In re Countrywide Fin. Corp.

• Citation: 966 F.Supp.2d 1031
• Decision Date: 19 December 2013
• Docket Number: Nos. MDL 11–ML–2265–MRP (MANx), 12–CV–3279–MRP (MANx), 12–CV–8558–MRP (MANx), 12–CV–6690–MRP (MANx).,s. MDL 11–ML–2265–MRP (MANx), 12–CV–3279–MRP (MANx), 12–CV–8558–MRP (MANx), 12–CV–6690–MRP (MANx).
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
• Parties: In re COUNTRYWIDE FINANCIAL CORP. MORTGAGE–BACKED SECURITIES LITIGATION.

966 F.Supp.2d 1031

In re COUNTRYWIDE FINANCIAL CORP. MORTGAGE–BACKED SECURITIES LITIGATION.

Nos. MDL 11–ML–2265–MRP (MANx), 12–CV–3279–MRP (MANx), 12–CV–8558–MRP (MANx), 12–CV–6690–MRP (MANx).

United States District Court,

C.D. California,

Western Division.

Dec. 19, 2013.

Brian Charles Devine, Brian E. Pastuszenski, Inez H. Friedman–Boyce, Goodwin Procter LLP, Boston, MA, David Martin Halbreich, Reed Smith LLP, Los Angeles, CA, David M. Wilk, Larson King LLP, St. Paul, MN, for In re Countrywide Financial Corp. Mortgage–Backed Securities Litigation.

ORDER REGARDING PLAINTIFFS' MOTION FOR RECONSIDERATION, OR, IN THE ALTERNATIVE, TO CERTIFY AN ORDER FOR INTERLOCUTORY APPEAL

MARIANA R. PFAELZER, District Judge.

I. INTRODUCTION

Plaintiffs Federal Deposit Insurance Corporation as Receiver for Franklin Bank, S.S.B. (“FDIC–Franklin”), FDIC as Receiver for Guaranty Bank (“FDIC–Guaranty”), and FDIC as Receiver for Security Savings Bank (“FDIC–SSB”) (collectively, the “Plaintiffs”) move for reconsideration of three separate orders ¹ rendered by this Court on August 26, 2013 (collectively, the “August 26 Orders”) which held that 12 U.S.C. § 1821(d)(14) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), does not preempt the statutes of repose contained in the Texas Securities Act (“TSA”) and the Nevada Securities Act (“NSA”). FDIC–SSB urges the Court in the alternative to certify the August 26, 2013 Order entered in Security Savings Bank to the Ninth Circuit Court of Appeals for interlocutory review under 28 U.S.C. § 1292(b). The motion was fully briefed by the parties and submitted on November 5, 2013. The Court heard oral arguments on November 12, 2013. After carefully considering the motion, the response, the reply, and the arguments presented at the hearing, the Court DENIES Plaintiffs' motion for reconsideration and FDIC–SSB's request for interlocutory review.

II. PROCEDURAL BACKGROUND

The three above-captioned cases involve allegations of material misstatements and omissions in connection with the offering documents of nineteen Countrywide mortgage-backed securities (“MBS”) purchased by Franklin Bank, S.S.B., Guaranty Bank, and Security Savings Bank. Between July 2005 and April 2006, Guaranty Bank purchased eight Countrywide MBS. On August 21, 2009, Guaranty Bank failed and the FDIC was appointed as its receiver. The FDIC, in its capacity as receiver for Guaranty Bank, filed suit nearly three years later to recover $592 million in alleged damages for violations of the TSA and the federal Securities Act of 1933. On August 26, 2013, the Court dismissed the federal securities claims because the 1933 Act's statute of repose had expired before the FDIC was appointed as receiver for Guaranty Bank. Guaranty Bank, 966 F.Supp.2d at 1021–22, 2013 WL 4536177 at *2 (C.D.Cal. Aug. 26, 2013). The Court also dismissed the state securities claims under the TSA's five-year statute of repose on the ground that FDIC–Guaranty filed suit more than five years after Guaranty Bank's MBS purchases and 12 U.S.C. § 1821(d)(14) does not preempt the TSA's five-year repose period. Id. at 1030–31, at *9. The August 26, 2013 Order resulted in dismissal of all claims with prejudice filed by FDIC–Guaranty.

Franklin Bank purchased six Countrywide MBS between January 2006 and August 2007. On November 7, 2008, the FDIC was appointed receiver of Franklin Bank. Three years later, FDIC–Franklin filed suit to recover $40 million in alleged damages for violations of the TSA and the federal Securities Act of 1933. On March 21, 2013, the Court dismissed as time-barred the claims of FDIC–Franklin under Section 11 of the 1933 Act for two of the six Countrywide MBS Franklin Bank purchased. See FDIC as Receiver for Franklin Bank v. Countrywide Sec. Corp., No. 2:12–cv–3297, slip op. (C.D.Cal. Mar. 21, 2013) (Dkt. No. 90). ² Subsequently, on August 26, 2013, the Court dismissed as untimely the TSA claims for the same two Countrywide MBS for the same reasons the Court dismissed the TSA claims of FDIC–Guaranty. See Franklin Bank., No. 2:12–cv–3297, slip op. at 1 (C.D.Cal. Aug. 26, 2013).

