Portfolio v. Bank of N.Y. Mellon
| Decision Date | 25 March 2016 |
| Docket Number | 14 Civ. 09372(GBD) |
| Citation | 180 F.Supp.3d 246 |
| Parties | Blackrock Allocation Target Shares: Series S Portfolio, et al., Plaintiffs, v. The Bank of New York Mellon, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Benjamin Galdston, Blair Allen Nicholas, Brett M. Middleton, David R. Kaplan, Lucas E. Gilmore, Timothy Alan Delange, Bernstein Litowitz Berger & Grossmann LLP, San Diego, CA, Jai Kamal Chandrasekhar, Jeroen Van Kwawegen, Bernstein Litowitz Berger & Grossmann LLP, New York, NY, for Plaintiffs.
Blackrock Core Active Libor Fund B. pro se.
AST PIMCO Total Return Bond Portfolio, pro se.
Fixed Income Shares: Series M, Pacific Bay CDO, LTD., pro se.
PCM Fund, Inc., pro se.
PIMCO Absolute Return Strategy 3D Offshore Fund Ltd., pro se.
PIMCO Absolute Return Strategy II Master Fund LDC, pro se.
PIMCO Bermuda Trust II: PIMCO Bermuda Income Fund (M), pro se.
PIMCO Bermuda Trust: PIMCO Bermuda U.S. Low Duration Fund, pro se.
PIMCO Cayman SPC Limited: PIMCO Cayman Global Aggregate Bond Segregated Portfolio, pro se.
PIMCO Cayman SPC Limited: PIMCO Cayman Japan Coreplus Segregated Portfolio, pro se.
PIMCO Cayman SPC Limited: PIMCO Cayman Japan Coreplus Strategy Segregated Portfolio, pro se.
PIMCO Cayman SPC Limited: PIMCO Cayman Japan Low Duration Segregated Portfolio, pro se.
PIMCO Cayman SPC Limited: PIMCO Cayman Unconstrained Bond Segregated Portfolio, pro se.
PIMCO Cayman Trust: PIMCO Cayman Foreign Bond Fund, pro se.
PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Ex-Japan (Yen-Hedged) Bond Fund II, pro se.
PIMCO Cayman Trust: PIMCO Cayman Global Bond (NZD-Hedged) Fund, pro se.
PIMCO Cayman Trust: PIMCO Cayman Global Ex-Japan (Yen-Hedged) Bond Fund, pro se.
PIMCO Cayman Trust: PIMCO Cayman Total Return Strategy Fund, pro se.
PIMCO Corporate & Income Opportunity Fund, pro se.
PIMCO Corporate & Income Strategy Fund, pro se.
PIMCO Distressed Senior Credit Opportunities Fund II, L.P., pro se.
PIMCO Dynamic Credit Income Fund, pro se.
PIMCO Dynamic Income Fund, pro se.
PIMCO ETF Trust: PIMCO Low Duration Active Exchange-Traded Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Diversified Income Duration Hedged Fund, pro se.
PIMCO ETF Trust: PIMCO Low Duration Active Exchange-Traded Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Diversified Income Duration Hedged Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Diversified Income Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Euro Bond Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Euro Income Bond Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Global Bond Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Global Investment Grade Credit Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Income Fund, pro se.
PIMCO Funds: Global Investors Series PLC, PIMCO Credit Absolute Return Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Stocksplus Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Total Return Bond Fund, pro se.
PIMCO Funds: Global Investors Series PLC, Unconstrained Bond Fund, pro se.
PIMCO Funds: Global Investors Series PLC, US Short-Term Fund; PIMCO Funds, pro se.
PIMCO Funds: PIMCO Commoditiesplus Strategy Fund, pro se.
PIMCO Funds: PIMCO Commodity Real Return Strategy Fund, pro se.
PIMCO Funds: PIMCO Diversified Income Fund, pro se.
PIMCO Funds: PIMCO Em Fundamental Indexplus Ar Strategy Fund, pro se.
