Goldman Sachs Motion to Dismiss RMBS Fraud Suit Granted in Part, Denied in Part

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On November 26, Justice Melvin Schweitzer of the New York Supreme Court granted in part and denied in part Goldman Sachs’s motion to dismiss a lawsuit brought by HSH Nordbank. Justice Schweitzer dismissed claims arising out of alleged misstatements regarding assignment and transfer of the mortgages underlying the RMBS at issue and the credit ratings assigned to the RMBS, holding that HSH Nordbank had not adequately alleged such statements were knowingly false when made. Justice Schweitzer also dismissed HSH Nordbank’s negligent misrepresentation claim, finding no special duty between Goldman Sachs and HSH Nordbank that could support such a cause of action. Justice Schweitzer allowed the remaining claims and allegations to proceed, including claims for fraud, fraudulent concealment, aiding and abetting fraud and rescission. In particular, he denied Goldman Sachs’s argument that the lawsuit was time-barred under German law, hold that HSH Nordbank’s knowledge of the existence of its claims was a question of fact not capable of resolution at the pleading stage. Justice Schweitzer also held that the complaint adequately alleged misrepresentations concerning compliance with underwriting guidelines, loan to value ratios and occupancy status. 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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