In Re: RFC and RESCAP Liquidating Trust Litigation

Filing 673

ORDER denying #317 Defendant Hometown Mortgage Service Inc.'s Unique Issue Motion to Dismiss Count I of Plaintiff's Second Amended Complaint. This document relates to Residential Funding Company, LLC v. Hometown Mortgage Services, Inc., Case No. 14-cv-3509. (Written Opinion) Signed by Judge Susan Richard Nelson on 07/28/15. (SMD)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

In re: RFC and ResCap Liquidating Trust
Litigation
This document relates to:

Case No. 13-cv-3451 (SRN/JJK/HB)

MEMORANDUM OPINION
AND ORDER

Residential Funding Company, LLC v.
Hometown Mortgage Services, Inc., No.
13-cv-3509 (PAM/HB)

SUSAN RICHARD NELSON, United States District Judge
I.

INTRODUCTION
This matter is before the Court on Defendant Hometown Mortgage Services, Inc.’s

Unique Issue Motion to Dismiss Count I of Plaintiff’s Second Amended Complaint [Doc.
No. 317]. For the reasons set forth below, the Motion is denied.
II.

BACKGROUND
The alleged facts giving rise to the lawsuits in this consolidated action have been

described in multiple prior Orders from this Court. Briefly stated, this particular lawsuit
arises out of Defendant Hometown Mortgage Services, Inc.’s (“Hometown”) sale of
allegedly defective mortgage loans to Residential Funding, LLC (“RFC”). (Second Am.
Compl. [Doc. No. 68, 13-cv-3509] ¶ 1.) Prior to May 2012, RFC was “in the business of
acquiring and securitizing residential mortgage loans,” (id. ¶ 2), and RFC acquired the loans
from “‘correspondent lenders,’” such as Hometown, (id. ¶ 3). According to the Second
Amended Complaint, RFC’s relationship with Hometown was governed by a Client
Contract that incorporated the terms and conditions of RFC’s Consumer Finance

Acquisitions Guide (“CFA Guide”) and RFC’s Client Guide, and these documents
“collectively form the parties’ Agreement, and set the standards to which Hometown’s loans
sold to RFC were expected to adhere.” (Id. ¶¶ 17–18 & Exs. A, B-1, B-4–B-31, F.) It is
alleged that, pursuant to the Agreement, Hometown made many representations and
warranties regarding the loans, including that Hometown would “promptly notify” RFC of
any material acts or omissions regarding the loans. (Id. ¶ 24(b) (citing Client Guide
A201(M)).) The Agreement also provided for certain remedies for RFC in the event of a
breach, including repurchase of the defective loan or indemnification against losses and
liabilities resulting from the breach. (Id. ¶¶ 29–33.) The Client Contract, Client Guide (or
excerpts thereof), and CFA Guide are attached to the Second Amended Complaint as
Exhibits A, B-1, B-4 through B-31, and F; and lists of the loans sold by Hometown to RFC
are attached as Exhibits C-1 and C-2. The most recent acquisition of any of the loans
allegedly occurred in 2007. (See id., Exs. C-1, C-2.)
After purchasing the loans from Hometown, RFC either pooled the loans to sell into
residential mortgage-backed securitization (“RMBS”) trusts or sold them to whole loan
purchasers. (Id. ¶¶ 3, 36.) According to RFC, many of the loans were defective and,
beginning in 2008, RFC faced claims and lawsuits resulting from defective loans it had
purchased, including loans from Hometown. (See id. ¶¶ 39, 49, 51, 55.) By May 2012,
RFC had spent millions of dollars repurchasing defective loans, including loans sold to it by
Hometown, (id. ¶ 71), and on May 14, 2012, RFC filed for Chapter 11 bankruptcy in the
Bankruptcy Court for the Southern District of New York, (id. ¶ 72; In re Residential Capital,

