You are here: / / IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, ...
, ,

IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION.

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Gische, in an action stemming from the sale of defective residential mortgage backed securities, determined defendant’s (Morgan Stanley’s) alleged failure to notify plaintiff of the discovery of defective securities constituted an independent breach of contract claim. The First Department further determined, despite the purported “sole remedy” contractual provision, the cause of action for gross negligence was adequately pled and should not have been dismissed:

… [U]nder similar RMBS agreements, a seller’s failure to provide the trustee with notice of material breaches it discovers in the underlying loans states an independently breached contractual obligation, allowing a plaintiff to pursue separate damages … .

… Where parties contractually agree to a limitation on liability, that provision is enforceable, even against claims of a party’s own ordinary negligence … . The purpose of provisions that limit liability or remedies available in the event of breach is to “allocat[e] the risk of economic loss in the event that the contemplated transaction is not fully executed” … . Courts will generally honor the remedies that the parties have contractually agreed to … . There are exceptions to this rule of law, however, and as a matter of long standing public policy, a party may not insulate itself from damages caused by its “grossly negligent conduct” … . Used in this context, “gross negligence” differs in kind, and not only degree, from claims of ordinary negligence. “It is conduct that evinces a reckless disregard for the rights of others or smacks’ of intentional wrongdoing” … . Morgan Stanley Mtge. Loan Trust 2006-13ARX v Morgan Stanley Mtge. Capital Holdings LLC, 2016 NY Slip Op 05781, 1st Dept 8-11-16

CONTRACT LAW (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/SECURITIES (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/NEGLIGENCE  (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/GROSS NEGLIGENCE (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/RESIDENTIAL MORTGAGE BACKED SECURITIES (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION

You might also like
BROADER FLORIDA STATUTE COULD NOT PROVIDE THE BASIS FOR SECOND FELONY OFFENDER STATUS.
THE QUESTION WHETHER THE SEXUAL ASSAULT OF PLAINTIFF IN DEFENDANT GYM’S STEAM ROOM WAS FORESEEABLE SHOULD NOT HAVE BEEN DECIDED AGAINST THE PLAINTIFF AS A MATTER OF LAW; THERE WAS EVIDENCE OF PRIOR SIMILAR ASSAULTS (FIRST DEPT).
Proof that a Floor is Inherently Slippery, Standing Alone, Will Not Support a Negligence Cause of Action
QUESTION OF FACT WHETHER THE INADEQUATE HEIGHT OF A GUARDRAIL ALONG THE STAIRWELL WAS THE PROXIMATE CAUSE OF PLANTIFF’S FALL, HEIGHT WAS BELOW THAT MANDATED BY THE NATIONAL FIRE PROTECTION ASSOCIATION (FIRST DEPT).
IN THIS FAMILY OFFENSE PROCEEDING, THE JUDGE SHOULD NOT HAVE PLACED TIME AND TESTIMONY RESTRICTIONS ON THE HEARING; ORDER REVERSED AND NEW HEARING ORDERED (FIRST DEPT).
COURT SHOULD HAVE TAKEN INTO CONSIDERATION THE FUTURE EARNING CAPACITY OF THE PARTIES IN CONNECTION WITH MOTHER’S MOTION FOR ATTORNEY’S FEES, MOTHER ENTITLED TO A HEARING (FIRST DEPT).
PLAINTIFF’S STATE AND CITY HUMAN RIGHTS LAW CAUSES OF ACTION PROPERLY DISMISSED PURSUANT TO THE DOCTRINE OF COLLATERAL ESTOPPEL; THE IDENTICAL CLAIMS UNDER FEDERAL LAW WERE DISMISSED IN FEDERAL COURT ON SUMMARY JUDGMENT; TWO-JUSTICE DISSENT (FIRST DEPT).
ONCE THE CITY TAX LIENS HAD BEEN ASSIGNED PAYMENT TO THE CITY, INSTEAD OF THE LIENHOLDER, IS NOT APPLIED TO THE DEBT (FIRST DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT; BOTH QUANTUM... OSTENSIBLE NON EMPLOYER WAS NOT A JOINT EMPLOYER SUBJECT TO EMPLOYMENT DISCRIMINATION...