LEHMAN XS TRUST, SERIES 2006-GP2, (LXS 2006-GP2), by U.S. BANK NATIONAL ASSOCIATION, solely in its capacity as Trustee, LEHMAN XS TRUST, SERIES 2006-GP3, (LXS 2006-GP3), by U.S. BANK NATIONAL ASSOCIATION, solely in its capacity as Trustee, LEHMAN XS TRUST, SERIES 2006-GP4, (LXS 2006-GP4), by U.S. BANK NATIONAL ASSOCIATION, solely in its capacity as Trustee, Plaintiffs-Appellants,
GREENPOINT MORTGAGE FUNDING, INC., Defendant-Appellee. [*]
Argued: April 17, 2018
U.S. Bank National Association ("U.S. Bank")
appeals from a judgment entered in the United States District
Court for the Southern District of New York (Carter, J.)
dismissing its second amended consolidated complaint as
untimely. U.S. Bank argues, among other things, that the
district court erred in dismissing its complaint because (1)
its claim for indemnification under the contract in dispute
is independent of its claim for breach of that contract, and
the former claim therefore was timely filed in federal court;
and (2) its claim for indemnification based on separate
contracts executed at a later date relates back to the
original state-court filing under Federal Rule of Civil
Procedure 15(c). We disagree. AFFIRMED.
TORRES (David J. Abrams, David J. Mark, on the brief),
Kasowitz Benson Torres LLP, New York, NY, for Plaintiffs-
THEODORE R. SNYDER (James A. Murphy, New York, NY; Cameron S.
Matheson, Glen Allen, VA, on the brief), Murphy &
McGonigle, P.C., for Defendant-Appellee.
Before: WESLEY, CHIN, AND CARNEY, Circuit Judges.
WESLEY, CIRCUIT JUDGE:
appeal is the most recent chapter in the ongoing saga of the
last decade's housing finance crisis. At the core of the
appeal are three trusts (the "Trusts") composed of
residential mortgage-backed securities that Defendant-
Appellee GreenPoint Mortgage Funding, Inc.
("GreenPoint") sold in 2006 to Lehman Brothers
Holding, Inc., and Lehman Brothers Bank, FSB (collectively,
"Lehman"), with Plaintiff-Appellant U.S. Bank
acting as Trustee. Six years after the sale, in 2012, a
forensic review of the Trusts revealed that nearly all of the
sample mortgages GreenPoint sold to Lehman were in breach of
the representations and warranties ("R & Ws")
GreenPoint made in its Flow Mortgage Loan Purchase and
Warranties Agreements ("MLPAs") with Lehman.
failed to cure or repurchase the loans within the contractual
time frames. As a result, the Federal Housing Finance Agency
("FHFA")-acting on behalf of U.S. Bank as Trustee
and as conservator for the Federal Home Loan Mortgage
Corporation ("Freddie Mac"),  which in turn was
the beneficial owner of some of the certificates issued by
the Trusts-filed summonses with notice in New York Supreme
removed the actions to federal court, at which point the FHFA
dropped out of the litigation and U.S. Bank as Trustee filed
an amended and consolidated complaint. After discovery
and the filing of a second amended consolidated complaint,
GreenPoint moved for summary judgment as to three counts of
this complaint, and to dismiss as to the fourth count,
arguing, among other things, that the claims were barred by
New York's statute of limitations.
district court concluded, for various reasons discussed in
this opinion, that none of U.S. Bank's claims was timely.
The issue before this Court is whether any of U.S Bank's
claims survive GreenPoint's motions for summary judgment
and dismissal. We affirm the district court's conclusion
that none does.
2006, Lehman, not a party to this appeal, purchased
aggregated pools of residential home mortgages from
GreenPoint. The sales were governed by two MLPAs, each
of which contained a series of R & Ws as to the quality
of the mortgage loans. When Lehman purchased the loans from
GreenPoint in 2006, they had an aggregate principal balance
exceeding $3.39 billion.
conveyed the mortgage loans and its rights under the MLPAs to
a depositor (also not a party to this appeal), which then
conveyed the mortgage loans to three Trusts-GP2, GP3, and
GP4-via another set of contracts denominated "Trust
Agreements." The last dates on which Lehman purchased
mortgage loans from GreenPoint (i.e., the effective
dates of the R & Ws) were May 15, 2006 (GP2), June 15,
2006 (GP3), and July 17, 2006 (GP4). The Trusts closed on the
MLPAs on May 31, 2006 (GP2), June 30, 2006 (GP3), and July
31, 2006 (GP4). Once the mortgage loans were deposited into
the Trusts, they were securitized and certificates were
issued representing rights to cash flows from the securitized
loan portfolios. Investors then purchased the certificates,
thereby acquiring an ownership interest in the Trusts.
