KANSAS CITY, Kan. (4/11/13)--Some of the National Credit Union Administration's claims in its $590 million lawsuit against Credit Suisse over residential mortgage backed securities sold to three corporate credit unions were dismissed Monday by a federal judge in Kansas City, Kan.
U.S. District Judge John W. Lungstrum dismissed NCUA's claims on 12 of the 20 certificates sold to U.S. Central FCU, Western Corporate FCU, and Southwest Corporate FCU. However, he denied Credit Suisse's motion to dismiss on the other eight certificates. Credit Suisse Securities was the underwriter or seller of the certificates.
The claims centered on whether NCUA filed the lawsuit in time according to an extender statute, which extends the time a party has to file its lawsuit, and whether the extension applied to the parties' tolling agreement that expired on Sept. 12, 2012.
"Plaintiff did not file this suit within three years after its appointment as conservator for WesCorp and U.S. Central on March 20, 2009. Accordingly, plaintiff's claims on behalf of those credit unions are timely only if the extender statute's three-year limitations period was tolled in some manner." The court agreed the extender statute's limitations period is not subject to tolling by agreement on 12 certificates.
The judge denied the motion to dismiss the federal claims regarding a tolling agreement in eight certificates, citing split decisions among other courts on the tolling issue. "In light of these splits of authority, the court cannot say as a matter of law, on the present record, that plaintiff may not avail itself of American Pipe tolling with respect to these eight certificates."
NCUA's claims were filed on 12 certificates bought by WesCorp from Oct. 27, 2005 to June 4, 2007; seven bought by U.S. Central from Sept. 22, 2006 to March 8, 2007; and one certificate bought by Southwest Corporate on June 14, 2006.
NCUA argued that the three-year extender statute limitations ran from the dates of its appointment as conservator and liquidating agent for the credit unions, which were March 20, 2009 and Oct. 1, 2010 for WesCorp and U.S. Central, and Sept. 24, 2010 and Oct. 30, 2010 for Southwest.
Judge Lungstrum noted his agreement with the a July 25, 2012, ruling by U.S. District Judge Richard D. Rogers in Topeka, Kan., in NCUA v. RBS Securities, a consolidation of two cases that also make the extender statute and tolling agreement arguments.
Monday's decision rejected Credit Suisse's venue arguments, noting Credit Suisse conducted numerous transactions worth hundreds of millions of dollars with U.S. Central, based in nearby Lenexa, Kan., and rejected its arguments about the extent of facts needed to plead in the case, as well as some interpretations of the extender statute.