1 

14-2859-cv(L) 

U.S. Bank National Assoc., et al v. Dexia Real Estate Capital Markets 

UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT 

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED 

BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY 

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE 

NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY 

OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at 

the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, 

on the 16th day of March, two thousand sixteen. 

Present: 

PETER W. HALL, 

DEBRA ANN LIVINGSTON, 

SUSAN L. CARNEY, 

 Circuit Judges.

____________________________________________________ 

U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of Wachovia 

Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 

2006-C28, Acting by and through its Special Servicer CWCapital Asset Management LLC, 

 Plaintiff-Appellee, 

 v. Nos. 14-2859-cv(L) 

 14-3582-cv(Con) 

 

DEXIA REAL ESTATE CAPITAL MARKETS, FKA ARTESIA MORTGAGE CAPITAL 

CORPORATION, 

 

Defendant–Third-Party Plaintiff–Appellant. 

____________________________________________________ 
2 

FOR APPELLANT: KENNETH I. SCHRATER, (Dina R. Kaufman, on the brief), 

Morgan, Lewis & Bockius LLP, New York, NY, and David D. 

Ferguson, Polsinelli PC, Kansas City, MO. 

FOR APPELLEE: GREGORY A. CROSS (Colleen M. Mallon and Heather Deans 

Foley, on the brief), Venable LLP, Baltimore, MD. 

__________________________________________________ 

 Appeal from a judgment of the United States District Court for the Southern District 

of New York (Scheindlin, J.). 

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 

ADJUDGED, AND DECREED that the judgment of the district court is REVERSED, 

and the case is REMANDED with instructions that Defendant-Appellant’s cross-motion 

for summary judgment be GRANTED. 

Defendant-Appellant Dexia Real Estate Capital Markets (“Dexia”) appeals from the 

district court’s order granting summary judgment to Plaintiff-Appellee U.S. Bank National 

Association (the “Trust”). Dexia challenges, inter alia, the district court’s conclusion that the 

Trust’s claims were timely because the statute of limitations began to run when what the 

Trust alleges was a defective loan guaranty (the “Guaranty”) was required to enforce the 

defaulting loan and not when Dexia made representations and warranties that the Guaranty 

was valid and enforceable. See U.S. Bank Nat’l Ass’n v. Dexia Real Estate Capital Markets, No. 

12-CV-9412, 2014 WL 3368670, at *6 (S.D.N.Y. July 9, 2014). We assume the parties’ 

familiarity with the underlying facts and the procedural history of the case. 

On appeal, Dexia argues that the Trust’s claims were not timely because the claims 

for breach of representations and warranties accrued when the Mortgage Loan Purchase 

Agreement (the “MLPA”) was executed. Dexia contends that the MLPA’s “material and 
3 

adverse effect” provision does not define the substantive elements of an actionable breach—

but instead “defines what the Trust can recover for the breach and when it can seek that 

recovery.” In light of the New York Court of Appeals’s recent decision in ACE Secs. Corp. v. 

D.B. Structured Prods., Inc., 25 N.Y.3d 581 (2015), and this Court’s recent decision in Deutsche 

Bank Nat’l Trust Co. v. Quicken Loans Inc., 810 F.3d 861 (2d Cir. 2015), we find this argument 

to be persuasive. 

We review a district court’s decision to grant summary judgment de novo. Gudmundsson 

v. United States, 634 F.3d 212, 216 (2d Cir. 2011). “Summary judgment is appropriate if there 

is no genuine issue as to any material fact, and if the moving party is entitled to a judgment 

as a matter of law.” Id. (internal quotation omitted). We also review de novo the district 

court’s application of the statute of limitations. Golden Pac. Bancorp v. F.D.I.C., 273 F.3d 509, 

515 (2d Cir. 2001). When sitting in diversity jurisdiction and reviewing New York state law 

claims, we must apply “law of New York as interpreted by the New York Court of Appeals.” 

Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 739 F.3d 45, 48 (2d Cir. 2013) (per curiam). 

