U.S.Bank National Association v. Bank of America, N.A.

Filing 97

MEMORANDUM OPINION AND ORDER re: 88 MOTION for Judgment on the Pleadings . filed by Bank of America N.A. For the reasons stated above, Defendant's motion for judgment on the pleadings is denied. (Dkt. No. 88) The Clerk of Court is directed to terminate the motion (Dkt. No. 88). SO ORDERED. (Signed by Judge Paul G. Gardephe on 3/31/2021) (jca)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
U.S. BANK NATIONAL ASSOCIATION, as
successor to Wells Fargo Bank, National
Association; as Trustee for the Registered
Holders of Citigroup Commercial Mortgage
Trust 2007-06, Commercial Mortgage PassThrough Certificates, Series 2007-C6; acting
by and through its Special Servicer
CWCapital Asset Management LLC,

MEMORANDUM
OPINION & ORDER
15 Civ. 8153 (PGG)

Plaintiff,
- against BANK OF AMERICA, N.A.,
Defendant.

PAUL G. GARDEPHE, U.S.D.J.:
In this action, Plaintiff U.S. Bank National Association (“U.S. Bank”) alleges
breach of contract claims against Defendant Bank of America, N.A. (“Bank of America”),
arising out of representations and warranties made in connection with the sale of commercial
mortgage loans. On October 14, 2015, this case was transferred to this District by the United
States District Court for the Southern District of Indiana. On January 27, 2016, Plaintiff moved
to re-transfer this case to the Southern District of Indiana. (Dkt. No. 56) Defendant moved for
judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). (Dkt. No. 54)
On September 20, 2016, this Court granted Defendant’s motion for judgment on
the pleadings and denied Plaintiff’s motion to re-transfer the action. (Dkt. Nos. 75, 76); see also
U.S. Bank Nat’l Ass’n v. Bank of Am. N.A., No. 15 Civ. 8153 (PGG), 2016 WL 5118298
(S.D.N.Y. Sept. 20, 2016). In granting Defendant’s motion for judgment on the pleadings, this

Court concluded that Plaintiffs’ claims were time-barred under New York law. See U.S. Bank,
2016 WL 5118298, at *13-14. Plaintiff appealed. (Dkt. No. 77)
On February 15, 2019, the Second Circuit affirmed this Court’s denial of
Plaintiff’s motion to re-transfer this action to the Southern District of Indiana, but vacated this
Court’s order granting Defendant judgment on the pleadings. (Dkt. No. 78); see also U.S. Bank
Nat’l Ass’n v. Bank of Am. N.A., 916 F.3d 143, 152 (2d Cir. 2019). After remand from the
Second Circuit, Defendant again moved for judgment on the pleadings pursuant to Fed. R. Civ.
P. 12(c). (Dkt. No. 88)
For the reasons stated below, Defendant’s motion for judgment on the pleadings
will be denied.
BACKGROUND
I.

THE COMPLAINT’S FACTUAL ALLEGATIONS
In December 1999, Women’s Physicians Group, LLC purchased a two-story

commercial building located at 8081 Township Line Road, Indianapolis, Indiana (the
“Property”) from Galen Hospital Corporation, Inc. for $3,512,500. (Cmplt. (Dkt. No. 1) ¶¶ 9,
12) The Property is located on the campus of the Hospital. (Id. ¶ 14) In connection with the
acquisition of the Property, Women’s Physicians Group executed a special warranty deed (the
“Deed”) that contains title exceptions that run with the Property. (Id. ¶ 16) Paragraph 1 of the
Deed contains the following use restriction:
The Property/Real Estate may be used and occupied only for an ambulatory
surgery center and medical offices for the private practice of medicine and for no
other purposes without the prior written consent of “Hospital” . . . , which consent
may be withheld in Hospital’s sole discretion. . . .
(Id. ¶ 17)
Paragraph 3 of the Deed sets forth the following right of first refusal:
2

If the owner of the Property/Real Estate (the “Owner”) shall receive a bona fide
offer from any third party for the purchase, acquisition or lease (for a term of
more than fifteen (15) years) of the Property/Real Estate or any part thereof or
interest therein, which offer the Owner desires to accept, or if Owner desire[s] to
sell or transfer, or make a bona fide offer to sell, transfer or assign the
Property/Real Estate or any part thereof or interest therein to a third party, Owner
shall promptly deliver to Galen Hospital Corporation, Inc. (the “Grantor”) . . . a
written notice setting forth the full terms and conditions of the proposed
transaction and, if available, a copy of such offer, in the case of a purchase or
other transfer, or a copy of the proposed lease agreement, in the case of a lease or
an assignment of any interest of Owner. Grantor may, within 30 days after receipt
of such notice, elect to purchase, acquire or lease the Property/Real Estate or such
portion thereof or interest therein which is subject to any offer as described above
(the “Offer Property”) on the same terms and conditions as those set forth in such
notice.
(Id. ¶ 18)
On April 30, 2007, LaSalle Bank National Association (“LaSalle”) made a $9
million commercial mortgage loan (the “Loan”) to Women’s Physicians Group. (Id. ¶¶ 8-9)
Repayment of the Loan is secured by, among other things, a mortgage on the Property. (Id. ¶ 9)
Bank of America became successor to LaSalle by merger. (Id. ¶ 5 n.1) On July 25, 2007,
LaSalle sold the Loan along with other commercial mortgage loans (together, the “Series 2007C6 Loan Pool”) to Citigroup Commercial Mortgage Securities, Inc. (“Citigroup”). (Id. ¶¶ 5, 8)
This sale was made pursuant to a Mortgage Loan Purchase Agreement (“MLPA”). (Id. ¶ 5) The
parties to the MLPA are LaSalle, as seller, and Citigroup, as purchaser. (MLPA (Dkt. No. 24-3)
at 2)1
In the Mortgage Loan Purchase Agreement, LaSalle made representations and
warranties regarding the Loan, including Representation No. 8, which reads as follows:
Each related Mortgage is a valid and enforceable first lien on the related
Mortgaged Property subject only to the exceptions and limitations set forth . . .
above and the following title exceptions . . . covenants, conditions and
1

