Pac. Life Ins. Co. v. The Bank of N.Y. Mellon

Full title: PACIFIC LIFE INSURANCE COMPANY And PACIFIC LIFE & ANNUITY COMPANY…

Court: United States District Court, S.D. New York

Date published: Feb 22, 2022

17-CV-1388 (KPF) (RWL) (S.D.N.Y. Feb. 22, 2022)

Opinion

17-CV-1388 (KPF) (RWL)

02-22-2022

PACIFIC LIFE INSURANCE COMPANY And PACIFIC LIFE & ANNUITY COMPANY, Plaintiffs, v. THE BANK OF NEWYORK MELLON, Defendant.

ROBERT W. LEHRBURGER, United States Magistrate Judge.

REPORT AND RECOMMENDATION TO HON. KATHERINE POLK FAILLA: SUMMARY JUDGMENT

ROBERT W. LEHRBURGER, United States Magistrate Judge.

INTRODUCTION.............................................................................................................2

PROCEDURAL HISTORY..............................................................................................6

SUMMARY JUDGMENT STANDARDS..........................................................................7

DISCUSSION..................................................................................................................9

I. PacLife Has Standing To Bring Claims For Sold Certificates...................................9

A. Standing Principles.......................................................................................10

B. California And New York Law Conflict..........................................................12

C. California Law Applies Under New York's Choice-Of-Law Rules..................13

D. Settlement Of The Sold Certificates Through The Depository Trust Company Does Not Change The Applicability Of California Law In This Case.............17

E. Royal Park v. Morgan Stanley Does Not Lead To A Different Outcome.......23

F. Plaintiffs Have Standing Under California Law.............................................26

II. The Countrywide Settlement Judgment Bars PacLife's Claims..............................28

A. Overview Of The Countrywide Settlement And Judgment..................................29

B. Law Of Res Judicata.....................................................................................31

C. Claim Preclusion...........................................................................................34

D. Issue Preclusion............................................................................................41

E. New York Case Law Supports Res Judicata In This Context.......................42

F. Mellon Has Not Lost The Res Judicata Argument "Five Times"...................45

G. Claims Not Subject To Res Judicata.............................................................49

III. Most Of PacLife's Claims Are Barred By The Statute Of Limitations.....................51

A. The Applicable Statutes Of Limitations: New York And California................51

B. Accrual Date Based On Entry Into Settlement..............................................54

C. Pre-EOD Claims: Document Defects............................................................56

D. Pre-EOD Claims: R&W Breaches.................................................................64

E. Post-EOD Claims - Not Subject To Continuing Breach Exception...............65

F. California's Discovery Rule Does Not Save PacLife's Claims.......................70

G. Mellon Is Not Equitably Estopped From Raising The Limitations Defense ... 74

H. Some Claims Are Not Within The Scope Of Mellon's Limitations Motion......77

IV. Other Issues..........................................................................................................78

A. Tort Claims...................................................................................................78

B. Trusts With No Damages..............................................................................82

C. Miscellaneous Affirmative Defenses.............................................................83

CONCLUSION..............................................................................................................84

DEADLINE TO OBJECT AND APPEAL........................................................................85

INTRODUCTION

This case is one of many that followed the financial crisis in the late 2000's. That crisis was precipitated in large part by the collapse of the market for residential mortgage-backed securities, otherwise known as "RMBS." Some of the first cases were filed by insurers that financially guaranteed payment to investors. Others were filed by banks serving as trustees for trusts established to hold the securities. Defendants typically included issuers of RMBS and the banks underwriting the mortgages backing the securities. In still other actions, investors sued the trustee banks for allegedly not fulfilling their duties under the relevant agreements. The instant dispute is one of those cases.

Specifically, Plaintiffs Pacific Life Insurance Company and Pacific Life & Annuity Company (collectively "PacLife") commenced this action against Defendant, the Bank of New York Mellon ("Mellon"), claiming that Mellon breached its contractual and fiduciary duties and was negligent as trustee of 13 RMBS trusts (including one re-securitization trust, the "Re-Sec Trust," backed by certificates in two RBMS trusts) (the "Trusts"). The Trusts were sponsored by Countrywide Home Loans, Inc. ("Countrywide"). PacLife purchased certificates in the Trusts with a value of more than $400 million. When the RMBS market imploded, PacLife's Trust certificates lost considerable value. PacLife now blames Mellon for breaching its duties and seeks damages for its investment losses.

The parties completed discovery and have cross-moved for summary judgment. Mellon seeks summary judgment in its favor based on affirmative defenses of (1) res judicata resulting from a settlement Mellon entered into with Countrywide and which was judicially approved as having been reasonable and made by Mellon, as trustee, in good faith and within its discretion; (2) PacLife's lack of standing to claim damages for certificates it sold; and (3) statute of limitations based on New York and California law. Mellon also seeks judgment in its favor on the merits of PacLife's claims.

For its part, PacLife seeks summary judgment dismissing several of Mellon's affirmative defenses - including res judicata, standing, and statute of limitations - and assorted others that Mellon asserted but has not developed. PacLife also seeks judgment in its favor that Mellon breached its duties to provide notice (to certificateholders) and enforce remedies (against Countrywide) for Countrywide's breaches and events of default arising from incomplete loan files, loans in breach of representations and warranties, servicing failures, and more. Judge Failla referred the motions to me for a Report and Recommendation.

As explained below, the Court has determined that it would be most efficient to primarily address in this Report and Recommendation the threshold issues of res judicata, standing, and statute of limitations. To the extent any of those defenses bar PacLife's claims in whole or in part at this juncture, the case may be significantly narrowed.

Indeed, the Court has determined just that, finding that Mellon is entitled to summary judgment based on res judicata. If adopted, the ruling will dispense with most of PacLife's claims. With respect to the other threshold issues, the Court has determined that PacLife has standing to assert claims for the sold certificates. Nonetheless, the Court also has determined that most of PacLife's claims are time-barred by the applicable statutes of limitations.

Additionally, the Court finds that summary judgment should be granted in favor of Mellon dismissing PacLife's remaining claims for negligence. Summary judgment should be denied with respect to Mellon's request to dismiss claims for two trusts that incurred no monetary damages. Finally, summary judgment should be granted in favor of PacLife dismissing Mellon's affirmative defenses grounded in champerty, monoline insurance, collateral source recovery, mitigation, and reliance, all of which Mellon has abandoned.

Following Judge Failla's consideration of this Report and Recommendation, I respectfully request that the matter be remanded to me for further determination of what remains of PacLife's claims and to address summary judgment issues on the merits not presently resolved with respect to those remaining claims.

FACTUAL BACKGROUND

Given the deluge of RMBS litigation over the last decade, the landscape of RMBS basics has been well-trod. See Blackrock Financial Management, Inc. v. The Segregated Account Of Ambac Assurance Corp., 673 F.3d 169, 173 (2d Cir. 2012) ("The features of residential mortgage-securitization trusts are well known in the recent annals of litigation"); BlackRock Allocation Target Shares: Series S. Portfolio v. Wells Fargo Bank, National Association, 247 F.Supp.3d 377, 383 (S.D.N.Y. 2017) ("Explanations of the typical formation process and structure of RMBS trusts abound in this District"), objections overruled, 2017 WL 3610511 (S.D.N.Y. Aug. 21, 2017). The Court assumes the parties' familiarity with that terrain and sets forth merely the following pithy description from the Second Circuit:

To raise funds for new mortgages, a mortgage lender sells pools of mortgages into trusts created to receive the stream of interest and principal payments from the mortgage borrowers. The right to receive trust income is parceled into certificates and sold to investors, called certificateholders. The trustee hires a mortgage servicer to administer the mortgages by enforcing the mortgage terms and administering the payments. The terms of the securitization trusts as well as the rights, duties, and obligations of the trustee, seller, and servicer are set forth in a Pooling and Servicing Agreement.

Blackrock v. Ambac, 673 F.3d at 173.

As for the specific facts of this case, the record is extensive. The parties have submitted more than 400 exhibits, as well as statements and counterstatements of disputed and undisputed fact totaling over 900 pages. To streamline matters, the Court incorporates by reference the factual background penned by Judge Failla in her decision on the earlier motion to dismiss in this case. See Pacific Life Insurance v. Bank Of New York Mellon, 17-CV-1388, 2018 WL 1382105, at *1 -6 (March 16, 2018) ("PacLife I"). That factual rendition was based entirely on PacLife's complaint, not evidence as is necessary at the summary judgment stage. The Court merely adopts it to provide context to the discussion below. The ensuing analysis will address or cite evidence from the summary judgment record that is salient to the particular issue being discussed.

PROCEDURAL HISTORY

PacLife commenced this action with filing of its complaint on February 23, 2017. (Dkt. 1.) On June 9, 2017, Mellon filed a motion to dismiss based on several grounds, including, among others, that (1) PacLife's claims are precluded by the doctrine of res judicata; (2) PacLife lacks standing to assert claims for certificates it sold; and (3) PacLife's claims are barred by the statute of limitations. On March 16, 2018, Judge Failla granted in part and denied in part Defendant's motion to dismiss, and a month later denied Mellon's motion for reconsideration. PacLife I, 2018 WL 1382105, reconsideration denied, 2018 WL 1871174 (April 17, 2018).