PIMCO Funds: PIMCO Emerging Local Bond Fund, pro se.
PIMCO Funds: PIMCO Emerging Markets Bond Fund, pro se.
PIMCO Funds: PIMCO Emerging Markets Currency Fund, pro se.
PIMCO Funds: PIMCO Floating Income Fund, pro se.
PIMCO Funds: PIMCO Foreign Bond Fund (U.S. Dollar-Hedged), pro se.
PIMCO Funds: PIMCO Foreign Bond Fund (Unhedged), pro se.
PIMCO Funds: PIMCO Fundamental Advantage Absolute Return Strategy Fund, pro se.
PIMCO Funds: PIMCO Global Advantage Strategy Bond Fund, pro se.
PIMCO Funds: PIMCO Global Bond Fund (U.S. Dollar-Hedged), pro se.
PIMCO Funds: PIMCO Global Bond Fund (Unhedged), pro se.
PIMCO Funds: PIMCO High Yield Fund, pro se.
PIMCO Funds: PIMCO Income Fund, pro se.
PIMCO Funds: PIMCO Inflation Response Multi-Asset Fund, pro se.
PIMCO Funds: PIMCO International Fundamental Indexplus Ar Strategy Fund, pro se.
PIMCO Funds: PIMCO International Stocksplus Ar Strategy Fund (U.S. Dollar-Hedged), pro se.
PIMCO Funds: PIMCO Investment Grade Corporate Bond Fund, pro se.
PIMCO Funds: PIMCO Long Duration Total Return Fund, pro se.
PIMCO Funds: PIMCO Long-Term Credit Fund, pro se.
PIMCO Funds: PIMCO Low Duration Fund, pro se.
PIMCO Funds: PIMCO Low Duration Fund II, pro se.
PIMCO Funds: PIMCO Low Duration Fund III, pro se.
PIMCO Funds: PIMCO Moderate Duration Fund, pro se.
PIMCO Funds: PIMCO Mortgage Opportunities Fund, pro se.
PIMCO Funds: PIMCO Mortgage-Backed Securities Fund, pro se.
PIMCO Funds: PIMCO Real Estate Real Return Strategy Fund, pro se.
PIMCO Funds: PIMCO Real Return Fund, pro se.
PIMCO Funds: PIMCO Short-Term Fund, pro se.
PIMCO Funds: PIMCO Small Company Fundamental Indexplus Ar Strategy Fund, pro se.
PIMCO Funds: PIMCO Stocksplus Absolute Return Fund, pro se.
PIMCO Funds: PIMCO Stocksplus Ar Short Strategy Fund, pro se.
PIMCO Funds: PIMCO Stocksplus Fund, pro se.
PIMCO Funds: PIMCO Total Return Fund, pro se.
PIMCO Funds: PIMCO Total Return Fund II, pro se.
PIMCO Funds: PIMCO Total Return Fund III, pro se.
PIMCO Funds: PIMCO Total Return Fund IV, pro se.
PIMCO Funds: PIMCO Unconstrained Bond Fund, pro se.
PIMCO Funds: PIMCO Unconstrained Tax Managed Bond Fund, pro se.
PIMCO Funds: PIMCO Worldwide Fundamental Advantage Ar Strategy Fund, pro se.
PIMCO Funds: Private Account Portfolio Series Asset-Backed Securities Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series Developing Local Markets Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series High Yield Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series International Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series Investment Grade Corporate Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series Mortgage Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series Short-Term Portfolio, pro se.
PIMCO Funds: Private Account Portfolio Series U.S. Government Sector Portfolio, pro se.
PIMCO Global Credit Opportunity Master Fund LDC, pro se.
PIMCO Global Income Opportunities Fund, pro se.
PIMCO Global Stocksplus & Income Fund, pro se.
PIMCO High Income Fund, pro se.
PIMCO Income Opportunity Fund, pro se.
PIMCO Income Strategy Fund II, pro se.
PIMCO Large Cap Stocksplus Absolute Return Fund, pro se.