Citations to page numbers of docketed materials correspond to the pagination generated by this
District’s Electronic Case Files (“ECF”) system.
3

restrictions, rights of way, easements and other matters of public record, none of
which, individually or in the aggregate, materially and adversely interferes with
the current use of the Mortgaged Property or the security intended to be provided
by such Mortgage or with the Mortgagor’s ability to pay its obligations under the
Mortgage Loan when they become due or materially and adversely affects the
value of the Mortgaged Property. . . .
(Id. at 24; Cmplt. (Dkt. No. 1) ¶ 34)2
The MLPA sets forth specific remedies available to the mortgagee in the event of
a “Document Defect or a Breach” of a representation. Section 3(c) of the MLPA provides that
upon receipt of notice of a Document Defect or Breach, the seller must
cure such Document Defect or Breach . . . in all material respects, or, if such
Document Defect or Breach . . . cannot be cured . . . , (i) repurchase the affected
Mortgage Loan at the applicable Purchase Price . . . , or (ii) substitute a Qualified
Substitute Mortgage Loan for such affected Mortgage Loan. . . .
(MLPA (Dkt. No. 24-3) § 3(c); Cmplt. (Dkt. No. 1) ¶ 43)
Citigroup deposited the loans it purchased from LaSalle into a trust fund (the
“Trust”), pursuant to a Pooling and Servicing Agreement (“PSA”). (Cmplt. (Dkt. No. 1) ¶¶ 6-7)3
Citigroup assigned all of its rights under the MLPA to the trustee for the Trust, pursuant to
Section 2.01(a) of the PSA. (Id. ¶ 35) The PSA describes Citigroup as the depositor, Wells
Fargo Bank, N.A. (“Wells Fargo”) as the trustee, and LaSalle as certificate administrator. (PSA
(Dkt. No. 24-4) at 2) Wells Fargo was the initial trustee of the Trust, and U.S. Bank
subsequently became the trustee. (Id. ¶ 10) The PSA “supplemented” the MLPA, and “provided

2

Although the MLPA (Dkt. No. 24-3) and PSA (Dkt. Nos. 24-4, 24-5, 24-6) are not attached as
exhibits to the Complaint, both contracts are referenced throughout the Complaint (Cmplt. (Dkt.
No. 1) ¶¶ 5-7, 34-35, 43-46) and are integral to U.S. Bank’s claims. Accordingly, the Court has
considered the terms of the MLPA and PSA in resolving Defendant’s motion for judgment on
the pleadings.
3
The PSA is dated “as of July 1, 2007.” (Dkt. No. 24-4 at 1) The date of the last notarized
signature on the PSA is July 31, 2007. (PSA (Dkt. No. 24-6) at 128)
4

that the purchaser would deposit the loans into the Trust and assign all of its rights under the
MLPA to the Trust.” U.S. Bank Nat’l Ass’n, 916 F.3d at 147.
The PSA, like the MLPA, provides that after receiving timely notice of a
Document Defect or Breach, the seller must
(i) cure such Document Defect or Breach, as the case may be, in accordance with
Section 3 of the applicable [MLPA], (ii) repurchase the affected Trust Mortgage
Loan in accordance with Section 3 of the related [MLPA], or (iii) within two (2)
years of the Closing Date, substitute a Qualified Substitute Mortgage Loan for
such affected Trust Mortgage Loan. . . .
(PSA (Dkt. No. 24-5) § 2.03(a)); see also Cmplt. (Dkt. No. 1) ¶ 44)
In April 2012, Women’s Physician Surgery Center, LLC (the “Surgery Center”) –
which was the Property’s major tenant – vacated the Property, eight years before its lease
expired. (Id. ¶ 22) After the Surgery Center vacated the Property, Women’s Physicians Group’s
efforts to secure a new tenant proved unsuccessful. (Id. ¶ 26) In August 2012, the Loan went
into default. (Id. ¶ 27) On December 13, 2012, the Trust commenced a foreclosure action
against Women’s Physicians Group in Indiana state court. (Id. ¶ 28)
In March 2013, the state court appointed a receiver for the Property. (Id.) The
receiver was unable to secure a tenant for the Property, however, due to the use restriction in the
Deed. (Id. ¶ 29) The Hospital refused to waive or modify the use restriction, despite the
receiver’s requests. (Id. ¶¶ 30-32)
Believing that the use restriction and the right of first refusal in the Deed are
contrary to Representation No. 8 in the MLPA, on October 18, 2013, the Trust notified Bank of
America that it had violated Representation No. 8, and that the violation had “materially and
adversely affected the value of the Loan.” (Id. ¶¶ 36, 41) The Trust requested that Bank of
America either cure the violation or repurchase the Loan within 90 days. (Id. ¶ 42) These are

5

the sole remedies available to the Trust under the MLPA and the PSA. (Id. ¶¶ 43-46) Bank of
America has refused to cure the violation or repurchase the Loan. (Id. ¶¶ 47-49)
II.

