Royal Park Investments SA/NA v. HSBC Bank USA National Association

Filing 442

ORDER: for (255 in 1:14-cv-10101-LGS-SN, 343 in 1:14-cv-08175-LGS-SN, 260 in 1:15-cv-02144-LGS-SN, 365 in 1:14-cv-09366-LGS-SN, 160 in 1:15-cv-10096-LGS, 211 in 1:15-cv-10032-LGS-SN) Report and Recommendations,(167 in 1:15-cv-10096-LGS) Motion for Miscellaneous Relief, filed by HSBC Bank USA, National Association, (264 in 1:15-cv-02144-LGS-SN) Motion for Miscellaneous Relief, filed by HSBC Bank US, National Association, (352 in 1:14-cv-08175-LGS-SN) Motion for Miscellaneous Relief, f iled by HSBC Bank USA National Association, (261 in 1:14-cv-10101-LGS-SN) Motion for Miscellaneous Relief, filed by HSBC Bank USA, National Association, (219 in 1:15-cv-10032-LGS-SN) Motion for Miscellaneous Relief, filed by HSBC Bank USA, National Association, (375 in 1:14-cv-09366-LGS-SN) Motion for Miscellaneous Relief, filed by HSBC Bank USA. For the reasons above, Defendants objections are OVERRULED, and the R&R is ADOPTED. The Clerk of Court is respectfully directed to close the motions at 14 Civ. 8175, Docket No. 352; 14 Civ. 9366, Docket No. 375; 14 Civ. 10101, Docket No. 261; 15 Civ. 2144, Docket No. 264; 15 Civ. 10032, Docket No. 219; and 15 Civ. 10096, Docket No. 167, and as further set forth in this order. Moti ons terminated: (352 in 1:14-cv-08175-LGS-SN) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge's Report and Recommendation Regarding Advice-Of-Counsel Defense re: (343) Report and Recommendatio ns, filed by HSBC Bank USA National Association, (264 in 1:15-cv-02144-LGS-SN) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge's Report and Recommendation Regarding Advice-Of-Counsel De fense re: (260) Report and Recommendations, filed by HSBC Bank US, National Association, (375 in 1:14-cv-09366-LGS-SN) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge's Report and Rec ommendation Regarding Advice-Of-Counsel Defense re: (365) Report and Recommendations, filed by HSBC Bank USA, (261 in 1:14-cv-10101-LGS-SN) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge 's Report and Recommendation Regarding Advice-Of-Counsel Defense re: (255) Report and Recommendations, filed by HSBC Bank USA, National Association, (167 in 1:15-cv-10096-LGS) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge's Report and Recommendation Regarding Advice-Of-Counsel Defense re: (160) Report and Recommendations, filed by HSBC Bank USA, National Association, (219 in 1:15-cv-10032-LGS-SN) MOTION Notice of HSBC's Rule 72 Objections and Motion To Not Approve Magistrate Judge's Report and Recommendation Regarding Advice-Of-Counsel Defense re: (211) Report and Recommendations, filed by HSBC Bank USA, National Association. (Signed by Judge Lorna G. Schofield on 12/14/2017) (ap)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ROYAL PARK INVESTMENTS SA/NV,
:
Plaintiff,
:
-against:
HSBC BANK USA, N.A.,
:
Defendant. :
-------------------------------------------------------------X
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BLACKROCK BALANCED CAPITAL
:
PORTFOLIO (FI), et al.,
:
Plaintiffs, :
-against:
HSBC BANK USA, N.A.,
:
Defendant. :
-------------------------------------------------------------X
-------------------------------------------------------------X
PHOENIX LIGHT SF LIMITED, et al.,
:
Plaintiffs, :
-against:
HSBC BANK USA, N.A.,
:
Defendant. :
-------------------------------------------------------------X
-------------------------------------------------------------X
NATIONAL CREDIT UNION
:
ADMINISTRATION BOARD, et al.,
:
Plaintiffs, :
:
-againstHSBC BANK USA, N.A.,
:
Defendant. :
-------------------------------------------------------------X
-------------------------------------------------------------X
:
COMMERZBANK AG,
:
Plaintiff,
:
-against:
HSBC BANK USA, N.A.,
Defendant. :
-------------------------------------------------------------X
-------------------------------------------------------------X
TRIAXX PRIME CDO 2006-1, Ltd., et al.,
:
Plaintiffs, :
-against:
HSBC BANK USA, N.A.,
:
Defendant. :
-------------------------------------------------------------X
LORNA G. SCHOFIELD, District Judge:

12/14/17

14 Civ. 8175 (LGS)
ORDER

14 Civ. 9366 (LGS)

14 Civ. 10101 (LGS)

15 Civ. 2144 (LGS)

15 Civ. 10032 (LGS)

15 Civ. 10096 (LGS)

Certificateholders of RMBS trusts are suing trustee HSBC Bank USA, N.A. (“HSBC”)
for violations of the agreements outlining HSBC’s obligations as trustee. HSBC seeks to reserve
the right to assert an advice of counsel defense in these coordinated actions. In a Report and
Recommendation dated May 8, 2017 (the “R&R”), Magistrate Judge Netburn recommended
striking this affirmative defense from HSBC’s answers in these coordinated actions. HSBC
objects. For the following reasons, HSBC’s objections are overruled, and Judge Netburn’s
recommendation is adopted.
I.

