Matter of Bank of N.Y. Mellon
Supreme Court of New York, New York County
March 31, 2017, Decided
[*212] [**358] Saliann Scarpulla, J.
Petitioner The Bank of New [***2] York Mellon seeks judicial instructions on how to distribute a portion of the $8.5 billion settlement payment entrusted to it as trustee of 530 residential mortgage-backed securities trusts (the covered trusts). Certain certificate holders from the [****2] various trusts dispute how the settlement payment should be distributed.
In June 2011, The Bank of New York Mellon (the trustee) entered into a settlement agreement on behalf of the covered trusts to resolve allegations that Bank of America Corporation, BAC Home Loan Servicing LP, Countrywide Financial Corporation, and Countrywide Home Loans, Inc. breached certain representations and warranties contained in the pooling and servicing agreements (PSAs) or sale and servicing agreements and indentures (collectively the governing agreements) for the covered trusts. Under the settlement agreement, each of the covered trusts is designated to receive a specified portion (an allocable share) of the $8.5 billion settlement payment.
Shortly after the settlement was executed, the trustee commenced a CPLR article 77 proceeding to obtain court approval of the [**359] settlement agreement. On January 31, 2014, Justice Barbara Kapnick approved the majority [***3] of the settlement agreement, with the exception of the release for loan modification repurchase claims. Subsequently, the First Department affirmed and modified Justice Kapnick's decision to "approve the settlement in all respects, including the aspect releasing the loan modification claims." (Matter of Bank of N.Y. Mellon, 127 AD3d 120, 128, 4 NYS3d 204 [1st Dept 2015].)
[*213] On February 5, 2016, the trustee commenced this proceeding seeking interpretation of the settlement agreement, i.e., specific instructions on how the settlement payment should be distributed. On that date, I directed any interested persons to submit an answer to the petition by March 4, 2016. I further directed the trustee to place the settlement payment in escrow during the pendency of this proceeding.
On May 12, 2016, I issued a partial severance order and partial final judgment for 512 of the covered trusts, for which there was no dispute as to payment of the allocable share attributable to those covered trusts. On November 18, 2016, I issued a second partial severance order and partial final judgment for three uncontested trusts, CWALT 2007-OA2, CWALT 2007-OA10, and CWHL 2006-OA4. As per the agreement of the trustee and those covered trusts, the partial judgments directed [***4] distribution according to the standard intex method. Fifteen disputed trusts remain.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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56 Misc. 3d 210 *; 51 N.Y.S.3d 356 **; 2017 N.Y. Misc. LEXIS 1068 ***; 2017 NY Slip Op 27102 ****
[****1] In the Matter of The Bank of New York Mellon, in its Capacity as Trustee or Indenture Trustee of 530 Countrywide Residential Mortgage-Backed Securitization Trusts, Petitioner.
Prior History: Matter of Bank of N.Y. Mellon, 2017 N.Y. Misc. LEXIS 1139 (N.Y. Sup. Ct., Mar. 31, 2017)
allocable share, certificate, settlement agreement, distributed, trusts, target, overcollateralization, parties, subsequent recovery, losses, investors, principal balance, calculated, realized, mortgage loan, certificateholders, balances, senior, loan balance, settlement, intex, available funds, instructions, allocated, res judicata, partial, absurd, courts, terms, settlement payment
Civil Procedure, Judgments, Preclusion of Judgments, Res Judicata, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Intent, Remedies, Reformation, Contract Interpretation, Parol Evidence