Although dismissing various aspects of PacLife's claims, Judge Failla denied Mellon's motion to dismiss with respect to the three issues identified above. Judge Failla found that, at least at the pleading stage, Mellon's settlement with Countrywide did not preclude PacLife's claims because PacLife asserted them against Mellon for its conduct rather than against Countrywide, and because PacLife purported to seek damages beyond those that it recovered from the settlement with Countrywide. PacLife I, 2018 WL 1382105 at *12. As to claims based on the certificates sold by PacLife, Judge Failla determined that California law, not New York law, applies, and that California law confers standing on PacLife. Id. at *16. And with respect to the statute of limitations, Judge Failla held that because PacLife raised "the specter of ongoing breaches," the Court was unable to resolve the statute of limitations defense at the motion to dismiss stage. Id. at *7.

Following completion of discovery, on June 7, 2021, Mellon filed its motion for summary judgment. (Dkt. 231.) On August 6, 2021, PacLife filed its cross motion for partial summary judgment and opposition to Mellon's motion. (Dkt. 245.) Both parties filed replies. (Dkts. 262 & 281.) The Court heard oral argument on February 2, 2022.

The parties' motions seek summary judgment on numerous issues, including res judicata, standing, and statute of limitations. Mellon argues that legal and factual developments since the motion to dismiss decision warrant summary judgment in its favor on all three of those issues, while PacLife argues to the contrary and seeks summary judgment dismissing Mellon's affirmative defenses of res judicata, standing, and several others. Both parties also seek summary judgment in their favor on the merits of PacLife's claims. Mellon thus contends it is entitled to summary judgment on PacLife's claims for both pre-event of default claims and post-event of default claims, while PacLife contends that it is entitled to summary judgment that events of default occurred in each trust and that Mellon breached its obligations to provide notice to certificateholders and enforce remedies against Countrywide.

As noted at the outset, this Report and Recommendation addresses the threshold issues of res judicata, standing, and statute of limitations, as well as a handful of other issues. The Court reserves for a later Report and Recommendation the merits-based issues to the extent any remain to be addressed.

SUMMARY JUDGMENT STANDARDS

To obtain summary judgment under Rule 56 of the Federal Rules Of Civil Procedure, the movant must show that there is no genuine dispute of material fact. Fed.R.Civ.P. 56(a). A fact is material "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). The moving party bears the initial burden of identifying "the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). The opposing party must then come forward with specific materials establishing the existence of a genuine dispute. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Geyer v. Choinski, 262 Fed.Appx. 318, 318 (2d Cir. 2008). Where the nonmoving party fails to make "a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial," summary judgment must be granted. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552; accord El-Nahal v. Yassky, 835 F.3d 248, 252 (2d Cir. 2016).

The moving party may demonstrate the absence of a genuine issue of material fact "'in either of two ways: (1) by submitting evidence that negates an essential element of the non-moving party's claim, or (2) by demonstrating that the non-moving party's evidence is insufficient to establish an essential element of the non-moving party's claim.'" Nick's Garage, Inc. v. Progressive Casualty Insurance Co., 875 F.3d 107, 114 (2d Cir. 2017) (quoting Farid v. Smith, 850 F.2d 917, 924 (2d Cir. 1988)). A party asserting that a fact cannot be, or is genuinely, disputed "must support the assertion by" either "citing to particular parts of materials in the record" or "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1); see also Powell v. National Board Of Medical Examiners, 364 F.3d 79, 84 (2d Cir. 2004) (if movant demonstrates absence of genuine issue of material fact, nonmovant bears burden of demonstrating "specific facts showing that there is a genuine issue for trial").

In assessing the record to determine whether there is a genuine issue of material fact, a court must resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513; Smith v. Bamesandnoble.com, LLC, 839 F.3d 163, 166 (2d Cir. 2016); Sutera v. Schering Corp., 73 F.3d 13, 16 (2d Cir. 1995) ("The district court must draw all reasonable inferences and resolve all ambiguities in favor of the nonmoving party and grant summary judgment only if no reasonable trier of fact could find in favor of the nonmoving party."). The court must inquire whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249, 106 S.Ct. at 2511. Summary judgment may be granted, however, where the nonmovant's evidence is conclusory, speculative, or not significantly probative, id. at 249-50, 106 S.Ct. at 2511. If there is nothing more than a "metaphysical doubt as to the material facts," summary judgment is proper. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356(1986).

DISCUSSION

I. PacLife Has Standing To Bring Claims For Sold Certificates

The parties dispute whether PacLife has standing with respect to certificates in six of the trusts that it sold between 2011 and 2014 (the "Sold Certificates"). Mellon argues that New York law applies and that under New York's General Obligation's Law § 13107(1), PacLife's claims for damages for the Sold Certificates transferred with the Sold Certificates to their purchasers. As a result, PacLife no longer has injury or redress as required to have standing. PacLife counters that California law applies and that it has standing to sue because its claims for damages in the Sold Certificates were retained and did not pass to the purchasers.

On the motion to dismiss, Judge Failla rejected Mellon's standing argument, finding that, under New York's choice of law rules, California law applies. At the same time, Judge Failla stated that Mellon was "free to renew the argument, as appropriate, upon discovery of facts to the contrary." PacLife I, 2018 WL1382105, at *16. Mellon renews the same argument now, at the summary judgment stage, and the Court similarly rejects it. PacLife has standing to assert claims against Mellon with respect to the Sold Certificates because the applicable law is that of California.

A. Standing Principles

To maintain an action in federal court, a plaintiff "must have standing under both Article III of the Constitution and applicable state law." Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168, 173 (2d Cir. 2005). "Article III standing requires plaintiffs to show (1) an injury in fact, (2) a causal connection between that injury and the conduct at issue, and (3) a likelihood that the injury will be redressed by a favorable decision." Maddox v. Bank Of New York Mellon Trust Co., N.A. 19 F.4th 58, 62 (2d Cir. 2021) (internal quotation marks omitted). New York's standards for standing are analogous. New York requires "[t]he existence of an injury in fact - an actual legal stake in the matter being adjudicated." Society of Plastics Industry, Inc. v. City of Suffolk, 77 N.Y.2d 761, 771-72, 570 N.Y.S.2d 778, 784 (1991). This requirement "ensures that the party seeking review has some concrete interest in prosecuting the action which casts the dispute in a form traditionally capable of judicial resolution." Id. at 772, 570 N.Y.S.2d at 784 (internal quotation marks omitted); accord Silver v. Pataki, 96 N.Y.2d 532, 539, 730 N.Y.S.2d 482, 487 (2001).

To determine whether a party has standing, the Court must first understand what rights the party does or does not have in the claims being advanced. See Cortlandt Street Recovery Corp. v. Hellas Telecommunications, S.a.r.l, 790 F.3d 411, 418, 420 (2d Cir. 2015) (evaluating whether noteholders actually assigned claims to plaintiff such that it had requisite rights and interest for standing because "the minimum requirement for an injury-in-fact is that the plaintiff have legal title to, or a proprietary interest in, the claim"); In re Century/ML Cable Venture, 311 Fed.Appx. 455, 456 (2d Cir. 2009) (plaintiff lacked standing because it had "no legally protected interest" having "never received a valid transfer of claim from [transferor]"); Port Washington Teachers' Association v. Board Of Education Of Port Washington Union Free School District, 478 F.3d 494, 498 (2d Cir. 2007) (stating that the irreducible constitutional minimum of standing requires "an invasion of a legally protected interest"); Phoenix Light SF Ltd. v. U.S. Bank National Association, No. 14-CV-10116, 2020 WL 1285783, at *8 (S.D.N.Y. March 18, 2020) (finding plaintiff did not have standing to bring breach of contract claims against RMBS trustee because RMBS certificate assignment agreements were void and thus plaintiff had not acquired rights in the certificates).

Where, as here, there is a question of which state's law applies to the party's rights, including those that affect standing, federal courts conduct a choice-of-law analysis. See Hau Yin To v. HSBC Holdings, PLC, 700 Fed.Appx. 66, 68 (2d Cir. 2017) (applying choice-of-law analysis to question of standing); Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In HetKapitaal Van Say bolt International B. V. v. Schreiber, 407 F.3d 34, 44-49 (2d Cir. 2005) (choice-of-law analysis was necessary to determine which state law applied on question of assignment of claims); Royal Park Investments SA/NV v. Deutsche Bank National Trust Co., No. 14-CV-4394, 2017 WL 1331288, at *7 (S.D.N.Y. April 4, 2017) (recognizing that standing requires choice-of-law analysis that could lead to application of multiple state laws); Cobalt Multifamily Investments I, LLC v. Shapiro, 857 F.Supp.2d 419, 432 (S.D.N.Y. 2012) (conducting choice-of-law analysis because choosing one state's law over another would determine the plaintiffs standing to sue).

