U.S. Bank N.A. v DLJ Mtge. Capital, Inc. 2024 NY Slip Op 32344(U) July 8, 2024 Supreme Court, New York County
Docket Number: Index No. 653140/2015 Judge: Joel M. Cohen Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001 (U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.653140/2015 U.S. BANK NATIONAL ASSOCIATION vs. DLJ MORTGAGE CAPITAL, INC

Motion No. 008 009 Page 1 of 6 

### SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 03M

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DECISION + ORDER ON MOTION INDEX NO. 653140/2015

MOTION DATE 02/01/2024, 02/01/2024

MOTION SEQ. NO. 008 009 U.S. BANK NATIONAL ASSOCIATION, solely in its capacity as Trustee of the Asset Backed Securities Corporation Home Equity Loan Trust, Series AMQ 2006

- HE7

Plaintiff,

- v
- DLJ MORTGAGE CAPITAL, INC, AMERIQUEST MORTGAGE COMPANY,

Defendant s

.

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HON. JOEL M. COHEN:
The following e

- filed documents, l isted by NYSCEF document number (Motion 008) 302, 303, 304, 305, 306, 313, 314, 315, 317
were read on this motion for REARGUMENT AND LEAVE TO AMEND

.
The following e

- filed documents, l isted by NYSCEF document number (Motion 009) 307, 308, 309, 310, 311, 316, 318
were read on this motion for REARGUMENT AND LEAVE TO AMEND

. Plaintiff U.S. Bank National Association, solely in its capacity as Trustee of the Asset

Backed Securities Corporation Home Equity Loan Trust, Series AMQ 2006

- HE7 (“Plaintiff” or

the “Trustee” ) moves for leave to reargu e , in part , the Court’s Decision and Order dated

December 30, 2023
, and entered on January 2, 2024 (NYSCEF 287 [Mot. Seq. Nos. 5 and 6] )

pursuant to CPLR 2221 ( d )
, and for leave to file a Second Amended Complaint pursuant to CPLR

3025 . The motion is denied

.
A. Background

L ike man y residential mortgage

- backed securities (“ RMBS ”) cases, t his dispute involves

a sole remedy repurchase protocol ( U.S. Bank N.A. v DLJ Mtge

. Capital, Inc. , 33 NY3d 72, 76 INDEX NO. 653140/2015

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### [* 1]653140/2015 U.S. BANK NATIONAL ASSOCIATION vs. DLJ MORTGAGE CAPITAL, INC

Motion No. 008 009 Page 2 of 6 [2019]). Specifically, Section 7.04 of the Mortgage Loan Purchase and Interim Servicing

Agreement (“MLPA” [ NYSCEF 193 ]) provides that Defendant Ameriquest Mortgage Company

(“Ameriquest” ) must cure any breach or repurchase a breaching mortgage loan “[w]ithin 90 days

of the earlier of either discovery b y or notice to. . .” Amerique st from Defendant DLJ Mortgage

Capital, Inc. (“DLJ” and with Ameriquest “Defendants”)

.
The Trustee obtained DLJ’s rights “ to the enforce ment or exercise of any right or remedy
against” Ameriquest under the MLPA pursuant to Section 6 of the Reconstitut ion Agreement
(“RA” [NYSCEF 194]). Finally, a “backstop ” provision in Section 2.03 of the Pooling and

Service Agreeme nt (“PSA” [ NYSCEF 196] ) provides that, s hould Ameriquest be “unable to

cure ” a breach or repurchase a loan
, that DLJ must do so ( U.S. Bank N.A. v DLJ Mtge. Capital,

Inc. , 33 NY3d at 76

- 77 ).

