On November 22, Justice Shirley Werner Kornreich of the Supreme Court of the State of New York partially dismissed a putback action brought by the trustee for the J.P. Morgan Mortgage Acquisition Trust 2006-WMC4 against J.P. Morgan Chase & Co. and WMC Mortgage. The court held that damages are available only as to loans that breached representations and warranties. The court rejected, however, JPMorgan’s argument that dismissal of certain breach claims was warranted by temporal limitations on the bank’s “bringdown” representations and warranties. The court also denied the motion to dismiss the plaintiff’s indemnification claim at the pleading stage. Decision.
State of New York
New York State Court Dismisses Rescission Claim in RMBS Putback Case
On November 21, Justice Shirley Werner Kornreich of the Supreme Court of the State of New York granted in part defendant DB Structured Products, Inc.’s (DB) motion to dismiss the complaint of ACE Securities Trust 2007-HE1. The court held that the trust could not obtain rescission of the entire transaction, or “complete refund” damages as to loans that did not breach the bank’s representations and warranties. The court denied the motion to dismiss, however, to the extent that DB sought an order precluding the trust from maintaining putback claims as to loans that were not identified in the trust’s demand letters. Decision.