The first step in the choice-of-law analysis is to determine if the two states' laws conflict. "An 'actual conflict' exists where 'the applicable law from each jurisdiction provides different substantive rules' and those differences are 'relevant to the issue at hand and ... have a significant possible effect on the outcome of the trial.'" First Hill Partners, LLC v. BlueCrest Capital Management Ltd., 52 F.Supp.3d 625, 632 (S.D.N.Y. 2014) (quoting Finance One Public Co. Ltd. v. Lehman Brothers Special Financing, Inc., 414 F.3d 325, 331 -32 (2d Cir. 2005)). In the absence of a substantive difference between laws of competing jurisdictions, a New York court will dispense with the choice-of-law analysis. Cobalt Multifamily Investments I, LLC v. Shapiro, 9 F.Supp.3d 399, 408 (S.D.N.Y. 2014); see also Finance One Public Co. v. Lehman Brothers Special Financing, 414 F.3d 325, 331 (2d Cir. 2005) ("where the court has determined that the result would be the same under either jurisdiction's law, it need not decide which to apply").

B. California And New York Law Conflict

California and New York law conflict on the issue of whether legal claims transferred from PacLife to the purchasers of the Sold Certificates. "Under California law, absent a manifestation of intent, a seller does not transfer legal claims to the buyer." PacLife I, 2018 WL1382105 at *16 (citing Cockerel! v. Title Insurance And Trust Co., 42 Cal.2d 284, 291 (1954) ("[w]hile no particular form of assignment is necessary, the assignment, to be effectual, must be a manifestation to another person by the owner of the right indicating his intention to transfer"); and Heritage Pacific Fin., LLC v. Monroy, 156 Cal.Rptr.3d 26, 40 (Cal.Ct.App. 2013)).

In contrast, under New York law, the buyer of a bond receives, and the seller relinquishes, the contractual damages claims that the seller held before transfer of the bond unless the seller reserved its rights in writing. N.Y. Gen. Oblig. § 13-107(1). In another RMBS case against Mellon, in the context of class certification, Judge Woods succinctly described the same conflict necessitating a choice-of-law analysis:

Because state law varies on the question of whether litigation rights are assigned by default when beneficial ownership of a certificate is transferred-compare Restatement (Second) of Contracts § 324 (1981) (describing the majority rule that assignments must manifest an intention to convey litigation rights) with N.Y. Gen. Oblig. § 13-107(1) (stating that litigation rights follow the assignment of a bond unless expressly reserved in writing)-the Court must apply New York's fact-intensive "center of gravity" choice of law framework to determine which state's law governs each assignment of beneficial ownership.

Royal Park Investors SA/NV v. Bank Of New York Mellon, No.14-CV-6502, 2019 WL 652841, at *6 (S.D.N.Y. Feb. 15, 2019). Thus, there is a conflict of laws determinative of the plaintiffs rights, and the Court must apply New York's choice-of-law rules to determine which state's law applies.

C. California Law Applies Under New York's Choice-Of-Law Rules

Given the conflict between New York and California's laws with respect to transfer of rights in the Sold Certificates, this Court must apply New York's choice of law analysis. See Podlin v. Ghermezian, 601 Fed.Appx. 31, 33 (2d Cir. 2015) ("A federal court sitting in diversity must apply the choice-of-law rules of the state in which the court is located; the district court thus properly applied New York choice-of-law principles") (summary order); Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998) (same); First Hill Partners, 52 F.Supp.3d at 632 (same).

Applying New York's choice-of-law rules, the Court finds that California law applies to PacLife's sale of the Sold Certificates. New York applies a "'center of gravity' or 'grouping of contacts' as the appropriate analytical approach to choice-of-law questions in contract cases." Zurich Insurance Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 618 N.Y.S.2d 609, 612 (1994); U.S. Bank National Association v. Sun Life Assurance Co. Of Canada, No. 14-CV-4703, 2016 WL 8116141, at *10 (E.D.N.Y. Aug. 30, 2016), R. & R. adopted, 2107 WL 347449 (Jan. 24, 2017 E.D.N.Y.) ("New York courts now employ the 'center of gravity' or 'grouping of contacts' test to determine choice of law questions in contract cases").

The center of gravity theory looks to "the law of the place which has the most significant contacts with the matter in dispute." Auten v. Auten, 308 N.Y. 155, 160 (1954) (internal quotation marks omitted). The New York Court of Appeals has endorsed consideration of the following factors to determine the center of gravity of a contract dispute: (1) the place of negotiation and performance; (2) the location of the subject matter; and (3) the domicile or place of business of the contracting parties. Fireman's Fund Insurance. Co. v. Great American Insurance. Co. Of New York, 822 F.3d 620, 642 (2d Cir. 2016); Matter Of Allstate Insurance Co., 81 N.Y.2d 219, 227, 597 N.Y.S.2d 904, 940 (1993). The place of negotiation and performance are given the heaviest weight in this analysis. AEI Life LLC v. Lincoln Benefit Life Co., 892 F.3d 126, 135 (2d Cir. 2018); Brink's Ltd. v. South African Airways, 93 F.3d 1022, 1031 (2d Cir. 1996). "Critical to a sound analysis, however, is selecting the contacts that obtain significance in the particular contract dispute." Fireman's Fund Insurance Co., 822 F.3d at 642. Based on those factors, Judge Failla found that "the [parties'] pleadings ... strongly suggest that California law applies, and that Plaintiffs have standing to pursue claims relating to the Sold Certificates." PacLife I, 2018 WL 1382105 at *16. Nothing presented on summary judgment changes that conclusion.

Applying the requisite factors, the Court again finds that the center of gravity related to the Sold Certificates is California. The salient facts are undisputed. The place of negotiation and sale of the Sold Certificates is California. Both the PacLife employees negotiating on behalf of the sellers and the employees negotiating on behalf of the buyers were located and worked in California offices. (Fiek Decl. ¶¶ 3-10.¹) California was also the place of performance. It is undisputed that the sales transactions were executed from California. (Mellon 56.1 Reply ¶ 568;² Fiek Decl. ¶ 7.) The relevant actions by PacLife to execute the transaction - confirming trade details by phone, entering details into the "Bloomberg" computer system, and approving the "Bloomberg ticket" ("the last act necessary to execute the trade and cement the parties' respective obligations") - were performed from California on California phones and computer terminals. (PacLife 56.1 Reply ¶ 568.³)

1 "Fiek Decl." refers to the Declaration Of Peter S. Fiek (Dkt. 253).

2 "Mellon 56.1 Reply" refers to The Bank of New York Mellon's Reply To Plaintiffs' Counter-Statement Of Undisputed Facts (Dkt. 266).

3 "PacLife 56.1 Reply" refers to Plaintiffs' Reply Counter-Statement Of Undisputed Facts Pursuant to Rule 56.1 (Dkt. 282).

Further, PacLife's principal place of business is Newport Beach, California; PacLife managed its investments in the Sold Certificates from its offices in Newport Beach, California; and the PacLife employees who decided to sell the Sold Certificates worked in Newport Beach, California. (Fiek Decl. ¶¶ 3-8.) The buyers also operated out of California. More specifically, the buyers were five large investment banks whose California offices entered into and consummated the transactions.⁴ (Fiek Decl. ¶¶ 9-20.)

4 Three of the Sold Certificates were purchased by the California office of one entity, Barclays, while the California offices of Credit Suisse, Nomura Securities, Jeffries, and Goldman Sachs purchased one each. (Fiek. Decl. ¶ 9.)

To be clear, the evidence does not show, and the Court makes no finding, that the purchasers had their principal places of business in California. Although that information does not appear in the summary judgment record, public information indicates the contrary.⁵ It is undisputed that the employees who negotiated and executed the purchase of the Sold Certificates on behalf of the buyers worked from their places of business in California.⁶ (Fiek Decl. ¶¶ 3-10.) Mellon has tendered no new facts to change that analysis; nor does it dispute that any of PacLife's connections to California do not exist. (See Mellon Mem. At 9.⁷)

5 As sourced collectively from company websites, Dun & Bradstreet (dnb.com), and Bloomberg.com: Barclays appears to be headquartered in London, with its U.S. operations headquartered in New York and incorporated in Delaware. Credit Suisse appears to be a Swiss company whose U.S. operations are headquartered in New York and incorporated in Delaware. Nomura Securities appears to be a Japanese company with U.S. operations headquartered and incorporated in New York. Jeffries appears to be incorporated in Delaware and headquartered in New York. Finally, Goldman Sachs similarly appears to be incorporated in Delaware and headquartered in New York. Focusing on the purchasers' U.S. headquarters would add more weight to New York but still would not change the center of gravity based on consideration of all relevant factors (as discussed above and below), particularly the place of negotiation, contracting, execution, and PacLife's being based in California.

6 At least two courts in this district have rejected the concept that branches or offices of an investment bank are distinct entities for purposes of establishing the center of gravity. See Commerzbank AG v. U.S. Bank N.A., 457 F.Supp.3d 233, 243 (S.D.N.Y. 2020), reconsideration denied, No. 16-CV-4569, 2021 WL 603045 (S.D.N.Y. Feb. 16, 2021); and Phoenix Light SF Limited v. Wells Fargo Bank, N.A., No. 15-CV-10033, 2021 WL 7082194 (S.D.N.Y Dec. 6, 2021). But both cases rely on the same case, HSH Nordbank AG v. RBS Holdings USA Inc. No. 13-CV-3303, 2015 WL 1307189 (S.D.N.Y. Mar. 23, 2015), which does not stand for that proposition. In HSH Nordbank, the court deemed that a New York subsidiary of plaintiff, a commercial bank incorporated and residing in Germany, were not "separate entities" for purposes of determining the bank's residency in the context of considering the applicable statute of limitations under New York's borrowing statute. Id. at *5. The court did not at all confront the question of the extent to which separate offices or branches influence the center of gravity analysis. In addition to citing to HSH Nordbank, Commerzbank v. U.S. Bank also cited to Deutsche Zentral-Genossenchaftsbank AG v. HSBC North America Holdings, Inc., No. 12-CV-4025, 2013 WL 6667601, at *6 (S.D.N.Y. Dec. 17, 2013), which is distinguishable on the same basis.

