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Federal Housing Finance Agency v. The Royal Bank of Scotland Group PLC

United States District Court, D. Connecticut

August 21, 2015

FEDERAL HOUSING FINANCE AGENCY, AS CONSERVATOR FOR THE FEDERAL NATIONAL MORTGAGE ASSOCIATION AND THE FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff,
v.
THE ROYAL BANK OF SCOTLAND GROUP PLC; RBS HOLDINGS USA, INC.; RBS SECURITIES, INC. (f/k/a GREENWICH CAPITAL MARKETS, INC.); RBS FINANCIAL PRODUCTS, INC. (f/k/a GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.), RBS ACCEPTANCE, INC. (f/k/a GREENWICH CAPITAL ACCEPTANCE, INC.); FINANCIAL ASSET SECURITIES CORP.; JOSEPH N. WALSH III; CAROL P. MATHIS; ROBERT J. MCGINNIS; JOHN C. ANDERSON; and JAMES M. ESPOSITO, Defendants

Page 93

          For Federal Housing Finance Agency, as conservator for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, Plaintiff: Leron Thumim, Andrew P Marks, Celine Crosa di Vergagni, Issar Birger, Jonathan B. Oblak, Manisha M. Sheth, Marina Olevsky, Adam M Abensohn, Stephen Schweizer, Tyler G. Whitmer, Jonathan Eser, Jordan Goldstein, Julia M Guaragna, Kathleen M Sullivan, Malgorzata Markowski, Michael R. McCray, Molly Stephens, Philippe Selendy, Richard A. Schirtzer, LEAD ATTORNEYS, PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan, LLP - NY, New York, NY; Sascha N Rand, LEAD ATTORNEY, PRO HAC VICE, Quinn Emanuel Urquhart Oliver & Hedges, LLP - NY, New York, NY; Zachary Williams, LEAD ATTORNEY, PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan, LLP - DC, Washington, DC; James T. Cowdery, James John Healy, Cowdery & Murphy, LLC, Hartford, CT.

         For Royal Bank of Scotland Group PLC, RBS Holdings USA, Inc., RBS Securities, Inc., formerly known as Greenwich Capital Markets, Inc., RBS Financial Products, Inc., formerly known as Greenwich Capital Financial Products, Inc., RBS Acceptance, Inc., formerly known as Greenwich Capital Acceptance, Inc., Financial Asset Securities Corp., Joseph N. Walsh, Carol P. Mathis, Robert J. McGinnis, John C. Anderson, James M. Esposito, Defendants: Alan C Turner, Andrew S. Amer, Andrew T. Frankel, Christopher O. Hultman, Craig S Waldman, Gabriel E. Bedoya, LEAD ATTORNEYS, PRO HAC VICE, Simpson Thacher & Bartlett LLP-NY, New York, NY; Thomas C. Rice, LEAD ATTORNEY, Simpson Thacher & Bartlett LLP-NY, New York, NY; David J. Woll, LEAD ATTORNEY, Simpson, Thacher & Bartlett, New York, NY; Matthew C. Brown, LEAD ATTORNEY, Wiggin & Dana-NH, New Haven, CT; Minta J Nester, LEAD ATTORNEY, PRO HAC VICE, Simpson, Thacher & Bartlett-NY, New York, NY; Timothy Andrew Diemand, LEAD ATTORNEY, Wiggin & Dana-Htfd, Hartford, CT; Melissa Fernandez, Wiggin & Dana LLP-Stfd, Stamford, CT.

Page 94

         RULING ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON THE STATUTES OF REPOSE

         Alvin W. Thompson, United States District Judge.

         For the reasons set forth below, the defendants' motion for summary judgment on the statutes of repose is being denied.

         I. Background

         Plaintiff Federal Housing Finance Agency (" FHFA" ) alleges in the Amended Complaint that " [b]etween September 30, 2005 and January 23, 2008, Fannie Mae and Freddie Mac purchased over $32.1 billion in residential mortgage-backed securities . . . issued in connection with 68 RBS-sponsored and/or RBS-underwritten securitizations." (Amended Complaint, Doc. No. 40, ¶ 2.) The Amended Complaint asserts claims under § § 11, 12(a)(2) and 15 of the Securities Act of 1933 (the " Securities Act" ), 15 U.S.C. § 77a et seq., § § 13.1-522(A)(ii) and 13.1-522(C) of the Virginia Code, and § § 31-5606.05(a)(1)(B) and 31-5606.05(c) of the District of Columbia Code, as well as a common law claim for negligent misrepresentation.