PROCEDURAL HISTORY
The Complaint was filed on September 12, 2014, in the United States District

Court for the Southern District of Indiana. (Dkt. No. 1) On December 3, 2014, Defendant
moved to dismiss for lack of personal jurisdiction and improper venue, pursuant to Federal Rules
of Civil Procedure 12(b)(2) and (b)(3) or, in the alternative, to transfer the action to the Southern
District of New York, pursuant to 28 U.S.C. §§ 1404(a), 1406, or 1631. (Dkt. No. 23)
On October 14, 2015, Judge Tanya Walton Pratt of the Southern District of
Indiana granted Defendant’s motion to transfer the action to the Southern District of New York,
pursuant to 28 U.S.C. § 1631, finding that the Indiana district court lacked personal jurisdiction
over Defendant. See U.S. Bank Nat’l Ass’n v. Bank of Am., N.A., No. 1:14-CV-01492-TWP,
2015 WL 5971126, at *10 (S.D. Ind. Oct. 14, 2015). Judge Pratt determined that (1) Defendant
had not waived its objection to personal jurisdiction in Indiana; and (2) the Indiana district court
did not have general or specific personal jurisdiction over Defendant. Id. at *6, 8, 10. Judge
Pratt denied as moot Defendant’s motion to dismiss. Id. at *10.
On January 27, 2016, Plaintiff moved to re-transfer this action to the United
States District Court for the Southern District of Indiana (Dkt. No. 56), and Defendant moved for
judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). (Dkt. No. 54) On September 20,
2016, this Court denied Plaintiff’s motion to re-transfer this action to the Southern District of
Indiana, and granted Defendant’s motion for judgment on the pleadings. (Dkt. No. 75; see also
Judgment (Dkt. No. 76)) Plaintiff filed a notice of appeal on October 21, 2016. (Dkt. No. 77)

6

On February 15, 2019, the Second Circuit affirmed this Court’s denial of the
motion to re-transfer this action to the Southern District of Indiana, but vacated this Court’s order
granting Defendant judgment on the pleadings, concluding that this Court should have applied
Indiana’s choice of law rules in determining the timeliness of this action. U.S. Bank Nat’l Ass’n,
916 F.3d at 154-155, 159 (2d Cir. 2019).
Although the Indiana court had ruled that Defendant was not subject to personal
jurisdiction in Indiana and transferred the case to New York under 28 U.S.C. § 1631, the Second
Circuit concluded that Defendant was in fact subject to personal jurisdiction in Indiana and that
“the Indiana court’s transfer to New York was not authorized by § 1631.” Id. at 146-47, 151-52.
The Second Circuit nonetheless affirmed this Court’s denial of Plaintiff’s motion to re-transfer
this action to Indiana, treating the transfer as one made under 28 U.S.C. § 1404(a) – “[f]or the
convenience of [the] parties and witnesses, in the interest of justice” – rather than under § 1631.
Id. at 153-54 & 153 n.6.
As to the law governing Defendant’s statute of limitations argument, the court’s
opinion provides as follows:
Transfers under § 1404(a) by a court that has jurisdiction are adjudicated in the
transferee state under the law of the transferor state. This is to avoid the
unfairness of having a discretionary transfer done for convenience change the law
under which the case will be decided. . . . Our disposition requires that the New
York district court treat the case as one properly filed in Indiana, applying
Indiana’s choice of law rules to determine whether the suit was timely filed. . . .
We express no view on the question whether the suit was timely filed, when that
question is judged under Indiana’s choice‐of‐law rules, as appropriate for a suit
properly brought in Indiana and subsequently transferred to New York under
§ 1404(a).
Id. at 154-55 (emphasis omitted).

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On August 22, 2019, Defendant moved again for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c), arguing that New York law applies here, and
that Plaintiff’s claims are time-barred under New York law. (Dkt. No. 89)
DISCUSSION
I.

DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS
Plaintiff claims that Defendant breached Representation No. 8 and Section 3(c) of

the MLPA and Section 2.03 of the PSA. (See Cmplt. (Dkt. No. 1) ¶¶ 36, 48, 54, 62); see also
U.S. Bank Nat’l Ass’n, 916 F.3d at 151-52.
Defendant contends that it is entitled to judgment on the pleadings because
Plaintiff’s breach of contract claim is time-barred. (Def. Br. (Dkt. No. 89) at 8) According to
Defendant, the “two contracts governing the securitization . . . – [the MLPA and the PSA] – are
expressly governed by New York law, which imposes a six-year limitations period on contract
claims.” (Id.) Defendant further maintains that (1) in the MLPA and the PSA the parties agreed
that New York substantive and procedural law would apply to any disputes arising under these
agreements; (2) the “purpose and commercial context [of the MLPA and the PSA also] would
resolve the limitations question in favor of New York’s six-year period for contract suits”; and
(3) “to the extent . . . [that] it is necessary to consider the parties’ transactional ‘contacts’ with
New York and Indiana, New York has the strongest connection to the facts of this litigation and
must supply the governing law.” (Id. at 8-10)
Plaintiff counters that Indiana’s ten-year statute of limitations for breach of
written contracts governs here, because the parties did not expressly state what procedural law
would apply to their disputes. (Pltf. Opp. (Dkt. No. 90) at 6, 28) Plaintiff further contends that
(1) the choice of law issue is governed by the MLPA, and not the PSA, and that the MLPA

8

requires the application of Indiana procedural law; (2) even if the PSA were relevant, Indiana
procedural law would still apply; (3) industry custom and practice favors application of Indiana
procedural law; and (4) Indiana’s “most intimate contacts test” is irrelevant, because there is no
dispute over the applicable substantive law. (Id. at 18-28)
II.

