New Jersey Carpenters Vacation Fund et al v. HarborView Mortgage Loan Trust 2006-4 et al

Filing 253

OPINION AND ORDER: re: (236 in 2:08-cv-05093-HB-DCF) MOTION for Reconsideration re; (210) Memorandum & Opinion, Notice of Motion for Reconsideration of this Court's January 3, 2013 Opinion and Order on Defendants' Motion to Dismiss Inter venors' Claims Based on an Intervening Change i MOTION for Reconsideration re; (210) Memorandum & Opinion,, Notice of Motion for Reconsideration of this Court's January 3, 2013 Opinion and Order on Defendants' Motion to Dismiss Inte rvenors' Claims Based on an Intervening Change i MOTION for Reconsideration re; (210) Memorandum & Opinion,, Notice of Motion for Reconsideration of this Court's January 3, 2013 Opinion and Order on Defendants' Motion to Dismiss Int ervenors' Claims Based on an Intervening Change i filed by Greenwich Capital Markets, Inc., RBS Acceptance Inc., Greenwich Capital Acceptance, Inc, Joseph N. Walsh,III, Robert J. McGinnis, James C. Esposito, Greenwich Capital Financial Products, Inc., RBS Securities Inc., Greenwich Capital Holdings, Inc., RBS Holdings USA Inc., Carol P. Mathis, John C. Anderson, The Royal Bank of Scotland Group, plc, RBS Financial Products Inc. I have considered the parties' remaining arguments and find them to be without merit. The motions for reconsideration brought by the Harborview Defendants and the RALI Defendants are GRANTED in part and DENIED in part as set out above. SO ORDERED. (Signed by Judge Harold Baer on 12/18/2013) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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NEW JERSEY CARPENTERS HEALTH FUND,
:
NEW JERSEY CARPENTERS VACATION FUND
:
And BOILERMAKER BLACKSMITH NATIONAL :
PENSION TRUST, on Behalf of Themselves and All
:
Others Similarly Situated,
:
:
Plaintiffs,
:
:
08 CV 8781 (HB)
- against :
:
RESIDENTIAL CAPITAL, LLC, et al.,
:
:
Defendants.
:
:
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OPINION AND ORDER
NEW JERSEY CARPENTERS VACATION FUND
:
And BOILERMAKER BLACKSMITH NATIONAL :
PENSION TRUST, on Behalf of Themselves and All
:
Others Similarly Situated,
:
:
Plaintiffs,
:
:
08 CV 5093 (HB)
- against :
:
THE ROYAL BANK OF SCOTLAND GROUP, PLC, :
et al.,
:
:
Defendants.
:
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Hon. Harold Baer, Jr., District Judge:
Before this Court are motions submitted by Defendants in two cases, 08 Civ. 5093 (the
“Harborview” case) and 08 Civ. 8781 (the “RALI” case) (respectively, “Harborview Defendants”
and “RALI Defendants”) to reconsider this Court’s January 3, 2013 and April 30, 2013 Orders.
Defendants argue that the Second Circuit’s decision in Police & Fire Ret. Sys. of City of Detroit v.
IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. June 27, 2013) (“IndyMac”) constitutes a significant
change in controlling law. I agree. Consequently, and for the reasons set forth below, Defendants’
motions to reconsider are GRANTED in part and DENIED in part.
Background
In both cases, Plaintiffs assert claims under Sections 11, 12(a)(2) and 15 of the Securities
Act of 1933, 15 U.S.C. §§ 77k, 77l(a)(2) & 77o, alleging that Defendants made false and
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misleading statements in the offering documents of certain mortgage-backed securities (“MBS”).
Background regarding the creation and sale of the securities at issue is available in my prior
Opinions, familiarity with which is presumed. See, e.g., N.J. Carpenters Health Fund v. Residential
Capital, LLC, No. 08 Civ. 8781, 2010 WL 1257528, (S.D.N.Y. Mar. 31, 2010); N.J. Carpenters
Vacation Fund v. Royal Bank of Scot. Group, PLC, No. 08 Civ. 5093, 720 F. Supp. 2d 254
(S.D.N.Y. Mar. 26, 2010). Defendants’ present motions to reconsider stem from the Court’s prior
denial of Defendants’ motions to dismiss Intervenors’ claims,1 N.J. Carpenters Health Fund v.
Residential Capital, LLC, 288 F.R.D. 290, 291 (S.D.N.Y. 2013), the Court’s reinstatement of
certain offerings under NECA–IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d
145 (2d Cir.2012)(“NECA”), N.J. Carpenters Health Fund v. Residential Capital, LLC, 08 CV
8781 HB, 2013 WL 1809767 (S.D.N.Y. Apr. 30, 2013), and on this circuit’s decision in IndyMac
which provides a change in controlling law.
In the Harborview case, the First Amended Complaint asserted claims on behalf of the
purchasers of certificates in 15 different offerings issued between April 2006 and October 2007,
based on two Registration Statements. In the RALI case, the First Amended Complaint asserted
claims on behalf of the purchasers of certificates in 59 different offerings issued in the period
between March 2006 and October 2007, also based on two Registration Statements. However, Lead
Plaintiffs in both cases had purchased certificates in only some of the offerings. In March 2010, I
held that Lead Plaintiffs had standing with respect to only those offerings whose certificates they
had purchased, and I dismissed all but two Harborview offerings2 and four RALI offerings.3 720 F.
Supp. 2d at 266; 2010 WL 1257528, at *4.
In July 2010, the Harborview Intervenors moved to intervene, asserting the validity of
claims based on six previously dismissed offerings.4 At the same time, the RALI Intervenors moved

