SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
PHOENIX LIGHT SF LIMITED, BLUE HERON FUNDING II LTD., BLUE HERON FUNDING V LTD., BLUE HERON FUNDING VI LTD., BLUE HERON FUNDING VII LTD., BLUE HERON FUNDING IX LTD., SILVER ELMS CDO PLC, SILVER ELMS CDO II LIMITED and KLEROS PREFERRED FUNDING V PLC, Plaintiffs,
-against-
J.P. MORGAN SECURITIES LLC, GOLDMAN SACHS & CO., CREDIT SUISSE SECURITIES (USA) LLC, MORGAN STANLEY, RBS SECURITIES, INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, EMC MORTGAGE LLC, J.P. MORGAN MORTGAGE ACQUISITION CORP., CHASE HOME FINANCE LLC, STRUCTURED ASSET MORTGAGE INVESTMENTS II INC., CHASE MORTGAGE FINANCE CORPORATION, J.P. MORGAN ACCEPTANCE CORPORATION I, BEAR STEARNS ASSET BACKED SECURITIES I LLC, JPMORGAN CHASE & CO., THE BEAR STEARNS COMPANIES LLC, GOLDMAN SACHS MORTGAGE COMPANY, GS MORTGAGE SECURITIES CORP., THE GOLDMAN SACHS GROUP, INC., DLJ MORTGAGE CAPITAL, INC., CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., ASSET BACKED SECURITIES CORP., CREDIT SUISSE AG, MORGAN STANLEY & CO. LLC, MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, MORGAN STANLEY ABS CAPITAL I, INC., SAXON CAPITAL, INC., SAXON FUNDING MANAGEMENT LLC, SAXON ASSET SECURITIES COMPANY, MORGAN STANLEY CAPITAL I JNC, GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., RBS ACCEPTANCE PNC, FINANCIAL ASSET SECURITIES CORP., THE ROYAL BANK OF SCOTLAND GROUP PLC, MERRILL LYNCH MORTGAGE LENDING, INC., FIRST FRANKLIN FrNANCIAL CORPORATION, MERRILL LYNCH MORTGAGE INVESTORS, INC. and MERRILL LYNCH & CO., Defendants.
JOINT MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT
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EXCERPT:
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5. Plaintiffs Fail to State a Claim Concerning Transfer of Title
Plaintiffs assert that the Offering Documents misrepresented that the loans at
issue would be validly assigned and transferred to the issuing trusts (H824-46). But the Offering Documents simply contained a description of the Pooling and Servicing Agreements (“PSA”) that governed such transfers and assignments and explicitly provided for the possibility of related issues by noting that the trustee would “review each mortgage file” and provide notice if any file was “missing or defective”.42 Plaintiffs cannot claim to have been misled about the possibility
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See, e.g.. JPMAC 2006-WMC3 at S-93 to S-94. The Offering Documents also disclosed that
the mortgages could be assigned in a variety of ways, including that they would be assigned to
the trustee, or a custodian for the trustee, and that mortgage notes would be endorsed either in
blank or to the trustee. See, e.g.. LBMLT 2006-1 at 27 (“The depositor will, with respect to each
mortgage asset, deliver or cause to be delivered to the trustee, or to the custodian, the mortgage
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that certain loans would not be properly transferred when the Offering Documents made no specific representations regarding the means by which loans would be assigned or transferred and outlined a procedure for remedying any defects. See Lone Star, 594 F.3d at 389-90;
Republic Bank. 707 F. Supp. 2d at 710-11. In the face of these extensive disclosures, Plaintiffs’ allegations are not sufficient to support a claim regarding assignments. See W. & S. Life Ins. Co. v. Countrywide Fin. Corp.. No. 2:11-ML-07166-MRP (MANx), ECF No. 246, slip. op. at 7-13 (CD. Cal. June 29, 2012) [Ex. M] (dismissing assignment and transfer claims where offering documents contained explicit disclosures, including “language indicating] that the section is meant as a description of the [PSA] rather than an independent manifestation of present intent”.)
note, an assignment (except as to any mortgage loan registered on the MERS® System) (as
defined below) and unless otherwise indicated in the applicable prospectus supplement) to the
tmstee or in blank of the mortgage in a form for recording or filing as may be appropriate in the
state where the mortgaged property is located.”)
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. . .
Third, Plaintiffs’ allegation that a significant number of the loans backing the securitizations at issue were not assigned to the securitization trust or were missing intervening assignments does not establish a strong inference of intent. The Complaint is devoid of any non-conclusory allegation that Defendants knew that mortgages would not properly be assigned.43 Plaintiffs’ claim that the alleged improper transfers caused harm to Plaintiffs also is unavailing , as the Complaint does not allege that any defaulted loans
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Plaintiffs make their title transfer allegations against Defendants generally, but allege that the
depositor is responsible for depositing the notes and security instruments into the trust. (199.)
Thus, those allegations are properly limited to the depositor Defendants only.
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were unable to be restructured or foreclosed upon due to title issues, much less that any losses were caused by such inability.44
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In addition Plaintiffs allegations based on unproven allegations from other lawsuits and
investigations (H 890-1094) are insufficient to allege scienter against Defendants. See, e.g.,
RSM Prod. Corp. v. Fridman. 643 F. Supp. 2d 382, 403 (S.D.N.Y. 2009) (“[P]aragraphs in a
complaint that are either based on, or rely on, complaints in other actions that have been
dismissed, settled, or have otherwise not resolved, are, as a matter of law immaterial”); see also
Me. State Ret. Svs. v. Countrywide Fin. Corp.. 2011 WL 4389689, at *20 (CD. Cal. May 5,
2011) (“Plaintiffs cannot rely on allegations from complaints in other cases if the Plaintiffs
themselves have not investigated the allegations.”)
