Fed. Hous. Fin. Agency v. UBS Americas Inc.
| Citation | 712 F.3d 136 |
| Decision Date | 05 April 2013 |
| Docket Number | Docket No. 12–3207–cv. |
| Parties | FEDERAL HOUSING FINANCE AGENCY, As Conservator for the Federal National Mortgage Association and The Federal Home Loan Mortgage Corporation, Plaintiff–Appellee, v. UBS AMERICAS INC., UBS Real Estate Securities Inc., UBS Securities, LLC, Mortgage Asset Securitization Transactions, Inc., David Martin, Per Dyrvik, Hugh Corcoran, and Peter Slagowitz, Defendants–Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
OPINION TEXT STARTS HERE
Kathleen M. Sullivan (Philippe Z. Selendy, Christine H. Chung, Adam M. Abensohn, William B. Adams, on the brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Plaintiff–Appellee.
Jay B. Kasner (Scott D. Musoff, Joseph N. Sacca, Robert A. Fumerton, Alexander C. Drylewski, on the brief), Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendants–Appellants.
Daniel Tenny (Mark B. Stern and Thomas M. Bondy, on the brief), for Stuart F. Delery, Acting Assistant Attorney General, Civil Division, U.S. Department of Justice, Washington, D.C., and Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Amicus Curiae United States.
Michael J. Dell and Aaron M. Frankel, Kramer Levin Naftalis & Frankel LLP, New York, NY, and Ira D. Hammerman and Kevin Carroll, Washington, D.C., for Amicus Curiae Securities Industry and Financial Markets Association.
Richard W. Painter (Mary–Christine Sungaila, Snell & Wilmer L.L.P., Costa Mesa, CA, on the brief), University of Minnesota Law School, Minneapolis, MN, for Amicus Curiae Professor Richard W. Painter.
Michael O. Ware, Catherine A. Bernard, and Mark G. Hanchet, Mayer Brown LLP, New York, NY, and Washington, D.C.; Matthew Solum, Robert J. Kopecky, and Devon M. Largio, Kirkland & Ellis LLP, New York, NY, and Chicago, IL; David Blatt and John McNichols, Williams & Connolly LLP, Washington, D.C.; David H. Braff, Brian T. Frawley, Jeffrey T. Scott, Joshua Fritsch, Bruce Clark, Amanda F. Davidoff, Richard H. Klapper, Theodore Edelman, Michael T. Tomaino, Jr., Tracy Richelle High, Penny Shane, Sharon L. Nelles, and Jonathan M. Sedlak, Sullivan
& Cromwell LLP, New York, NY, and Washington, D.C.; Brad S. Karp, Bruce Birenboim, and Susanna M. Buergel, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY; Richard W. Clary and Michael T. Reynolds, Cravath, Swaine & Moore LLP, New York, NY; Thomas C. Rice, David J. Woll, and Alan Turner, Simpson Thacher & Bartlett LLP, New York, NY; Greg A. Danilow and Vernon Broderick, Weil, Gotshal, & Manges LLP, New York, NY; and James P. Rouhandeh, Brian S. Weinstein, Daniel J. Schwartz, Nicholas N. George, and Jane M. Morril, Davis Polk & Wardwell LLP, New York, NY; for Amici Curiae Related–Case Financial Institution Defendants.
Before: CHIN and LOHIER, Circuit Judges, and GARDEPHE, District Judge.*
In this case, the Federal Housing Finance Agency (“FHFA”), as conservator of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), sued UBS Americas Inc., certain affiliated entities, and several officers (collectively, “UBS”) for fraud and misrepresentation in connection with the marketing and sale of mortgage-backed securities. FHFA has filed some seventeen other similar actions against other financial institutions involved in the mortgage-backed securities industry.
In the district court, UBS moved to dismiss on the grounds, inter alia, that (1) the action was untimely and (2) FHFA lacked standing to bring suit. The district court (Cote, J.) denied these prongs of the motion, and certified its decision for interlocutory appeal. We granted UBS's petition for leave to bring this interlocutory appeal. We now affirm.