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In the Harborview case, Intervenors are Laborers’ Pension Fund and Health and Welfare Department of the
Construction and General Laborers’ District Counsel of Chicago, Midwest Operating Engineers Pension Trust Fund
and Iowa Public Employees’ Retirement System (collectively, “Harborview Intervenors”). In the RALI case, the
Intervenors are Iowa Public Employees’ Retirement System, Midwest Operating Engineers Pension Trust Fund, Orange
County Employees Retirement System and Police and Fire Retirement System of the City of Detroit (collectively,
“RALI Intervenors”).
2
Lead Plaintiff New Jersey Carpenters had purchased certificates in the Harborview 2006-4 offering, and Lead Plaintiff
Boilermaker Blacksmith National Pension Trust had purchased certificates in the Harborview 2007-7 offering.
3
Lead Plaintiffs New Jersey Carpenters’ Health Fund, New Jersey Carpenters’ Vacation Fund, and Boilermaker
Blacksmith National Pension Trust had purchased certificates in the following RALI offerings: RALI 2006-QO7, 2007QS1, 2007-QH4, and 2007-QO4.
4
Harborview Intervenors had purchased certificates in the following offerings: Harborview 2006-7, 2006-9, 2006-10,
2006-11, 2006-12, and 2006-14.

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to intervene based on six dismissed offerings.5 I granted the movants’ motions to intervene in
December 2010, which effectively revived the claims based on some of the dismissed offerings.
N.J. Carpenters Health Fund v. Residential Capital, LLC, Nos. 08 Civ. 8781 & 08 Civ. 5093, 2010
WL 5222127, at *7 (S.D.N.Y. Dec. 22, 2010). In both cases, Lead Plaintiffs’ and Intervenors’
complaints were subsequently consolidated and amended in January 2011 to name Intervenors as
Plaintiffs.
On January 3, 2013, the Court denied the Defendants’ motions in both cases to dismiss the
Intervenors’ claims based on the statute of repose, as well as Plaintiffs’ motions to reconsider the
Court’s March 2010 dismissal of certain offerings based on NECA, but without prejudice to renewal
if the Supreme Court denied the petition for certiorari, N.J. Carpenters Health Fund v. Residential
Capital, LLC, No. 08 Civ. 8781, 2013 WL 55854 (S.D.N.Y. Jan. 3, 2013), which it did, NECA,
cert. denied, 2013 WL 1091772 (U.S. Mar. 18, 2013) (No. 12-528). Subsequently, Plaintiffs
renewed their motions to reconsider in light of the intervening change in controlling law that NECA
presented. On April 30, 2103, I granted in part and denied in part Plaintiffs’ motions. N.J.
Carpenters Health Fund v. Residential Capital, LLC, 08 CV 8781 HB, 2013 WL 1809767
(S.D.N.Y. Apr. 30, 2013). In the Harborview case, I granted Plaintiffs’ motion with respect to 12
offerings. In the RALI case, I found that Plaintiffs had class standing only with respect to the
offerings that shared Homecomings Financial Networks, Inc. (“HFN”) as an originator and were
underwritten by the same defendants: UBS, Citigroup, Goldman Sachs & Co., and GMAC/RFC
Securities, the underwriters of the offerings purchased by Lead Plaintiffs, as well as Lehman
Brothers and Deutsche Bank AG, the underwriters of the offerings purchased by Intervenors.6
Consequently, I reinstated 37 of the 55 offerings that had been dismissed in the March 2010 order.
Discussion
Under Fed. R. Civ. P. 54(b), “any order . . . that adjudicates fewer than all the claims or
the rights and liabilities of fewer than all the parties . . . may be revised at any time before the entry
of judgment adjudicating all the claims and all the parties rights and liabilities.” Although a motion
for reconsideration should not be lightly granted, “an intervening change of controlling law” is a
5

