Judge John G. Koeltl of the Southern District of New York

RMBS Claims Against U.S. Bank National Association Dismissed in Part

On May 31, Judge John G. Koeltl of the United States District Court for the Southern District of New York granted in part and denied in part a motion to dismiss claims brought against U.S. Bank National Association (U.S. Bank) by the Oklahoma Police Pension and Retirement System on behalf of a putative class of investors in Bear Stearns residential mortgage-backed securities.  Plaintiff alleges that U.S. Bank, as trustee for the RMBS, owed it and the putative class duties under the governing agreements and the Trust Indenture Act of 1939 (TIA).  Judge Koeltl held that the certificates at issue were not covered by the TIA because the contracting parties structured the transactions so as to exempt them from the TIA, as allowed by the statute.  The court held Plaintiff had, however, adequately alleged standing and had stated a claim for breach of contract based on alleged failures to ensure adequate title and documentation of the loans, to enforce the repurchase protocol and to provide notice of default by the servicer.  The court allowed these claims for breach of contract to proceed, but dismissed duplicative claims for breach of the covenant of good faith and fair dealing.  Opinion.

S.D.N.Y. Partially Grants and Partially Denies Motion to Dismiss RMBS Investor Putative Class Action Against J.P. Morgan Chase

On March 30, 2011, Judge John G. Koeltl of the Southern District of New York granted in part and denied in part a motion to dismiss an RMBS investor putative class action lawsuit asserting federal securities law claims against RMBS issuer J.P. Morgan Acceptance Corporation I (“JPMAC”) and certain of its affiliates, officers and directors. The court dismissed claims relating to several certificates because the putative class representative did not itself purchase those certificates. The court also dismissed plaintiff’s Section 12(a)(2) claim, finding plaintiff had failed to allege adequately that it purchased its Certificates in the initial public offering, as opposed to secondary market purchases, as would be required to state a claim under that section. As to the plaintiff’s Section 11 claim, the court sustained allegations that the offering materials for the RMBS certificates misrepresented or concealed deficient underwriting and appraisal practices and inflated loan-to-value ratios, but dismissed plaintiff’s allegation that the credit ratings for the certificates were misstated. The court sustained control-person liability claim under Section 15 against the officer and director defendants, but dismissed that claim against JPMAC’s parent corporation because the parent-subsidiary relationship, standing alone, is insufficient for pleading a Section 15 claim. Decision.