As explained in the Order, i t is undisputed that, p rior to commencing litigation in 2012,

t he Trustee served notice on DLJ, but not o n Ameriquest

. The Trustee did not serve notice on

Ameriquest until December of 2 012
, after it commenced litigation and the limitations period had

run . The Trustee served additional no tices in 201 9

. On December 30, 2023, the Court held that the Trustee failed to comply with the

c o n t r a c t u a l r e p u r c h a s e protocol and dismissed the First, Second and Thir d Causes of Action in

the Trustee’s Amended Complaint (the “ notice

- based claims ”) ( U.S. Bank Nat. Ass'n v DLJ

Mortg. Capital, Inc , 2023 N.Y. Slip Op. 34560[U], *1

- 2 [N.Y. Sup Ct, New York County 2023]

[the “Order”]). T h e Court s u s t a i n e d the Trustee’s Fourth Cause of Action for failure to notify

(the “ disc overy - based claim ”) against DLJ ( id. ). The Order provide d that Plaintiff could seek

leave to amend to add a “‘ failure to notify ’ discovery

- based claim against Ameriquest ” ( id. at

*9)

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Motion No. 008 009 Page 3 of 6 B. Discussion

The Trustee timely moved for leave to reargue and to amend. With respect to

reargu ment, the Trustee first argues that its dismissed notice

- based claims also pled viable

discovery

- based claims. Next, the Trustee argues that its notice

- based claims premised on

notice s sent in 2019 are viable. With respect to its motion for leave to amend, the Trustee seeks
to add a “failure to notify claim” against Ameriquest on the theory that, had Ameriquest notified

the Trustee of breaches it discovered, the Trustee could have ser ved timely notices and made

timely claims.

a. Leave to Reargue is Denied

Under CPLR 2221(d), “[a] motion for leave to reargue , addressed to the sound discretion

of the court, may be granted upon a showing that the court overlooked or misapprehended the
relevant facts or misapplied any controlling principle of law” ( Cortlandt St. Recovery Corp. v

Bonderman , 75 Misc 3d 469, 475 [Sup Ct, NY County 2022] [collecting cases]. However,
“[r]eargument is not designed to afford the unsuccessful party successive opportunities to

reargue issues previously decided or to present arguments different from those originally

asserted” ( William P. Pahl Equip. Corp. v Kassis , 182 AD2d 22, 27 [1st Dept 1992]).

Plaintiff has n ot identified any fact overlooke d or misapprehended by the Court or any

controlling principle of law misapplied in the Order. Plaintiff’s Amended Complaint’s notice

based claims d o n o t c o n t a i n a l l e g a t i o n s suggesting that v i a b l e discovery

- based repurchase claims

exist

. Instead, the notice

- based claims assert that breaches occurred af t er Defendants were
“notified” (Am. Cplt. ¶¶71, 80, 86). By contrast, the surviving discovery

- based claim against INDEX NO. 653140/2015

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Motion No. 008 009 Page 4 of 6 DLJ expressly pleads a “Failure t o Notify” theory and cites the pertinent sections of the PSA

(Am Cplt. ¶¶90

- 96).

With respect to the 2019 notices, those post

- suit notices are insufficient to state a claim in

a case that was commenced in 201 2 ( U.S. Bank N.A. v DLJ Mtge. Capital, Inc.
, 38 NY3d 169,

183 [2022 ] [ “ HEAT 2007

- 1 ”] [“W e cannot rewrite the contract by substituting a different, post

suit notice procedure in place of the one chosen by the parties ”] ). As explained by the First

Department, “ notice must be provided before a suit is filed ” ( Finkelstein v U.S. Bank, N.A. , 219

AD3d 401, 403 [1st Dept 2023] citing id. )

. Accordingly, leave to reargue is denied.

b. Leave to Amend is Denied

CPLR 3025(b) provides that “[a] party may amend his or her pleading, or supplement it

by setting forth additional or subsequent transactions or occurrences, at any time by leave of
court.” “Motions for leave to amend should be freely granted, absent prejudice or surprise ...

unless the proposed amendment is palpab ly insufficient or patently devoid of merit” ( MBIA Ins.

Corp. v Greystone & Co., Inc. , 74 AD3d 499, 499 [1st Dept 2010] [citations omitted]) . A

motion to amend should be denied where the pleading would not survive a motion to dismiss

( Scott v Bell Atl. Co rp. , 282 AD2d 180
, 185 [1st Dept 2001], affd as mod sub nom. Goshen v

Mut. Life Ins. Co. of New York , 98 NY2d 314 [2002] ; Olam Corp. v Thayer , 2021 N.Y. Slip Op.

