New York Federal Court Denies Motion to Dismiss Repurchase Suit Against UBS

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On August 15, Judge Harold Baer, Jr. of the District Court for the Southern District of New York denied UBS Real Estate Securities Inc.’s motion to dismiss a suit by several RMBS mortgage trusts in connection with the repurchase of $1.6 billion of mortgage loans. The trusts allege that UBS failed to repurchase mortgage loans that violated representations and warranties in the underlying agreements. UBS moved to dismiss the trusts’ request for monetary damages based on the contractual clause limiting the “sole remedy” for breaches of representations and warranties to repurchase. In denying the motion to dismiss, the court rejected the trusts’ argument, holding that monetary damages could be available in lieu of specific performance of the sole remedies if specific performance was unavailable. However, the court held that plaintiff would be limited to the “Purchase Price” as the contractual measure of damages and could not obtain damages beyond that amount. 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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