2

LLC, Case No. 12-12020 (MG) (Bankr. S.D.N.Y.)). RFC alleges that hundreds of proofs of
claim related to allegedly defective mortgage loans, including those sold to RFC by
Hometown, were filed in connection with the bankruptcy proceedings. (Second Am.
Compl. ¶ 73.)
The Bankruptcy Court eventually approved a global settlement for more than $10
billion in allowed claims. (Id. ¶ 76.) RFC claims that Hometown is obligated, pursuant to
the Agreement, to compensate RFC for losses and liabilities related to Hometown’s
breaches of representations and warranties. (Id. ¶ 78.) Accordingly, RFC filed a lawsuit
asserting two causes of action against Hometown. In Count One, a claim for breach of
contract, RFC alleges that Hometown materially breached the representations and
warranties it made to RFC because the mortgage loans it sold to RFC did not comply with
those representations and warranties. (Id. ¶ 83.) RFC asserts that these material breaches
constitute Events of Default under the Agreement and have resulted in losses and liabilities
related to the defective loans, as well as losses associated with defending the lawsuits and
proofs of claim that stem from those loans. (Id. ¶¶ 84–85.) In Count Two, RFC alleges that
it is entitled to indemnification from Hometown for those losses and liabilities. (Id. ¶¶ 87–
90.)
III.

DISCUSSION
When evaluating a motion to dismiss under Rule 12(b)(6) of the Federal Rules of

Civil Procedure, for failure to state a claim upon which relief can be granted, the Court
assumes the facts in the Complaint to be true and construes all reasonable inferences from

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those facts in the light most favorable to the plaintiff. Morton v. Becker, 793 F.2d 185, 187
(8th Cir. 1986). However, the Court need not accept as true wholly conclusory allegations,
see Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal
conclusions the plaintiff draws from the facts pled, Westcott v. City of Omaha, 901 F.2d
1486, 1488 (8th Cir. 1990). In addition, the Court ordinarily does not consider matters
outside the pleadings on a motion to dismiss. See Fed. R. Civ. P. 12(d). The Court may,
however, consider exhibits attached to the complaint and documents that are necessarily
embraced by the pleadings, Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir.
2003), and may also consider public records, Levy v. Ohl, 477 F.3d 988, 991 (8th Cir.
2007).1
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint “must
contain . . . a short and plain statement of the claim showing that the pleader is entitled to
relief.” The U.S. Supreme Court, in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), clarified that this Rule does not require
that a complaint contain “detailed factual allegations,” but it does require that it contain facts
with enough specificity “to raise a right to relief above the speculative level.” Twombly,
550 U.S. at 555. In other words, this standard “calls for enough fact[s] to raise a reasonable
expectation that discovery will reveal evidence of [the claim].” Id. at 556. “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do
1

As discussed above, several exhibits were attached to the Second Amended
Complaint. The Court may properly consider these documents because they are attached
to the Second Amended Complaint and are necessarily embraced by the pleadings.
4

not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). Thus, to survive a
motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is
plausible on its face.” Twombly, 550 U.S. at 570.
In its Motion, Hometown argues that Count I must be dismissed both because the
statute of limitations precludes recovery on all of the loans it sold to RFC, and because RFC
cannot bring suit on liquidated loans. (See Mem. of Law in Supp. of Hometown’s Mot. to
Dismiss Count I of Pl.’s Second Am. Compl. [Doc. No. 319] (“Hometown’s Mem.”) at 5–
13.) Both arguments fail.
A.

