Siding with the arguments of an Orrick litigation team, the New York Court of Appeals today issued a precedent-setting decision for our client, Credit Suisse subsidiary DLJ Mortgage Capital, that has broad implications for other high stakes RMBS repurchase cases pending in the lower courts.
In a 6-1 decision, New York’s highest court rejected U.S. Bank’s efforts to recover damages for hundreds of purportedly defective loans it had failed to identify to DLJ in timely pre-lawsuit notices, holding loan-specific pre-suit notice was required under a contractual sole remedy provision. The Court described U.S. Bank’s arguments as “nothing more than an attempt to avoid the consequences of the sole remedy provision.”
Our team urged the appeals court to address this key issue to ensure sophisticated commercial parties remain confident agreed-upon contractual terms will be enforced by the courts. This ruling directly impacts many other pending RMBS repurchase cases because the provision it construed is standard across RMBS contracts. The win for DLJ also prevents U.S. Bank from recovering “accrued interest” that had not actually accrued on liquidated loans, further limiting DLJ’s potential exposure in the case.
Our team was led by partner Rich Jacobsen, who argued the case, as well as partners Paul Rugani and Danny Rubens and associate Jennifer Keighley.