KANSAS CITY, Kan. (5/1/13)--Eight lawsuits by the National Credit Union Administration against big banks that sold residential mortgage-backed securities (RMBS) to corporate credit unions before the financial crisis hit are on hold, pending a decision by the Tenth Circuit Court of Appeals on two consolidated cases.
U.S. District Court Judge John W. Lungstrum in Kansas City, Kan., Monday ordered the stay in the cases, pending the appeals' court resolution of an interlocutory appeal. The lawsuits are against RBS Securities Inc., Wachovia Capital Markets LLC, J.P. Morgan Securities LLC, UBS Securities LLC, Barclays Capital Inc., and Credit Suisse Securities (USA) LLC, and others.
Lungstrum's decision was made after a status conference Monday. In the order, he wrote that a stay is "appropriate in each of these cases" because "the appeal may materially advance the ultimate termination of expensive and complex litigation.
"Indeed, the Tenth Circuit's opinion (applied to each of these cases) could result in the dismissal of all claims with respect to a number of certificates, including the dismissal of all claims against certain defendants," Lungstrum wrote.
"Interests of judicial economy and the time and expense that could be spared the parties depending on the outcome of the appeal, which are served by a stay, significantly outweigh the detrimental effect of a delay in starting the discovery process," said the order.
The stay halts all proceedings except the completed briefing and resolution of any pending motion to dismiss, and any submission by NCUA--if it chooses--of a motion related to statistical sampling it described in the status conference.
RBS Securities appealed a July 25, 2012, ruling by U.S. District Judge Richard D. Rogers in Topeka, Kan., in the two consolidated cases. At issue is whether NCUA brought its claims within the three-year statute of repose period required to file a civil lawsuit. NCUA argued that an Extender Statute allows more time to file its lawsuits. Rogers had agreed that the extender statute applies, and RBS Securities appealed to the Tenth Circuit Court in Denver.
The appeals court will decide whether the Extender Statute applies to the state of repose as outlined in the Securities Act, and whether it applies to federal and state statutory claims (News Now Nov. 20).
Earlier last month, Lungstrum dismissed NCUA's claims on 12 of 20 certificates sold to U.S. Central FCU, Western Corporate FCU, and Southwest Corporate FCU by Credit Suisse, saying NCUA did not file its lawsuits in time (News Now April 11).
In each suit, NCUA claims the RMBS sellers misled the corporates as to the stability of the investments.