U.S. Bank Natl. Assn. v. DLJ Mtge. Capital, Inc.
Supreme Court of New York, New York County
January 15, 2014, Decided
Eileen Bransten, J.
In this action, Plaintiff U.S. Bank National Association ("Trustee") asserts three breach of contract claims against Defendant DLJ Mortgage Capital, Inc. ("DLJ"). Defendant DLJ brings the instant motion, seeking to dismiss the Trustee's Amended Complaint in its entirety. The Trustee opposes. For the reasons that follow, DLJ's motion is granted in part and denied in part.
Plaintiffs' claims stem from the Home Equity Asset Trust 2007-1 ("HEAT 2007-1") securitization sponsored by [***2] DLJ, which was comprised of approximately 5,153 residential [****2] mortgage loans. (Am. Compl. ¶ 1.) These mortgage loans were pooled in the HEAT 2007-1 Trust, which issued certificates that were sold to investors. Id. The certificates represented interests in the mortgage loans, the value of which hinged on the quality of the loans themselves. Id.
DLJ made certain representations and warranties regarding the characteristics of the mortgage loans, including that the loans met certain quality standards and complied with sound underwriting practices and applicable legal requirements. Id. ¶ 2. In the event that any mortgage loans breached these representations and warranties — and the breaches materially and adversely affected the value of the loans and the interest of the certificateholders in the loans — the transaction's Pooling and Servicing Agreement ("PSA") required that DLJ cure or repurchase the breaching loans. Id.
Plaintiff alleges that its "[f]orensic review of certain loan files from the Trust establishes DLJ's extensive breaches of its [representations and warranties]." Id. ¶ 5. On December 6, 2011 and March 30, 2012, the Trustee gave notice to DLJ of breaches concerning 300 loans [***3] and 900 loans, respectively, which were purportedly in breach. Id. ¶ 7. Plaintiff contends that DLJ has refused to repurchase all but three of these loans. Id.
The initial complaint in this action was filed on February 1, 2013. On June 28, 2013, the Trustee filed an Amended Complaint, asserting three breach of contract claims against DLJ premised on DLJ's alleged breaches of representations and warranties and seeks: (1) specific performance of the repurchase protocol; (2) compensatory, consequential, rescissionary, and equitable damages; and, (3) indemnification.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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42 Misc. 3d 1213(A) *; 984 N.Y.S.2d 635 **; 2014 N.Y. Misc. LEXIS 100 ***; 2014 NY Slip Op 50029(U) ****; 2013 WL 6997183
[****1] U.S. Bank National Association, solely in its capacity as Trustee of the HOME EQUITY ASSET TRUST 2007-1 (HEAT 2007-1), Plaintiff, against DLJ Mortgage Capital, Inc., Defendant.
Notice: THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED OFFICIAL REPORTS.
PUBLISHED IN TABLE FORMAT IN THE NEW YORK SUPPLEMENT.
Subsequent History: Affirmed by U.S. Bank N.A. v. DLJ Mtge. Capital, Inc., 121 A.D.3d 535, 995 N.Y.S.2d 11, 2014 N.Y. App. Div. LEXIS 7060 (N.Y. App. Div. 1st Dep't, Oct. 21, 2014)
damages, repurchase, representations, loans, sole remedy, warranties, parties, breaches, accrued, motion to dismiss, closing date, indemnification, consequential, breach of contract claim, contends, mortgage loan, limitations, rescission, rescissory