Freddie Mac was one of these investors.
& Ws contained in the MLPAs and the Trust Agreements made
assertions about the quality of individual mortgage loans and
the mortgage loan pools. Specifically, Section 7 of the MLPAs
represented that the mortgage loans were "underwritten
in accordance with [GreenPoint's] Underwriting
Guidelines," J.A. 160, 261; that the mortgage loan
schedules were "complete, true and correct,"
id. 154, 255; that GreenPoint possessed complete
mortgage files, id. 161, 262; and that, except as
specifically scheduled, the loan-to-value ratio for the
mortgage loans did not exceed 80%, id. 158, 259. The
MLPAs provided that GreenPoint made these R & Ws "as
of" each closing date. Section 2.03 of the Trust
Agreements incorporated the R & Ws from the MLPAs.
effort to ensure compliance with the R & Ws, the MLPAs
and the Trust Agreements created a contractual remedy in the
event that GreenPoint breached. Under Section 8 of the MLPAs,
upon learning of a breach, GreenPoint had sixty days to
"use its best efforts promptly to cure such [b]reach in
all material respects." Id. 165, 268. If the
breach could not be cured, Section 8 of the MLPAs provided
that GreenPoint "shall, at the Purchaser's option,
repurchase such Mortgage Loan" at an established
repurchase price. Id. The Trust Agreements included
an identical clause, except they gave GreenPoint ninety days
from the discovery of the breach to cure or repurchase. The
same section of the MLPAs contained an Accrual Provision that
established how the parties would proceed in the event of a
9 of the MLPAs also contained an indemnification clause,
which reads, in relevant part:
[GreenPoint] agrees to indemnify [Lehman] and hold it
harmless from and against any and all claims, losses,
damages, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and
expenses that [Lehman] may sustain in any way related to (i)
any act or omission on the part of [GreenPoint] or any other
person or entity in the origination, receiving, processing,
funding or servicing any Mortgage Loan prior to the related
Transfer Date or otherwise arising from the transfer of
servicing of the Mortgage Loans provided for in this
Agreement, [and] (ii) any assertion based on, grounded upon
[or] resulting from a Breach of any of [GreenPoint's R
& Ws] contained herein . . . . [GreenPoint] shall
immediately notify [Lehman] if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans .
J.A. 167, 270.
addition to the indemnification provisions included in the
MLPAs, GreenPoint (together with Lehman and SASC) entered
into separate Indemnification Agreements for each Trust. The
agreements provided that GreenPoint would "indemnify and
hold harmless" the other parties to the MLPAs and Trust
Agreements "from and against any and all losses, claims,
liabilities, damages, penalties, fines, forfeitures, legal
fees and expenses and related costs, judgments, and any other
costs, fees and expenses" that "arise out of or are
based upon any untrue statement or alleged untrue statement
of any material fact" or the omission of any such fact
in the information GreenPoint provided to Lehman.
Id. 1062, 1071, 1080. The relevant "as of"
dates for the Indemnification Agreements were May 30, 2006
(GP2); June 28, 2006 (GP3); and July 28, 2006 (GP4).
2012, Freddie Mac conducted a forensic review of the loan
files and determined that an overwhelming
percentage of the mortgage loans in the Trusts breached
GreenPoint's R & Ws under the MLPAs and Trust
Agreements. U.S. Bank submitted breach notices to
GreenPoint on the following dates: March 19, 2012, and August
24, 2012, for the GP2 Trust; March 19, 2012, for the GP3
Trust; and April 17, 2012, for the GP4 Trust. GreenPoint did
not cure or repurchase within the sixty- or ninety-day
periods established in the MLPAs and Trust Agreements,