EMC Obtains Partial Dismissal of Repurchase Action

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On May 29, Justice Eileen Bransten of the New York County Supreme Court denied in part and granted in part defendants’ motion to dismiss a loan repurchase lawsuit brought at the direction of certain certificate holders of four RMBS. The complaint alleged that EMC Mortgage breached certain representations and warranties concerning loans in the trusts and also sought to hold certain JPMorgan entities vicariously liable for EMC’s alleged breaches. Justice Bransten dismissed without prejudice the claims against the JPMorgan entities for failure to properly plead successor liability or parent liability. As to EMC, the Court rejected EMC’s argument that the claims were limited to certain loans identified in timely repurchase demands, holding that the content of the specific repurchase demands at issue sufficiently and timely notified EMC of its alleged obligation to repurchase all allegedly breaching loans in the trusts. Justice Bransten also relied on Plaintiff’s allegation that EMC discovered allegedly breaching loans during its pre-closing due diligence to hold that Plaintiff’s claims as to all allegedly breaching loans in the transaction were timely. Justice Bransten refused to dismiss plaintiff’s unjust enrichment claims, which were based upon allegations that EMC withheld settlement funds received from loan originators that properly belonged to the Trust, holding that the PSA’s sole remedy clause does not preclude these claims. Finally, Justice Bransten dismissed claims for consequential and rescissory damages as barred by the sole remedy provision, and dismissed plaintiff’s reimbursement claim because the PSA did not unmistakably provide for attorney’s fees in first-party actions. Order.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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