7 "Mellon Mem." Refers to the Bank of New York Mellon's Memorandum Of Law In Support Of Its Motion For Summary Judgment (Dkt. 243.)

The first and third factors strongly point to California as the center of gravity. The contracting, negotiation, and performance of the sales all occurred in California, and the contracting parties, both seller and buyers, had places of business in California, including PacLife's principal place of business, from which it conducted the transactions. (Fiek Decl. ¶¶ 9-20.) That leaves the question of where the subject matter of the sales transactions was located. The Court addresses that in the next section.

D. Settlement Of The Sold Certificates Through The Depository Trust Company Does Not Change The Applicability Of California Law In This Case

Mellon seeks to shift the center of gravity to New York by arguing that the place of both performance and subject matter of the contracts is New York because the sale and purchase of the Sold Certificates eventually "settled" through the Depository Trust Company ("DTC"), which is incorporated and based in New York.⁸ (Mellon Mem. at 7-8.) The Court rejects the notion that the contracts for the Sold Certificates were performed in New York - as explained above, both PacLife as seller, and each purchaser, performed their part from California. That said, the Court agrees that the subject matter of the contracts, to some extent, is located in New York as the Sold Certificates are virtually located within the DTC, even if only reflected electronically. That does not change, however, the outcome in this case given the strength of the other factors, including the most important - the place of negotiation and contracting.

8 The DTC's role is hardly a new fact learned during discovery. The Sold Certificates were sold between 2011 and 2014. (Compl. ¶ 198, see Mellon Motion to Dismiss at 29.) The certificates were thus settled through the DTC at least three years before discovery began and do not constitute a new fact. "Mellon Motion to Dismiss" refers to Memorandum Of Law In Support Of The Bank Of New York Mellon's Motion To Dismiss (Dkt. 30.)

The DTC is a utility for the efficient settlement of stock and bond trades that have already been executed. See In re Enron Creditors Recovery Corp., 422 B.R. 423, 426 (S.D.N.Y. 2009) (DTC was created "to reduce costs and provide clearing and settlement efficiencies by immobilizing securities and making 'book-entry' changes to ownership of securities"); Old Monmouth Stock Transfer Co. v. Depository Trust And Clearing Corp., 485 F.Supp.2d 387, 389 (S.D.N.Y. 2007) (DTC describes itself as a utility to facilitate settlement). Clearing systems such as DTC are "nothing more than an automated, ministerial process for ensuring that the securities eventually get to the buyer and the money to the seller." In re Sanofl-Aventls Securities Litigation, 293 F.R.D. 449, 458 (S.D.N.Y. 2013). Some courts thus have given little weight to the role of the DTC in transactions where the matter does not involve a dispute with the DTC. See, e.g., In re Petrobras Securities Litigation, 152 F.Supp.3d 186, 193 (S.D.N.Y. 2016) (in securities fraud case, rejecting plaintiffs argument that note purchases settled through DTC were domestic because the mechanics of DTC settlement do not involve the substantive indicia of a contractual commitment); Ravenwoods Investments Co., LP. v. Bishop Capital Corp., No. 04-CV-9266, 2005 WL 236440, at *6 (S.D.N.Y. Feb. 1, 2005) (in securities fraud case, trading agreement with the DTC was not a "significant contact with the operative facts of this action" that would justify keeping venue in New York rather than Wyoming).

According to Mellon, the fact that the transfer of Sold Certificates is by book-entry and settled through the DTC is evidence that the "location of the subject matter of PacLife's sale transactions is New York."⁹ (Mellon Mem. at 8.) As noted above, however, the DTC's role is ministerial; it is not a contact of such "significance in th[is] particular contract dispute" that it overcomes the pull of the many California contacts. Fireman's Fund Insurance Co., 822 F.3d at 642. In order to perform its part of the bargain with the purchasers, PacLife had to authorize the transfer to be carried out. That authorization was initiated and performed in California. Thus, the last act necessary to create a binding commitment and put the transaction in motion was committed in California, not New York.

9 "Book entry is a method of tracking ownership of securities where no physically engraved certificate is given to investors. Securities are tracked electronically, rather than in paper form, allowing investors to trade or transfer securities without having to present a paper certificate as proof of ownership." Book-Entry Securities, Investopedia (June 26, 2019), https://www.investopedia.eom/terms/b/bookentrysecurities.asp.

Mellon also relies on the DTC's rules, which provide that the transfer of securities held with the DTC are always governed by New York law. (Mellon Mem. at 9.) Mellon contends that section 5.02(e)(iii) of the Pooling and Servicing Agreements ("PSAs") binds PacLife to the DTC's rules.¹⁰ DTC rules provide that for "transfers and pledges of securities, and the settlement of transactions for Participants by book-entry" as either a free delivery or delivery versus payment," "[t]he relevant jurisdictions [for all material aspects of DTC's activities] are the United States and New York."¹¹ (Mellon 56.1 ¶ 15.¹²) Putting aside the question of whether that provision says anything relevant to the center of gravity analysis, the DTC's rules and by-laws govern transactions between only participants and DTC.¹³ Neither PacLife nor any of PacLife's affiliates are DTC participants. (Fiek Decl. ¶ 13.) The act of transferring the Sold Certificates through a DTC participant does not transform PacLife into a participant itself. The Court thus agrees with PacLife that the DTC's post-trade involvement in settlement is not dispositive and does not shift the center of gravity to New York.

10 While there is a PSA for each Trust, the relevant provisions among the PSAs are substantially identical. The citations to the PSAs throughout this Report and Recommendation are to the PSA for the CWALT 2006-32CB Trust (Houpt Ex. 49). Section 5.02(e)(iii) of the PSA provides "ownership and transfers of registration of the Book-Entry Certificates on the books of the Depository shall be governed by applicable rules established by the Depository." (PSA Section 5.02(e)(iii).)

11 See generally The Depository Trust Company Disclosure Framework at 14-15 (Dec. 2021) https://www.dtcc.eom/-/media/Files/Downloads/legal/policy-and-compliance/DTC DisclosureFramework.pdf.

12 "Mellon 56.1." refers to The Bank of New York Mellon's Statement of Undisputed Material Facts Pursuant To Local Rule 56.1 (Dkt. 241).

13 See generally Rules, By-laws, and Organization Certificate Of The Depository Trust Company, (Nov. 2021) https://www.dtcc.eom/~/media/Files/Downloads/legal/rules/ dtcrules.pdf. The term "Participant" is defined in the DTC's rules as a "Person approved as a Participant by the Corporation pursuant to Section 1 of Rule 2."

Two judges in this District recently addressed the role of the DTC in choice-of-law analyses in RMBS cases involving sold certificates. In both instances, the court found that the DTC's role with respect to sold RMBS certificates and effectuating transactions placed the center of gravity in New York. See Commerzbank AG v. U.S. Bank N.A., 457 F.Supp.3d 233, 243 (S.D.N.Y. 2020), reconsideration denied, No. 16-CV-4569, 2021 WL 603045 (S.D.N.Y. Feb. 16, 2021); Phoenix Light SF Limited v. Wells Fargo Bank, N.A., No. 15-CV-10033, 2021 WL 7082194, at *10 (S.D.N.Y Dec. 6, 2021) ('Phoenix Light v. Wells Fargo"). ¹⁴ Both of those decisions post-date Judge Failla's decision on the motion to dismiss where, as noted, Mellon did not rely at all on the DTC's role. Both cases, however, are distinguishable from this one.

14 Phoenix Light v. Wells Fargo is a consolidated action brought by plaintiffs Phoenix Light SF Limited and Commerzbank AG against Wells Fargo Bank, N.A.

In Commerzbank, the parties disputed whether English or New York law applied under Ohio's choice-of-law rules to sold RMBS certificates. Like Mellon, defendant U.S. Bank argued it should be granted summary judgment because, under New York law, Commerzbank did not have standing to sue on claims arising from certificates Commerzbank sold through the DTC. English law dictated a different outcome. Finding for U.S. Bank, Judge Pauley held that, under Ohio's choice-of-law rules, New York law applied because "[t]he fact that DTC actually holds the certificates and effectuates the transactions means that the transactions actually occurred in New York and are governed by New York law." Commerzbank, 457 F.Supp.3d at 243.

