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Bnp Paribas Mortgage Corp. v. Bank of America, N.A.

United States District Court, Second Circuit

December 9, 2013

BNP PARIBAS MORTGAGE CORPORATION and BNP PARIBAS, Plaintiffs,
v.
BANK OF AMERICA, N.A., Defendant. DEUTSCHE BANK AG, Plaintiff,
v.
BANK OF AMERICA, N.A., Defendant.

Robin A. Henry, Esq., Motty Shulman, Esq., Jack Wilson, Esq., BOIES SCHILLER & FLEXNER LLP, Armonk, NY, Attorneys for Plaintiff BNP Paribas, Mortgage Corporation and BNP Paribas.

William E. McDaniels, Esq., Stephen D. Andrews, Esq., Stephen P. Sorensen, Esq., Daniel M. Dockery, Esq., Katherine O'Connor, Esq., WILLIAMS & CONNOLLY LLP, Washington, DC, Attorneys for Plaintiff Deutsche Bank AG.

Marc T.G. Dworsky, Esq., Kristin Linsley Myles, Esq., Gregory Weingart, Esq., Richard St. John, Esq., MUNGER, TOLLES & OLSON LLP, Los Angeles, CA, Richard T. Marooney, Esq., KING & SPALDING LLP, New York, NY, Attorneys for Defendant Bank of America, N.A.

OPINION

ROBERT W. SWEET, District Judge.

Plaintiffs' BNP Paribas Mortgage Corporation ("BNPP") and Deutsche Bank AG ("DB") (together, "Plaintiffs") move for joint leave to supplement and amend their Second Amended Complaints ("BNP SAC" and "DB SAC") (collectively, the "SACs") pursuant to Federal R. Civ. P. 15(a)(2) and 15(d). For the reasons set forth below, the motion is denied.

Prior Proceedings

The Plaintiffs initiated these actions against BoA on November 25, 2009, and each filed Amended Complaints on March 17, 2010.[1] On April 30, 2010, BoA moved to dismiss the FACs and on March 23, 2011, this Court issued its ruling on BoA's motion in BNP Paribas Mortg. Corp. v. Bank of America, N.A., 778 F.Supp.2d 375 (S.D.N.Y. 2011) (the "March 23 Opinion"). The decision dismissed (1) Plaintiffs' contract claims for lack of standing under the Depositary Agreement, the Custodial Agreement and the March 2009 Letter; (2) Plaintiffs' indemnification claims; and (3) all claims relating to Ocala Notes issued prior to July 20, 2009. The decision upheld all remaining claims.

On August 30, 2010, the Plaintiffs filed new actions against BoA in the Southern District of Florida, asserting claims for conversion of Ocala's assets and seeking to recover for their investment losses on their unpaid Ocala notes. Deutsche Bank AG v. Bank of America ("Deutsche II"), S.D. Fla. Civil Action No. 10-23124 and BNP Paribas Mortg. Corp. v. Bank of America ("BNP II"), S.D. Fla. Civil Action No. 10-23115 (collectively, the "Conversion Actions"). On November 17, 2010, the actions were transferred to the Southern District of New York and referred to this Court. On August 30, 2011, this Court dismissed Plaintiffs' conversion claims. BNP Paribas Mortg. Corp. v. Bank of America, N.A., Nos. 10-8630 and 10-8299, 2011 WL 3847376 (S.D.N.Y. Aug. 30, 2011) (the "August 30 Opinion"). On July 6, 2011, Plaintiffs made a formal demand by letter on BoA, as Indenture Trustee and Collateral Agent, to pursue claims against the Depositary, Custodian and Collateral Agent for breaches of the corresponding Depositary, Custodial and Security Agreements. On August 6, 2011, BoA refused Plaintiffs' demands.

On June 22, 2011, BoA filed its Complaint against third party defendant BNP Paribas Securities Corporation ("BNPPS") and third party defendant Deutsche Bank Securities, Inc. ("DBS") (collectively, the "Note Dealers" or the "Third Party Defendants"), and motions to dismiss were heard and marked fully submitted on January 25, 2012. On December 29, 2011, Plaintiffs filed a motion to amend, which was heard and marked fully submitted on April 4, 2012. On June 5, 2012, this Court issued its ruling on BoA's Complaint against the Third Party Defendants and Plaintiffs' Motion to Amend in BNP Paribas Mortg. Corp. v. Bank of America, N.A., 866 F.Supp.2d 257 (S.D.N.Y. 2012) (the "June 6 Opinion"). The decision dismissed BoA's Complaint in its entirety and granted Plaintiffs' motion to amend and file the Second Amended Complaint.

Plaintiffs filed their SACs on October 1, 2012, reasserting their initial surviving claims and adding allegations of (1) BoA failing to "sue itself" or assign its claims; (2) negligence and negligent misrepresentation; and (3) contingent quasi-contract claims. On January 15, 2013, BoA filed a motion to dismiss counts four through twelve of the Plaintiffs' SACs and BNP's Fourteenth Cause of Action. BoA's motion to dismiss was granted in its entirety in BNP Paribas Mortg. Corp. v. Bank of America , N.A., 2013 WL 2452169 (S.D.N.Y. June 6, 2013) (the "June 6 Opinion").

On July 8, 2013, Plaintiffs filed the instant motion for joint leave to supplement and amend their SACs. This motion was heard and marked fully submitted on October 2, 2013.

Facts

The transaction giving rise to this action was alleged in the initial complaint and described in the June 6 Opinion. Plaintiffs' motion to file the Third Amended Complaints ("TACs") principally relates to the terms of a May 23, 2013 assignment, under which BoA, as Indenture Trustee, assigned claims to BNPP and DB in exchange for Plaintiffs' agreement not to appoint a successor Indenture Trustee.

On April 8, 2013, Plaintiffs notified BoA that, pursuant to Section 10.6(b) of the Base Indenture, BoA was removed as Indenture Trustee, pending appointment of a new Indenture Trustee. (Affidavit of Nathan Holcomb, July 8, 2013 ("Holcomb Aff."); Ex. D (April 8, 2013 Notice of Removal of Bank of America as Indenture Trustee for Ocala Funding).) On May 23, 2013, BoA, as Indenture Trustee, assigned "all of the Indenture Trustee's right, title, and interest in and to" any claims or potential claims "that the Indenture Trustee may have under the Depositary Agreement and/or the Custodial Agreement against BoA for alleged breaches of any duties and obligations under the Depositary Agreement and/or the Custodial Agreement" to Plaintiffs. (Holcomb Aff. Ex. C ΒΆ 1 (May 23, 2013 Limited Assignment/Transfer Agreement among BoA, BNP Paribas Mortgage Corp. and DB) (the "Assignment Agreement"). The Assignment Agreement mandated that these assigned claims be pursued by the Noteholders only in this Court and only by way of amendment of the existing pleadings. ( Id. (assigning "all of the Indenture Trustee's right, title and interest in and to the Claims, provided, however, that the Investors acknowledge and agree that, to the extent the Investors intend to assert the Claims, such claims shall be ...


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