Commerzbank AG v. U.S. Bank N.A. et al
Filing
498
OPINION AND ORDER: Commerzbank's March 8, 2022 motion is denied. The Clerk of Court shall close the case. (Signed by Judge Denise L. Cote on 3/25/2022) (vfr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
COMMERZBANK A.G.,
:
:
Plaintiff,
:
-v:
:
U.S. BANK N.A.,
:
:
Defendant.
:
:
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APPEARANCES:
For plaintiff:
Ryan Anthony Kane
Brad Jeffrey Axelrod
Bridget Elizabeth Croutier
Christian Skinner-Klee
David H Wollmuth
Grant Bercari
Jay Gerald Safer
Maxwell George Dillan
Melissa Ann Finkelstein
Michael Christopher Ledley
Philip Ransom Schatz
Roselind Franciska Hallinan
Scott C Ferrier
Sean Patrick McGonigle
Steven Sanford Fitzgerald
Wollmuth Maher & Deutsch LLP
500 Fifth Avenue
New York, NY 10110
Niraj Jayant Parekh
Barnes & Thornburg LLP
390 Madison Avenue
12th Floor
New York, NY 10017
For defendant:
David F. Adler
Erik Doughty
Michael T. Marcucci
16cv4569 (DLC)
OPINION AND ORDER
Jones Day (Boston)
100 High Street
Boston, MA 02110
David Leichtman
Lechtman Law PLLC
228 East 45th Street
Suite 605
New York, NY 10017
Michael Collyard
Thomas M. Ferndt
Robins, Kaplan, Miller & Ciresi L.L.P.
2800 Lasalle Plaza, 800 Lasalle Avenue
Minneapolis, MN 55402
Albert J. Rota
Jones Day (NYC)
250 Vesey Street
34th Floor
New York, NY 10281
Amanda Rose Parker
Calland Ferraro
Jeff Smith
Joseph Cassalia Barry
Joseph Zachary Czerwien
Louis A. Chaiten
Shimson Balanson
Jones Day (Cleveland)
901 Lakeside Avenue
Cleveland, OH 44114
Samuel Lewis Walling
Jones Day (Minneapolis)
90 S. 7th St.
Ste. 4950
Minneapolis, MN 55402
DENISE COTE, District Judge:
Plaintiff Commerzbank A.G. (“Commerzbank”) has moved to
reopen the case so that it can file a motion to reconsider a
summary judgment opinion, issued nearly two years ago, based on
2
a change in Ohio law that occurred a year ago.
For the reasons
given below, Commerzbank’s request is untimely.
Its motion is
therefore denied.
Background
This Court assumes familiarity with the prior Opinions
issued in this case and summarizes only the facts necessary to
decide this motion.
See Commerzbank A.G. v. U.S. Bank Nat’l
Ass’n, 277 F. Supp. 3d 483 (S.D.N.Y. 2017) (“Commerzbank I”);
Commerzbank AG v. U.S. Bank Nat’l Ass’n, 457 F. Supp. 3d 233
(S.D.N.Y. 2020) (“Commerzbank II”).
This case arises out of
Commerzbank’s investment between 2005 and 2007 in residential
mortgage-backed security (“RMBS”) trust certificates.
Commerzbank II, 457 F. Supp. 3d at 238–39.
On December 28,
2015, Commerzbank brought suit against U.S. Bank N.A. (“U.S.
Bank”) and Bank of America N.A. (“Bank of America”) in the
Southern District of Ohio, alleging that they breached their
duty as RMBS trustees to monitor, notify, and take action
against the providers of the mortgages making up the trust for
breaches of the trusts’ governing documents.
Id. at 239.
The
case was transferred to the Southern District of New York in
2016, and assigned to the Honorable William H. Pauley III.
On September 27, 2017, Judge Pauley granted in part the
defendants’ motion to dismiss Commerzbank’s claims, dismissing
all claims arising from 17 of the trusts at issue.
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Commerzbank
I, 277 F. Supp. 3d at 499–501.
Commerzbank and Bank of America
agreed to settle their claims on December 11, 2019, and
stipulated to a dismissal of the claims against Bank of America
on February 19, 2020.
Afterward, only Commerzbank’s claims
against U.S. Bank remained.
Those claims arose from 56 trusts.
Commerzbank II, 456 F. Supp. 3d at 238, 240.
On April 28, 2020, Judge Pauley granted in part U.S. Bank’s
motion for summary judgment on the claims against it.
263.
Id. at
With that decision, all that remained for trial were the
plaintiff’s claims regarding eight certificates (“Trial
Certificates”).
Id. at 263 n.43.