Statute of Limitations

Hometown first argues that RFC’s claims for breach of contract are time-barred. As
for loans RFC purchased prior to May 14, 2006, Hometown asserts that any related claims
accrued on the date of purchase and so are barred by Minnesota’s six-year statute of
limitations. (See id. at 5–11.) According to Hometown, this Court is bound by Judge
Magnuson’s decision in Residential Funding Co., LLC v. Embrace Home Loans, Inc., 27 F.
Supp. 3d 980 (D. Minn. 2014) (“Embrace I”), in which Judge Magnuson—prior to
consolidation—granted Hometown’s motion to dismiss Count I of RFC’s First Amended
Complaint to the extent that it was based on such loans. (Id. at 5.) Hometown also
contends that the Second Amended Complaint (filed on September 29, 2014) does not relate
back to the date of the original Complaint because it alleges breaches of both the CFA
Guide and the Client Guide (whereas the original Complaint and First Amended Complaint
alleged breaches only of the Client Guide), and because the Second Amended Complaint

5

newly alleges breaches under a continuing obligation theory. (Def. Hometown’s Reply to
Opp. to Mot. to Dismiss Count I of Pl.’s Second Am. Compl. [Doc. No. 432]
(“Hometown’s Reply”) at 6–7.) Accordingly, Hometown argues, RFC’s claims based on
loans it purchased between May 14, 2006 and September 29, 2008 also are untimely. (See
Hometown’s Mem. at 9–10.)
In opposition, RFC argues that its breach of contract claims based on loans sold to
RFC prior to May 14, 2006 are timely because Hometown had a continuing contractual
obligation to notify RFC of loan defects, as it argued in response to a similar motion to
dismiss brought by Decision One Mortgage Company, LLC (“Decision One”) in this
consolidated action. (Pl.’s Mem. of Law in Opp. to Hometown’s Mot. to Dismiss Count I
of Pl.’s Second Am. Compl. [Doc. No. 387] (“Pl.’s Opp.”) at 6.) RFC asserts that, because
Hometown has not raised any new arguments not already addressed by this Court’s Order
denying Decision One’s Motion, Hometown’s Motion also should be denied. (Id.) RFC
further argues that Judge Magnuson’s decision in Residential Funding Co., LLC v. Embrace
Home Loans, Inc., Civ. No. 13-3457 (PAM/HB), 2015 WL 1275340 (D. Minn. Mar. 19,
2015) (“Embrace II”), in which he denied a motion to dismiss Count I of RFC’s Second
Amended Complaint and reinstated RFC’s breach of contract claim for loans acquired prior
to May 14, 2006 (based on the continuing obligation theory), supersedes Embrace I. (Id. at
7.) Finally, RFC argues that its Second Amended Complaint relates back to the date of the
original Complaint because the claims arose out of the same conduct. (See id. at 7–14.)

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The Court agrees with RFC. First, under § 108(a) of the Bankruptcy Code, if the
statute of limitations governing a debtor’s claim has not expired prior to the filing of the
bankruptcy petition, the trustee may commence an action on that claim before the later of
the end of the statutory limitations period or “two years after the order for relief.” 11 U.S.C.
§ 108(a). The parties agree that Minnesota has a six-year statute of limitations for contract
claims. See Minn. Stat. § 541.05, subd. 1(1). And, here, the instant action was originally
filed in December 2013, which is within the two-year period following the Bankruptcy
Court’s order for relief. Accordingly, the six-year statute of limitations had not expired as
to loans sold to RFC on or after May 14, 2006 at the time RFC filed its bankruptcy petition
on May 14, 2012. See 11 U.S.C. § 1107(a) (stating that “a debtor in possession shall have
all the rights . . . and powers, and shall perform all the functions and duties . . . of a trustee
serving in a case under [Chapter 11]”); Johnson v. First Nat’l Bank of Montevideo, 719 F.2d
270, 278 n.11 (8th Cir. 1983) (citations omitted) (“Although the language of § 108 refers
only to the trustee, it is generally agreed that the debtor-in-possession is also entitled to the
statute’s privileges.”).
Likewise, contrary to Hometown’s assertions, the breach of contract claim in the
Second Amended Complaint is not untimely simply because the Second Amended
Complaint was filed more than two years after the Bankruptcy Court’s order for relief.
Rather, pursuant to Rule 15(c) of the Federal Rules of Civil Procedure, “[a]n amendment to
a pleading relates back to the date of the original pleading when . . . the amendment asserts a
claim or defense that arose out of the conduct, transaction, or occurrence set out—or

