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In re Residential Capital, LLC

United States District Court, S.D. New York

September 16, 2014

In re: RESIDENTIAL CAPITAL, LLC; RESCAP LIQUIDATING TRUST, Plaintiff,
v.
PRIMARY CAPITAL ADVISORS, LLC, Defendant

Page 866

[Copyrighted Material Omitted]

Page 867

Chapter 11. Case No. 12-12020 (MG). Adv. Proc. No. 14-01999 (MG).

For Rescap Liquidating Trust, Plaintiff: Alex J.B. Rossmiller, Isaac Nesser, LEAD ATTORNEYS, Quinn Emanuel, New York, NY; John Patrick Sullivan, LEAD ATTORNEY, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY; Peter E. Calamari, LEAD ATTORNEY, Quinn Emanuel Urquhart Oliver & Hedges, LLP, New York, NY.

For Primary Capital Advisors LLC, Defendant: Richard Levy, Jr., LEAD ATTORNEY, Pryor Cashman LLP, New York, NY.

Page 868

Memorandum Order

LAURA TAYLOR SWAIN, United States District Judge.

Plaintiff ResCap Liquidating Trust (" ResCap" ) filed this suit on May 13, 2014, as an adversary proceeding in the confirmed Chapter 11 bankruptcy case In re Residential Capital, LLC, No. 12-12020, which is currently pending before Judge Martin Glenn in the United States Bankruptcy Court for the Southern District of New York. Defendant Primary Capital Advisors, LLC (" PCA" ), thereafter moved in this Court to withdraw the bankruptcy reference, and for transfer of the adversary proceeding to the District of Minnesota.

This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334.

The Court has carefully considered the parties' submissions. For the following reasons, the Court grants the Defendant's motion in its entirety.

Background

The following summary of Plaintiff's relevant factual allegations and the procedural history is drawn from the Amended Complaint, the exhibits thereto and court records.

Plaintiff ResCap Liquidating Trust is a Delaware statutory trust that is the successor-in-interest to Residential Funding Company (" RFC" ). Prior to the time of its bankruptcy, RFC was in the business of acquiring and securitizing residential mortgage loans. (Am. Compl. at ¶ 2.) RFC's business model was premised on purchasing loans from " correspondent lenders" such as PCA and distributing them, either by pooling them with similar mortgage loans into residential mortgage-backed securitization trusts (" RMBS" ), or by selling them to whole loan purchasers. (Id. at ¶ 3.) RFC alleges that, over the course of its relationship with PCA, PCA sold RFC over 3,900 mortgage loans, generating a combined principal balance in excess of $252 million. (Id. at ¶ 4.) The contracts through which PCA sold these loans (" the Contracts," Id. Ex. A) included nondiscretionary forum selection clauses mandating that all claims stemming from the contracts be brought in Minnesota:

Each of the parties irrevocably submits to the jurisdiction of any state or federal court located in Hennepin County, Minnesota over any action, suit or proceeding to enforce or defend any right under this Contract or otherwise arising from any loan sale or servicing relationship existing in connection with this Contract, and each of the parties irrevocably agrees that all claims in respect of any such action or proceeding may be heard or determined in such state or federal court. Each of the parties irrevocably waives the defense of an inconvenient forum to the maintenance of any such action or proceeding . . . Each of the parties further agrees not ...

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