RALI Intervenors had purchased certificates in the following offerings: RALI 2006-QS18, 2006-QO9, 2006-QS8,
2007-QS1, and 2007-QO2. Mississippi Public Employees’ Retirement System also filed a motion to intervene, but it
was subsequently dismissed from the action. See N.J. Carpenters Health Fund v. Residential Capital, LLC, Nos. 08 Civ.
8781 & 08 Civ. 5093, 2011 WL 2020260 (S.D.N.Y. May 19, 2011).
6
I denied class standing for the 16 offerings underwritten by Bank of America/Merrill Lynch, Credit Suisse, JP
Morgan/Bear Stearns, Morgan Stanley, or RBS, and found no class standing with respect to RALI 2007-QH1 and RALI
2006-QH1.

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ground for exercising the Court’s discretion. Ayazi v. United Fed’n of Teachers Local 2, 487 F.
App’x 680, 681 (2d Cir. 2012).
Contrary to this Court’s earlier analysis of Plaintiffs’ standing, which relied on the tolling
principles enunciated in Am. Pipe & Const. Co. v. Utah, 414 U.S. 538 (1974) (“American Pipe”),
the Second Circuit held in IndyMac that the tolling concept applied there was not applicable to the
three year statute of repose in Section 13, nor to the Rule 15(c) “relation back” doctrine. IndyMac,
721 F.3d at 101. However, IndyMac did not destroy the standing principles established under
NECA. 721 F.3d at 111 n. 19 (“[O]ur decision today implicates only those claims and defendants as
to which [plaintiff] would lack standing under NECA–IBEW.”)
Plaintiffs urge this Court not to apply IndyMac retroactively, or to postpone its application in
light of the petition for a writ of certiorari that was filed in IndyMac on November 22, 2013. As to
Plaintiffs’ first argument, it is well settled that I must apply the IndyMac holding to this matter
because once the circuit applies “a rule of federal law to the parties before it, that rule is the
controlling interpretation of federal law and must be given full retroactive effect in all cases still
open on direct review.” Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 97 (1993). Further, I
decline to postpone IndyMac’s application pending the Supreme Court’s decision on the cert
petition.
A. The Harborview Case
The Harborview Defendants request that the Court reconsider its January 3, 2013 decision,
in which Defendants’ motion to dismiss Intervenors’ claims was denied in part based on the tolling
principles in American Pipe. Specifically, Defendants argue that claims based on four of the
offerings currently at issue – the HarborView Mortgage Loan Trust (“HVMLT”) 2006-7, 2006-8,
2006-10, and 2006-14 – should be dismissed because no remaining party has standing to assert
them. I agree that the 2006-8 and 2006-10 Offerings should be dismissed.
In contrast, the HVLMT 2006-7 and 2006-14 Offerings survive application of IndyMac
based on their status under NECA. These offerings share common originator American Home
Mortgage Corporation (“AHM”) with the HVMLT 2007-7 Offering purchased by Lead Plaintiff
Boilermakers Blacksmith Pension Trust (“Boilermakers”). Although Defendants contend that
differing shelf registrations – the HVLMT 2006-6 and 2006-14 Offerings had 2006 shelf
registrations while the HVLMT 2007-7 Offering had a 2007 shelf registration – defeat the survival
of these claims under NECA, this narrow reading of NECA is unsupported.