PIMCO Multi-Sector Strategy Fund Ltd., pro se.
PIMCO Offshore Funds—PIMCO Absolute Return Strategy IV Efund, pro se.
PIMCO Offshore Funds: PIMCO Offshore Funds--PIMCO Absolute Return Strategy V Alpha Fund, pro se.
PIMCO Strategic Income Fund, Inc., pro se.
PIMCO Tactical Opportunities Master Fund Ltd., pro se.
PIMCO Variable Insurance Trust: PIMCO Commodity Real Return Strategy Portfolio, pro se.
PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (U.S. Dollar Hedged), pro se.
PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (Unhedged), pro se.
PIMCO Variable Insurance Trust: PIMCO Global Advantage Strategy Bond Portfolio, pro se.
PIMCO Variable Insurance Trust: PIMCO Global Bond Portfolio (Unhedged), pro se.
PIMCO Variable Insurance Trust: PIMCO Low Duration Portfolio, pro se.
PIMCO Variable Insurance Trust: PIMCO Real Return Portfolio, pro se.
PIMCO Variable Insurance Trust: PIMCO Total Return Portfolio, pro se.
PIMCO Variable Insurance Trust: PIMCO Unconstrained Bond Portfolio, pro se.
Terlingua Fund 2, LP, pro se.
Michael Martinez, Kramer Levin Naftalis & Frankel LLP, Christopher James Houpt, Matthew D. Ingber, Allison Joan Zolot, Jarman Douglas Russell, Lisa Robyn Blank, Silvia Araxie Babikian, Mayer Brown LLP, New York, NY, for Defendants.
MEMORANDUM DECISION AND ORDERGEORGE B. DANIELS
, United States District Judge:
This action is one of many derivative actions brought in New York state court and the Southern District of New York against trustees of trusts containing residential mortgage-backed securities (“RMBS”). See, e.g., Fixed Income Shares: Series M v. Citibank N.A. , 130 F.Supp.3d 842, 845–46 (S.D.N.Y.2015)
. Plaintiffs are holders in trusts for which Defendant The Bank of New York Mellon (“BNYM”) serves as a trustee. (Compl. ¶¶ 1, 18, ECF No. 1.) Plaintiffs have also named the trusts themselves as nominal defendants. (Compl.¶ 175.) Plaintiffs assert six causes of action: (1) breach of contract (Compl. 501–513), (2) violation of the Trust Indenture Act of 1939 (“TIA”) (Compl.¶¶ 514–522), (3) negligent breach of the pre-default duty of independence (Compl.523–530), (4) breach of the fiduciary duty of care (Compl.¶¶ 531–537), (5) negligent breach of the duty of care (Com pl.538–544), and (6) breach of the post-default fiduciary duty of independence (Compl.¶¶ 545–552). BNYM moves pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)
to dismiss the Complaint in its entirety.
Plaintiffs are a group of investors in 260 RMBS trusts (“Trusts”) created between 2004 and 2008 originally secured by loans valued at more than $177.6 billion at the time of securitization. (Compl.¶¶ 1, 16–19.) Plaintiffs' claims arise out of BNYM's role as the trustee of those trusts. (See Compl. ¶ 1.)
The Trusts' assets are residential mortgage loans. (See Compl. ¶ 2.) Investment banks acting as “Sponsors” and “Depositors” (collectively known as “Sellers”) first acquired these loans generated by mortgage loan originators. (See Compl. ¶¶ 2, 197–99.) The Sellers then pooled the loans and conveyed them into the Trusts. (Compl.¶¶ 2, 197–99.) The Sponsors select “Servicers,” who collect payments on the loans from the underlying borrowers and send the funds to the trustees. (Compì.2, 200.) The trustees make payment to the Trusts' Certificateholders. (Compl.¶ 200.) In this manner, the principal and interest payments on the underlying residential mortgage loans are “passed through” to the Trusts' Certificateholders. (Compl.¶ 2.)
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