Narrative Opinion Summary
The case involves plaintiffs, including a German commercial bank and several special purpose vehicles, alleging fraud and misrepresentation in the sale of residential mortgage-backed securities (RMBS) by defendants affiliated with The Royal Bank of Scotland Group. The plaintiffs claim that the defendants misrepresented underwriting standards, loan-to-value ratios, and ownership of the underlying mortgages, seeking damages for over $243 million in RMBS certificates purchased. The court addressed motions to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f). The court partially denied the motion to dismiss, affirming the sufficiency of fraud allegations regarding underwriting misrepresentations while dismissing claims for negligent misrepresentation and fraudulent concealment due to the absence of a special relationship. The court found that LBBW had standing to sue as a successor-in-interest, and rejected the motion to strike complaint paragraphs referencing unadjudicated allegations. The statute of limitations issues require further discovery. The court scheduled a Rule 16 conference and denied the motion to dismiss for aiding and abetting fraud, allowing the case to proceed. The complaint adequately alleges justifiable reliance and loss causation, while the rescission claim based on mutual mistake was dismissed.
Legal Issues Addressed
Aiding and Abetting Fraudsubscribe to see similar legal issues
Application: The court denied the motion to dismiss the aiding-and-abetting claim as the plaintiffs sufficiently alleged RBS Securities' involvement and knowledge.
Reasoning: The Complaint alleges that RBS Securities provided Offering Materials containing false statements, which constitutes substantial assistance, not self-aiding.
Fraud Claims under Fed. R. Civ. P. 9(b)subscribe to see similar legal issues
Application: Plaintiffs adequately alleged fraudulent misrepresentations regarding underwriting guidelines but failed to establish scienter for LTV ratios and owner-occupancy rates.
Reasoning: The Court finds that Plaintiffs have adequately alleged that Defendants possessed knowledge or access to information that their public statements regarding loan compliance were inaccurate.
Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)subscribe to see similar legal issues
Application: The court partially granted and partially denied the motion to dismiss, considering the sufficiency of the allegations and the plaintiffs' standing.
Reasoning: On March 31, 2014, the Court partially granted and partially denied this motion, and this opinion outlines the Court’s reasoning.
Motion to Strike under Federal Rule of Civil Procedure 12(f)subscribe to see similar legal issues
Application: The court denied the motion to strike paragraphs referencing unadjudicated complaints, as they were deemed relevant to the allegations against the defendants.
Reasoning: Defendants' motion to strike this information is denied.
Negligent Misrepresentation and Fraudulent Concealmentsubscribe to see similar legal issues
Application: Claims were dismissed due to lack of a special relationship or fiduciary duty between the parties.
Reasoning: Plaintiffs in this case have not established the necessary special relationship for either claim, as the parties were sophisticated entities engaged in an arm’s length transaction.
Rescission Based on Mutual Mistakesubscribe to see similar legal issues
Application: The rescission claim was dismissed since the statements regarding title transfer were forward-looking, not concerning existing facts.
Reasoning: Plaintiffs' allegations regarding title transfer are deemed forward-looking statements, resulting in the dismissal of their claim for rescission based on mutual mistake.
Standing under Federal Rule of Civil Procedure 12(b)(1)subscribe to see similar legal issues
Application: Standing was established for LBBW due to the acquisition of claims and liabilities from Sachsen LB, while Spencerview's standing was deemed potentially irrelevant.
Reasoning: Defendants' motion to dismiss the claims of LBBW and Spencerview for lack of standing is denied without prejudice.
Statute of Limitations under New York Borrowing Statutesubscribe to see similar legal issues
Application: The court could not determine the statute of limitations for the claims due to insufficient information about the financial base of the plaintiffs.
Reasoning: The current complaint lacks sufficient detail regarding payment methods, account locations, and the presence of decision-making personnel, necessitating further discovery to ascertain the true locus of the injuries.