Mastr Adjustable Rate Mortgs. Trust 2006-OA2 v. UBS Real Estate Secs., Inc.

Mastr Adjustable Rate Mortgs. Trust 2006-OA2 v. UBS Real Estate Secs., Inc.

Opinion

MEMORANDUM AND ORDER

CASTEL, U.S.D.J.

Defendant UBS Real Estate Securities Inc. ("UBS") moves in limine to preclude the plaintiffs from introducing evidence that it argues is not permitted under this Court's earlier Memorandum and Order deciding the parties' summary judgment motions. (Docket # 312.) This Memorandum and Order addresses UBS's argument that the plaintiffs may not seek recovery as to noticed breaches that were not specifically identified in the pre-suit breach notices. For the reasons explained, UBS's motion is denied.

BACKGROUND

The plaintiffs are [*3]  three trusts (the "Trusts") that purchased pools of residential mortgage-backed securities assembled by UBS. The Trusts bring a single breach of contract claim. They contend that UBS breached representations and warranties that guaranteed compliance with certain quality and underwriting guidelines used to select mortgage loans that it placed into pools of residential mortgage-backed securities. See MASTR Adjustable Rate Mortgs. Trust 2006-OA2 v. UBS Real Estate Secs. Inc., 2015 U.S. Dist. LEXIS 24988, 2015 WL 764665, at *1 (S.D.N.Y. Jan 9, 2015). UBS acquired those mortgage loans from various originators before assembling them into pools and selling them to the Trusts, which, in turn, issued securities (which the parties called "Certificates") to investors (which the parties called "Certificateholders"). Id. The three transactions between UBS and the Trusts were governed by three separate Pooling and Servicing Agreements ("PSAs"), which were identical in all material respects relevant to this litigation. 2015 U.S. Dist. LEXIS 24988, [WL] at *2.

Each PSA includes a remedial provision. (See, e.g., Docket # 269, Ex. E at 60-62.) Section 2.03 of each PSA provides that if a party to the PSA discovers "a breach of representation or warranty made by [UBS] pursuant to this Section 2.03 that materially and adversely affects the interests of the Certificateholders [*4]  or the Certificate Insurer in any Mortgage Loan, the party discovering such breach shall give prompt notice thereof to the other parties and the Trustee." (Id. at 61.) It further provides that UBS "hereby covenants that within ninety (90) days of the earlier of its discovery or its receipt of written notice from any party of a breach of any representation or warranty made pursuant to this Section 2.03 which materially and adversely affects the interest of the Certificateholders or Certificate Insurer in any Mortgage Loan, it shall cure such breach in all material respects . . . ." (Id.) If the breach is not cured, UBS "shall" substitute the defective mortgage loan with an eligible loan or repurchase the defective mortgage loan. (Id. at 61.) Section 2.03 provides that UBS's obligation "to cure, repurchase or replace any Mortgage Loan as to which a breach has occurred and is continuing shall constitute the sole remedies" against UBS in the event of a breach. (Id. at 62.)

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