Commerzbank, however, did not involve New York's choice-of-law principles. Rather, it applied Ohio's. Id. at 242. In his decision denying Commerzbank's motion for reconsideration, Judge Pauley emphasized the distinction between the two states' choice-of-law frameworks, finding "a litany of cases," including Judge Failla's order on the motion to dismiss in the instant case, to be inapplicable because they did not turn on Ohio choice of law. Commerzbank AG v. U.S. Bank N.A., No. 16-CV-4569, 2021 WL 603045 at *3 (Feb. 16, 2021). Judge Pauley rejected Commerzbank's argument that the Court was "globalizing New York's standing rule" and stated that "[t]his rule only applies as a result of the Ohio choice-of-law test in instances where parties cleared their RMBS transactions through the DTC." Id. Ohio law is not at issue here; by its own logic, Commerzbank does not apply.¹⁵

15 To be sure, Ohio's choice-of-law rubric bears some similarity to New York's. Ohio choice-of-law requires the court to determine the jurisdiction with the "most significant relationship to the claims" based on the following factors: "(1) the place of the injury; (2) the place where the conduct causing the injury occurred; (3) the domicile, residence, nationality, place of incorporation, and place of business of the parties; (4) the place where the relationship between the parties, if any, is located; and (5) any factors under Section 6 [of 1 Restatement (Second) of Conflict of Laws 10]." Commerzbank, 457 F.Supp.3d at 242. The Court also recognizes that Judge Pauley's analysis of DTC's role and where the transaction occurred stands on its own, separate from the choice-of-law analysis. As explained below, the Court finds DTC's role to be relevant but not dispositive.

The dispute in Phoenix Light v. Wells Fargo did involve New York's choice-of-law rules. There, defendant Wells Fargo argued, like U.S. Bank, that Commerzbank lacked standing to bring claims based on RMBS certificates it sold because the center of gravity was New York, not England. Phoenix Light v. Wells Fargo, 2021 WL 7082194 at *8. Judge Netburn found that the DTC's role dictated that the center of gravity was New York despite Commerzbank's argument that the transactions occurred in and were negotiated from London offices.¹⁶ Id. at 10. Judge Netburn relied on and accepted the analysis set forth by Judge Pauley in Commerzbank. However, Judge Netburn's Report and Recommendation is distinguishable from the instant case on two grounds.

16 Judge Netburn's Report and Recommendation, to which the parties have objected in part, remains pending before Judge Failla at the time of this Court's Report and Recommendation.

First, the facts regarding place of contracting differed materially from those in the instant case. The transactions took place out of Commerzbank's London branch between sellers and purchasers who were largely located in London. However, Commerzbank's principal place of business is Germany, and the "information Commerzbank provid[ed] about the buyer's domicile or place of business [did] not convince the Court that the certificate buyers were located in England for the purposes of the 'center of gravity' test." Id. at 22. Here, PacLife's principal place of business is California, the buyers operated out of California, and all of the pertinent components of contract formation took place in California. (Fiek Decl. ¶¶ 3-7.) A second distinction is that Commerzbank traded through a wholly owned subsidiary that was a DTC participant. Phoenix Light v. Wells Fargo, 2021 WL 7082194 at *10. As explained above, PacLife was not a DTC participant, nor did it trade through any subsidiary entities that were DTC participants.

Due to the discernable differences, the Court declines to reach the same conclusion as that in either Commerzbank or Phoenix Light v. Wells Fargo. Despite the role played by the DTC in settling the Sold Certificate transactions, all other factors relevant to the choice-of-law analysis are firmly grounded in California.

E. Royal Park v. Morgan Stanley Does Not Lead To A Different Outcome

Mellon invokes a 2018 New York Appellate Division case (also post-dating PacLife I), Royal Park Investments SA/NV v. Morgan Stanley, for the proposition that standing is procedural under New York law and that "[u]nlike substantive law, matters of procedure are governed by the law of the forum state." 165 A.D.3d 460, 461, 86 N.Y.S.3d 14, 16 (1st Dep't 2018) (internal quotation marks omitted). Mellon argues that because New York is the forum state and standing is a procedural issue, New York law dictates whether PacLife has standing to bring claims. Eschewing choice-of-law principles, Mellon then seizes upon § 13-107 of New York's General Obligations Law to argue that PacLife lacks standing for the Sold Certificates because its claims under those instruments transferred to their buyer. (Mellon Mem. at 8-10.) That reasoning does not survive scrutiny.

Royal Park v. Morgan Stanley does not alter the Court's choice-of-law analysis, which applies regardless of whether N.Y. GOL § 13-107 is considered procedural or substantive.¹⁷ As set out at the beginning of this standing section, federal courts sitting in diversity conduct a choice-of-law analysis to determine the applicable law, including in the context of standing. Hau Yin To, 700 Fed.Appx. at 68 (2d Cir. 2017); Stichting, 407 F.3d at 44-49; Royal Park v. Deutsche Bank, 2017 WL 1331288 at *7; Cobalt Multifamily Investments, 857 F.Supp.2d at 432; see also WES & A Holdings, LLC v. Malino, No. 10-CV-3865, 2013 WL 5298465, at *6 (S.D.N.Y. Sept. 20, 2013) (applying choice-of-law principles to determine whether plaintiff had standing to assert common law breach claim); In re Optimal U.S. Litigation, 813 F.Supp.2d 351, 374 (S.D.N.Y. 2011) (conducting choice-of-law analysis to determine shareholder standing to assert direct claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, gross negligence, breach of contract, and unjust enrichment), on reconsideration in part, 813 F.Supp.2d 383 (S.D.N.Y. 2011). Royal Park v. Morgan Stanley does not obviate that analysis.

17 A compelling argument can be made that because NY GOL § 13-107 governs the transfer of property rights, it is substantive, not procedural, in nature. See In re Sept. 11 Litigation, 802 F.3d 314, 340 (2d Cir. 2015) (a rule is procedural if "it governs only the manner and the means by which the litigants' rights are enforced, not the rules of decision by which the court will adjudicate those rights") (internal quotation marks omitted). It seems odd that application of a law that determines transfer of substantive rights would become procedural in nature when it has an impact on a party's standing. Royal Park v. Morgan Stanley appears to have rejected this argument in the context of a similar issue, but it did so without analysis and by distinguishing a state case cited by the plaintiff where the parties had agreed on the governing law. 165 A.D.3d at 461, 86 N.Y.S.3d at 16. This Court does not, however, resolve the question of whether N.Y. GOL §13-107 is substantive or procedural under New York law, as the outcome of the standing analysis is the same in either case.

Judge Netburn similarly found that Royal Park v. Morgan Stanley did not alter the analysis when Phoenix Light relied on it in its case against Wells Fargo. Phoenix Light v. Wells Fargo, 2021 WL 7082194 at *9. As explained there, "Royal Park appears to be an outlier and may reflect a co-mingling of issues. It relies primarily on an 85-year-old decision from the New York Court of Appeals, which stated that the 'law of the forum determines the jurisdiction of the courts, the capacity of parties to sue or be sued, the remedies which are available to suitors and the procedure of the courts.'" Id. (citing Mertz v. Mertz, 271 N.Y. 466, 473 (1936)). While related, standing and capacity to sue are not the same. See Fund Liquidation Holdings LLC v. Bank Of America Corp., 991 F.3d 370, 382 (2d Cir. 2021); Silver, 96 N.Y.2d at 537, 730 N.Y.S.2d at 486.

Accepting Mellon's argument would lead to an untoward result. N.Y. GOL § 13-107 was adopted by the New York Legislature over seventy years ago in order to "bring New York in line with other jurisdictions, including the federal courts, which contemplated the automatic transfer of rights." Bluebird Partners, LP. v. First Fidelity Bank, N.A., 97 N.Y.2d 456, 461, 741 N.Y.S.2d 181, 184 (2002). The passage of time, however, has led to quite the opposite. As the New York Court of Appeals explained, "New York's attempt to bring its rule into conformity with other jurisdictions has ironically achieved the opposite result" as those same courts New York was trying to align with no longer treat claims as automatically assigned to buyers of bonds. Id. at 461 n.1, 741 N.Y.S.2d at 184 n.1. New York appears to remain only one of three states to maintain such a policy. See The Western And Southern Life Insurance Co. v. Bank Of New York Mellon, 129 N.E.3d 1085, 1098 (Ohio Ct. App. 2019) ("New York and Ohio laws are similar on this issue and both states have statutes that give the purchaser or the transferee all rights or claims in the security"); FDIC v. Citibank N.A., No. 15-CV-6560, 2016 WL 8737356, at *4 (S.D.N.Y. Sept. 30, 2016) ("New York and Delaware law are consistent. When a security or bond is sold, the property rights associated with the bond, travel with the bond").

While the New York legislature may have good reasons for maintaining the statute, it would be presumptuous and contrary to principles of comity to attempt to extend its applications to transactions, like the sale of the Sold Certificates in California, beyond New York given that it is contrary to most every state's own rule. "New York cannot by its statutes control or impair transactions which are extraterritorial." Weyant v. Phia Group LLP, No. 17-CV-8230, 2018 WL 4387557, at *4 (S.D.N.Y. Sept. 13, 2018) (holding § 5-335 of N.Y. GOL could apply because the "underlying transaction and relationship in th[e] case are centered in New York"); see Phoenix Light SF Ltd. v. U.S. Bank National Association, No. 14-CV-10116, 2015 WL 2359358, at *2 n.3 (S.D.N.Y. May 18, 2015) (rejecting assertion that N.Y. GOL 13-107 should apply to a transfer of "certificates and/or claims from a German company in Germany to Irish and Cayman companies in Ireland and the Cayman Islands").