Relevant here, summary judgment was granted against
Commerzbank’s claims arising from 51 certificates held by German
entities, because those claims were barred by the statute of
limitations.
Id. at 245, 263.
Judge Pauley found that Ohio law
determined the applicable statute of limitations, but that Ohio
law required claims arising from the German certificates to be
timely under Germany’s three-year statute of limitations.
at 244–45.
Id.
Because Commerzbank’s causes of action had accrued
as early as 2007, Judge Pauley dismissed Commerzbank’s claims
arising from the German certificates (“German Certificates”).
Id. at 246–48.
Commerzbank moved to reconsider the summary judgment
decision on May 12, 2020, arguing, among other things, that its
4
claims arising from the German Certificates were not time
barred.
Commerzbank’s motion was denied on February 16, 2021.
Commerzbank AG v. U.S. Bank Nat’l Ass’n, 16CV04569, 2021 WL
603045 (S.D.N.Y. Feb. 16, 2021), modified by 2021 WL 4124509
(S.D.N.Y. Sept. 9, 2021).
After the decision on the summary judgment motion issued,
the parties began the most time-consuming and expensive part of
the discovery process, which they termed Phase 2 expert
discovery.
During this period, the parties engaged in loan-
level re-underwriting and performed their damages calculations.
In August 2021, they exchanged seven expert reports.
Two more
reports were exchanged in September 2021, and expert depositions
were taken during October and November of 2021.
Daubert motions
were filed in December 2021.
Meanwhile, the case was reassigned to this Court on July
27, 2021.
In August, the parties submitted letters describing
the status of the litigation and jointly proposed a schedule for
the completion of discovery and the filing of the pretrial order
on March 25, 2022.
In its letter summarizing the status of the
litigation, Commerzbank explained that Judge Pauley had used
Ohio choice-of-law principles to dismiss some of its claims
under Germany’s statute of limitations.
On September 7, this
Court adopted the parties’ proposed schedule and placed the
action on the June 2022 trial ready calendar.
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The Court also
required the parties to engage in settlement discussions in
October before their preferred forum.
The parties thereafter
began serious settlement discussions and selected a mediator.
On February 8, 2022, after the parties had filed their
Daubert motions, Commerzbank and U.S. Bank informed the Court
that they had reached a settlement in principle regarding
Commerzbank’s claims arising from Trial Certificates.
They
anticipated filing a stipulation of dismissal with prejudice by
the end of the month and requested a stay of the litigation.
The next day, the Court issued an Order discontinuing the case,
giving the parties 30 days to move to restore the action.
On March 8, 2022 -- two days before the 30-day period was
set to expire, and one day after it had received its settlement
payment -- Commerzbank moved to reopen the case.
Commerzbank
expressed its intention to move for reconsideration with respect
to 18 of the German Certificates dismissed in the April 28, 2020
summary judgment Order.
Commerzbank explained that it would
argue on reconsideration that an intervening change in Ohio law,
which had retroactive effect, no longer required Commerzbank’s
claims on the German Certificates to be timely under German law.
Commerzbank added that the motion regarding the German
Certificates would not affect the settlement that the parties
had just concluded.
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The change in Ohio law on which Commerzbank was relying in
its March 8 request occurred almost precisely one year earlier:
on March 11, 2021.
This was a little over a month after Judge
Pauley had denied Commerzbank’s motion for reconsideration of
his decision finding the claims on the German Certificates
untimely.
The statute took effect roughly eight months before
Commerzbank’s pending motion, that is, on June 16, 2021.
See
Ohio Rev. Code Ann. § 2305.03(B); 2021 Ohio Laws 1 (S.B. 13).
This Court issued an Order on March 9, 2022 reopening the
action with respect to the certificates that were not subject to
the parties’ settlement.
It required the parties to submit
briefs solely addressing the timeliness of Commerzbank’s request
to reopen the case in order to move for reconsideration of the
2020 Opinion.
Commerzbank filed its brief on March 15.
It
argues that the amendment to the Ohio law “probably would have
changed” Judge Pauley’s ruling regarding the German
Certificates.
U.S. Bank filed an opposition brief on March 18,
and Commerzbank replied on March 21.
Discussion
Local Rule 6.3 requires that a “notice of motion for
reconsideration or reargument of a court order determining a
motion shall be served within fourteen (14) days after the entry
of the Court’s determination of the original motion.”
Commerzbank expressed its intention to move for reconsideration
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on March 8, 2022 -- almost two years after the issuance of the
summary judgment opinion it seeks to have reconsidered, and
almost a year after the enactment of the Ohio law providing the
basis for its motion.
Multiple courts in this District have
held that failure to comply with Local Rule 6.3 provides a
sufficient basis to deny a motion for reconsideration.