LEGAL STANDARDS
“The standard for addressing a Rule 12(c) motion for judgment on the pleadings

is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim.” Cleveland
v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006). To prevail on such a motion, “the plaintiff
must provide the grounds upon which his claim rests through factual allegations sufficient ‘to
raise a right to relief above the speculative level.’” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Where, as here, the parties’ disputes “rest[ ] on interpretation of the . . . contract,
[it] ‘is a question of law.’” Philadelphia Indem. Ins. Co. v. Streb, Inc., 487 F. Supp. 3d 174, 18384 (S.D.N.Y. 2020) (quoting VAM Check Cashing Corp. v. Fed. Ins. Co., 699 F.3d 727, 729 (2d
Cir. 2012)). “[The Court’s] role in interpreting a contract is to give effect to the intent of the
parties at the time of the contract’s making.” Israel v. Chabra, 601 F.3d 57, 65 n.2 (2d Cir.
2010).
III.

RELEVANT CONTRACT PROVISIONS
As discussed above, LaSalle, to which Bank of America is the successor-by-

merger, executed the MLPA on July 25, 2007. The MLPA provides for the sale of certain loans,
including the Loan, to Citigroup. (Cmplt. (Dkt. No. 1) ¶¶ 5-8) Pursuant to the MLPA, LaSalle
made certain representations and warranties regarding the Loan to Citigroup. (Id. ¶ 34) Pursuant
to Section 2.01(a) of the PSA, dated “as of July 1, 2007,” Citigroup, as Depositor, assigned all of

9

its rights under the MLPA to the Trustee for the Trust. (Id. ¶¶ 7, 35) Wells Fargo Bank, N.A.
was the initial trustee of the Trust; U.S. Bank subsequently became the trustee. (Id. ¶ 10)
As noted above, the Complaint alleges that Defendant breached Representation
No. 8 and Section 3(c) of the MLPA and Section 2.03 of the PSA. (Cmplt. (Dkt. No. 1) at ¶¶ 36,
48, 54, 62)
As discussed below, the two contracts have different choice of law provisions.
Plaintiff now contends that the MLPA is “the relevant contract because (1) “[t]he
Second Circuit recognized that the MLPA is ‘the contract here in question’” in its 2019 opinion
(Pltf. Opp. (Dkt. No. 90) at 18 (citing U.S. Bank Nat’l Ass’n., 916 F.3d at 152)); and
(2) Defendant clearly “agree[s] that Plaintiff’s claim arises out of the MLPA,” as Defendant’s
brief states that “‘Plaintiff’s claims arise out of the alleged breach of a warranty representation in
the 2007 MLPA. . . .’” (Id. at 18-19 (quoting Def. Br. (Dkt. No. 89) at 8))
The Second Circuit described the “central tenets of Plaintiff’s theory of liability”
as follows:
(i) Defendant breached Representation No. 8 of the MLPA that there were no
restrictions on the use of the Indiana Property that would interfere with the
mortgagor’s ability to make its payments or adversely affect the value of the
Property and (ii) Defendant failed to comply with its contractual commitment to
cure the breach. . . . Plaintiff alleges that Bank of America then breached its
commitments under Section 3(c) of the MLPA to either “cure such . . . Breach . . .
or, if such . . . Breach . . . cannot be cured, [to] (i) repurchase the affected
Mortgage Loan at the applicable Purchase Price . . . or (ii) substitute a Qualified
Substitute Mortgage Loan for such affected Mortgage Loan. . . .”
U.S. Bank Nat’l Ass’n, 916 F.3d at 151-52.
Plaintiff contends that because the core of this action is “whether [Bank of
America] breached Representation 8 of the MLPA,” the “relevance of the PSA to this litigation
is extremely limited.” (Pltf. Opp. (Dkt. No. 90) at 19)

10

Plaintiff is, however, not a party to the MLPA. It is only a party to the PSA. (See
id. (“The PSA gives the Plaintiff (a non-party to the MLPA) standing on behalf of the Trust
parties to bring a claim against a mortgage loan seller for breach of the MLPA.”); see also PSA
(Dkt. Nos. 24-4, 24-5, 24-6); MLPA (Dkt. No. 24-3)) Although the purchaser in the MLPA
(Citigroup) assigned all its rights to Plaintiff in the PSA (see Cmplt. (Dkt. No. 1) ¶ 35), Plaintiff
did not negotiate the MLPA – it only negotiated the terms of the PSA. It is not plausible to
contend that, when Plaintiff was negotiating the terms of the PSA, it intended that the choice of
law provision in a contract to which it is not a party – the MLPA – would trump the choice of
law provision in the contract that it was then negotiating. See Israel, 601 F.3d at 65 n.2.
Accordingly, this Court will apply the PSA’s choice of law provision in determining which
state’s procedural law governs.
IV.