F. Plaintiffs Have Standing Under California Law

Having established that California law applies, the Court finds that PacLife has standing to assert its claims against Mellon for damages incurred while PacLife held the Sold Certificates. As explained above in describing the conflict between New York and California law, absent a manifestation of intent, a bond seller does not transfer legal claims to the buyer under California law. Nothing before the Court suggests that PacLife manifested an intent to transfer its legal claims along with the sale of the relevant certificates.

The Court does not agree with Mellon's argument that even if California law applied, PacLife still lacks standing. Citing Article 8 of the Uniform Commercial Code as adopted in California, Mellon asserts that under California law "a purchaser of a certified or uncertified security acquires all rights in the security that the transferor had or had power to transfer." (Mellon Mem. at 10 (citing California Commercial Code § 8302(a)).) Mellon concedes, however, that no California court has applied Article 8 in circumstances similar to this case; although, courts in other states have dismissed claims for lack of standing based on identically worded provisions. (Mellon Mem. at 10.)

PacLife counters that UCC Article 8 does not apply to issues arising from contracts for the purchase or sale of securities but instead only to those concerning the settlement phase of securities transactions. (PacLife Mem. at 44.¹⁸) The Court agrees. Article 8 clearly deals with the settlement of securities transactions and "does not regulate the rights and duties of those involved in the contracting process."¹⁹ Petroleos de Venezuela S.A. v. MUFG Union Bank, N.A., 495 F.Supp.3d 257, 284 (S.D.N.Y. 2020) ("[Article 8] does not deal with the process of entering into contracts for the transfer of securities or regulate the rights and duties of those involved in the contracting process. ... Article 8 deals with the settlement phase of securities transactions") (quoting Prefatory Note to Article 8 at III.B (1994)); Consolidated Edison, Inc. v. Northeast Utilities, 318 F.Supp.2d 181, 188 (S.D.N.Y. 2004), rev'd on other grounds, 426 F.3d 524 (2d Cir. 2005) ("The legislative history of the predecessor provision to § 8-302(a) and the structure of U.C.C. Article 8 confirm that § 8-302(a), rather than defining what rights are in the security, involves the mechanism for transferring rights and applies primarily to disputes over the quality of title and the competing ownership rights passed from transferor to transferee"). As the claims asserted by PacLife have nothing to do with settlement of trades, Article 8 does not apply. PacLife has standing to assert claims in the Sold Certificates.

18 "PacLife Mem." refers to Plaintiffs' Memorandum Of Law In Opposition To Defendant's Motion For Summary Judgment And In Support Of Their Cross-Motion For Partial Summary Judgment (Dkt. 259).

19 One commentator has explained the distinction between trade and settlement in the context of Article 8 as follows: "The distinction between trade and settlement is important in understanding the scope of Article 8. Article 8 deals with the settlement phase of securities transactions. It deals with the mechanisms by which interests in securities are transferred, and the rights and duties of those who are involved in the transfer process. It does not deal with the process of entering into contracts for the transfer of securities or regulate the rights and duties of those involved in the contracting process. To use securities parlance, Article 8 deals not with the trade, but with settlement of the trade. Indeed, Article 8 does not even deal with all aspects of settlement." William F. Willier and Frederick M. Hart, Uniform Commercial Code Reporter-Digest, Vol. 6A, Part III, Revised Article 8 Investment Securities (2022).

II. The Countrywide Settlement Judgment Bars PacLife's Claims

In 2011, Mellon entered into a settlement (the "Settlement") with Countrywide on behalf of hundreds of trusts, including the Trusts at issue, resolving Countrywide's liability for furnishing defective loans and loan files, failing to repurchase defective loans, and failing to properly service loans. The Settlement was judicially approved after a lengthy special proceeding for which Mellon had notice and opportunity to be heard. Mellon argues that the Settlement and its judicial approval bar PacLife's claims pursuant to the res judicata doctrine, which encompasses both claim preclusion and issue preclusion. The Court agrees.

A. Overview Of The Countrywide Settlement And Judgment

In October 2010, a large group of institutional investors holding certificates in Countrywide-sponsored trusts, wrote a letter charging Countrywide with extensive breaches of its obligations. In re Bank of New York Mellon, No. 11 -CV-651786, 2014 WL 1057187, at *6-7 (N.Y. Sup. Ct. 2014) ("In re Bank of Mellon I"), aff'd as modified sub nom., In re Bank Of New York Mellon, 127 A.D.3d 120, 4 N.Y.S.3d 204 (1st Dep't 2015) ("In re Bank of Mellon II"). PacLife was not one of those investors. The next month, Mellon and the investors began negotiations with Countrywide, and its successor Bank of America ("BOA"), in an attempt to reach a settlement and avoid litigation. In re Bank of Mellon I at *7. In December 2010, Mellon and Countrywide entered into a "Forbearance Agreement," tolling the statute of limitations on the claims asserted by the institutional investors.²⁰

20 References to Countrywide with regard to and following the Settlement collectively include its successor-in-interest Bank of America.

In June 2011, following months of negotiation, Countrywide and Mellon, as Trustee for 530 RMBS trusts, including all twelve of the at-issue RMBS Trusts and the two trusts that issued certificates backing the Re-Sec Trust, entered into the Settlement. (PacLife Counter 56.1 ¶¶ 36-38.²¹) In exchange for an $8.5 billion cash payment that was distributed to the trusts for the benefit of certificateholders, Mellon released all claims on behalf of the trusts against Countrywide arising from failure to repurchase loans breaching their representations and warranties ("R&Ws"), failure to deliver complete mortgage file documentation, failures with respect to loan servicing, and failure to repurchase modified loans. In re Bank of Mellon I at *7, 13.

21 "PacLife Counter 56.1" refers to Plaintiffs' Counter-Statement Of Undisputed Facts Pursuant to Rule 56.1 (Dkt. 260).

On June 29, 2011, Mellon commenced a proceeding in New York Supreme Court seeking a judgment approving the Settlement pursuant to New York CPLR Section 7701 (the "Article 77 Proceeding"). Following notice issued to all potentially interested persons, including PacLife and other certificateholders, nearly 100 certificateholders intervened and challenged Mellon's decision to settle as violating its duties as Trustee. (Mellon 56.1 Reply ¶¶ 42-44.) Even though PacLife received notice of the Article 77 Proceeding, it opted not to object. (PacLife Counter 56.1 ¶¶ 48-50.) Objectors who did intervene claimed, among other things, that Mellon acted in bad faith and with self-interest and that Mellon should have litigated repurchase claims for R&W breaches, document exceptions, and servicing failures against Countrywide instead of settling them. (Houpt Deck, Ex. 1, Table G²²); see In re Bank of Mellon I at *10. The Article 77 Proceeding was expansive, involving discovery, over 1,000 filed documents, hundreds of pages of briefing, 36 hearing days, and testimony from 22 witnesses. (PacLife Counter 56.1 ¶¶ 45-47.)

22 "Houpt Decl." refers to the Declaration Of Christopher J. Houpt (Dkts. 234 and 237).

On January 31, 2014, the Article 77 court entered judgment approving the Settlement (the "Settlement Judgment"). Among other findings, the court determined that (1) "a full and fair opportunity" was offered to all potentially interested persons, including the trust beneficiaries, to make their views known to the Court, to object to the Settlement and to the approval of the actions of the Trustee in entering into the Settlement, and to participate in the hearing; (2) Mellon had authority, pursuant to the governing agreements, to enter into the Settlement; and (3) Mellon acted reasonably and in good faith, within its discretion, by entering into the Settlement. In re Bank of Mellon I at *3-4; see also Id. at *15 (recognizing Mellon's obligation to act with "reasonable prudence" in settling claims). While approving most of the Settlement Agreement, the Article 77 court did not approve release of claims against Countrywide with respect to modified loans.

Following cross appeals, on March 5, 2015, the First Department approved the Settlement in all respects, including release of the loan modification claims. In re Bank of Mellon II, 127 A.D.3d at 128, 4 N.Y.S.3d at 209. The First Department stated that Mellon "properly obtained and considered the opinions of several highly respected outside experts" in evaluating the Settlement. Id. at 127, 4 N.Y.S.3d at 209. The court opined that Mellon acted reasonably and noted that "it would have been unreasonable to decline to enter into the settlement with the expectation of obtaining a much greater judgment after years of litigation, while knowing that attempts to enforce such a judgment would likely result in the actual collection of a lesser sum than that offered in the proposed settlement." Id., 4 N.Y.S.3d at 209.

B. Law Of Res Judicata

The doctrine of res judicata dictates "that a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Burgos v. Hopkins, 14 F.3d 787, 789 (2d Cir. 1994) (internal quotations omitted); In re Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 291 (2005) ("Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter"). "By precluding parties from contesting matters that they have had a full and fair opportunity to litigate, claim preclusion and issue preclusion protect against the expense and vexation attending multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibility of inconsistent decisions." PacLife I, 2018 WL1382105 at *11 (cleaned up) (quoting Taylor v. Sturgell, 533 U.S. 880, 892, 128 S.Ct. 2161,2171 (2008)).

