U.S. Bank defeated a lawsuit by investors in a residential mortgage-backed securities trust that lost more than $100 million in the 2008 housing market collapse.
The investors said in the class suit U.S. Bank was required as trustee to take action against Wells Fargo, the master servicer that monitored the trust’s individual mortgage loan servicers, when Wells Fargo allegedly failed to make certain deposits in the trust.
The U.S. Court of Appeals for the Second Circuit disagreed Jan. 9 in an unpublished ruling. It found the investors failed to show that Wells Fargo committed a default that would obligate U.S. Bank to act.
The court also declined to hold U.S. Bank liable for failing to take quick action against UBS Real Estate Securities Inc. That company allegedly misrepresented key terms about the 5,660 adjustable-rate mortgages it provided to the trust.
The court said U.S. Bank took action by suing UBS over the issue in 2012. Though the investors said the suit came too late, the court said they didn’t show any harm caused by the delay.
Judges Amalya L. Kearse, Debra Ann Livingston, and Susan L. Carney joined the ruling. It affirms a 2018 ruling by a federal judge in New York.
Kaufman Coren & Ress PC and Abbey Spanier LLP represent the investors. Morgan Lewis & Bockius LLP represents U.S. Bank.
The case is Bakal v. U.S. Bank N.A., 2d Cir., No. 18-1320, unpublished 1/9/19.