LOS ANGELES (7/15/13 UPDATED 12:30 p.m. CT)--A federal judge in Los Angeles Friday ruled that National Credit Union Administration waited too long before filing some of its claims in a lawsuit against Goldman Sachs over $491 million in losses from residential mortgage-backed securities sold to U.S. Central FCU and Western Corporate FCU.
However, U.S. District Court Judge George Wu also said he would grant NCUA's request for an interlocutory appeal to the Ninth Circuit Court of Appeals on the time-barred issue. The decision affects the federal claims in the case, but not the state-based claims, which will still move forward.
"The court grants the motion for interlocutory appeal on the question of whether the Extender Statute applies to extend the statute of repose...because this issue is a controlling question of law, has generated a substantial degree of disagreement, and its resolution can materially advance this litigation," said Wu.
It was the second decision in a week that dismissed NCUA's claims against brokerage firms that sold or underwrote residential mortgage-backed securities (RMBS) that caused the collapse of several corporates, including U.S. Central and WesCorp. A U.S. District Court in Kansas last week dismissed the agency's suit vs. Barclays Capital and reaffirmed the dismissal of 12 of 20 claims against Credit Suisse, saying the claims were time-barred and that NCUA had not filed the case in time. (See related story in News Now, Court Dismisses NCUA Lawsuit Over Corporate CU Losses Vs. Barclays).
In the Goldman Sachs suit, the agency claimed U.S. Central and WesCorp purchased 21 RMBS from Goldman Sachs, which also acted as the underwriter. NCUA alleged losses of more than $491 million in the case.
In each of the lawsuits, NCUA alleged that the offering documents for the securities sold to the corporates "systematically abandoned" underwriting standards and misled the corporates into making the investments. U.S. Central and WesCorp were liquidated in 2009-2010 as a result of their losses.
The Tenth Circuit Court of Appeals in Kansas also is reviewing the time-barred issues in a separate suit NCUA filed against RBS Securities.