7

attempted to be set out—in the original pleading.” Fed. R. Civ. P. 15(c)(1)(B). As the
Eighth Circuit has noted, Rule 15(c) is “liberally construed” because the purpose of the Rule
“is to permit cases to be decided on their merits.” Alpern v. Utilicorp United, Inc., 84 F.3d
1525, 1543 (8th Cir. 1996). “Thus, relation back has been permitted of amendments that
change the legal theory of the action . . . .” Id. And, “whether [an amended pleading]
relates back to the date of the original pleading [is a] matter[] within the sound discretion of
the trial court.” Shea v. Esensten, 208 F.3d 712, 720 (8th Cir. 2000).
The Court finds that the breach of contract claim as stated in the Second Amended
Complaint arose out of the same conduct, transaction, or occurrence that was set out in the
original Complaint—i.e., Hometown’s sale of loans to RFC that allegedly breached the
representations and warranties Hometown made to RFC regarding those loans. (Compare
Compl. [Doc. No. 1, 13-cv-3509] (“Compl.”) ¶ 64 (“Defendant breached its representations
and warranties to RFC inasmuch as the mortgage loans did not comply with the
representations and warranties.”), with Second Am. Compl. ¶ 83 (“Defendant materially
breached its representations and warranties to RFC inasmuch as the mortgage loans
materially did not comply with the representations and warranties.”). In addition, the same
representations and warranties from the Client Guide are alleged to have been breached in
each version of the complaint, including Section A201(M), under which RFC allegedly
represented and warranted that it “‘[would] promptly notify GMAC-RFC of any occurrence,
act, or omission regarding [Defendant], the Loan, the Mortgaged Property or the Mortgagor
of which [Defendant] has knowledge, which . . . may materially affect [Defendant], the

8

Loan, the Mortgaged Property or the Mortgagor.’” (Compare Compl. ¶23(b) (quoting
Client Guide A201(M)), with Second Am. Compl. ¶ 24(b) (same).) Although the Second
Amended Complaint also alleges that certain provisions of the CFA Guide were breached, it
states that the relevant provisions of the Client Guide and CFA Guide are “substantially
similar,” (Second Amended Compl. ¶ 18), and demonstrates the similarities through
citations to the corresponding paragraphs of each guide, (see id. ¶ 24). Thus, relation back
of the amended pleading is permissible because “the amended complaint is related to the
general fact situation alleged in the original pleading.” Alpern, 84 F.3d at 1543.
Hometown cites to several cases for the proposition that, when a complaint is
dismissed without prejudice, the statute of limitations does not stop running and an
amendment of that complaint does not relate back to the date of the original complaint, (see
Hometown’s Mem. at 9–10), but those cases either did not involve application of Rule
15(c)2 or are inapposite3. When a complaint is dismissed without prejudice so that a party

