Ninth Circuit

Ninth Circuit Revives RMBS Claims against Nomura

On August 15, 2016, the Ninth Circuit Court of Appeals vacated the Central District of California’s order dismissing claims brought by the National Credit Union Administration Board (“NCUA”), as liquidating agent of Western Corporate Federal Credit Union (“Wescorp”), against Nomura Home Equity Loan, Inc. (“Nomura”) under the Securities Act of 1933.  In 2014, the district court granted Nomura’s motion to dismiss claims that it had made materially false and misleading statements in the offering documents in respect of certificates sold to Wescorp in 2006 and 2007, holding that the NCUA’s claims were barred by the statute of repose established in Section 13 of the 1933 Act, which runs three years after the securities were offered or sold.  The Ninth Circuit disagreed with the district court, concluding that both the text and the legislative purpose of the Extender Statute in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) indicate that Congress intended it to supplant the 1933 Act statute of repose and to further a policy of “protecting the government’s right to recovery.” Opinion at 13.  The Ninth Circuit further concluded that, although the text of the Extender Statute only mentions contract and tort claims, because its dictate is to cover “all actions” brought by the NCUA, it also applies to statutory claims, such as the 1933 Act claims at issue in this case.  Thus, the Ninth Circuit held that the NCUA’s claims against Nomura are not time-barred and remanded the case to the Central District for further proceedings. Summary.


Ninth Circuit Overturns Remand to State Court and Orders Lower Court to Consider Arbitration Motion

On June 15, 2011, the Ninth Circuit overturned a district court’s order to remand this declaratory judgment action to state court. The action was brought by Countrywide and BAC Home Loans Servicing LP against Mortgage Guaranty Insurance Co. (“MGIC”) and seeks a declaration concerning the terms of an insurance policy covering borrower defaults. The policy provides for a reduction in the claimed loss amount in cases of “fraud, misrepresentation, or negligence” on the part of Countrywide, and on the basis of this provision, MGIC denied coverage on several Countrywide claims. The insurance agreement also contains an arbitration clause, and MGIC argued that the district court was required to consider its motion to stay the action pending resolution in arbitration under the Federal Arbitration Act (“FAA”) before exercising its discretion to remand under the Declaratory Judgment Act (“DJA”). The Court of Appeals, in a question of first impression in the Ninth Circuit, agreed with MGIC and found that the FAA did require the district court to reach the merits of MGIC’s motion to stay before exercising its discretion to remand under the DJA. Decision.