National Credit Union Administration Board v. UBS Securities, LLC et al

Filing 72

MEMORANDUM AND ORDER - The 21 Defendants' Motion to Dismiss is granted in part and denied in part. The motion is granted with respect to all claims against defendant MAST, which claims are hereby dismissed. The motion is granted with respect to plaintiffs claims against defendant UBS based on 10 particular certificates, as set forth more specifically herein. The motion is otherwise denied. Signed by District Judge John W. Lungstrum on 9/3/2013. (ses)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

NATIONAL CREDIT UNION
ADMINISTRATION BOARD,

)
)
)
Plaintiff,
)
)
v.
)
)
UBS SECURITIES, LLC and
)
MORTGAGE ASSET SECURITIZATION
)
TRANSACTIONS, INC.,
)
)
Defendants.
)
)
_______________________________________)

Case No. 12-2591-JWL

MEMORANDUM AND ORDER
This matter is presently before the Court on the motion to dismiss by defendants
UBS Seurities, LLC (“UBS”) and Mortgage Asset Securitization Transactions, Inc.
(“MAST”) (Doc. # 21). The Court concludes that certain of plaintiff’s claims are timebarred; accordingly, the motion is granted in part and denied in part. The motion is
granted with respect to all claims against defendant MAST, which claims are hereby
dismissed. The motion is granted with respect to plaintiff’s claims against defendant
UBS based on 10 particular certificates, as set forth more specifically herein. The
motion is otherwise denied.

I.

Background

Plaintiff National Credit Union Administration Board brings this suit as
conservator and liquidating agent of two credit unions, U.S. Central Federal Credit
Union (“U.S. Central”) and Western Corporate Federal Credit Union (“WesCorp”). The
suit relates to 22 different residential mortgage-backed securities (“RMBS” or
“certificates”), each purchased by one of the credit unions between March 2006 and
April 2007. By the present suit, filed on September 6, 2012, plaintiff brings claims under
the federal Securities Act of 1933 and under California and Kansas statutes, based on
alleged untrue statements or omissions of material facts relating to each RMBS.
Defendant UBS was the underwriter or seller for the certificates, while defendant MAST
issued some of the certificates. Defendants have moved to dismiss certain claims against
them.
Plaintiff has brought eight other similar suits, involving different certificates, in
this district, which cases have been re-assigned to the undersigned judge. In one of those
actions, Case No. 12-2648, by Memorandum and Order dated April 8, 2013, the Court
granted in part and denied in part the motion to dismiss filed by the Credit Suisse
defendants (“Credit Suisse”). See National Credit Union Admin. Bd. v. Credit Suisse
Sec. (USA) LLC, __ F. Supp. 2d __, 2013 WL 1411769 (D. Kan. Apr. 8, 2013) (“Credit
Suisse”). In that opinion, the Court held as follows: (1) Credit Suisse did not show that
the Court lacked venue over plaintiff’s claims asserted on behalf of credit unions
WesCorp and Southwest; (2) plaintiff’s claims were not untimely as a matter of law with
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respect to the applicable one- and two-year discovery limitations periods; (3) the socalled Extender Statute, 12 U.S.C. § 1787(b)(14), which provides the limitations period
for claims brought by plaintiff as conservator or liquidator, applies to federal and
statutory claims; (4) the Extender Statute displaces both limitations periods in the
otherwise-applicable federal (Section 13, 15 U.S.C. § 77m) and state statutes; (5)
plaintiff’s three-year limitations period under the Extender Statute was triggered by
plaintiff’s appointment as conservator for a credit union, not by its later appointment as
liquidator; (6) the Extender Statute’s three-year limitations period may not be extended
by a tolling agreement; (7) plaintiff’s assertion of American Pipe tolling with respect to
its federal claims based on some certificates did not fail as a matter of law at this stage;
and (8) plaintiff’s substantive allegations were sufficient to state plausible and
cognizable claims against Credit Suisse. In some of its rulings, the Court followed the
reasoning of Judge Rogers in ruling on a motion to dismiss in another of these nine
similar cases (before the case was reassigned). See id. (citing National Credit Union
Admin. Bd. v. RBS Sec., Inc., 900 F. Supp. 2d 1222 (D. Kan. 2012) (“RBS”)). Last week,
in an interlocutory appeal in RBS, the Tenth Circuit affirmed Judge Rogers with respect
to two of the issues listed above, holding that the Extender Statute does apply to federal
and statutory claims and does displace Section 13’s three-year limitations period. See
National Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., __ F.3d __, 2013
WL 4516997 (10th Cir. Aug. 27, 2013).
After issuing its opinion in Credit Suisse, the Court invited the parties in seven
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of the other similar cases (one case had not yet been filed) to submit briefs addressing
(a) the application of the Court’s rulings in Credit Suisse to the motions to dismiss filed
by the defendants in those cases and (b) the specific issue of the enforceability of
plaintiff’s tolling agreements.