See
McGraw-Hill Global Educ. Holdings, LLC v. Mathrani, 293 F. Supp.
3d 394, 397 (S.D.N.Y. 2018) (collecting cases).
Commerzbank’s
application to file a motion for reconsideration is therefore
untimely.
Commerzbank argues that Local Rule 6.3 does not apply to
motions for reconsideration based on intervening changes in law,
and that its motion is therefore timely.
Nothing in the text of
the rule, however, contains any such exclusion.
R. 6.3.
See Local Civ.
At most, Rule 6.3’s fourteen-day clock might restart
when an intervening change in law occurs.
See Palin v. N.Y.
Times Co., 482 F. Supp. 3d 208, 224 n.15 (S.D.N.Y. 2020).
But
the Ohio statute providing the basis for Commerzbank’s planned
motion for reconsideration became law on March 11, 2021, and
took effect on June 16, 2021.
2305.03(B).
See Ohio Rev. Code Ann. §
Even if the fourteen-day clock restarted on each of
these dates, Commerzbank’s request is untimely.
Commerzbank also points to Federal Rule of Civil Procedure
54(b), which states that a district court’s opinion “may be
8
revised at any time before the entry of a judgment adjudicating
all the claims and all the parties’ rights and liabilities.”
But just because a district court has the authority to alter its
decision does not mean that it must or should do so.
In
particular, district courts may adopt and enforce local rules
consistent with the Federal Rules of Civil Procedure.
R. Civ. P. 83(a)(1).
See Fed.
Here, Local Rule 6.3 imposes a time limit
on motions for reconsideration that Commerzbank has not met.
Commerzbank’s application to submit a motion for reconsideration
may therefore be denied as untimely, and Rule 54(b) does not
require otherwise.
Commerzbank argues that its delay moving for
reconsideration should be forgiven because it only “discovered”
the change in Ohio law while “engaged in productive settlement
discussions” regarding the Trial Certificates.
It admits that
it did not advise opposing counsel or the Court at that time of
either the change in the law or its intention to move for
reconsideration of the 2020 summary judgment decision. 1
Instead,
it waited until after it had received the settlement payment
from U.S. Bank to advise the Court of its desire to move for
reconsideration.
Whether due to strategic considerations or
Commerzbank has not identified
aware of the change in Ohio law,
out in its opposition brief that
about exactly when it learned of
1
the date on which it became
even after U.S. Bank pointed
Commerzbank was being “cagey”
the change.
9
simply lack of diligence, this delay is not excusable.
See
Gonzalez v. Crosby, 545 U.S. 524, 537 (2005); Off. Comm. Of
Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand,
LLP, 322 F.3d 147, 168 (2d Cir. 2003).
Moreover, reopening the case now would prejudice the
defendant.
Had Commerzbank raised the issue in a timely manner,
and had it prevailed both on the motion for reconsideration and
in defeating each of U.S. Bank’s summary judgment arguments
regarding the German Certificates, its claims under the German
Certificates could have been litigated concurrently with its
other claims.
In particular, the Phase 2 expert discovery could
have incorporated the German Certificates and the 15 separate
expert reports, their related 11 Daubert motions, and each of
the expert depositions could have addressed all of the
certificates destined for trial.
Instead, Commerzbank’s delay
allowed it to pocket the money from the settlement of the claims
on the Trial Certificates, while keeping its arguments regarding
the German Certificates in reserve.
This tactical choice was
made even though it ran the risk of increasing the cost and
length of this litigation.
Reopening the case would create
perverse incentives and encourage gamesmanship.
As importantly, Commerzbank’s delay deprived the district
court of almost a year of time in which to manage this
litigation in the most effective way.
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Commerzbank’s attempt to
restart expensive and time-consuming Phase 2 expert discovery on
18 Certificates first issued nearly two decades ago, on a
schedule of its own choosing instead of one managed by a court
that has a complete understanding of the parties’ claims and
positions, is inconsistent with “the just, speedy, and
inexpensive determination” of its claims.
Fed. R. Civ. P. 1.
Finally, in its reply brief Commerzbank argues that it
would promote judicial efficiency to consider Ohio’s updated
statute of limitations on a motion for reconsideration.
Commerzbank argues that a failure to address the merits of its
motion for reconsideration now will leave consideration of those
merits for the appellate process, where the Court of Appeals
will be “compelled” to reverse the summary judgment Opinion.
The Court of Appeals will, of course, decide for itself what
arguments have been properly preserved for appeal.
On this
record, however, Commerzbank has not shown that this case should
be reopened by this Court to permit it to bring an untimely
motion for reconsideration.
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