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THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive two-judge dissent, determined plaintiff trustee (HSBC) was limited to the cure and replurchase remedy described in the contracts for these residential mortgage-backed securities, and could not sue for general contract damages:

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In these appeals stemming from four residential mortgage-backed securities (RMBS) transactions, we are asked to decide whether claims for general contract damages based on alleged breaches of a “no untrue statement” provision can withstand a motion to dismiss based on a contract provision mandating cure or repurchase as the sole remedy for breaches of mortgage loan-specific representations and warranties. We hold that, inasmuch as the claims for general contract damages at issue here are grounded in alleged breaches of the mortgage loan-specific representations and warranties to which the limited remedy fashioned by the sophisticated parties applies, plaintiffs’ claims for general contract damages should be dismissed. * * *

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.. .[I]t is readily apparent from the face of the complaints that the alleged breaches of the No Untrue Statement Provision are, in fact, based upon alleged breaches of the Mortgage Representations. … [T]he sole remedy for breaches of the Mortgage Representations is cure or repurchase. HSBC cannot “subvert this ‘exclusive remedies’ limitation” of liability by simply re-characterizing its claims … . Rather, “[r]eading the [contracts] as a harmonious and integrated whole” …  and honoring “the exclusive remedy that the[se] [sophisticated] parties fashioned” … , we conclude that the Sole Remedy Provision applies, precluding HSBC from seeking general contract damages for the particular claims challenged on this appeal. Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 2017 NY Slip Op 08622, CtApp 12-12-17

 

SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/CONTRACT LAW (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/RESIDENTIAL MORTGAGE-BACKED SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/SOLE REMEDY PROVISIONS (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))

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