Between February 2006 and September 2006, Security Savings Bank purchased five Countrywide MBS. On February 27, 2009, Security Savings Bank failed and the FDIC was appointed as its receiver. Nearly three years later, the FDIC–SSB filed suit on behalf of Security Savings Bank to recover $12 million in alleged damages for violations of the NSA and the federal Securities Act of 1933. After a ruling by this Court dated March 21, 2013, the only remaining claims brought by FDIC–SSB were for violations of Section 11 based on CWALT 2006–21CB and the NSA based on CWALT 2006–29T1 and CWALT 2006–26CB. See FDIC as Receiver for Security Savings Bank v. Banc of Am. Sec. LLC, 934 F.Supp.2d 1219, 1238 (C.D.Cal.2013). On August 26, 2013, the Court dismissed the remaining NSA claims because FIRREA does not preempt the NSA's five-year statute of repose. Security Savings Bank, No. 12–CV–6690, slip op. at 1–2 (C.D.Cal. Aug. 26, 2013). Each plaintiff now moves for reconsideration of the Court's August 26, 2013 Order in their respective cases while FDIC–SSB requests, in the alternative, that the Court certify the Order rendered in Security Savings Bank for interlocutory review.

III. THE COURT'S DECISION IN GUARANTY BANK

All three of the decisions dated August 26, 2013 concluded that FIRREA's extender provision does not preempt the state statutes of repose in those cases, but the principal reasoning for that conclusion was set forth in Guaranty Bank. At issue in Guaranty Bank was FIRREA's extender provision, which provides in relevant part:

(14) Statute of limitations for actions brought by conservator or receiver

(A) In general. Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as conservator or receiver shall be—

(i) in the case of any contract claim, the longer of—

(I) the 6—year period beginning on the date the claim accrues; or

(II) the period applicable under State law; and

(ii) in the case of any tort claim (other than a claim which is subject to section 1441a(b)(14) of this title), the longer of—

(I) the 3—year period beginning on the date the claim accrues; or

(II) the period applicable under State law.

12 U.S.C. § 1821(d)(14). The Court carefully considered whether the term “statute of limitations” referred to state statutes of repose, such as the one contained in Article 581–33(H)(2)(b) of the TSA. After discussing important distinctions between the purpose of a statute of limitation and a statute of repose, the Court concluded that the issue was ultimately one of preemption because “Article 581–33(H)(b) reflects the State's intent to set a fixed cut-off point to file suit” while FIRREA “supplants state time limitations under certain circumstances and grants the FDIC additional time to bring claims.” Guaranty Bank, 966 F.Supp.2d at 1024, 2013 WL 4536177, at *4 (C.D.Cal. Aug. 26, 2013). Central to the preemption analysis is whether Congress, in passing the extender provision, intended to preempt state statutes of repose by the use of the term “statute of limitations” contained in 12 U.S.C. § 1821(d)(14). See, e.g., Cipollone v. Liggett Grp. Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (noting that the “purpose of Congress is the ultimate touchstone of pre-emption analysis”) (internal quotation marks and citation omitted). The Court concluded that the states' historic role in regulating securities transactions and failed banks warranted a presumption that Congress did not intend to preempt the TSA's statute of repose without “clear and manifest” evidence to the contrary. Guaranty Bank, 966 F.Supp.2d at 1025–26, 2013 WL 4536177, at *5 (C.D.Cal. Aug. 26, 2013). After considering several forms of federal preemption—including express, field, impossibility, and obstacle preemption—the Court was unable to find “clear and manifest” Congressional intent to displace the TSA's statute of repose. Id. at 1025–31, at *5–9.

IV. PLAINTIFFS' MOTION FOR RECONSIDERATION

A. Legal Standard

Motions for reconsideration are governed by the Local Rules of this district. Local Rule 7–18 provides that reconsideration is permissible only on the following grounds: “(a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision.” L.R. 7–18. The Local Rule further states that “[n]o motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion.” Id.

B. The Tenth Circuit's Decision in NCUA/Nomura Is Not a Basis for Reconsideration

Plaintiffs urge the Court to reconsider on the ground that the Tenth Circuit's decision in NCUA v. Nomura Home Equity Loan—rendered one day after the August 26 Orders—represents a material change of law under Local Rule 7–18(a). (Dkt. No. 87, at 4.) The Court disagrees. The non-binding decision in NCUA/Nomura explicitly did not address the state statutes of repose involved in that case and therefore had no occasion to consider preemption. 727 F.3d 1246, 1254 n. 8 (10th Cir.2013) (hereinafter, “NCUA/Nomura ”) (“Although the Kansas and California securities laws contain statutes of repose—five years in both states—Defendants do not argue that these state repose periods bar NCUA's state law claims.”). Plaintiffs invite the Court to speculate on what the Tenth Circuit would have ruled had it addressed that question. A material change of law, however, cannot arise “by inferences from opinions...