U.S. Bank NA v. Citigroup Global Markets Realty Corp., No. 1:13-cv-06989 (S.D.N.Y. Oct. 1, 2013)

On March 16, 2015, Judge George B. Daniels of the United States District Court for the Southern District of New York denied the majority of claims in U.S. Bank’s attempt to refile an amended complaint against Citigroup Global Markets Realty Corp. and CitiMortgage, Inc. U.S. Bank, as RMBS trustee, had sued Citigroup in October 2013, alleging that it breached representations and warranties in a $832 million RMBS deal. In November 2014, Judge Daniels dismissed most of the claims, but permitted leave to amend. In addressing U.S. Bank’s proposed amendments, Judge Daniels first held that the cause of action for breach of representations and warranties was untimely as to certain loans under the six-year statute of limitations. Next, it dismissed U.S. Bank’s second claim that Citigroup independently discovered defects in the loan pool through due diligence or government investigations, because U.S. Bank failed to allege non-speculative facts plausibly showing such discovery. These rulings were substantially similar to those set forth in the November 2014 order. Finally, Judge Daniels permitted U.S. Bank’s third cause of action to proceed, holding that the plaintiff sufficiently pleaded that CitiMortgage discovered breaches of representations and warranties during its servicing of the securitized loans, and did not fulfill its contractual duties to notify the parties of the breaches and to enforce Citigroup’s cure or repurchase obligation. Order.