Ambac Assurance Corporation v. US Bank National Association
Filing
195
ORDER with respect to #192 Motion to Stay. The Parties shall appear for a telephonic conference to discuss the Parties' joint request on February 23, 2021 at 3:30 p.m. The dial-in number is (888) 363-4749. The access code is 3070580. SO ORDERED. (Signed by Judge William H. Pauley, III on 2/17/2021) (kv)
Case 1:17-cv-02614-WHP-KHP Document 195 Filed 02/17/21 Page 1 of 2
February 9, 2021
Hon. William H. Pauley III
United States District Court
Southern District of New York
500 Pearl Street, Room 1920
New York, NY 10007
Re:
Ambac Assurance Corp. v. U.S. Bank National Association,
No. 17-cv-2614-WHP-KHP (S.D.N.Y.)
Dear Judge Pauley:
We are counsel for Ambac Assurance Corporation (“Ambac”) and U.S. Bank National
Association (“U.S. Bank”), parties in the above-captioned action. We write to request that the
Court stay proceedings related to Ambac’s Fifth and Sixth Causes of Action, which seek a
declaratory judgment and damages for breach of contract related to the accounting for and
distribution of funds and Ambac’s rights to receive distributions (the “Waterfall Provisions”),
pending an appeal to the Second Circuit of related issues in another case between the Parties.
As Your Honor is aware, this case concerns five RMBS trusts issued from the
Harborview shelf in 2005 (the “Covered Trusts”). Ambac’s claims primarily relate to whether
U.S. Bank complied with its duties as Trustee of the Covered Trusts, and in particular whether it
had an obligation to pursue claims against Countrywide Home Loans, Inc. Two of Ambac’s
claims, however, address a different issue: in its Fifth Cause of Action, Ambac seeks a
declaratory judgment that U.S. Bank must account for and distribute funds pursuant to the
Waterfall Provisions, and in its Sixth Cause of Action Ambac seeks a declaratory judgment on
the operation of the Waterfall Provisions. U.S. Bank’s liability under the Fifth and Sixth Causes
of Action turns on the interpretation of the Waterfall Provisions, and the Parties therefore believe
these issues fall under “Phase 1” expert discovery under the current Revised Scheduling Order
(Dkt. 76, 153).1 Phase 1 expert reports are to be served on March 18, 2021.
Another case between the parties, Ambac Assurance Corporation v. U.S. Bank National
Association, No. 18-cv-5182, before Judge Schofield, addressed the interpretation of the
analogous provisions with respect to the Harborview Mortgage Loan Trust 2005-10 (“HV
2005-10 Waterfall Provisions”). HV 2005-10 is not among the Covered Trusts, but its governing
agreements contain similar contractual language to the Covered Trusts. Judge Schofield
requested early summary judgment briefing on the plain-language interpretation of the HV
2005-10 Waterfall Provisions, before the parties undertook fact or expert discovery. On
December 7, 2020, she issued an opinion and order, and on December 22, 2020 a judgment,
holding that the HV 2005-10 Waterfall Provisions are unambiguous on their face and
1
Phase 1 relates to all issues other than reunderwriting of loans and damages; Phase 2 relates to
reunderwriting and damages.
12310550
Case 1:17-cv-02614-WHP-KHP Document 195 Filed 02/17/21 Page 2 of 2
Hon. William H. Pauley III
February 9, 2021
Page 2
interpreting them as a matter of law. Ambac has appealed that judgment to the Court of Appeals
for the Second Circuit (No. 21-70).
The Parties agree that the Second Circuit’s resolution of the appeal concerning the
HV 2005-10 Waterfall Provisions would clarify the issues related to the Waterfall Provisions in
this case. Depending on the outcome of the appeal, expert discovery and summary judgment
briefing related to the Waterfall Provisions may not be necessary, or the areas of dispute with
respect to the Waterfall Provisions may be narrowed. Therefore, the Parties jointly request that
the Court stay Ambac’s Fifth and Sixth Causes of Action until the Second Circuit appeal related
to the HV 2005-10 Waterfall Provisions is decided.
The Parties propose to submit a joint letter within 10 days of the issuance of the mandate
in the appeal of HV 2005-10 Waterfall Provisions setting forth their positions on whether expert
discovery and/or briefing will be required on those issues in this action, and if necessary
proposing a schedule. The Parties anticipate that one or both will request permission to move for
summary judgment following the completion of Phase 1 expert discovery on June 18, 2021, and,
given the likely schedule in the Second Circuit, our expectation is that if discovery is required on
the Waterfall Provisions it can be folded into the Phase 2 expert discovery that is already
anticipated under the existing Revised Scheduling Order.
A proposed stipulation and order reflecting the Parties’ request is enclosed. We thank the
Court for its attention to this matter.
Respectfully submitted,
/s/ Henry J. Ricardo
Peter W. Tomlinson
Henry J. Ricardo
Stephanie Teplin
PATTERSON BELKNAP WEBB & TYLER
LLP
1133 Avenue of the Americas
New York, NY 10036-6710
(212) 336-2000
pwtomlinson@pbwt.com
hjricardo@pbwt.com
steplin@pbwt.com
Attorneys for Plaintiff Ambac Assurance
Corporation
/s/ Michael T. Marcucci
David F. Adler
Michael T. Marcucci
JONES DAY
100 High Street, 21st Floor
Boston, Massachusetts 02110-1781
(617) 960-3939; (617) 499-6999 (fax)
dfadler@jonesday.com
mmarcucci@jonesday.com
Albert J. Rota
JONES Day
2727 North Harwood Street
Dallas, Texas 75201
(214) 220-3939; (214) 969-5100 (fax)
ajrota@jonesday.com
Attorneys for Defendant U.S. Bank National
Association
12310550
The Parties shall appear for a telephonic
conference to discuss the Parties' joint request
on February 23, 2021 at 3:30 p.m. The dial-in
number is (888) 363-4749. The access code is
3070580.
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