Pursuant to the Full Faith and Credit Act, 28 U.S.C. § 1738, federal courts give preclusive effect to state court judgments "whenever the courts of the State from which the judgments emerged would do so." Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 415 (1980); see also PacLife I, 2018 WL1382105 at *11 ("It is settled law 'that a federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered'") (quoting Migra v. Warren City School District Board Of Education, 465 U.S. 75, 81, 104 S.Ct. 892, 896 (1984)). As the Settlement Judgment was issued by a New York court, this Court applies New York law of claim and issue preclusion. PacLife I, 2018 WL1382105 at *11 (citing Logan v. Maveevskii, 175 F.Supp.3d 209, 233 (S.D.N.Y. 2016)).

In New York, claim preclusion "bars successive litigation based upon the same transaction or series of connected transactions if: (i) there is a judgment on the merits rendered by a court of competent jurisdiction, and (ii) the party against whom the doctrine is invoked was a party to the previous action, or in privity with a party who was." People ex rel. Spitzer v. Applied Card Systems, Inc., 11 N.Y.3d 105, 122, 863 N.Y.S.2d 615 (2008) (internal quotation marks and citations omitted). "Under New York's transactional analysis approach to res judicata, once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." In re Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286 (2005) (internal quotation marks omitted); see also Ferris v. Cuevas, 118 F.3d 122, 126 (2d Cir. 1997) (explaining that New York's transactional approach to res judicata "operates to preclude the litigation of matters that could have or should have been raised in a prior proceeding arising from the same factual grouping, transaction, or series of transactions") (internal quotations omitted). New York's transactional approach is "arguably broader than the principles adopted by the federal courts" and employs a "pragmatic test" when analyzing "whether the facts are related in time, space, origin, or motivation." Corlnes v. American Physicians Insurance Trust, 769 F.Supp.2d 584, 591 (S.D.N.Y. 2011) (internal quotation marks omitted).

For issue preclusion, the required elements are that "(1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits." Conason v. Megan Holding, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 215 (2015) (internal quotation marks and citations omitted). "The doctrine ... is a flexible one, and the enumeration of these elements is intended merely as a framework, not a substitute, for case-by-case analysis of the facts and realities. In the end, the fundamental inquiry is whether relitigation should be permitted in a particular case in light of fairness to the parties, conservation of the resources of the court and the litigants, and the societal interests in consistent and accurate results. No rigid rules are possible, because even these factors may vary in relative importance depending on the nature of the proceedings." Buechel v. Bain, 97 N.Y.2d 295, 304, 740 N.Y.S.2d 252, 257 (2001) (internal quotation marks and citations omitted).

C. Claim Preclusion

It is undisputed that the Settlement Judgment was a final judgment on the merits. The New York appellate court approved the Settlement in its entirety after finding that Mellon had authority and discretion to enter into the Settlement and was reasonable in doing so. Any time to appeal further expired long ago. The first element of claim preclusion is satisfied.

The second element is also satisfied as a result of the Article 77 Proceeding. The purpose of Article 77 is to allow a trustee to obtain guidance or approval from a court for the trustee's actions with respect to the trust. As the Second Circuit has explained,

Article 77 of the New York Civil Practice Law and Rules authorizes a special proceeding to determine a matter relating to any express trust.... Permissible uses of Article 77 are broadly construed to cover any matter of interest to trustees, beneficiaries or adverse claimants concerning the trust. Such proceedings are used by trustees to obtain instruction as to whether a future course of conduct is proper, and by trustees (and beneficiaries) to obtain interpretations of the meaning of trust documents.

BlackRock v. Ambac, 673 F.3d at 174 (internal quotation marks and citations omitted).

An Article 77 proceeding is thus designed to bind all beneficiaries as long as they are given proper notice. See 4E N.Y. Practice, Commercial Litigation in New York State Courts § 113:45 (5th ed.) ("The key substantive features [of Article 77 proceedings] are the ability of any beneficiary to be heard and the power of the court to bind all beneficiaries"); id. § 113:46 ("One of the key strategic benefits of an Article 77 proceeding is its ability to place the trust, the trustee, and all beneficiaries before the court and to bind them to the outcome"). In considering the predecessor statute to Article 77, the Supreme Court emphasized the power of courts to conclusively resolve interests of all trust beneficiaries:

[T]he interest of each state in providing means to close trusts that exist by the grace of its laws and are administered under the supervision of its courts is so insistent and rooted in custom as to establish beyond doubt the right of its courts to determine the interests of all claimants, resident or nonresident, provided its procedure accords full opportunity to appear and be heard.

Mullane v. Central Hanover Bank And Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 656 (1950). Courts may thereby "cut off [beneficiaries'] rights to have the trustee answer for negligent or illegal impairments of their interests." Id. at 70, S.Ct. 652 at 657; see also Sterling Federal Bank, F.S.B. v. Countrywide Financial Corp., 2012 WL 2368821, at *14 (N.D. III. June 21, 2012) ("The Article 77 Proceeding provides a single mechanism for the New York court to consider all interested certificateholders' objections").

The Restatement of Trusts similarly recognizes the preclusive effect of court judgments on trust matters: "The beneficiary may be barred by a decree of a proper court from holding the trustee liable for a breach of trust." Restatement (Second) of Trusts § 220; see also Id. cmt. a ("The settlement of a trustee's account in a court having jurisdiction to settle his accounts renders res judicata matters which were open to dispute, whether or not actually disputed"); In re Hunter, 6 A.D.3d 117, 124, 775 N.Y.S.2d 42, 47 (2d Dep't 2004) ("a person who has been aggrieved by any breach of this duty [of a trustee to act in good faith] may not raise such a claim in a subsequent proceeding, after having already had a full and fair opportunity to litigate it in a prior proceeding"), aff'd, In re Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286 (2005).

PacLife indisputably had a full and fair opportunity to object to Mellon's resolution of the Trusts' claims in the Article 77 Proceeding. PacLife received notice of the Settlement and the Article 77 Proceeding through a court-approved program to notify certificateholders of the proceeding. (PacLife Counter 56.1 ¶¶ 42-43.) And as found in the Settlement Judgment, Trust beneficiaries were given a full and fair opportunity to "make their views known to the Court, to object to the Settlement and to the approval of the actions of the Trustee in entering into the Settlement Agreement and to participate in the hearing." In Re Bank of Mellon I, 2014 WL 1057187 at *14. Nearly 100 certificateholders intervened to do just that. (PacLife Counter 56.1 ¶ 44.) Document discovery was permitted, although not as extensively as would occur in a plenary proceeding. (PacLife Counter 56.1 ¶ 46; see Kane Deck, Ex. 33 at 61-62²³ (statement of court in another Article 77 proceeding initiated by Mellon).) A 36-day hearing with live witness testimony was held. (PacLife Counter 56.1 ¶ 47.) PacLife did not participate and did not take advantage of the opportunity with which it was provided.

23 "Kane Decl." refers to the Declaration Of Ryan A. Kane In Opposition to Defendant's Motion For Summary Judgment And In Support of Plaintiffs' Cross-Motion For Partial Summary Judgment (Dkts. 248 and 254).

PacLife thus gains no traction by contending that it was not a party to the Article 77 Proceeding. Nor does it benefit from Taylor v. Sturgell. There, the Supreme Court noted the general rule that non-parties are not subject to claim preclusion, recognized six exceptions to that rule, and declined to adopt a theory of "virtual representation."²⁴ The Court, however, was not faced with a question of res judicata under New York law. Nor did it deal with an Article 77 Proceeding, trusts, or any subject matter relevant to the instant case. Rather, Taylor was a decision concerning the preclusive effect of a judgment upholding the Federal Aviation Administration's denial of a request for documents pursuant to the Freedom of Information Law. In other words, the Court was faced with a question of the preclusive effect of a federal court judgment involving federal law and applying federal common law. As noted above, New York's law of res judicata has been characterized as arguably more expansive than federal law.

24 One of the exceptions acknowledged in Taylor is for suits brought by "trustees and other fiduciaries." Taylor 553 U.S. at 894, 128 S.Ct. at 2161, 2164. Mellon does not invoke that exception, presumably because Mellon denies having fiduciary duties to PacLife, particularly prior to an event of default. In compromising claims with Countrywide by way of the Settlement and seeking judicial approval, Mellon was acting as a trustee on behalf of the Trust beneficiaries. At the same time, the Article 77 Proceeding was adversarial, in the sense that it gave beneficiaries the opportunity to object to Mellon's entry into the Settlement. See N.Y. CPLR. Art. 7701 (providing right to examine trustees under oath).

Finally, the claims PacLife now asserts in this action could have been - and many, if not all, actually were - asserted and addressed in the Article 77 Proceeding. In the instant action, PacLife contends that Mellon breached its contractual duties set forth in the governing agreements and that Mellon breached its fiduciary obligations and was otherwise negligent. PacLife alleges that Mellon had a duty to enforce remedies against Countrywide, and that its failure to do so caused PacLife's losses on its certificates. (See Compl. ¶¶ 197-98, 200.) More particularly, PacLife contends that Mellon failed to pursue, upon discovery, repurchase remedies against Countrywide for loan document defects and breaches of representations and warranties, provide notice to shareholders of breaching loans, exercise prudence in pursuing remedies against Countrywide for events of default, provide certificateholders with notice of events of default, and provide notice and take steps to remedy Countrywide's loan-servicing failures. (Compl. ¶ 209.)