2

See Gerhardson v. Gopher News Co., 698 F.3d 1052, 1056–57 (8th Cir. 2012)
(holding that the statute of limitations was not tolled during the time period in which an
unsuccessful motion to intervene was pending); Strandlund v. Hawley, 532 F.3d 741,
745–46 (8th Cir. 2008) (stating that the statute of limitations is not tolled when a case is
dismissed pursuant to Federal Rule of Civil Procedure 21 for misjoinder); Garfield v. J.C.
Nichols Real Estate, 57 F.3d 662, 666 (8th Cir. 1995) (finding that the statute of
limitations was not tolled when the plaintiffs filed a voluntary stipulation of dismissal
without prejudice); Moore v. St. Louis Music Supply Co., 539 F.2d 1191, 1194 (8th Cir.
1976) (stating that the statute of limitations is not tolled when a case is dismissed without
prejudice for failure to prosecute); MacIntyre v. Lender Processing Servs., Inc., Civ. No.
12-1514 (PAM/SER), 2012 WL 4872678, at *3 (D. Minn. Oct. 15, 2012) (stating that the
statute of limitations would not ordinarily be tolled when a case is dismissed without
prejudice on grounds of claim-splitting); Graves v. Principi, 294 F.3d 1350, 1356 (Fed.
Cir. 2002) (finding that the plaintiff’s voluntary dismissal without prejudice of his appeal
to Veterans Court put him in the same position as if the appeal had never been filed).
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can re-plead a claim, and the amended complaint satisfies Rule 15(c)—as was the case here
with regard to RFC’s breach of contract claim based on loans sold on or after May 14,
2006—the amended complaint relates back to the date of the original complaint for statuteof-limitations purposes. See United States ex rel. Vosika v. Starkey Labs., Inc., Civ. No.
01-709 (DWF/SRN), 2004 WL 2065127, at *2–3 (D. Minn. Sept. 8, 2004) (finding that “the
statute of limitations ceased running from the filing of the original Complaint” where the
Second Amended Complaint satisfied Rule 15(c), even though the First Amended
Complaint had been dismissed without prejudice for failure to plead fraud with
particularity); Siegel v. Converters Transp., Inc., 714 F.2d 213, 215–16 (2d Cir. 1983)
(applying Rule 15(c) to relate an amended complaint alleging a derivative action back to the
date of filing of the original complaint, which had been dismissed without prejudice for
erroneously asserting an individual claim); Gordon v. Green, 602 F.2d 743, 747 (5th Cir.
1979) (dismissing a complaint for violation of Rule 8 and holding that the filing of a proper
amendment would relate back to the original filing per Rule 15(c), “thus eliminating any
question concerning the statute of limitations”).
Second, as for the loans sold prior to May 14, 2006, the continuing obligation theory
that RFC advances is not based on Hometown’s alleged failure to fulfill pre-suit remedial

3

See Moore v. Chamberlain, 559 F. App’x 969, 970 (11th Cir. 2014) (rejecting the
plaintiff’s attempt to apply Rule 15(c) as between complaints filed in separate actions
when the first action was dismissed without prejudice for insufficient service of process);
Abram-Adams v. Citigroup, Inc., 491 F. App’x 972, 974–75 (11th Cir. 2012) (holding
that Rule 15(c) did not apply where, after the plaintiff’s complaint was dismissed without
prejudice for failure to comply with the court’s deadline, she was required to initiate a
new lawsuit).
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obligations, as Hometown argues, (see Hometown’s Mem. at 11 n.1), but rather is based on
Hometown’s alleged breaches of the representation and warranty in Section A201(M) that it
would “promptly notify” RFC of any material acts or omissions regarding the loans.
(Second Am. Compl. ¶ 24(b) (citing Client Guide A201(M)); see id. ¶ 20.) As this Court
discussed in Residential Funding Co., LLC v. Academy Mortgage, “‘[w]here a warranty
relates to a future event that will determine whether or not it is breached, the statute does not
begin to run until the happening of such future event.’” 59 F. Supp. 3d 935, 952 (D. Minn.
2014) (quoting City of Pipestone v. Wolverine Ins. Co., Civ. No. 4-84-634, 1985 WL 1845,
at *4 (D. Minn. June 28, 1985)). As alleged, a breach of the representation and warranty in
Section A201(M) could relate to an event that occurred, if at all, after the sale of a loan.
Accordingly, it is plausible from the face of the Second Amended Complaint that the statute
of limitations for a claim based on a loan sold to RFC prior to May 14, 2006 would not
begin to run until after May 14, 2006.
Moreover, this Court is not bound by Judge Magnuson’s ruling in Embrace I.
Hometown relies heavily on the “law of the case” doctrine, (see Hometown’s Reply at 2–3),
which “‘expresses the practice of courts generally to refuse to reopen what has been
decided,’” Cottier v. City of Martin, 604 F.3d 553, 556 (8th Cir. 2010) (quoting Messinger
v. Anderson, 225 U.S. 436, 444 (1912)). However, according to the Eighth Circuit, the law
of the case doctrine “is ‘not a limit to [the courts’] power.’” Id. (quoting Messinger, 225
U.S. at 444). Rather, “‘[a] court has the power to revisit prior decisions of its own or of a
coordinate court in any circumstances, although as a rule courts should be loathe to do so in