         The gravamen of the Amended Complaint is that Fannie Mae and Freddie Mac, in purchasing the 68 securitizations at issue, relied upon certain false and misleading statements contained in offering documents, and Fannie Mae and Freddie Mac suffered massive losses because of these misrepresentations. FHFA was appointed conservator of Fannie Mae and Freddie Mac on September 6, 2008, and it filed the instant action on September 2, 2011, within three years after the date FHFA was appointed conservator.

         The issue in the instant motion is whether 12 U.S.C. § 4617(b)(12), the Housing and Economic Recovery Act of 2008 (" HERA" ) extender statute, overrides both statutes of limitations and statutes of repose. The Second Circuit in FHFA v. UBS Americas Inc., 712 F.3d 136 (2d Cir. 2013), held that the extender statute " supplants any other time limitations that otherwise might have applied. As FHFA commenced suit within three years after it was appointed conservator of Freddie Mac and Fannie Mae, the action was timely." Id. at 144.

         After UBS was decided, the Supreme Court issued its opinion in CTS Corp. v. Waldburger, 134 S.Ct. 2175, 189 L.Ed.2d 62 (2014), holding that the federal commencement date established under 42 U.S.C. § 9658 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (" CERCLA" ) for state personal injury or property damage actions preempted only state statutes of limitations, not statutes of repose.

         The defendants contend that, interpreted properly in light of Waldberger, HERA's extender statute likewise displaces only statutes of limitations, and not statutes of repose, and thus, the plaintiff's claims are barred under applicable state and federal statutes of repose. However, the court concludes that Waldburger is materially different from and does not abrogate UBS.

         II. Discussion

         " [The court's] first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. [The court's] inquiry must cease if the statutory language is unambiguous and the statutory scheme is coherent and consistent." Robinson v. Shell Oil Co., 519 U.S. 337, 340,

Page 95

117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (internal quotation marks and citation omitted). " The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id. at 341. " Legislative history can be a legitimate guide to a statutory purpose obscured by ambiguity, but in the absence of a clearly expressed legislative intention to the contrary, the language of the statute itself must ordinarily be regarded as conclusive." Burlington N. R. Co. v. Oklahoma Tax Comm'n, 481 U.S. 454, 461, 107 S.Ct. 1855, 95 L.Ed.2d 404 (1987) (internal quotation marks and brackets omitted).

         Section 4617(b)(12) of HERA sets forth the statute of limitations for actions brought by FHFA as conservator or receiver:

(12) Statute of limitations for actions brought by conservator or receiver
(A) In general
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Agency as conservator or receiver shall be-
(i) in the case of any contract claim, the longer of-
(I) the 6-year period beginning on the date on which the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of--
(I) the 3-year period beginning on the date on which the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of--
(i) the date of the appointment of the Agency as conservator or receiver; or
(ii) the date on which the cause of action accrues.

12 U.S.C. § 4617(b)(12).

         As the Second Circuit explained in UBS, the plain language of § 4617(b)(12) makes it clear that it applies to the claims in this action:

Section 4617(b)(12) sets forth " the applicable statute of limitations with regard to any action brought by [FHFA] as conservator or receiver." 12 U.S.C. § 4617(b)(12)(A) (emphasis added). . . . It further provides that " the date on which the statute of limitations begins to run" is the later of (i) the date FHFA is appointed conservator or receiver or (ii) the date the cause of action accrues. Id. § 4617(b)(12)(B)(i), (ii).
By explicitly stating that " the" statute of limitations for " any action" brought by FHFA as conservator " shall be" as specified in § 4617(b)(12), Congress clearly provided that the extender statute shall apply to an action such as this one-an action brought by FHFA, as conservator, to recover " obligations and money" due Fannie Mae and Freddie Mac. Id. § 4617(b)(2)(B)(ii). By using these words, Congress precluded the possibility that some other limitations period might apply to claims brought by FHFA as conservator.

UBS, 712 F.3d at 141-42 (emphasis in original).

         The defendants contend that the Supreme Court held in ...


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