appeals from the orders of the Supreme Court, New York County
(Shirley Werner Kornreich, J.), entered September 18, 2015,
which, to the extent appealed from as limited by the briefs,
granted defendants' motions to dismiss the first, second,
sixth, and seventh causes of action, the fourth cause of
action insofar as it alleges that defendant J.P. Morgan
Mortgage Acquisition Corp. breached its backstop repurchase
obligation, and the fifth cause of action as against
defendant JPMorgan Chase Bank, N.A.
Emanuel Urquhart & Sullivan, LLP, New York (Philippe Z.
Selendy, William B. Adams, Andrew R. Dunlap and Daniel P.
Mach of counsel), for appellant.
& Block LLP, Washington, D.C. (Matthew S. Hellman of the
bar of District of Columbia, admitted pro hac vice, of
counsel) and Jenner & Block LLP, New York (Stephen L.
Ascher of counsel), for WMC Mortgage, LLC, respondent.
Sullivan & Cromwell LLP, New York (Darrell S. Cafasso,
Robert A. Sacks and Matthew L. Lippert of counsel), for J.P.
Morgan Mortgage Acquisition Corporation and JPMorgan Chase
Bank, N.A., respondents.
Rolando T. Acosta, J.P. Richard T. Andrias Karla Moskowitz
Judith J. Gische Troy K. Webber, JJ.
case is one of many commenced in the wake of the 2008 global
financial crisis. As in many of the other cases that have
come before us - including one nearly identical to this case
- the action is based upon the sale of residential
mortgage-backed securities (RMBS).
Master Loan Sale and Interim Servicing Agreement (MLSA) dated
July 1, 2005, defendant J.P. Morgan Mortgage Acquisition
Corp. (JPMAC) bought from defendant WMC Mortgage Corp. (WMC),
the originator, approximately 6, 510 residential mortgage
loans with a total principal balance of approximately $1.275
billion . JPMAC sold the securitized loans to
the J.P. Morgan Mortgage Acquisition Trust, Series 2006-WMC2
(Trust) under a Pooling and Servicing Agreement (PSA) dated
June 1, 2006; plaintiff Bank of New York Mellon (BNY), was
the securities administrator for the Trust. In a transaction
that closed on June 28, 2006, the Trust issued RMBS
securities and sold them to investors (certificate holders)
in the Trust.
JPMAC made numerous representations and warranties (R &
Ws) in the Mortgage Loan Sale and Interim Servicing Agreement
(MLSA) and Pooling and Servicing Agreement (PSA) regarding
the nature and quality of the loans. WMC and JPMAC also
agreed to certain repurchase, indemnification, and notice
obligations with respect to the Trust. First, as relevant
here, the MLSA provided that when a party discovers a
material breach of any R & W, that party shall give the
other parties prompt written notice of the breach; the
notified parties then have 60 days to cure the breach by
repurchasing or substituting the defective loan and providing
indemnification (the repurchase protocol). The MLSA further
provided that a cause of action for repurchase did not accrue
until after the purchaser made a demand for repurchase (the
section 2.03(a)(i) of the PSA restated the repurchase
protocol, and provided, in pertinent part, that if a party
discovers a breach by WMC of any R & W under the MLSA,
the discovering party, or BNY or the Trustee, must try to
"cause [WMC] to... cure such defect or breach within 90
days from the date [WMC] was notified of such missing
document, defect or breach." Section 2.03(a)(I) further
contained the so-called "backstop provision, "
which obliged JPMAC to purchase defective loans if WMC did
not do so. Specifically, section 2.03(a)(I) stated, "In
the event that [WMC] shall fail to cure the applicable breach
or repurchase of a Mortgage Loan in accordance with the
[repurchase protocol], [JPMAC] shall do so." Third and
finally, section 2.02 of the PSA provided that, should the
servicer (defendant JPMorgan Chase Bank, N.A. [JPM Bank]),
among others, discover any breach of WMC's R & Ws in
the MLSA, it was to give prompt written notice to the other
24, 2012, January 22, 2013, and October 31, 2013, certain
certificate holders provided notice to BNY, JPMAC, and WMC of
purported warranty breaches with respect to many of the loans
in the Trust. Accordingly, by notices dated June 7, 2012,
January 28, 2013, and November 5, 2013, BNY, in its capacity
as securities administrator, notified WMC and JPMAC that over
1, 593 mortgage loans breached one or more of the R & Ws,
and demanded that WMC or JPMAC repurchase the defective
loans. Despite this demand, however, neither JPMAC nor WMC
repurchased the loans.
November 1, 2013, BNY, in its capacity as securities
administrator for the trust and on behalf of the certificate
holders, commenced this "put back" action. As
relevant to this appeal, BNY asserted claims seeking damages
from WMC and JPMAC for breach of contract with respect to the
R & Ws, and specific performance of the repurchase
obligation. BNY also sought damages from WMC, JPMAC, and JPM
Bank for breach of the PSA by failing to provide notice of
March 2014, defendants moved to dismiss the complaint under
CPLR 3211, arguing, among other things, that BNY's causes
of action for breach of the repurchase obligations were
untimely under this Court's decision in ACE Sec.
Corp. v DB Structured Prods., Inc., (112 A.D.3d 522');">112 A.D.3d 522 [1st
Dept 2013], affd 25 N.Y.3d 581');">25 N.Y.3d 581 ) because they
were filed more than six years after the PSA's June 28,
2006 closing date.
court dismissed the action in its entirety. As to BNY's
causes of action against WMC for breach of the MLSA by
failing to repurchase defective loans (the first, second,
sixth, and seventh causes of action), the IAS court dismissed
these claims as untimely. The court also dismissed BNY's
cause of action against JPMAC for breach of the
"backstop" repurchase obligations under the PSA
(the fourth cause of action) and against JPMAC and JPM Bank
for failure to notify (the fifth cause of action)
. We now modify to ...