INDIANA CHOICE OF LAW RULES
The Second Circuit’s decision in this case “requires that the New York district

court treat the case as one properly filed in Indiana, applying Indiana’s choice-of-law rules to
determine whether the suit was timely filed.” U.S. Bank Nat’l Ass’n, 916 F.3d at 155; see also
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 243 n.8 (1981) (“[W]here a case is transferred
pursuant to 28 U.S.C. § 1404(a), [the transferee court] must apply the choice-of-law rules of the
State from which the case was transferred.” (citing Van Dusen v. Barrack, 376 U.S. 612, 639
(1964))).
“Substantive law is ‘[t]he part of the law that creates, defines, and regulates the
rights, duties, and powers of parties.’ Procedural law is ‘[t]he rules that prescribe the steps for
having a right or duty judicially enforced, as opposed to the law that defines the specific rights or
duties themselves.’” Hedden v. CBS Corp., No. 1:13-CV-01986-TWP-TAB, 2015 WL 5775570,
at *7 (S.D. Ind. Sept. 30, 2015) (internal citations omitted) (quoting Black’s Law Dictionary
11

(10th ed. 2014)). Indiana courts have long held that statutes of limitations are procedural, and
not substantive. Lehman Bros. Holdings v. Laureate Realty Servs., Inc., No. 1:04-CV-1432RLY-TAB, 2007 WL 2904591, at *10 (S.D. Ind. Sept. 28, 2007) (“Indiana law treats statutes of
limitations as procedural, rather than substantive, and therefore not subject to choice of law
disputes.” (citing McLaughlin Equip. Co. v. SerVaas, No. IP98-0127-C-T/K, 2004 WL 1629603,
at *45 (S.D. Ind. Feb. 18, 2004))); Miller v. Javitch, Block & Rathbone, LLP, 397 F. Supp. 2d
991, 1002 (N.D. Ind. 2005) (“[U]nder Indiana law, statutes of limitation are procedural, rather
than substantive, and are not subject to parties’ choice of law disputes.” (citations omitted));
Bailey v. Skipperliner Indus., Inc., 278 F. Supp. 2d 945, 951 (N.D. Ind. 2003) (same); Horvath v.
Davidson, 264 N.E.2d 328, 332 (Ind. Ct. App. 1970) (“Without exception the statute of
limitations has been considered procedural in Indiana.” (citations omitted)); see also Kissel v.
Rosenbaum, 579 N.E.2d 1322, 1326-27 (Ind. Ct. App. 1991) (stating that a statute of limitations
is a procedural constraint). Accordingly, unless the parties here specifically contracted to select
the procedural law of another forum, Indiana procedural law applies.
Indiana courts apply the principle of lex fori – “law of the forum” – in addressing
procedural issues. Brill v. Regent Commc’ns, Inc., 12 N.E.3d 299, 306 (Ind. Ct. App. 2014).
Parties may, of course, choose to be bound by the law of another forum. Id. (“Generally, Indiana
courts will give effect to the parties’ agreement as to controlling law.” (citing JKL Components
Corp. v. Insul-Reps, Inc., 596 N.E.2d 945, 950 (Ind. Ct. App. 1992))). However, “‘the prevailing
authority indicates that, unless the parties expressly agree to apply the statute of limitations of
another state, general choice of law provisions in contracts incorporate only substantive law and
do not displace the procedural law of the forum state.’” Smither v. Asset Acceptance, LLC, 919
N.E.2d 1153, 1157-58 (Ind. Ct. App. 2010) (quoting Western Video Collectors, L.P. v.

12

Mercantile Bank of Kansas, 935 P.2d 237, 239 (Kan. Ct. App. 1997)). “[A] contract provision
that an agreement is to be governed by the law of another state operates only to import the
substantive law of that state; the procedural law of the forum state applies to procedural issues.”
JKL Components Corp., 596 N.E.2d at 950 (citation omitted) (holding that “while the parties . . .
agreed that their contract will be construed under and governed by California law, . . . Indiana
law . . . governs the procedures to be followed by the trial court”). In sum, “[b]ecause in Indiana
statutes of limitations are procedural in nature, Indiana choice-of-law rules state that the statute
of limitations of the forum state, Indiana, will apply.” Autocephalous Greek-Orthodox Church
of Cyprus v. Goldberg & Feldman Fine Arts Inc., 717 F. Supp. 1374, 1385 (S.D. Ind. 1989)
(citing Albrecht v. Ind. Harbor Belt R.R. Co., 178 F.2d 577, 578 (7th Cir. 1949); Dart Indus.,
Inc. v. Adell Plastics, Inc., 517 F. Supp. 9, 10 (S.D. Ind. 1980); Horvath, 264 N.E.2d 328, 332)).
There are very few Indiana decisions in which courts have concluded that parties
contracted around the application of Indiana procedural law. See, e.g., Lehman Bros. Holdings,
2007 WL 2904591, at *9-10 (holding that although the parties had agreed that their contract
would be “governed by and construed in accordance with the substantive laws of the State of
New York (without regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such laws,” the parties
had chosen only New York substantive law, and Indiana’s statute of limitations applied); Tokio
Marine & Fire Ins. Co. v. Giffels Assocs., Inc., No. 3:04-CV-013-RLY/WGH, 2005 WL
2127084, at *2 (S.D. Ind. Sept. 1, 2005) (“[D]espite the Kentucky choice of law provision in the
contract . . . , Indiana procedural law [– including Indiana’s statute of limitations –] applies to
this case.”).