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As I explained in my April 30, 2013 opinion, under NECA, offerings must share the “same
set of concerns” to preserve class standing. NECA, 693 F.3d at 149, but nowhere is it written that
these “same set of concerns” are destroyed simply because of different shelf registrations. Although
the offerings in NECA were in fact issued under the same registration statement, there was no
language finding that a shared registration statement was an essential element of the “same set of
concerns” requirement. Indeed, I rejected the proposition that a common originator was insufficient
to satisfy the “same set of concerns” standard enunciated in NECA, and noted that NECA identified
common originators as one source of these common concerns. N.J. Carpenters Health Fund v.
Residential Capital, LLC, 08 CV 8781 HB, 2013 WL 1809767 (S.D.N.Y. Apr. 30, 2013)
(“Defendants also argue that NECA is not applicable because there are two different registration
statements . . . I am not persuaded by Defendants’ arguments that concern the registration
statements . . . as Defendants fail to explain why or how those considerations would be relevant
under NECA, perhaps because they cannot. The Second Circuit in its opinion emphasized the
common originators for the ‘same set of concerns’ analysis.”) In a post-IndyMac decision, Judge
Kaplan reached the same conclusion, holding that NECA’s “same set of concerns” requirement
could be satisfied even where offerings were “made in different time periods and implicated
different loan products” because the offerings “implicate statements and omissions substantially
similar to those that Lead Plaintiffs allege to be false or misleading.” In re IndyMac MortgageBacked Secs. Litig., 09 Civ. 4583, 2013 U.S. Dist. LEXIS 103576 at *8-*10(S.D.N.Y. July 23,
2013). Thus, even applying IndyMac, and consistent with my earlier interpretation of NECA,
HVLMT Offerings 2006-7 and 2006-14 survive because they share common originators with
HVLMT Offering 2007-7, thereby satisfying the “same set of concerns” analysis. On the other
hand, as noted, HVLMT Offerings 2006-8 and 2006-10 cannot survive because they do not have a
common originator with a timely filed claim.
B. The RALI Case
Similarly, the RALI Defendants request that the Court reconsider both its January 3, 2013
and April 30, 2013 orders in light of the IndyMac decision. Specifically, the RALI Defendants
argue that the six offerings underwritten by Deutsche Bank AG should be dismissed.7 Plaintiffs do
not dispute that the Deutsche Bank AG offerings cannot survive an application of IndyMac. Pls.’
Opp. Mem. at 2. It is true that even under NECA, Plaintiffs would not have class standing for the
7

The Deutsche Bank AG Offerings include RALI 2006-QS18, RALI 2007-QO2, RALI 2006-QS11, RALI 2006-QS9,
RALI 2007-QS4, and RALI 2007-QS-7.

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Deutsche Bank AG offerings since none of the original plaintiffs had standing to bring those claims.
The RALI Defendants also request that offerings issued by Citigroup and Goldman Sachs & Co. be
dismissed. Interestingly, Defendants concede that these claims survive under NECA, but suggest
that dismissing them now "prevents the need for further intercession by this Court in the event that

NECA ultimately is overturned or this Court's application of NECA in this case is reversed." Defs.'
Mem. at 2, n. 4. While I appreciate Defendants' concern for any further extension of this litigation
and their noticeable bashfulness at coming to court, these claims will not be dismissed at this
juncture. Thus, those offerings issued by Deutsche Bank AG are dismissed, while those issued by
Citigroup and Goldman Sachs & Co. survive.

Conclusion
I have considered the parties' remaining arguments and find them to be without merit. The
motions for reconsideration brought by the Harborview Defendants and the RALI Defendants are
GRANTED in part and DENIED in part as set out above.

SOORDWD
Decembe~, 2013
New Yor~ New York
Hon. Harold Baer, Jr.
U.S.D.J.

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