The Police and Fire Retirement System of the City of Detroit v. Goldman Sachs & Co. et al

Filing 46

MEMORANDUM OPINION AND ORDER: re: 32 MOTION to Dismiss Amended Class Action Complaint. filed by Goldman Sachs Mortgage Company, Daniel L. Sparks, Kevin Gasvoda, Goldman Sachs & Co., Michelle Gill, GS Mortgage Securities Corp. According to th e complaint, PFRS sold its certificates on October 5, 2009, at a loss of $165,877.05. PFRS alleges that Defendants made numerous misrepresentations in the offering documents that created the impression that investing in the Loan Trust was less r isky than it actually was. Defendants counter that PFRS suffered no injury because the 6A-1 certificates have made all scheduled payments, both during the time PFRS owned them and after PFRS sold. PFRS alleges that it suffered injury when the certifi cates were downgraded by the ratings agencies, thus making them less valuable. However, given that the certificates have never missed a payment and that the downgrade occurred during the midst of the housing crisis, this is not enough to show injury. PFRS has failed to allege that any of the misrepresentations specified in the complaint applied to the particular mortgages underlying the certificates it purchased. The motion to dismiss is granted with leave to PFRS to file an amended complaint by no later than July 9, 2012, setting out with specificity how the alleged misrepresentations made by Defendants affected the value of the particular certificates it purchased. The Clerk of the Court is directed to close the motion. (Signed by Judge Miriam Goldman Cedarbaum on 5/31/2012) (jfe)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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THE POLICE AND FIRE RETIREMENT
SYSTEM OF THE CITY OF DETROIT,
Individually and on Behalf of All
Others Similarly Situated,
Plaintiff,

MEMORANDUM OPINION
AND ORDER

-against10 Civ. 4429 (MGC)
GOLDMAN, SACHS & CO., GOLDMAN
SACHS MORTGAGE COMPANY, GS
MORTGAGE SECURITIES CORP., DANIEL
L. SPARKS, MICHELLE GILL, and
KEVIN GASVODA,
Defendants.
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APPEARANCES:
WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP
Attorneys for Plaintiff
270 Madison Avenue
New York, New York 10016
By:

Lawrence P. Kolker, Esq.
Michael Liskow, Esq.

KOHN, SWIFT & GRAF, PC
Attorneys for Plaintiff
One South Broad Street, Suite 2100
Philadelphia, Pennsylvania 19107
By:

Joseph C. Kohn, Esq.
Denis F. Sheils, Esq.
Barbara L. Moyer, Esq.

SULLIVAN & CROMWELL LLP
Attorneys for Defendants
125 Broad Street
New York, New York 10004

By:

Richard H. Klapper, Esq.
Theodore Edelman, Esq.
Michael T. Tomaino, Jr., Esq.
D. Andrew Pieto, Esq.
Matthew A. Peller, Esq.

Cedarbaum, J.
Police and Fire Retirement System of the City of Detroit
(“PFRS”) sues Goldman, Sachs & Co., Goldman Sachs Mortgage Co.,
GS Mortgage Securities Corp., and three individuals
(collectively, “Defendants”) for violations of Sections 11 and
15 of the Securities Act of 1933.

Defendants move to dismiss

the amended complaint on the grounds that it is barred by the
applicable statute of limitations, that it fails to state a
claim upon which relief can be granted, and that PFRS lacks
standing.

I heard oral argument on the motion on April 17,

2012.
On June 15, 2007, PFRS purchased mortgage-backed
certificates from Class 6A-1 of the GSR Mortgage Loan Trust
2007-4F.

According to the complaint, PFRS sold its certificates

on October 5, 2009, at a loss of $165,877.05.

PFRS alleges that

Defendants made numerous misrepresentations in the offering
documents that created the impression that investing in the Loan
Trust was less risky than it actually was.

Defendants counter

that PFRS suffered no injury because the 6A-1 certificates have
made all scheduled payments, both during the time PFRS owned
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them and after PFRS sold.

PFRS alleges that it suffered injury

when the certificates were downgraded by the ratings agencies,
thus making them less valuable.

However, given that the

certificates have never missed a payment and that the downgrade
occurred during the midst of the housing crisis, this is not
enough to show injury.
PFRS has failed to allege that any of the
misrepresentations specified in the complaint applied to the
particular mortgages underlying the certificates it purchased.
The motion to dismiss is granted with leave to PFRS to file an
amended complaint by no later than July 9, 2012, setting out
with specificity how the alleged misrepresentations made by
Defendants affected the value of the particular certificates it
purchased.
The Clerk of the Court is directed to close the motion.

SO ORDERED.

Dated:

New York, New York
May 31, 2012

S/______________________________
MIRIAM GOLDMAN CEDARBAUM
United States District Judge

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