BACKGROUND
On November 10, 2016, Plaintiff moved to compel HSBC to respond to an interrogatory

concerning its advice of counsel defense. In response, HSBC argued that the interrogatory was
premature because Plaintiffs had not to date identified “loan-level breaches and specific Events of
Default,” and that “[o]nly after a plaintiff identifies its specific claims can a defendant determine
whether it even received advice related to those claims.” On November 17, 2016, Judge Netburn
ordered HSBC to “decide whether it intends to assert an advice of counsel defense by January 27,
2017,” “[r]egardless . . . of the plaintiffs’ ability to identify specific information about the loanlevel breaches and/or Events of Default.” HSBC neither objected to the Order nor sought an
extension of the deadline. In an Order dated January 26, 2017, Judge Netburn “remind[ed]
HSBC of its obligation to notify plaintiffs whether it intends to assert the defense by January 27,
2017, regardless of whether plaintiffs are able to identify specific loan-level breaches.” On
January 27, 2017, HSBC wrote to Plaintiffs, “at this time HSBC does not intend to raise an
advice of counsel defense.” HSBC purported to “reserve all rights” to raise an advice of counsel
defense as to specific breaches Plaintiffs may identify at a later date. Plaintiffs moved to strike
HSBC’s affirmative defense from its answers on April 6, 2017. Judge Netburn recommended
granting the motion on May 8.
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II.

LEGAL STANDARD
A district court reviewing a magistrate judge’s report and recommendation “may accept,

reject, or modify, in whole or in part, the findings or recommendations made by the magistrate
judge.” 28 U.S.C. § 636(b)(1)(C). The district court “may adopt those portions of the report to
which no specific, written objection is made, as long as the factual and legal bases supporting the
findings and conclusions set forth in those sections are not clearly erroneous or contrary to law.”
Adams v. N.Y. State Dep’t of Educ., 855 F. Supp. 2d 205, 206 (S.D.N.Y. 2012) (internal quotation
marks omitted) (citing Fed. R. Civ. P. 72(b)). The court must undertake a de novo review of any
portion of the report to which a specific objection is made. See 28 U.S.C. § 636(b)(1)(C);
Thomas v. Arn, 474 U.S. 140, 149 (1985); United States v. Male Juvenile, 121 F.3d 34, 38 (2d
Cir. 1997). The court may then accept, reject, or modify in whole or in part recommendations of
the magistrate judge. 28 U.S.C. § 636(b)(1)(C); Trs. of the Mason Tenders, Dist. Council
Welfare Fund, Pension Fund, Annuity Fund & Training Program Fund v. Faulkner, 484 F. Supp.
2d 254, 257 (S.D.N.Y. 2007).
III.

DISCUSSION
As Judge Netburn explained in the R&R, HSBC is time-barred from raising an advice of

counsel defense. Judge Netburn ordered HSBC to make a final determination as to any advice of
counsel defense by January 27, 2017. HSBC failed to seek reconsideration of or object to the
Order. HSBC likewise failed to seek an extension of the deadline or leave to “reserve” the right
to assert any such defense after the deadline. Because HSBC did not seek any such relief at the
appropriate time, it has waived the opportunity and is bound to comply. See Loc. Civ. R. 6.3 (14day deadline to file a motion for reconsideration); Harty v. Spring Valley Marketplace LLC, No.
15 Civ. 8190, 2016 WL 8710480, at *2 (S.D.N.Y. Jan. 22, 2016) (untimely requests for
reconsideration warrant denial); Fed. R. Civ. P. 72(a) (As to nondispositive matters, a “party may
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not assign as error a defect in the order not timely objected to.”); Smith v. Campbell, 782 F.3d 93,
102 (2d Cir. 2015) (As to dispositive matters, “[w]here parties receive clear notice of the
consequences, failure to timely object to a magistrate’s report and recommendation operates as a
waiver of further judicial review of the magistrate’s decision.”); Thai Lao Lignite (Thailand) Co.
v. Gov’t of Lao People’s Democratic Republic, 924 F. Supp. 2d 508, 517 (S.D.N.Y. 2013)
(“Parties who fail to object to a magistrate’s ruling within 14 days waive their opportunity to
challenge that ruling.”).
IV.

CONCLUSION
For the reasons above, Defendants’ objections are OVERRULED, and the R&R is

ADOPTED.
The Clerk of Court is respectfully directed to close the motions at 14 Civ. 8175, Docket
No. 352; 14 Civ. 9366, Docket No. 375; 14 Civ. 10101, Docket No. 261; 15 Civ. 2144, Docket
No. 264; 15 Civ. 10032, Docket No. 219; and 15 Civ. 10096, Docket No. 167.

Dated: December 14, 2017
New York, New York

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