13

Brill v. Regent Communications, Inc. is the rare case in which an Indiana court
following Indiana choice-of-law principles holds that the parties had in fact contracted around
the application of Indiana procedural law. The contract provisions at issue in that case state that
(1) “[t]his Agreement shall be interpreted and the rights of the parties determined under the laws
of the Commonwealth of Virginia without regard to the conflict of law provisions thereof”; and
(2) “[t]his . . . Agreement shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Virginia (without regard to any conflict of law provisions
thereof).” Brill, 12 N.E.3d at 305 (quotation marks and citations omitted). The Brill Court
concluded that – in including this language –the parties had agreed that both “substantive matters
[and] also the procedural matters [are to be resolved in accordance with] the law of the specified
state.” Id. at 308. The court deemed the inclusion of these phrases “to be an indication of the
parties’ intent.” Id.
As discussed below, neither the PSA nor the MLPA contain any such provision.
Defendant nonetheless contends that this Court should apply New York procedural law, because
(1) the PSA states that portfolio claims and “remedies” shall be determined in accordance with
New York law; and (2) the MLPA states that it “shall be governed in accordance with the
internal laws and decisions of New York,” citing N.Y. General Obligations Law § 5-1401. (Def.
Br. (Dkt. No. 89) at 17-18)
V.

CONTRACT PROVISIONS AT ISSUE
A.

The Pooling and Servicing Agreement’s Choice of Law Provision
Section 11.04 of the PSA provides as follows:

Governing Law. This Agreement and the Certificates shall be construed in
accordance with the internal laws of the State of New York applicable to
agreements negotiated, made and to be performed entirely in said State, and the

14

obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
(PSA (Dkt. No. 24-6) § 11.04)
Defendant contends that “remedies” – as used in the PSA’s choice of law
provision – encompasses New York’s statute of limitations. Because statutes of limitation “only
serve to effect the remedy. . . . [t]he plain terms of both the MLPA and PSA . . . evidence an
intent to apply all aspects of New York law to claims and remedies arising out of those
contracts.” (Def. Br. (Dkt. No. 89) at 17, 19) In support of this argument, Defendant states that
“Indiana courts have long held that statutes of limitations ‘generally are not considered to be
substantive in nature but rather only serve to effect the remedy.’” (Id. at 17-18 (quoting Guthrie
v. Wilson, 162 N.E.2d 79, 81 (Ind. 1959) (emphasis omitted); citing DeHart v. Anderson, 383
N.E.2d 431, 435 (Ind. Ct. App. 1978); In re Hogan, 129 N.E. 633, 634 (Ind. Ct. App. 1921),
overruled in part on other grounds by Zeller v. Mesker, 155 N.E. 520 (Ind. Ct. App. 1927) (en
banc))) Defendant adds that “[t]he PSA confirms [the] conclusion [that the New York statute of
limitations applies, because it] requir[es] the contracts to be construed as if they were performed
‘entirely in’ New York. . . .” (Id. at 9)
Black’s Law Dictionary defines “remedy” as “[t]he means of enforcing a right or
preventing or redressing a wrong; legal or equitable relief.” Remedy, Black’s Law Dictionary
(11th ed. 2019). Given that a statute of limitations is “[a] law that bars claims after a specified
period,” Statute of Limitations, Black’s Law Dictionary (11th ed. 2019), statutes of limitations
do not meet this definition. In short, a statute of limitations is not a remedy; it is instead a
procedural barrier to potentially obtaining a remedy. Sun Oil Co. v. Wortman, 486 U.S. 717,
725 (1988) (a statute of limitations “does not extinguish the underlying right but merely causes
the remedy to be withheld”); F.D.I.C. v. J.P. Morgan Acceptance Corp. I, 958 F. Supp. 2d 1002,
15

1006 n.1 (S.D. Ind. 2013) (“A statute of limitations requires a lawsuit to be filed within a
specified period of time after a legal right has been violated, and is procedural, barring only the
remedy.”); see also Hinkle by Hinkle v. Henderson, 85 F.3d 298, 301 (7th Cir. 1996) (“This
Court has stated that statutes of limitations are procedural, barring only the remedy, while
statutes of repose are substantive, extinguishing the right to bring a cause of action.” (emphasis
in original) (citing Boggs v. Adams, 45 F.3d 1056, 1060 (7th Cir. 1995)).
The fact that statutes of limitation are pleaded as an affirmative defense further
demonstrates that they are not remedies. See Vergara v. City of Chicago, 939 F.3d 882, 886 (7th
Cir. 2019) (“A motion to dismiss based on failure to comply with the statute of limitations
should be granted only where the allegations of the complaint itself set forth everything
necessary to satisfy the affirmative defense.” (citation, quotation marks, and alteration marks
omitted)); Chicago Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d 610, 613 (7th Cir.
2014) (“‘[T]he statute of limitations is an affirmative defense.’” (quoting United States v. N.
Trust Co., 372 F.3d 886, 888 (7th Cir.2004))). In sum, statutes of limitations fix the time period
within which a remedy may be sought; they do not provide the remedy itself.
The cases Defendant cites – Guthrie, DeHart, and Hogan – are not to the contrary.
Guthrie is a medical malpractice case that addresses statutory changes affecting a statute of
limitations, and whether the altered period of limitations could be retroactively applied to bar a
claim. Guthrie, 162 N.E.2d at 82. DeHart is a personal injury automobile accident case that
likewise addresses a change to the statute of limitations, and whether that change could be
applied retroactively. DeHart v. Anderson, 383 N.E.2d at 435. The instant case does not involve
any alleged change to a statute of limitations. Finally, the statement in Hogan that statutes of
limitations “neither create nor destroy rights, but pertain to the remedy solely,” does not

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demonstrate that a statute of limitations is a remedy, much less that use of the term “remedies” in
a choice of law demonstrates the parties’ intent to select a particular state’s procedural law. See
In re Hogan, 129 N.E. at 634.
Applying Indiana’s choice of law principles, this Court concludes that neither the
reference to “remedies” in the PSA nor any other language in the PSA’s choice of law provision
demonstrates that the parties agreed that New York procedural law would apply to disputes
arising under the PSA.
B.

