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U.S. Bank, N.A. v. UBS Real Estate Sec. Inc.

United States District Court for the Southern District of New York

September 6, 2016, Decided; September 6, 2016, Filed

12-cv-7322 (PKC) (JCF)

Opinion

 [*395]  MEMORANDUM AND ORDER

OVERVIEW OF THE AGREEMENTS AND CLAIM

SUBJECT MATTER JURISDICTION

A. It Is Unlikely that the Court Ever Had Bankruptcy Jurisdiction.

B. The Court Has Diversity Jurisdiction.

1. Legal Standard.

2. Diversity Jurisdiction Existed When the Action Commenced.

3. Judge Baer Concluded that the Action Was Brought by U.S. Bank on Behalf

of the Trusts.

4. U.S. Bank Is the Real Party to the Controversy.

5. The Recent Americold Decision Does Not Alter This Analysis.

6. The Amended Complaint Expressly Alleges Diversity Jurisdiction.

CHOICE OF LAW

BURDEN OF PROOF

RELEVANT NEW YORK CONTRACT PRINCIPLES

A. The PSAs' Unambiguous Terms Are Construed to Reflect the Intent of the

Parties as Manifested in the Agreements.

B. Parol Evidence Plays No Role [**2]  in Interpreting an Unambiguous Contract.

C. No Party Asserts that Contra Preferentem Applies.

D. Contractual Warranties under New York Law.

THE TRUSTS MAY RECOVER THE MONEY DAMAGE EQUIVALENT OF THE

REPURCHASE REMEDY FOR BREACHED LOANS WHERE REPURCHASE IS NOT

POSSIBLE.

THE TRUSTS, THE TRUSTEE AND RELATED PERSONS.

THE NOTICE AND DISCOVERY REQUIREMENT.

A. The Requirements of Section 2.03.

1. UBS Received Written Breach Notices of that Identified 4,869 Breached

Loans, Including 4,462 Breaches that Were Timely Identified Before the

Commencement of this Action.

a. The Assured Breach Notices.

b. The U.S. Bank Breach Notices.

2. Upon Receipt of the Holt Report of August 2015, UBS Had Knowledge of

Purported Breaches in the Loans Identified Therein.

3. Lapse of the 90-Day Cure Period as Condition Precedent.

4. Discovery of a Breach by UBS Triggers Its Cure and Repurchase Obligations.

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205 F. Supp. 3d 386 *; 2016 U.S. Dist. LEXIS 119890 **

U.S. BANK, NATIONAL ASSOCIATION, solely in its capacity as Trustee of MASTR ADJUSTABLE RATE MORTGAGES TRUST 2006-OA2, MASTR ADJUSTABLE RATE MORTGAGES TRUST 2007-1, AND MASTR ADJUSTABLE RATE MORTGAGES TRUST 2007-3, Plaintiffs, -against- UBS REAL ESTATE SECURITIES INC., Defendant.

Subsequent History: Magistrate's recommendation at U.S. Bank, N.A. v. UBS Real Estate Secs., Inc., 2017 U.S. Dist. LEXIS 86013 (S.D.N.Y., Apr. 21, 2017)

Related proceeding at Bakal v. U.S. Bank N.A., 2018 U.S. Dist. LEXIS 56950 (S.D.N.Y., Apr. 2, 2018)

Motion denied by United States Bank, N.A. v. UBS Real Estate Secs., Inc., 2018 U.S. Dist. LEXIS 111567 (S.D.N.Y., May 10, 2018)

Prior History: Mastr Adjustable Rate Mortgs. Trust 2006-OA2 v. UBS Real Estate Secs., Inc., 2016 U.S. Dist. LEXIS 49017 (S.D.N.Y., Apr. 12, 2016)

CORE TERMS

borrower, Warranty, guidelines, ratio, underwriter, loans, Trusts, origination, breached, notice, Certificateholders, files, mortgage, mortgage loan, documents, closing date, adversely affect, repurchase, misrepresentation, funding, opined, misstated, red flag, adverse effect, undisclosed, subject property, occupancy, time of discovery, defects, parties