good morning your honour's may please the court i am deborah gross of kaufman korn unrests representing the plaintiff appellants alexander mccall sander and david fisher and yes some fund certificate holders who brought this action against us bank the trustee marm two thousand and six dash to trust as this court is familiar with the litigation arising from residential mortgage backed security trusts i will focus my argument on the uniqueness of the case at hand this case is unique in that disputes relating to this trust first arose in two thousand and ten leading to an interplay or lawsuit by the trust administrator which in twenty twelve this court ultimately passed judgment on affirming the lower court's decision in the interim the certificate insurer sent notices of breach of the representations and warranties made about the mortgage loans in the trust and demanded repurchase to the transfer and sponsor and to the trustee by virtue of the a to zero three which says upon discovery of breach by certificate insurer it shall give prompt notice to other parties and subsequently because of no response by the sponsor transfer the nor the that lawsuit resulted in a bench trial in the district court before the same judge handling the case at hand moreover the court in that litigation the trustee litigation did not even did not yet attempt to calculate the damages suffered by the trust referred the matter to a special master rather than assessing plaintiffs pleading using the well established standards on a motion to dismiss the district court relied on its knowledge and factual findings from the trial in the trustee litigation to dismiss the second and to complete by considering information beyond the f c c and beyond those matters which the district court could properly take judicial notice the district court or at this procedural posture of the case the court he's making findings based on what he thinks will happen the judge in the for example made a determination that he had that there could there may not have been a statute of limitations because the judge relied on no more which has subsequently been i will say challenge by the court the new york court of appeal so that there's it's not findings of fact that that this court in our case should rely on and similar cases have held that pacific life  and and phoenix life so recently you know in phoenix like the court held that the court couldn't gauge the success or failure of the trustees efforts whether its claims were timely and whether the claims in the state court litigation satisfied its duty to enforce repurchase litigations so you know we're that's that's the big concern here is that the court took more than the face value of the complaint more than the fact that the complaint was filed and but and used the findings before him in the bench trial to make a decision in this matter but it's certainly entitled to look at when the complaint was filed and to assess the period in which you say should have had  allege as far as damages the complaint doesn't have to under new york law which we're following the complaint for breach of contract claim the complaint doesn't have to lead it but we now have the complaint you know that there was an action taken to enforce the representations and that you say that there was a failure by by the by not bringing that action earlier but one of the matters played in the complaint i believe at paragraph sixty one is that the trustee in its litigation did not go did not seek out files from india which is one of the originators so the trustee gave up all the rights to that to suing breaches and representations concerning those in the mac so that's one of the examples of the damages in those damages have not been calculated because they were not even submitted to the to the special master with respect to the fact that we believe that the f c c does that  zero one little i and it alleges that the master service or failed to allege or performance by by directing and permitting their erroneous release of funds by the trust administrator in violation of a waterfall payment the violation the destroy the distribution the court focused on the fact that the trustee didn't have any responsibility for the for the distribution of the monies however the  and in this tribulation however the wells fargo as the master service are had to compile the information dirt to present the information two days before to this certificate holder to the trust administrator and dictate how the money should be stripped it and then the so the master servicer actually dictated how those monies should be distributed and that was in violation of the waterfall and that's an inference that could be drawn because  met the trust administrator would not stray from what the directions were given to them by the master service or and the violation of the event of default is defined as the master servicers failure to observe or perform so w plaintiffs are arguing that the master service or fail to observe or perform in that respect good morning and may it please the court michael kraut of morgan lewis and balky as for us bank national association we know this court is well aware that investors have brought numerous cases against trustees for in recent years trying to recoup losses mortgage backed securities and we agree with with my colleague that this case is unique in fact as judge cristol recognized this case is different from the others in which investors are suing trustees because in those cases the investors i'm sorry because in this case the trustee took the step that the investors in those cases say the trustee should have taken and asked to file a lawsuit to enforce rep and warranty violations for that reason judge just correctly dismissed plaintiff's complaint after affording them three tries to plead a claim we believe this court should affirm judge just tells decision for three primary reasons first plaintiff's theories largely hinge on the occurrence of an event of terminations and as judge cristol correctly concluded no event of terminations is alleged here second plaintiff's theory that the trustee failed to enforce rep and warranty breaches is not viable because the trustee didn't force breaches third the trustee had no duty to investigate and search of any additional potential breaches that would be at the indy mac point that that  gross raising there's also an independent basis for a firm it's and that's that plaintiff's claims are barred by the no action clause and the governing agreements happy to address that as well but for the first point your honour's the plaintiffs assume the occurrence of an event of terminations that never occurred plaintiffs in their complaint focus on their dispute with assured the insurer the trust for the certificates and as to how wells fargo allocated the money and as as your honor mentioned a moment ago judge just correctly recognized the difference between wells fargo acting in its capacity as trust administrator versus as master service or and not surprisingly given the name master service or event of terminations only the conduct of the master service or can ever lead to an event of terminate plaintiffs have argued today as they did in their briefs but they did not plead anywhere in the complaint that the master service or must have instructed the trust administrator to make a payment so there must have been some master servicer breach well appellate courts obviously can infer breaches that weren't pl to make the argument work moreover even if the court would infer that there was a master service or breach that's not the same thing under the contract as an event of terminations an event of terminations under the type discussed today seven zero one roman two can only occur if a series of specific steps occur first there must be written notice of the breach to the master service or by one of specified parties number two