The Mortgage Loan Purchase Agreement’s Choice of Law Provision
Section 13 of the MLPA provides as follows:

Governing Law. This agreement and the rights, duties, obligations and
responsibilities of the parties hereto shall be governed in accordance with the
internal laws and decisions of New York. The parties hereto intend that the
provisions of Section 5-1401 of the New York General Obligations Law shall
apply to this agreement.
(MLPA (Dkt. No. 24-3) § 13)
Section 5-1401 of the New York General Obligations Law provides as follows:
1. The parties to any contract, agreement or undertaking, contingent or otherwise,
in consideration of, or relating to any obligation arising out of a transaction
covering in the aggregate not less than two hundred fifty thousand dollars,
including a transaction otherwise covered by subsection (a) of section 1-301 of
the uniform commercial code, may agree that the law of this state shall govern
their rights and duties in whole or in part, whether or not such contract, agreement
or undertaking bears a reasonable relation to this state. This section shall not
apply to any contract, agreement or undertaking (a) for labor or personal services,
(b) relating to any transaction for personal, family or household services, or (c) to
the extent provided to the contrary in subsection (c) of section 1-301 of the
uniform commercial code.
2. Nothing contained in this section shall be construed to limit or deny the
enforcement of any provision respecting choice of law in any other contract,
agreement or undertaking.
N.Y. Gen. Oblig. Law § 5-1401 (McKinney 2018) (emphasis added).

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As discussed above, this Court has concluded that the PSA is the governing
contract. However, even if this Court were to conclude that the MLPA governs, the Court would
not find – under Indiana’s choice of law rules – that in the MLPA the parties contracted around
application of Indiana procedural law, including Indiana statutes of limitations.
In stating that the “rights, duties, obligations, and responsibilities of the parties . . .
shall be governed in accordance with the internal laws and decisions of New York,” the parties
do not – under Indiana’s choice of law rules – displace Indiana procedural law and elect New
York procedural law. And the citation to Section 5-1401 of the New York General Obligations
Law does not change the outcome. Parties who elect to be governed by Section 5-1401 agree
that their contract will be interpreted in accordance with New York substantive law. See VFS
Fin., Inc. v. Elias-Savion-Fox LLC, 73 F. Supp. 3d 329, 337 (S.D.N.Y. 2014) (“As the New
York Court of Appeals has explained, the goal of the New York State legislature in enacting this
law ‘was to promote and preserve New York’s status as a commercial center and to maintain
predictability for the parties’; accordingly, where the statute’s requirements are met, courts are to
apply New York substantive law rather than undertake an ‘interest analysis’ assessing the
relative interests of competing states.” (citation omitted)); Lehman Bros. Com. Corp. v.
Minmetals Int’l Non-Ferrous Metals Trading Co., 179 F. Supp. 2d 118, 136-37 (S.D.N.Y. 2000)
(“‘Section 5-1401 is a broad choice of law provision clearly written to leave no doubt that New
York substantive law applies when it is provided for in certain contracts.’” (quoting Supply &
Bldg. Co. v. Estee Lauder Int’l, Inc., No. 95 Civ. 8136 (RCC), 2000 WL 223838 (S.D.N.Y. Feb.
25, 2000))); IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A., 20 N.Y.3d 310, 315 (2012) (“The
plain language of General Obligations Law § 5-1401 dictates that New York substantive law

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applies when parties include an ordinary New York choice-of-law provision, such as appears in
the Guarantee, in their contracts.”).
Accordingly, even if the MLPA’s choice of law provision applied here, this Court
would conclude that Indiana procedural law, including Indiana’s statutes of limitations, governs
the timeliness of Plaintiff’s claims.
C.

The History and Context of the MLPA and the PSA
Do Not Compel Application of New York Procedural Law
Citing the multi-jurisdictional nature of mortgage securitizations, Defendant

contends that the “purpose and context” of the PSA and MLPA should be considered in
determining whether the parties elected New York or Indiana procedural law. (Def. Br. (Dkt.
No. 89) at 24) “Mortgage securitizations are not only complex, but fundamentally multijurisdictional in nature: they involve the pooling of hundreds of mortgage loans from nearly
every state in the country. The securitization here is a prime example: it encompassed 318
mortgage loans secured by approximately 500 properties in 44 states.” (Id.) Defendant contends
that these circumstances mandate that this Court apply New York procedural law – the law of the
forum.
This Court is bound, however, by (1) the choice of law language the parties
selected; (2) the Second Circuit’s direction to “apply[] Indiana’s choice of law rules to determine
whether the suit was timely filed,” U.S. Bank Nat’l Ass’n, 916 F.3d at 155; and (3) Indiana
choice of law rules stating that statutes of limitations are procedural, and that Indiana procedural
law applies absent contractual language displacing Indiana procedural law in favor of the
procedural law of another jurisdiction.
As discussed above, while the choice of law provisions in the PSA and the MLPA
provide for the application of New York substantive law, the parties did not clearly contract
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around Indiana’s default application of Indiana procedural law. Indiana law is clear that, in such
circumstances, Indiana procedural law applies. Defendant’s invocation of industry practice (see
Def. Reply Br. (Dkt. No. 93) at 13) cannot overcome the choice of law language the parties
utilized, the Second Circuit’s direction to apply Indiana choice of law rules, and the clear
requirement under Indiana choice of law rules that Indiana procedural law be applied.
D.

