News & Events

On December 19, 2013, New York’s Appellate Division, First Department, unanimously held that breach of contract claims against Firm client DB Structured Products, Inc. (“DBSP”) — an affiliate of Deutsche Bank AG — were barred by the statute of limitations, reversing a lower court ruling in a closely-watched appeal.  The complaint alleged breaches of loan-level representations and warranties in contracts governing a residential mortgage-backed securities (“RMBS”) trust sponsored by DBSP.  These contracts require the securitization’s trustee to provide notice of any breaches and afford DBSP 60 days to cure or 90 days to repurchase any breaching mortgage loans.  The Appellate Division concluded that New York’s six-year statute of limitations began to run on the date the representations and warranties were made – i.e., the closing date in March 2006.  In so holding, the Appellate Division rejected the plaintiff’s argument that the claims did not accrue until DBSP was notified of alleged breaches and declined to repurchase the allegedly breaching mortgage loans.

The Appellate Division also held that under the governing “no-action” clause, only the securitization trustee had standing to bring the claims at issue, and rejected the plaintiffs’ argument that the trustee’s untimely complaint could be deemed timely through relation back to an earlier summons filed by investors in the RMBS trust.  In addition, the Appellate Division held that the investors’ summons was a “nullity” because it was filed before the contractual notice provisions had been satisfied.

The Simpson Thacher team includes Thomas C. Rice, David J. Woll (who argued the appeal), Evan I. Cohen, Isaac M. Rethy, John Robinson, Andrew J. Dempster, Danielle Kantor and Johnson Atkinson.