unions. NCUA alleged in the actions (filed in New York, California, and Kansas federal courts) that the characteristics of the RMBS and the underlying loans were misrepresented in the offering documents. NCUA Press Release on Barclays. NCUA Press Release on Wachovia. We previously covered two of NCUA’s actions against Wachovia here and here.
On October 13, 2015, the First Department of the Appellate Division of the Supreme Court for the State of New York decided an appeal in four actions brought by HSBC Bank as Trustee on behalf of four RMBS trusts against Nomura Credit & Capital, Inc. and related entities. We previously covered Justice Friedman’s trial court decision in one of the actions here. In a decision written by Justice John W. Sweeney, the First Department held that the trusts can proceed with claims relating to loans that were not the subject of pre-suit breach notices or where Nomura was not given the contractual 90-days-notice of the alleged breaches before suit was filed. The First Department distinguished its decision in Ace (previously covered here) on the basis that in Ace there were no timely claims. The court reasoned that the untimely claims here would have related back in an amended pleading to timely claims in the complaint, and cited the trusts’ allegations that Nomura independently discovered the alleged breaches.
Affirming Justice Friedman’s decision, the court also held that the trusts are not limited by the contractual “sole remedy” of repurchase of loans breaching representations and warranties if the loans have been liquidated or foreclosed. Instead, the trusts may seek money damages for breaching loans where specific performance of the repurchase sole remedy is impossible. The court further affirmed the lower court’s decision that the trusts’ claims for breach of the implied covenant of good faith and fair dealing were duplicative of their breach of contract claims and affirmed the dismissal of the trusts’ claims for rescission or rescissory damages.
The court reversed Justice Friedman’s decision insofar as it dismissed the trusts’ claims that Nomura breached its representation that the deal documents did not contain any untrue statements. The court held that alleged breaches of that provision were not subject to the contract’s sole remedy of repurchase. The court further held that the trusts’ claims for damages for the failure to repurchase were properly dismissed, but the lower court erred in dismissing claims for damages for Nomura’s failure to give notice of breaches that it allegedly discovered. Decision.
On September 29, 2015, Judge Valerie Caproni of the United States District Court for the Southern District of New York partially granted RMBS trustee Bank of New York Mellon’s (“BNYM”) motion to dismiss claims brought by Phoenix Light SF Ltd., and certain other RMBS investors (together, the “Plaintiffs”). Judge Caproni dismissed Plaintiffs’ breach of fiduciary duty claims as duplicative of Plaintiffs’ breach of contract claims, whose viability Judge Caproni also appeared to doubt in her decision, noting that “[t]he low bar at the motion to dismiss stage salvage[d] Plaintiffs’ claims for now.” Judge Caproni explained that to survive summary judgment, Plaintiffs would need to demonstrate that BNYM possessed actual knowledge of events of default on a loan-by-loan basis. Judge Caproni denied BNYM’s motion to dismiss Plaintiffs’ negligence, gross negligence, and negligent misrepresentation claims. Order.
On October 2, 2015, Justice Saliann Scarpulla of the New York Supreme Court issued an Opinion and Order partially granting Bank of New York Mellon’s (“BNYM”) Motion to Dismiss an RMBS action brought by Commerce Bank and other RMBS investors (together, the “Plaintiffs”). Justice Scarpulla dismissed Plaintiffs’ breach of fiduciary duty claim as well as Plaintiffs’ breach of contract claim to the extent it relies on allegations that BNYM failed to provide Plaintiffs with notice of events of default under the transaction documents. Justice Scarpulla stated that a Trustee’s obligation to notify certificateholders of an event of default under the relevant Pooling and Servicing Agreements arises only upon the receipt of written notice that a default has occurred, and that Plaintiffs failed to allege that BNYM had received such written notice. Justice Scarpulla permitted claims that BNYM had failed to notify certificateholders of breaches of representations and warranties to proceed, but noted that Plaintiffs will ultimately be required to prove the Trustees’ actual discovery of those breaches on a loan-by-loan basis. Justice Scarpulla also permitted breach of contract claims based on BNYM’s alleged failure to properly review and examine the loan files and accurately certify what it had received, as well as claims alleging negligence by BNYM. Order.
On September 23, Justice Marcy S. Friedman of the New York Supreme Court for New York County denied CIFG’s motion to amend its complaint against J.P. Morgan in a case the Court previously dismissed in June. CIFG had originally brought suit claiming two causes of action against J.P. Morgan: 1) that J.P. Morgan had made material misrepresentations to induce CIFG to issue insurance on credit default swaps guaranteeing two collateralized debt obligations, and 2) for common-law fraud. In its June dismissal order, the Court dismissed the first cause of action but allowed CIFG to attempt to replead its fraud claim. CIFG’s proposed amended complaint included two causes of action, the first of which the Court held was identical in all material respects to the previously dismissed first cause of action. As to the proposed second cause of action for common law fraud, the Court noted that while CIFG had added additional allegations to attempt plead the action with particularly, it had failed to address whether a common law fraud claim could be maintained based on alleged misrepresentations made by non-insured Bear Stearns about the collateral underlying the CDOs. The Court granted CIFG leave to amend to attempt to cure this issue. Order.