Under New York law, the six-year limitations period on claims for breach of contract 

generally runs from the time the contract was breached. N.Y. C.P.L.R. 203(a), 213(2); see also

Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 402 (1993). Accordingly, “[a] cause of 

action for breach of contractual representations and warranties that guarantee certain facts as 

of a certain date—but do not guarantee future performance—accrues on the date those 

representations and warranties become effective.” Quicken Loans, 810 F.3d at 865 (citing 

ACE, 25 N.Y.3d at 596). 
4 

In this case, the Complaint alleged a breach of the representations and warranties 

made in the MLPA, including that any agreement executed in relation to the underlying 

mortgage loans “is a legal, valid, and binding obligation,” and that “there is no valid offset, 

defense, or right to rescission with respect to [any such agreement].” Compl. ¶ 19 (quoting 

MLPA Schedule I(5–6)). The MLPA specifies that these representations and warranties 

were made “as of the Closing Date, with respect to . . . each Mortgage Loan.” MLPA § 3(b); 

By the time the Trust filed suit in December 2012, more than six years had passed since the 

MLPA was executed on October 1, 2006, and the Trust’s claims were thus time-barred. 

The district court recognized that the repurchase provisions of the MLPA and the 

related but separate Pooling and Service Agreement (the “PSA”), which state that a breach 

must “materially and adversely affect[] the value of the affected Mortgage Loan” before the 

Trust can demand cure and repurchase, see PSA § 2.03(a), MLPA § 3(c), are procedural in 

nature. U.S. Bank Nat’l Ass’n, 2014 WL 3368670, at *6. The district court concluded, 

however, that because the PSA and MLPA also provide that a Document Defect is not 

material and adverse unless the document is needed “in connection with an imminent 

enforcement of the mortgagee’s rights or remedies,” PSA § 2.03(a), MLPA § 3(c), the Trust’s 

claims did not accrue until it required the defective Guaranty to enforce the defaulting loan. 

Id. 

The “material[] and adverse[]” effect language does not create a substantive element 

of an actionable breach for statute of limitations purposes. Id. Rather, the language 

referring to material and adverse effects is part of the contractual provision through which 

the Trust might seek repurchase as one recourse for a breach of representations and 
5 

warranties made in the MLPA. Such a remedial mechanism is not an element of breach and 

does not toll the statute of limitations under New York law. See ACE, 25 N.Y.3d at 598 

(holding that the failure to repurchase or cure under a substantially similar MLPA is not a 

substantive condition precedent capable of delaying accrual of a trust’s claims). Because the 

repurchase provision does not create “an independent obligation but merely an alternative 

contractual remedy to damages, [and] the relevant ‘performance’ is the truth or falsity” of the 

representations and warranties, the statute of limitations runs from the time those 

representations and warranties were made. Quicken Loans, 810 F.3d at 867 (citation omitted). 

In the alternative, the Trust argues that the cause of action accrues when demand is 

made and refused, not upon breaches of the representations and warranties made in the 

MLPA, because demand is a substantive condition precedent. This argument fails because, 

as previously stated, the underlying performance is the truth or falsity of those representations 

and warranties, as alleged in the Complaint. It thus follows that any demand requirement in 

the MLPA is merely a procedural condition precedent. See ACE, 25 N.Y.3d at 597 (noting 

that there is a “difference between a demand that is a condition to a party’s performance,” 

such that it is substantive, and a “demand that seeks a remedy for a preexisting wrong,” such 

that it is procedural). 

We similarly reject the district court’s conclusion that even if the MLPA contained a 

procedural demand requirement, the Trust had no right to make a demand until the material 

and adverse effect language was satisfied. This argument is effectively equivalent to the 

Trust’s contention that the material and adverse effect language was an essential element of 

the breach. As explained above, that argument is without merit. 
6 

 We have considered the remainder of the Trust’s arguments and conclude that they 

are without merit. Because the Trust’s claims accrued when the MLPA was executed and its 

complaint was not filed until more than six years after that date, Dexia is entitled to 

judgment as a matter of law. We therefore REVERSE the judgment of the district court 

and REMAND this case with instructions that Dexia’s cross-motion for summary judgment 

be GRANTED. 

 FOR THE COURT: 

 Catherine O’Hagan Wolfe, Clerk