II.

Analysis
A.

Initial Application of Credit Suisse

The Court notes that defendants, in their supplemental briefing in support of their
motion to dismiss, have not offered additional arguments relating to venue over claims
on behalf of WesCorp, the sufficiency of plaintiff’s substantive allegations, the
application of the discovery limitations periods, the displacement of Section 13’s
limitations periods by the Extender Statute, and the application of the Extender Statute
to federal or statutory claims. Thus, defendants have not distinguished the Court’s
Credit Suisse rulings concerning those issues, and the Court resolves the issues in
plaintiff’s favor in this case as well, for the reasons stated in Credit Suisse and as held
by the Tenth Circuit in the appeal in RBS.
Nevertheless, defendants seek dismissal of some of plaintiff’s claims on behalf
of U.S. Central and WesCorp as time-barred pursuant to the three-year limitations period
imposed by the Extender Statute. Absent some form of tolling, plaintiff was required to
file suit to assert those claims by March 20, 2012, three years after its appointment as
conservator for those credit unions. Plaintiff did not initiate this action, however, until
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September 6, 2012. Nor may plaintiff rely on the Extender Statute’s alternative
reference to the applicable state-law limitations periods, as this case was filed more than
five years (the applicable repose period for both states) after the purchases of these
certificates.
Plaintiff has asserted tolling pursuant to an agreement executed by the parties, but
the Court has, by an opinion issued in the Credit Suisse case on July 10, 2013, reaffirmed
its ruling that plaintiff may not rely on such an agreement to avoid application of the
Extender Statute’s limitations period, and that ruling will also be applied in the present
case. Thus, with respect to certificates for which plaintiff has not asserted some other
form of tolling, plaintiff’s federal and state claims on behalf of U.S. Central and
WesCorp would be time-barred and subject to dismissal. Based on plaintiff’s complaint
and the parties’ supplemental submissions, such claims include those based on the
following certificates:
Purchaser

Issuing Entity

CUSIP

U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
WesCorp
WesCorp

MASTR-ARMT 2006-OA2
MASTR-ARMT 2007-1
MASTR-ARMT 2007-1
MASTR-ARMT 2007-HF1
MASTR-ABST 2006-HE4
MASTR-ABST 2006-HE4
MASTR-ABST 2006-HE4
MASTR-ABST 2006-WMC4
CHL 2006-OA5
CHL 2006-OA5

55275NAP6
576431AE0
576431AB6
57645RAA9
576449AC6
576449AD4
576449AE2
57645MAE2
126694M88
126694N38

Plaintiff has not disputed that, assuming the Court reaffirms and applies its prior rulings,

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those claims—which include all claims against defendant MAST—would be subject to
dismissal. Accordingly, defendants’ motion is granted with respect to those claims based
on the listed certificates, which claims are hereby dismissed.
B.