11

the absence of extraordinary circumstances such as where the initial decision was clearly
erroneous and would work a manifest injustice.’” Starks v. Rent-A-Center, 58 F.3d 358,
364 (8th Cir. 1995) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817
(1988)). The doctrine, however, “has less force at the trial court level, where it is essentially
a management practice to allow a logical progression toward a final resolution.” Paulson v.
Greyhound Lines, Inc., 628 F. Supp. 888, 891 (D. Minn.), aff’d, 804 F.2d 506 (8th Cir.
1986). Thus, for example, “[o]ne judge denying a summary judgment motion does not
preclude a successor judge from granting it. A successor judge has the same discretion to
reconsider a ruling as the first judge would.” Id. (internal citations omitted).
The Court finds that Judge Magnuson, and this Court as his successor, are permitted
by Federal Rule of Civil Procedure 54(b) to reconsider Embrace I. Under Rule 54(b), “any
order or other decision, however designated, that adjudicates fewer than all the claims . . .
does not end the action as to any of the claims . . . and may be revised at any time before the
entry of a judgment adjudicating all the claims . . . .” Embrace I adjudicated fewer than all
of RFC’s claims. As such, it did not end the action as to any of the claims, including the
breach of contract claims that were dismissed with prejudice on statute-of-limitations
grounds. And, because judgment adjudicating all of the claims has not yet been entered, the
ruling may be revised.
Even if “extraordinary circumstances” are required for this Court to revisit the ruling
in Embrace I, the Court finds that such circumstances exist. In Embrace I, Judge Magnuson
dismissed with prejudice RFC’s breach of contract claims as alleged in RFC’s First

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Amended Complaints against Hometown and other defendants regarding loans acquired
prior to May 14, 2006 because—despite referencing Section A201(M) of the Client
Guide—RFC did not “mention any continuing obligations.” 27 F. Supp. 3d at 983–84 &
n.4. In other words, RFC failed to properly allege its continuing obligation theory.
However, after RFC amended its complaints to properly allege breaches based on that
theory, Judge Magnuson in Embrace II permitted those same breach of contract claims to
proceed. 2015 WL 1275340, at *2–3. Although Hometown’s action had since been
transferred to this Court as part of the consolidated proceedings, RFC similarly amended
its complaint against Hometown. In light of Embrace II, and this Court’s finding that
RFC’s breach of contract claim as amended is sufficient to prevent dismissal on statute-oflimitations grounds, the Court finds that it would be manifestly unjust to preclude RFC from
proceeding on that claim as to the loans it acquired from Hometown prior to May 14, 2006.4
Therefore, Hometown’s motion to dismiss Count I as time-barred is denied.
B.

Liquidated Loans

Hometown also argues that RFC’s breach of contract claim fails because the Client
Guide contained a “survival clause” in Section A209(c), under which the representations
and warranties at issue were only effective for the “life of the Loans.” (See Hometown’s
Mem. at 12–13.) Hometown argues that courts interpret such language as limiting the time
period in which lawsuits arising from a breach of the representation and warranty must be
4

