United States District Court, S.D. New York
G. Schofield United States District Judge
of RMBS trusts are suing trustee HSBC Bank USA, N.A.
(“HSBC”) for violations of the agreements
outlining HSBC's obligations as trustee. HSBC seeks to
reserve the right to assert an advice of counsel defense in
these coordinated actions. In a Report and Recommendation
dated May 8, 2017 (the “R&R”), Magistrate
Judge Netburn recommended striking this affirmative defense
from HSBC's answers in these coordinated actions. HSBC
objects. For the following reasons, HSBC's objections are
overruled, and Judge Netburn's recommendation is adopted.
November 10, 2016, Plaintiff moved to compel HSBC to respond
to an interrogatory concerning its advice of counsel defense.
In response, HSBC argued that the interrogatory was premature
because Plaintiffs had not to date identified
“loan-level breaches and specific Events of Default,
” and that “[o]nly after a plaintiff identifies
its specific claims can a defendant determine whether it even
received advice related to those claims.” On November
17, 2016, Judge Netburn ordered HSBC to “decide whether
it intends to assert an advice of counsel defense by January
27, 2017, ” “[r]egardless . . . of the
plaintiffs' ability to identify specific information
about the loan-level breaches and/or Events of
Default.” HSBC neither objected to the Order nor sought
an extension of the deadline. In an Order dated January 26,
2017, Judge Netburn “remind[ed] HSBC of its obligation
to notify plaintiffs whether it intends to assert the defense
by January 27, 2017, regardless of whether plaintiffs are
able to identify specific loan-level breaches.” On
January 27, 2017, HSBC wrote to Plaintiffs, “at this
time HSBC does not intend to raise an advice of counsel
defense.” HSBC purported to “reserve all
rights” to raise an advice of counsel defense as to
specific breaches Plaintiffs may identify at a later date.
Plaintiffs moved to strike HSBC's affirmative defense
from its answers on April 6, 2017. Judge Netburn recommended
granting the motion on May 8.
district court reviewing a magistrate judge's report and
recommendation “may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the
magistrate judge.” 28 U.S.C. § 636(b)(1)(C). The
district court “may adopt those portions of the report
to which no specific, written objection is made, as long as
the factual and legal bases supporting the findings and
conclusions set forth in those sections are not clearly
erroneous or contrary to law.” Adams v. N.Y. State
Dep't of Educ., 855 F.Supp.2d 205, 206 (S.D.N.Y.
2012) (internal quotation marks omitted) (citing Fed.R.Civ.P.
72(b)). The court must undertake a de novo review of any
portion of the report to which a specific objection is made.
See 28 U.S.C. § 636(b)(1)(C); Thomas v.
Arn, 474 U.S. 140, 149 (1985); United States v. Male
Juvenile, 121 F.3d 34, 38 (2d Cir. 1997). The court may
then accept, reject, or modify in whole or in part
recommendations of the magistrate judge. 28 U.S.C. §
636(b)(1)(C); Trs. of the Mason Tenders, Dist. Council
Welfare Fund, Pension Fund, Annuity Fund & Training
Program Fund v. Faulkner, 484 F.Supp.2d 254, 257
Judge Netburn explained in the R&R, HSBC is time-barred
from raising an advice of counsel defense. Judge Netburn
ordered HSBC to make a final determination as to any advice
of counsel defense by January 27, 2017. HSBC failed to seek
reconsideration of or object to the Order. HSBC likewise
failed to seek an extension of the deadline or leave to
“reserve” the right to assert any such defense
after the deadline. Because HSBC did not seek any such relief
at the appropriate time, it has waived the opportunity and is
bound to comply. See Loc. Civ. R. 6.3 (14-day
deadline to file a motion for reconsideration); Harty v.
Spring Valley Marketplace LLC, No. 15 Civ. 8190, 2016 WL
8710480, at *2 (S.D.N.Y. Jan. 22, 2016) (untimely requests
for reconsideration warrant denial); Fed.R.Civ.P. 72(a) (As
to nondispositive matters, a “party may not assign as
error a defect in the order not timely objected to.”);
Smith v. Campbell, 782 F.3d 93, 102 (2d Cir. 2015)
(As to dispositive matters, “[w]here parties receive
clear notice of the consequences, failure to timely object to
a magistrate's report and recommendation operates as a
waiver of further judicial review of the magistrate's
decision.”); Thai Lao Lignite (Thailand) Co. v.
Gov't of Lao People s Democratic Republic, 924
F.Supp.2d 508, 517 (S.D.N.Y. 2013) (“Parties who fail
to object to a magistrate's ruling within 14 days waive
their opportunity to challenge that ruling.”).
reasons above, Defendants' objections are
OVERRULED, and the R&R is
Clerk of Court is respectfully directed to close the motions
at 14 Civ. 8175, Docket No. 352; 14 Civ. 9366, Docket No.
375; 14 Civ. 10101, Docket No. 261; 15 Civ. 2144, Docket No.
264; 15 ...