Royal Park Investments

SDNY Denies Class Certification in Royal Park Action Against Trustee Bank of New York

 

On February 15, Judge Gregory H. Woods in the United States District Court for the Southern District of New York denied certificateholder Royal Park Investments SA/NV’s (“Royal Park“) renewed motion for class certification in its lawsuit against RMBS trustee Bank of New York Mellon. This was the second time Judge Woods denied Royal Park’s motion for class certification in this case, and it is consistent with other judges’ rulings on Royal Park’s class certification motions in its lawsuits against trustees. Judge Woods found that Royal Park failed to demonstrate that questions of law or fact common to class members predominated over individualized questions. Judge Woods held that liability must be determined individually on a loan-by-loan and trust-by-trust basis, and that none of the inquiries required to prove liability were susceptible to simple, class-wide proof. Further, each putative class member needed to demonstrate that it holds litigation rights, which requires the court to undertake a difficult, fact-dependent analysis of individualized legal issues. In addition, the Court found that each putative class member would present a different statute of limitations defense, and these defenses would apply different time periods under New York law because the trusts were non-residents. Finally, the Court held that the damage calculation in this case required hundreds of fact intensive inquiries that could not be answered on a class-wide basis.

Bank of New York Mellon’s Motion to Dismiss Denied in Part in Trustee RMBS Suit by Royal Park Investments

On March 2, Judge Gregory H. Woods of the United States District Court for the Southern District of New York issued an Opinion and Order denying in part and granting in part the Bank of New York Mellon’s (“BNYM”) motion to dismiss an action brought by Royal Park Investments SA/NV (“Royal Park”) claiming damages of $1.12 billion arising from failures by BNYM, in its capacity as trustee, to protect the interests of investors in certain RMBS trusts.  Judge Woods denied arguments by BNYM that Royal Park had failed to plausibly allege BNYM’s discovery and knowledge of (i) breaches of representations and warranties in securitized loans; and (ii) events of defaults committed by servicers of the relevant trusts.  Judge Woods did, however, dismiss Royal Park’s claims against the bank for breach of trust, a violation of section 315(a) of the Trust Indenture Act, and the Streit Act.  Opinion and Order.

Judge Mostly Denies Deutsche Bank National Trust Co.’s Motion to Dismiss in RMBS Class Action

On February 3, Judge Alison Nathan of the United States District Court for the Southern District of New York largely denied Deutsche Bank National Trust Co.’s (the “Trustee’s”) motion to dismiss in a proposed class action brought by Royal Park Investments SA/NV over $3.1 billion in losses in residential mortgage-backed securities.  Royal Park alleged that the Trustee failed to require the loan sellers to repurchase or substitute loans when it became aware that the underlying mortgages were defaulting.  Judge Nathan rejected the Trustee’s argument that Royal Park failed to make a written demand to initiate a repurchase action as required in the trusts’ pooling and service agreements, holding that the Trustee had an obligation to provide notice to the other parties when it independently discovered breaches of representations and warranties.  Judge Nathan did, however, dismiss Royal Park’s derivative claims on behalf of 10 trusts that held the loans because the suit was direct rather than derivative in nature.  Order.