Cases & Deals

U.S. Bank obtains significant win at summary judgment in case alleging hundreds of millions of dollars in losses relating to residential mortgage-backed securities

Client(s) U.S. Bank National Association

Jones Day secured a significant win on behalf of U.S. Bank National Association in a lawsuit seeking hundreds of millions of dollars in alleged losses concerning investments in certificates issued by residential mortgage-backed securities trusts for which U.S. Bank served as trustee. The plaintiff, Germany's second-largest bank, alleged that U.S. Bank breached its duties under the trusts' governing agreements by, among other things, failing to investigate and remedy defective mortgage loans collateralizing the certificates and failing to enforce the contractual obligations of the underlying mortgage loan sellers and servicers. After U.S. Bank prevailed on several claims at the motion-to-dismiss stage, the case proceeded to summary judgment on the plaintiff's remaining breach-of-contract and tort claims.

On April 28, 2020, the United States District Court for the Southern District of New York granted U.S. Bank a substantial victory. The court agreed with U.S. Bank that the plaintiff lacked standing under New York law to pursue claims on dozens of certificates that the plaintiff had previously sold. Further narrowing the plaintiff's case, the court held that the plaintiff's claims as to the vast majority of the certificates were time-barred under German law. The court also applied a contractual bar to suit in the governing agreements to dismiss several additional trusts. All told, the ruling reduced by nearly 90% the number of certificates and trusts in the plaintiff's case. The plaintiff subsequently filed a motion for reconsideration, which was denied by the court on February 16, 2021.

Commerzbank AG v. U.S. Bank N.A., et al., No. 1-16-cv-04569 (S.D.N.Y.)