In July 2008, in response to the national housing and economic crisis, Congress passed the Housing and Economic Recovery Act of 2008 (“HERA”). SeePub.L. No. 110–289, 122 Stat. 2654 (2008). Congress enacted HERA because it was concerned about the financial condition of Fannie Mae, Freddie Mac, and other government-sponsored entities (“GSEs”). Hence, Congress created FHFA as an “independent agency of the Federal Government,” 12 U.S.C. § 4511(a), and conferred upon FHFA broad power to appoint itself conservator or receiver of the GSEs, id. § 4617(a), and to “take such action as may be ... necessary to put the [GSEs] in a sound and solvent condition; and. appropriate to carry on the business of the [GSEs] and preserve and conserve [their] assets and property,” id. § 4617(b)(2)(D). Congress specifically authorized FHFA, as conservator or receiver, to “collect all obligations and money due the [GSEs].” Id. § 4617(b)(2)(B)(ii).
HERA set forth provisions governing the limitations period for actions brought by FHFA as conservator or receiver. Section 4617(b)(12) of HERA (the “extender statute”) provides:
(A) In General
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Agency as conservator or receiver shall be—
(I) the 6–year period beginning on the date on which the claim accrues; or
(II) the period applicable under State law; and
(I) the 3–year period beginning on the date on which the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of—
(i) the date of the appointment of the Agency as conservator or receiver; or
(ii) the date on which the cause of action accrues.
12 U.S.C. § 4617(b)(12).
On July 30, 2008, as HERA was signed into law, Congress appointed James B. Lockhart III Acting Director of FHFA. Lockhart had previously been nominated by President Bush and confirmed by the Senate as Director of the Office of Federal Housing Enterprise Oversight (“OFHEO”) of the U.S. Department of Housing and Urban Development. On August 25, 2009, after Lockhart resigned his position from FHFA, President Obama designated Edward DeMarco—who was then Deputy Director of FHFA—as its Acting Director, effective September 1, 2009.
As relevant to this appeal, the allegations of the second amended complaint are assumed to be true and may be summarized as follows:
From September 2005 through August 2007, Fannie Mae and Freddie Mac purchased $6.4 billion in residential mortgage-backed securities sponsored or underwritten by UBS. They did so in reliance on certain false and misleading statements contained in the offering documents. In particular, UBS represented to potential investors that the mortgage loans serving as collateral for the securitizations were underwritten in accordance with established guidelines to ensure that borrowers could meet their payment obligations, and UBS provided statistical material relating to the likelihood that underlying mortgage loans would be repaid. These representations were false. As a consequence of their reliance on these representations, Fannie Mae and Freddie Mac sustained massive losses.
Acting Director Lockhart appointed FHFA conservator of Fannie Mae and Freddie Mac on September 6, 2008.
On July 27, 2011, more than three years after the last of the securities offerings in question but within three years of FHFA's appointment as conservator, FHFA commenced this action below. It did so at the direction of Acting Director DeMarco.
On September 2, 2011, FHFA filed some seventeen other similar actions against other financial institutions. Sixteen of these actions were assigned to Judge Cote in the Southern District of New York as related to this case, but one was subsequently transferred to the Central District of California. The seventeenth case was filed in the District of Connecticut.
The second amended complaint asserted claims under §§ 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. §§ 77k, 77 l (a)(2), and 77 o; the Virginia Securities Act, Va.Code Ann. § 13.1–522(A)(ii); and the District of Columbia Securities Act, D.C.Code § 31–5606.05(a)(1)(B), (C). The second amended complaint also asserted a common law claim for negligent misrepresentation. Defendants moved to dismiss, contending, inter alia, that the securities claims were time-barred, FHFA had no standing to pursue the action because its Director had not been constitutionally appointed, and the negligent misrepresentation claim failed to state a claim upon which relief could be granted.
On May 4, 2012, in a thorough and carefully considered opinion and order, the district court denied the motion to dismiss with respect to the statutory claims and granted it only with respect to the negligent misrepresentation claim. See FHFA v. UBS Americas, Inc., 858 F.Supp.2d 306 (S.D.N.Y.2012). By order entered June 19, 2012, the district court certified an interlocutory appeal from its May 4th opinion and order. On August 14, 2012, we granted UBS's petition for interlocutory appeal.
On this appeal from the district court's ruling on a motion to dismiss, we review the district court's legal conclusions de novo, accepting the factual allegations of the second amended complaint as true. See Commack Self–Serv. Kosher Meats, Inc. v. Hooker, 680 F.3d 194, 203 (2d Cir.2012).
Two issues are presented: first, the timeliness of this action, and, second, FHFA's standing to bring this suit.
The principal question is whether FHFA's claims under the Securities Act and the Virginia and D.C. Blue Sky laws are governed by HERA's extender statute, including, in particular, the provision extending the “statute of limitations” for tort claims to the three-year period after the appointment of FHFA as conservator...
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