New York Appellate Court Orders Dismissal of Repurchase Claims Against DB Structured Products as Time-Barred

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On December 19, the Appellate Division, First Department of the New York Supreme Court held that repurchase claims brought by an RMBS trust against DB Structured Products were barred by the statute of limitations, reversing the trial court’s denial of DB’s motion to dismiss. The court rejected plaintiff-appellee’s argument that the statute of limitations for breach of representations and warranties begins to run when the bank fails to cure or repurchase a defective loan. Instead, the claims accrued when the representations and warranties first were breached. Plaintiff-appellee’s complaint did not relate back to an earlier summons with notice filed by the trust’s certificate holders, for two reasons. First, the court held that the summons with notice filed was a nullity because the certificate holders failed to comply with the contractual repurchase protocol by not waiting for the expiration of the requisite 60- and 90-day periods for cure or repurchase before attempting to commence the action. Second, the court held that the certificate holders did not have standing to sue, and that the subsequent complaint filed by plaintiff-appellee could not relate back to a summons with notice filed by a party without standing. Decision.

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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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