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Policemen's Annuity & Benefit Fund v. Bank of America, N.A.

United States District Court, Second Circuit

September 23, 2013

POLICEMEN'S ANNUITY AND BENEFIT FUND OF THE CITY OF CHICAGO, LABORERS' PENSION FUND AND HEALTH AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL LABORERS' DISTRICT COUNCIL OF CHICAGO AND VICINITY, IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, and ARKANSAS PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Plaintiffs,
v.
BANK OF AMERICA, NA (as Trustee Under Various Pooling and Servicing Agreements), and U.S. BANK NATIONAL ASSOCIATION (as Trustee Under Various Pooling and Servicing Agreements), Defendants.

OPINION & ORDER

KATHERINE B. FORREST, District Judge.

This case was originally filed on April 11, 2012. (ECF No. 1.) An Amended Complaint was filed on January 4, 2013 (ECF No. 50), and a Second Amended Complaint ("SAC") was filed on January 15, 2013 (ECF No. 57). In two prior rulings on the adequacy of the pleadings, [1] the Court noted that at its core, this is a breach of contract case. That characterization has not changed. What has changed is the development of a sufficient factual record upon which defendant U.S. Bank National Association ("U.S. Bank"), as Trustee under various pooling and servicing agreements ("PSAs"), now moves for partial summary judgment.[2]

Plaintiffs' claims involve 19 separate trusts in which they invested (the "Covered Trusts"). Plaintiffs allege that they purchased certificates in the Covered Trusts, which include groups of mortgage-backed securities ("MBS"). Among the governing documents between the depositor, servicer, and trustee of the MBS at issue were various PSAs. In their two-count SAC, plaintiffs claim that both defendants breached the terms of the PSAs as well as statutory duties owed pursuant to the Trust Indenture Act of 1939 ("TIA"), 15 U.S.C. §§ 77aaa et seq. According to plaintiffs, pursuant to the TIA, defendants were required to notify certificate holders of breaches in the PSA.

Both U.S. Bank and Bank of America, N.A. ("B of A") have been sued in their capacities as trustees of the Covered Trusts. As it turns out, however, the undisputed facts demonstrate that U.S. Bank could not have breached a PSA or the TIA as to 16 of the 19 trusts, because U.S. Bank was never a trustee of those trusts during the period of time when plaintiffs owned certificates in them. There simply were no contractual obligations flowing from defendant U.S. Bank to plaintiffs pursuant to the PSAs for the 16 trusts, and therefore no damages may be attributable to breaches of the PSAs or to corresponding breaches of the TIA with respect to those same 16 trusts. Thus, plaintiffs are unable to maintain a claim for breach of contract against U.S. Bank as to those 16 trusts.

Accordingly, and for the reasons set forth below, defendant U.S. Bank's motion for partial summary judgment is GRANTED.

I. FACTS

It is the rare case that a movant for summary judgment proffers a Statement of Undisputed Material Facts pursuant to Local Rule 56.1 as to which there is truly no dispute. The stars have here aligned, however, and this is just such a case. While plaintiffs do not dispute any of the facts set forth below, they vigorously dispute whether the record is sufficiently developed and what legal conclusions can be drawn from these facts.

U.S. Bank is currently the trustee for the following 16 residential mortgagebacked securitization trusts:

• WaMu Mortgage Pass-Through Certificates Series 2006-AR8 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR10 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR11 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR12 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR14 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR16 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2006-AR18 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2007-HY1 Trust;
• WaMu Mortgage Pass-Through Certificates Series 2007-HY2 Trust;
• WaMu Mortgage Pass-Through Certificates Series ...

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