On Tuesday, a New York State judge refused to reopen a dismissed lawsuit against a Credit Suisse AG unit, Law360 [1] reports. New York Supreme Court Judge Eileen Bransten previously dismissed the case involving $1 billion in losses from faulty residential mortgage-backed securities (RMBS), but new RMBS claims were not enough for U.S. Bank NA [2], a trustee for some RMBS pools, reopen the suit. Bransten’s decision was upheld by the First Department of the Appellate Division.
Another case, Nomura Home Equity Loan v. Nomura Credit & Capital, held that the duty to notify is a separate and indecently enforceable obligation. The case finding allowed claims against banks for failing to notify investors of loans which breached the underlying contracts, and U.S. Bank NA attempted to reopen and fight the ruling.
“The First Department has upheld this court’s decision,” Judge Bransten said. “This court declines to undo that final judgment.”
Judge Bransten stated that a change in law cannot be used to reopen a final judgement. Additionally, she does not find that a change in law at the time of dismissal would have much effect on the final judgement. If a failure-to-notify claim had been recognized at the time, U.S. Bank contends that the action would have survived.
Law360 reports that some $2.8 billion worth of mortgage loans in pools are at issue, and investors such as U.S. Bank claim to have lost over $1 billion due to misrepresentations by Credit Suisse.
The Federal Housing Finance Agency [3] (FHFA) filed the original claim and served as the original plaintiff, although Judge Bransten asserted that the FHFA was not the proper plaintiff, and unfortunately for U.S. Bank, by the time it became plaintiff, the statute of limitations period for the claims had passed.