there must be a sixty day cure period during which the master service or doesn't and the complaint doesn't allege that proper notice was given to the master service or that some instruction it gave to the trust administrator was a breach but even if it even if we assume the notice is given by either the trustee or twenty five percent of the fixed the first apartment in the commerce bank versus bank of new york case emphasize that distinction and that distinction is important because under the governing agreements the trustee may conclusively assume that no event of terminations has occurred unless it receives actual knowledge or has written notice of it in the briefs that the plaintiffs argue that the notice need not be given be under something called the prevention doctrine as judge just tell recognize plaintiffs can't rely on the prevention doctrine for three reasons number one the trustee had no contractual duty to give that notice to the trustee can have no implied duties under the contracts and three the trustee didn't engage in any active conduct that prevented notice from being given we cited the fixed income case from the first department in our brief on that point we think that's sufficient to make that point but but last month the first department reaffirm that principle in a case called blakroc two thousand eighteen westlaw five zero four sixty six forty will will rest on our brief on the other arguments as to why the master service or event determination wasn't sufficiently pled they weren't raised this morning so i'll move on to our second point which is that the plaintiffs don't plead adequately that the trustee breached the governing agreements by failing to enforce  appellate brief about what happened in other cases really are in opposite here because in those cases a key issue was whether the trustee had discovered breaches here is not the speed of the insurer for the deal assured notified the trustee of breaches and directed the trustee to sue which it did so unlike those cases discovery is not an issue on appeal plaintiffs now say their claim is really one of their own arguments is that the trustee pursued relief on timely but they can't point to anything in the governing agreements that says when the lawsuit must occurred they have no basis for saying the claims were on timely because they weren't on timely and as also as your own as question pointed out that plaintiffs have been unable to identify any damages that they've incurred based on the timing of the lawsuit in the brief they say they need discovery to figure that out but the not entitled to discovery to see whether they have a claim and the last point that plaintiffs make on this point is that the judge just tell him properly relied on his knowledge of they were purchased case  specific details about the repurchase case in a dozen different places in paragraphs in the complaint they specifically quote from that opinion they incorporate it by reference in their decision they acknowledge in their appellate brief that the existence of the law suit was taken into account throughout the second amended complaint so they're really in no position to argue that the judge looked at the decision but importantly that the judge didn't rely on any unique knowledge he had of the case the existence of the case the procedural  history all of that is judicially noticeable and when we argued this down below it was not challenged and so we don't believe that's an argument available on appeal so the third point your honor says that apart from that the breach is that the trustee pursued the trustee had no duty to investigate any other breaches the governing agreements very clear on this point that absent an event of terminations the trustees duties are limited to those expressly set forth in the contract and that no implied no duties or covenants can be employed against the trustee as a judge just tell correctly found no event of terminations was pled so that provision alone eight zero one room and one should be sufficient for the trustee to prevail here but it goes be the contract goes beyond that leaves no room for doubt because not only is there no express duty to investigate in the agreement the agreement actually specifically expressly says that the trustee has no duty to investigate unless directed to do so by certificate hold holders holding five percent of the voting rights of each class of certificates and it's not allege that that happened so what the trustee would have found had it done some investigation is academic that's not a duty the trustee has but i'll finish just by  crude and simply doesn't apply here in cruden the court said that no action clauses can't require investors to demand that a party sue itself the clause that issue in the clue cruden case provided that the trustee was the only party upon whom demand  made this case involves different contracts a different contract different facts and different claims the contract here permits investors to make demands on either of two parties they can make it on the trust administrator or the trustee and as multiple courts have recognized asking wells fargo to sue us bank would not be absurd even if the investor alleges wrongdoing by wells fargo that comes up in the commerzbank case the sterling case and  important distinction between asking a party to sue itself versus suing another party was recognized by judge sell of and the ellington case as well so it's not just that the contracts are different but the facts in the claims are different here plaintiff's primary theory here is that  u b s the seller breached reps and warranties and that the trustee should have pursued claims against u b s there is absolutely nothing absurd about investors demanding that wells fargo trust administrator sue us bank for failing to sue so that the trustee the no action clause says that you cannot sue the trustee or the trust administrator the cases that have upheld are going against actually the cases that have gone against cruden ha been cases where the where the trustee hasn't been sued where that where there is not obligate or where there is not an obligation on the trustee to sue one of the cases that's recently cited by the defendants and opportunity the no action cla of breach of contract claim against the securities administrator these are different from the facts at hand with respect to the commerce court commerzbank state case which defendants rely on to show that there was no  event of default the facts there to differ again from here the notice that the trustee got was not specifically related to the trust in that matter it was a letter from holders in other trusts which which said that there was potentially an event of default and that was rendered moot by a settlement the case in hand the letter from assured me the letter from assured specifically applied to the trust at hand specifically said the loans which had breaches specifically laid out the ways the loans were breached similarly with respect to plaintiff's claim for breach of it should the court find that there is no event of a fault which we which we do believe there was the court can still find that plaintiff allegations regarding the studio of trust are sufficient there are extra contract there are extra contractual duties for which plaintiffs are owed duty are owed damages and those duties lie in roof in the trustees refraining from engaging in conflicts of interest and recently in royal park versus deutsche bank the court recognise that a breach of duty of trust is a claim based on a failure to avoid conflicts of interest the claims here do allege that the us bank has been complicit in a quid pro quo system there are specific allegations in the complaint similar to those alleged in blackrock allocation that said that the trustee wouldn't didn't want to sue itself laden suing itself because it had engaged in the same situation