In a significant decision for mortgage-backed securities litigation, U.S. District Court Judge Alvin K. Hellerstein (S.D.N.Y.) found in favor of Ropes & Gray’s client, Deutsche Bank National Trust Company (“DBNTC”), and denied a motion to dismiss filed by defendant WMC Mortgage LLC (“WMC”).
Here, DBNTC—acting in its capacity as Trustee of a particular trust—alleges that WMC breached a contractual obligation to repurchase thousands of defective mortgage loans that it originated and sold to the trust. WMC argued that the suit should be dismissed as untimely, because the complaint was filed more than six years after the trust’s formation. Ropes & Gray responded that the suit is timely because the breach occurred not when the Trust was formed in 2006, but only after WMC refused to repurchase defective loans in response to a 2011 demand from the Trustee. Judge Hellerstein, considering conflicting case law on this issue, found Ropes & Gray’s argument more persuasive and denied the motion.
Just days after that decision, the New York Appellate Division reversed a New York Supreme Court case on which Ropes & Gray had relied, and which Judge Hellerstein had cited favorably in his order. Ropes & Gray moved swiftly to bring the Appellate Division’s opinion to Judge Hellerstein’s attention, and explain why it did not warrant any alteration of his order. WMC later moved for reconsideration based on the Appellate Division’s opinion, but Judge Hellerstein promptly and summarily denied the motion.
The ruling raises the possibility that, notwithstanding the recent decision of the New York Appellate Division, similar mortgage-backed securities cases may not be time-barred if brought in jurisdictions other than New York state court.
The cross-office Ropes & Gray team in this litigation includes Boston-based associate Daniel Ward.
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