The Court declines Hometown’s request to also reconsider Judge Magnuson’s
denial in Embrace I of Hometown’s motion to dismiss Count II of RFC’s First Amended
Complaint. Hometown raised this issue for the first time in a letter submitted to the
Court on June 17, 2015 [Doc. No. 538], with no opportunity for RFC to respond.
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filed. (See id.) In opposition, RFC asserts that this argument was raised in Decision One’s
Motion to Dismiss, and that Hometown has waived the argument by failing to join in that
Motion. (Pl.’s Opp. at 14–15.) In the alternative, RFC argues that Hometown’s Motion
should be denied for the same reasons RFC articulated in response to Decision One’s
Motion.5 (Id. at 15.)
The defendants in this consolidated action were ordered to join Decision One’s
Motion to the extent that the issues raised therein were “common,” (Pretrial Order No. 4
[Doc. No. 214] at 3), and the Court notes that Hometown’s arguments regarding
liquidated loans are the same as those raised by Decision One (even if, as Hometown
points out, Decision One sought to dismiss RFC’s First Amended Complaint). Because
Hometown has not raised any new issues (and, in fact, has cited to the same cases that
Decision One relied upon), the Court finds no cause to depart from its reasoning as stated in
its Order denying Decision One’s Motion:
The Court cannot properly dismiss RFC’s claims based on liquidated
loans at this stage of the proceedings. [I]n each of the Eighth Circuit and
District of Minnesota cases relied upon by [Hometown], the contract
language at issue expressly limited the time period in which claims based on
breaches of the contract could be asserted. For example, in Eckert v. Titan
Tire Corp., the contractual language at issue provided that “‘[t]he
representations and warranties of the parties . . . and the right to make a claim
for indemnification hereunder for breaches of representations and
warranties or otherwise with respect thereto shall survive only for a period of
one (1) year after the Closing Date.’” 514 F.3d 801, 803 (8th Cir. 2008)
(emphasis added). The Eighth Circuit held that “the plain language of [the
5

Hometown takes issue with RFC’s incorporation by reference of its briefing on
Decision One’s Motion, stating: “Absent joinder by Hometown therein, RFC may not
rely on its arguments made in its Opposition to Decision One’s motion to dismiss.”
(Hometown’s Reply at 8.) However, Hometown has not demonstrated any resulting
prejudice. Accordingly, the Court will consider RFC’s previously-raised arguments.
14

contract] makes it clear that the parties sought to require that claims for
breaches of representations and warranties . . . be brought within one year of
the close of the transaction.” Id. at 804 (emphasis added); see also Pentair,
Inc. v. Wis. Energy Corp., 545 F. Supp. 2d 917, 920 (D. Minn. 2008) (“‘The
representations and warranties shall survive the Closing for a period lasting
until, and no claim or action shall be brought . . . for breach of a
representation or warranty after the lapse of, twelve (12) months after the
Closing.’”); Caddy Prods., Inc. v. Greystone Int’l, Inc., Civ. No. 05-301
(JRT/FLN), 2006 WL 2385149, at *2 (D. Minn. Aug. 17, 2006) (“‘The
representations and warranties . . . , and all claims with respect to such
representations and warranties hereunder, shall terminate upon the expiration
of two (2) years following the Closing Date.’”). Contrary to the language at
issue in those cases, Section A209(c) does not expressly restrict the time
period in which a claim based on representations and warranties can be
initiated. Accordingly, the contractual language is—at best—ambiguous, in
which case its interpretation cannot be resolved on a motion to dismiss. See
Olympus Ins. Co. v. AON Benfield, Inc., 711 F.3d 894, 898 (8th Cir. 2013)
(“If the court determines that a contract is ambiguous, its interpretation then
becomes a question of fact for the jury and the district court should not grant a
motion to dismiss.”).
In re RFC & ResCap Liquidating Trust Litig., No. 13-cv-3451 (SRN/JJK/HB), 2015 WL
3756476, at *5 (D. Minn. June 16, 2015). Accordingly, Hometown’s Motion is denied to
the extent that it seeks dismissal of RFC’s breach of contract claims based on liquidated
loans.
IV.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS

HEREBY ORDERED THAT Defendant Hometown Mortgage Services, Inc.’s Unique
Issue Motion to Dismiss Count I of Plaintiff’s Second Amended Complaint [Doc. No. 317]
is DENIED.
Dated: July 28, 2015

s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
15