30345[U] [N.Y. Sup Ct, New York County 2021]).

Plaintiff’s P roposed Second A mended C omplaint seeks to add a claim that Section 7.04

of the MLPA impose d an obligation on Ameriquest to provide notice to Plaintiff upon the

discovery of a breach and that Ameriquest’s failures prevented Plaintiff from bri ngi ng timely

claims (NYSCEF 310 ¶

¶26, 52 , 99

- 104 ). Specifically, it seeks to allege that “ Section 7.04 of the INDEX NO. 653140/2015

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### [* 4]653140/2015 U.S. BANK NATIONAL ASSOCIATION vs. DLJ MORTGAGE CAPITAL, INC

Motion No. 008 009 Page 5 of 6 MLPA requires Ameriquest to give prompt written notice to the Trustee upon discovering

breaches of Ameriquest ’s and DLJ’s R&Ws” (NYSCEF 310 ¶101).

Section 7.04 of the MLPA provides, in relevant part:

Upon discovery by the Purchaser of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of the Mortgag e Loans or the interest of the Purchaser (or which materially and adversely affects the interests of the Purchaser in the related Mortgage Loan in the case of a representation and warranty relating to a particular Mortgage Loan), the party discovering such breach shall give prompt written notice to the others.

T h e f i r s t p a r a g r a p h o f t h e M L P A defines Defendant DLJ as the “Initial Purchaser

. ”

“Purchaser” i s , i n t u r n , d e f i n e d a s “ the Initial Purchaser or the Person, if any, to which the Initial

Purchaser assigns its rights and obligations hereunder as Purchaser with respect to a Mortgage

Loan, and each of their respective successors and assigns .” Defendant Ameriquest
, f r o m w h i c h

D L J a c q u i r e d t h e s u b

j e c t m o r t g a g e l o a n s , is n o t a “Pu rchaser ” a n d t h u s i s n o t s u b j e c t t o t h e

r e q u i r e m e n t s o f S e c t i o n 7

. 0 4

. The MLPA’s repurchase protocol is not ambiguous and the

Trustee’s attempt to establish an affirmative c o n t r a c t u a l obligation on the part of Ameriquest that

is not included in the MLPA is rejected ( IKB Intl., S.A. v Wells Fargo Bank, N.A. , 40 NY3d 277,

28 5 [2023] [“t he governing agreements do not impose on defendants an affirmative duty to

enfo rce repurchase obligations and so those claims should be dismissed”])

. Plaintiff’s argument under Section 2.03 of the PSA fare s no better. Ameriquest is not a

party to the PSA and is instead defined as an “Originator” of the loans. T h e P S A d o e s n o t

i m p o s e a n obligation u p o n Ameriquest to provide notice to the Trustee

. Further, Plaintiff’s attempt to plead a failure to notify claim nearly eighteen years after

the subject transaction and twelve years after this litigatio n started would prejudice Ameriquest

( Pecora v Pecora , 204 AD3d 611, 612 [1st Dept 2022]). Plaintiff pled a n express “Failure to INDEX NO. 653140/2015

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Motion No. 008 009 Page 6 of 6 Notify” claim against DLJ in its Amended Complaint

. Plaintiff’s decision to not file a failure to

notify claim against Ameriquest a t t h a t t i m e cuts against its argument that Ameriquest wa s on

notice of such a claim.

* * * *

Accordingly, it is

ORDERED that Plaintiff’s motions for leave to reargue and leave to amend (Mot. Seq.

Nos. 8 and 9) are DENIED

.
This constitutes the decision and order of the Court.

7 / 8 /2024 DATE JOEL M. COHEN, J.S.C.

CHECK ONE: CASE DISPOSED X NON

- FINAL DISPOSITION

GRANTED X DENIED GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE INDEX NO. 653140/2015

NYSCEF DOC. NO. 331 RECEIVED NYSCEF: 07/08/2024

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