Ace Sec. Corp. v. DB Structured Prods., Inc.

• Decision Date: 19 December 2013
• Citation: 977 N.Y.S.2d 229,2013 N.Y. Slip Op. 08517,112 A.D.3d 522
• Parties: ACE SECURITIES CORP., etc., Plaintiff–Respondent, v. DB STRUCTURED PRODUCTS, INC., Defendant–Appellant. The Securities Industry and Financial Markets Association, The Association of Mortgage Investors, Professor Robert T. Miller and Mortgage Bankers Association, Amici Curiae.
• Court: New York Supreme Court — Appellate Division

112 A.D.3d 522
977 N.Y.S.2d 229
2013 N.Y. Slip Op. 08517

ACE SECURITIES CORP., etc., Plaintiff–Respondent,
v.
DB STRUCTURED PRODUCTS, INC., Defendant–Appellant.
The Securities Industry and Financial Markets Association,
The Association of Mortgage Investors,
Professor Robert T. Miller
and
Mortgage Bankers Association, Amici Curiae.

Supreme Court, Appellate Division, First Department, New York.

Dec. 19, 2013.

[977 N.Y.S.2d 230]

Simpson Thacher & Bartlett LLP, New York (David J. Woll of counsel), for appellant.

Kasowitz, Benson, Torres & Friedman LLP, New York (Marc E. Kasowitz of counsel), for respondent.

Wachtell, Lipton, Rosen & Katz, New York (George T. Conway III of counsel), for The Securities Industry and Financial Markets Association, amicus curiae.

McKool Smith, P.C., New York (Robert W. Scheef of counsel), for The Association of Mortgage Investors, amicus curiae.

Robert T. Miller, amicus curiae pro se.

Jenner & Block LLP, New York (Paul M. Smith of counsel), for Mortgage Bankers Association, amicus curiae.

TOM, J.P., ANDRIAS, DeGRASSE, RICHTER, JJ.

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered May 14, 2013, which denied defendant's motion to dismiss the complaint, unanimously reversed, on the law, with costs, and the motion granted. The Clerk is directed to enter judgment accordingly.

This action is barred by the six-year statute of limitations on contract causes of action (CPLR 213[2] ).

Plaintiff alleges that defendant breached representations and warranties in connection with the securitization of a pool of mortgage loans governed by a Mortgage Loan Purchase Agreement (MLPA) and a Pooling and Servicing

[977 N.Y.S.2d 231]

Agreement (PSA). The MLPA and PSA provided that the trustee was not entitled to sue or to demand that defendant repurchase defective mortgage loans until it discovered or received notice of a breach and the cure period lapsed. The motion court erred in finding that plaintiff's claims did not accrue until defendant either failed to timely cure or repurchase a defective mortgage loan ( see Structured Mtge. Trust 1997–2 v. Daiwa Fin. Corp., 2003 WL 548868, 2003 U.S. Dist. LEXIS 2677 [S.D.N.Y.2003] ). To the contrary, the claims accrued on the closing date of the MLPA, March 28, 2006, when any breach of the representations and warranties contained therein occurred ( see Ely–Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 402, 599 N.Y.S.2d 501, 615 N.E.2d 985 [1993]; Varo, Inc. v. Alvis PLC, 261 A.D.2d...