Indiana’s Forum “Contacts” Test
Defendant contends that under Indiana’s “most intimate contacts” test, this Court

should apply New York procedural law. (Def. Br. (Dkt. No. 89) at 28) “Although the text and
context of the MLPA and PSA resolve the limitations question here in favor of New York law,
the result would be the same under the traditional forum contacts test Indiana courts apply in the
absence of a controlling contract election.” (Id.)
Defendant’s argument is not persuasive, because Indiana cases – including those
Defendant cites – indicate that the “most intimate contacts” test is used to determine which
substantive law should be applied. See, e.g., Marshall v. Wellcraft Marine, Inc., 103 F. Supp. 2d
1099, 1112-13 (S.D. Ind. 1999) (applying the substantive law of Florida after finding that Florida
had the “most intimate contacts” to the litigation); Kentucky Nat. Ins. Co. v. Empire Fire &
Marine Ins. Co., 919 N.E.2d 565, 576-77 (Ind. Ct. App. 2010) (applying the “most intimate
contacts” test and concluding that Kentucky substantive law applied); Bedle v. Kowars, 796
N.E.2d 300, 303 (Ind. Ct. App. 2003) (applying the substantive law of Ohio after finding
that Ohio had the “most intimate contacts” to the litigation); Schaffert by Schaffert v. Jackson
Nat. Life Ins. Co., 687 N.E.2d 230, 234 (Ind. Ct. App. 1997) (applying the “most intimate
contacts” test and concluding that Illinois substantive law applied); Gen. Motors Corp. v.
Northrop Corp., 685 N.E.2d 127, 135 (Ind. Ct. App. 1997) (applying the substantive law of

20

California to “govern the resolution of [appellants’] common law causes of action” after finding
that California had the “most intimate contacts” to the litigation); OVRS Acquisition Corp. v.
Cmty. Health Servs., Inc., 657 N.E.2d 117, 124 (Ind. Ct. App. 1995) (applying Indiana’s “most
intimate contacts” choice of law rule and finding that Kentucky substantive law applied because
Kentucky had the “most intimate contacts to th[e] litigation”; defendant was a Kentucky
corporation, plaintiff had its principal place of business in Kentucky, and the contract was signed
in Kentucky), reh’g denied, trans. denied.4
Defendant has not cited any case suggesting that the “most intimate contacts” test
applies to the determination of which state’s procedural law applies. Instead, as discussed above,
Indiana law provides that when parties have not contracted around Indiana’s default application
of Indiana procedural law, Indiana’s procedural law governs. Such is the case here.
VI.

APPLICATION OF INDIANA’S STATUTE OF LIMITATIONS
“The question of when a cause of action accrues is generally one of law for the

courts to determine.” Meisenhelder v. Zipp Exp., Inc., 788 N.E.2d 924, 927 (Ind. Ct. App. 2003)
(citing Malachowski v. Bank One, 590 N.E.2d 559, 564 (Ind. 1992)). Here, the parties have not
briefed the question of when Plaintiff’s breach claim began to accrue for purposes of Indiana’s
statute of limitations. (Def. Br. (Dkt. No. 89); Def. Reply Br. (Dkt. No. 93); Pltf. Opp. (Dkt. No.
90) at 25 (“The issue of when a statute of limitations began to accrue is not before the Court[.]”))
Indiana has a ten-year statute of limitations for claims for breach of written
contracts. Ind. Code Ann. § 34-11-2-11; see also Lehman Bros. Holdings, 2007 WL 2904591, at

4

In Jean v. Dugan, 20 F.3d 255, 261-62 (7th Cir. 1994), also cited by Defendant, the court
applied the “most significant contacts” test to a tort claim. Jean does not support Defendant’s
argument that Indiana applies a contacts-based approach in determining which state’s statute of
limitations applies.
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*10-11 (applying Indiana’s ten-year statute of limitations to a claim for breach of certain
warranties and representations contained in a mortgage loan purchase agreement).
Here, as discussed above, the last signature on the Pooling and Servicing
Agreement was notarized on July 31, 2007 (PSA (Dkt. No. 24-6) at 128), and the Mortgage Loan
Purchase Agreement was executed on July 25, 2007. (Cmplt. (Dkt. No. 1) ¶¶ 5, 7) Given that
this action was filed in the Southern District of Indiana on September 12, 2014 (see Cmplt. (Dkt.
No. 1), Plaintiff’s breach of contract claim is timely.
CONCLUSION
For the reasons stated above, Defendant’s motion for judgment on the pleadings is
denied. (Dkt. No. 88) The Clerk of Court is directed to terminate the motion (Dkt. No. 88).
Dated: New York, New York
March 31, 2021
SO ORDERED.

_________________________________
Paul G. Gardephe
United States District Judge

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