Guaranty Bank

SDNY Dismisses FDIC Claims for Lack of Standing Again

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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.

Guaranty Bank RMBS Lawsuits Dismissed As Time-Barred

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Judge Sam Sparks of the United States District Court for the Western District of Texas granted judgment to defendants in two related cases filed by the FDIC on behalf Guaranty Bank (now defunct) arising out of Guaranty Bank’s purchases in 2004 and 2005 of US$2.1 billion in RMBS.  Defendants Goldman Sachs, Deutsche Bank, Merrill Lynch and RBS Securities sought judgment on the pleadings that the FDIC’s claims were time barred under the Texas Securities Act’s five-year statute of repose.  The court agreed, holding that under the Supreme Court’s recent decision in CTS Corp. v. Waldburger the FDIC Extender Statute did not preempt the Texas statute of repose.  Goldman/DB Order.  Merrill/RBS Order.

Central District of California Dismisses FDIC’s Federal and State Securities Claims In Connection With RMBS Purchases

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On August 26, Judge Mariana R. Pfaelzer of the U.S. District Court for the Central District Court of California dismissed with prejudice a suit brought by the Federal Deposit Insurance Corporation (FDIC) against Countrywide Securities Corporation, Countrywide Financial Corporation, Bank of America Corporation, Deutsche Bank Securities, Inc. and Goldman, Sachs & Co.  In its amended complaint, the FDIC alleged that the offering documents for eight RMBS certificates that Guaranty Bank purchased between July 2005 and April 2006 contained material misstatements in violation of Sections 11 and 12(a)(2) of the Securities Act of 1933 and Article 581-33 of the Texas Securities Act.  It also brought claims under Section 15 of the 33 Act against Countrywide.  The FDIC was appointed as receiver for Guaranty Bank in August 2009 and filed suit on August 17, 2012.  The court followed its earlier decisions in dismissing the FDIC’s claims as time-barred by the three year statute of repose under the ’33 Act.  The court also held that the extender provision of FIRREA does not toll or pre-empt state statutes of repose, and therefore dismissed the FDIC’s claims under the Texas Securities Act as time-barred.  Decision.