Claims for Which American Pipe Tolling Has Been Asserted

Defendants also make several arguments for dismissal of claims on behalf of U.S.
Central and WesCorp for which plaintiff has asserted American Pipe tolling. In
particular, defendants argue (1) that American Pipe tolling should not apply to extend
the limitations periods set forth in the Extender Statute; (2) that American Pipe tolling
should not be permitted as asserted with respect to some certificates because the named
plaintiffs in the particular cited class actions asserted standing with respect to these
certificates only based on a common registration statement; and (3) that American Pipe
tolling should not apply with respect to plaintiff’s state-law claims. By Memorandum
and Order issued this same day in Bear Stearns, one of the similar cases brought in this
district, the Court has rejected these same arguments. See Memorandum and Order of
Sept. 3, 2013, NCUAB v. Bear Stearns & Co., Inc. (“Bear Stearns”), Case No. 12-2781JWL, slip. op. at 7-19. For the same reasons, the Court rejects these arguments as
asserted by defendants in this case.1

1

In its initial response to the motion to dismiss, plaintiff stated that it asserted
American Pipe tolling only with respect to its federal claims. In its supplemental brief,
however, plaintiff asserted that such tolling should also apply to its state-law claims
against UBS. UBS argues that plaintiff should not be able to change its position at this
time. The Court rejects that argument by UBS for the same reasons stated by the Court
(continued...)
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Defendants also argue that plaintiff should not be permitted to rely on American
Pipe tolling with respect to 11 of the remaining certificates because the plaintiffs in those
particular class actions had already been determined to lack standing with respect to
those certificates by March 20, 2012 (when the Extender Statute’s three-year limitations
period expired absent tolling). Plaintiff concedes that, for purposes of this motion, it
does not assert tolling for periods of time after those standing determinations as argued
by defendants. Thus, defendants argue that no tolling was occurring between March 20,
2012, and September 6, 2012 (the date this suit was filed), and that plaintiff’s claims
with respect to those 11 certificates are therefore untimely.
The Court rejects this argument. As the Supreme Court ruled in American Pipe
itself, the commencement of the class action “suspends” the limitations period. See
American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974); accord State Farm
Mutual Auto. Ins. Co. v. Boellstorff, 540 F.3d 1223, 1230 (10th Cir. 2008) (quoting
American Pipe, 414 U.S. at 554). Defendants have provided no authority supporting the
argument that American Pipe tolling does not suspend the statute of limitation but must
instead be in effect after the expiration of the applicable limitations period. Indeed,
defendants’ interpretation would render American Pipe tolling essentially useless, as an
putative class member might be required to file her own suit before the determination

1

(...continued)

in rejecting the same argument in its Bear Stearns opinion. See Bear Stearns, slip. op.
at 14.
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that she is not in fact a class member.2
Defendants change tack in their supplemental reply. Instead of continuing to
argue for their unique method of applying American Pipe tolling, defendants note that
the American Pipe Court’s reference to “suspension” was to suspension of “the
applicable statute of limitations.” See American Pipe, 414 U.S. at 554. Defendants
argue that at the time these class actions were commenced, Section 13 provided the
applicable statute of limitations governing plaintiff’s claims, as the Extender Statute had
not yet been triggered by plaintiff’s appointment as conservator for these two credit
unions. Thus, defendants argue that the Extender Statute’s limitations period should not
be tolled in this case.
The Court rejects this argument as well. As noted above, the Court has already
ruled that the Extender Statute is subject to American Pipe tolling. The Court sees no
reason to limit that ruling to tolling that begins only after the Extender Statute has been
triggered, as in either case, American Pipe tolling is intended to relieve plaintiff, as a
putative class member, from having to file an individual lawsuit while its class
membership remains possible. Accordingly, the Court denies defendants’ motion to
dismiss certain claims on this basis.

2

In an opinion subsequent to American Pipe, the Supreme Court discussed how
this tolling is applied in the context of deciding between suspension of the applicable
limitations period and renewal of the limitation period once tolling ceases. See Chardon
v. Fumero Soto, 462 U.S. 650 (1983). There was no mention of a possible third method
of application as urged by defendants here.
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IT IS THEREFORE ORDERED BY THE COURT THAT defendants’ motion
to dismiss (Doc. # 21) is granted in part and denied in part. The motion is granted
with respect to all claims against defendant MAST, which claims are hereby dismissed.
The motion is granted with respect to plaintiff’s claims against defendant UBS based on
10 particular certificates, as set forth more specifically herein. The motion is otherwise
denied.

IT IS SO ORDERED.

Dated this 3rd day of September, 2013, in Kansas City, Kansas.

s/ John W. Lungstrum
John W. Lungstrum
United States District Judge

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