The Article 77 Proceeding considered and ultimately approved Mellon's actions in releasing Countrywide, in exchange for substantial consideration, from the same failures that PacLife seeks to hold Mellon accountable for in the instant action. As characterized by the Article 77 court, Mellon released the trusts' claims, among others, "arising out of the alleged failure to repurchase loans that breached representations and warranties," "claims arising out of Countrywide's failure to deliver all of the requirement mortgage documentation," "servicing claims against [Countrywide]," and "claims arising out of the failure to repurchase modified loans." In re Bank of Mellon I at *19.

In opposing the Settlement, objectors raised many of the same arguments that PacLife makes here: that Mellon acted in bad faith, placed its own interests above those of certificateholders, and failed to properly investigate loan defects (In re Bank of Mellon II, 127 A.D.3d at 124-25); that Mellon should have litigated repurchase claims against Countrywide (e.g., Houpt Deck,Ex. 88 at 4; Houpt Deck, Ex. 89 at 23); that "[f]rom the inception of the Covered Trusts until summer of 2010," Mellon as Trustee took "no steps ... to trigger the noticing of Events of Default" or "to enforce any of the Trusts' resulting repurchase rights" (Houpt Deck, Ex. 89 at 12-13); and that Mellon's handling of Countrywide's failure to repurchase modified loans should be rejected (e.g., Houpt Deck, Ex. 91 at 4-9).

The Article 77 court eschewed those arguments, concluding that Mellon's entry into the Settlement, by which Mellon resolved the Trusts' claims against Countrywide on behalf of certificateholders - "appropriately evaluated the terms, benefits, and consequences of the Settlement and the strengths and weaknesses of the claims being settled." In Re Bank of Mellon I, 2014 WL 1057187 at *3. Additionally, the court concluded that the "Trustee acted in good faith, within its discretion, and within the bounds of reasonableness in determining that the Settlement Agreement was in the best interests of the Covered Trusts." Id. at *4 The Appellate Court agreed, observing that pursuing litigation against Countrywide would likely result in collecting a lesser sum of money for the Trusts than that provided by the Settlement. In re Bank of Mellon II, 127 A.D.3d at 127, 4N.Y.S.3dat209.

PacLife maintains that there is no identity of claims because its "claims against Defendant [are] not for the Trustee's conduct in negotiating and executing the [Countrywide] Settlement Agreement, and not for Countrywide's own misconduct, but rather for the Trustee's conduct in performing its substantive duties under the PSA[s] -which were not extinguished by the [Countrywide] Settlement." (PacLife Mem. at 47.) That argument does not survive scrutiny. First, PacLife's argument ignores New York's transactional approach to res judicata. Even if PacLife's claims involve different theories or seek a different remedy, they arise out of the same series of transactions at issue in the Article 77 Proceeding: namely, Mellon's resolution of Countrywide's breaches with respect to loans backing the Trusts. See In re Hunter, 4 N.Y.3d at 269, 794 N.Y.S.2d at 291; Ferris, 118 F.3d at 126.

Second, Mellon's conduct as Trustee in pursuing remedies against Countrywide for breaching loans, missing documents, repurchase obligations, and servicing failures was directly at issue in the Article 77 Proceeding. The Article 77 Proceeding did not simply resolve a dispute between the Trusts and Countrywide; It resolved Mellon's obligations to Trust certlflcateholders In resolving and releasing claims against Countrywide ²⁵ See generally Blackrock v. Ambac, 673 F.3d at 178 (characterizing the Article 77 Proceeding as one that "concerns the relationship between the entity which administers the securities, The Bank of New York Mellon, and the certificateholders").

25 PacLife tries to deflect by referencing various statements made by Mellon during the Article 77 Proceeding to the effect that the Article 77 court was not being asked to decide whether the governing legal documents mandate Countrywide's repurchase of modified loans, that the Article 77 court was not being asked to determine Countrywide's liability with precision, and that the court need not determine whether any event of default occurred. (See, e.g., PacLife Counter 56.1 ¶¶ 50-51.) That is beside the point, because the Article 77 court considered and resolved whether Mellon acted reasonably and in good faith in considering those issues. As explained above, the court determined that Mellon fulfilled its obligations to certificateholders in how it handled and resolved Countrywide's failures, which is what PacLife seeks to hold Mellon liable for in the instant case.

Section 8.02(iii) of the PSAs states that Mellon "shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights of powers conferred upon it by this Agreement." (PSA Section 8.02(iii).) Mellon negotiated and entered into the Settlement to hold Countrywide accountable for breaches under the governing agreements, whether related to repurchase obligations, R&W breaches, document defect breaches, or servicing failures. As Trustee for PacLife and other certificateholders, Mellon released Countrywide for all such claims in exchange for $8.5 billion payable to the trusts. And it is Mellon's actions in entering into the Settlement and compromising claims on behalf of the Trusts that the Article 77 court blessed as having been made in "good faith" and "within its discretion." In Re Bank of Mellon I, 2104 WL 1057197 at *4. Indeed, in approving the Settlement Judgment, the First Department expressly found that Mellon could not have done any better in pursuing rights on behalf of its beneficiaries. See In Re Bank of Mellon II, 127 A.D.3d at 127, 4 N.Y.S.3d at 209 ("it would have been unreasonable to decline to enter into the settlement with the expectation of obtaining a much greater judgment after years of litigation, while knowing that attempts to enforce such a judgment would likely result in the actual collection of a lesser sum than that offered in the proposed settlement").

Third, to find in Mellon's favor on the claims it brings in the instant action, the Court necessarily would have to find that Mellon should not have resolved loan and servicing breaches and undeclared events of default by entering into the Settlement. PacLife's damages theory proves the point. The damages model is set forth in the expert report of Christopher Milner. Milner's "primary damages scenario" is premised on the absence of the Settlement Agreement altogether. As Milner explains, "I analyze the hypothetical scenario in which the Trustee enforces these contractual remedies without litigation and which the Obligated Parties [e.g., Countrywide] comply with their contractual obligations." (Milner Report at 6.²⁶) As "alternative" scenarios, Milner assumes the Trustee's enforcement "through litigation against the Obligated Parties lasting 1, 3 or 5 years." (Milner Report, at 6-7.)

26 "Milner Report" refers to the Amended Expert Report Of Christopher J. Milner (Dkt. 252, Ex. A).

In other words, Milner posits a "but-for" world where the Settlement does not exist, even though the Article 77 court and the First Department have affirmed that Mellon fulfilled its duties as Trustee to the certificateholders by entering into that Settlement. And he has modeled alternative scenarios premised on Mellon litigating against Countrywide, even though the First Department has determined that litigating would have been unreasonable and likely to result in a lesser recovery than that received from the Settlement. That is exactly the type of inconsistency that res judicata guards against.

D. Issue Preclusion

Even if claim preclusion did not bar PacLife's claims, issue preclusion would bar relitigation of the primary issue in dispute: whether Mellon, as Trustee, fulfilled its obligations to certificateholders in resolving Countrywide's breaching loans, repurchase obligations, events of default, and servicing failures. That same issue was resolved by the Settlement Judgment. The first element of collateral estoppel, identity of issues, is satisfied.

The second element also is satisfied. The Article 77 court and First Department found that Mellon, as Trustee, fulfilled its obligations to certificateholders in resolving the Countrywide loan problems. The issue thus was actually litigated and decided in the earlier proceeding.

PacLife had a full and fair opportunity to participate in the prior proceeding, thus satisfying the third element of collateral estoppel. The Article 77 court found that notice was duly provided to certificateholders. PacLife received that notice and decided not to object to Mellon's resolution and release of the Trusts' claims against Countrywide.

Finally, the issue previously litigated in the Article 77 Proceeding was necessary to the court's approval of the Settlement and rejection of certificateholders' objections. That satisfies the fourth collateral estoppel requirement.

E. New York Case Law Supports Res Judicata In This Context

Mellon has been party to at least two other cases in which the res judicata effect of the Settlement and Settlement Judgment has been addressed. Both have found the doctrine applicable.

In Commerce Bank v. Bank of New York Mellon, the First Department held that a portion of the plaintiff's complaint was "barred by our approval of the settlement in Bank of N.Y.Mellon in all respects, including the aspect releasing the loan modification claims." 141 A.D.3d 413, 415, 35 N.Y.S.3d 63, 65 (1st Dep't 2016). The portion of the complaint referenced alleged that Mellon had breached its duty to fully analyze loan modification claims in "negotiating the greatest value possible for such claims in any attempted settlement with Bank of America." (PacLife. Mem. at 52.) The claim at issue thus directly impugned Mellon's entry into the Settlement and the amount of money it obtained in enforcing the Trusts' rights against Countrywide.

In another case, Mellon, as plaintiff, sought specific instructions on how payment from the Settlement should be distributed. In re Bank of New York Mellon, 56 Misc.3d 210, 51 N.Y.S.3d 356 (N.Y. Sup. Ct. 2017); see also Houpt Deck, Ex. 54. When one of the parties objected to the allocation of funds, the Supreme Court of New York held "[b]ecause [the objecting party] had a full and fair opportunity to raise its objection to the Settlement Agreement's terms in the prior [Article 77] proceeding, [its] objection in this proceeding is now barred by res judicata." Id. at 56 Misc.3d at 217, 51 N.Y.S.3d at 361-62. That case, like Commerce Bank v. Bank of New York Mellon, was a direct attack on the Settlement terms.

In the instant case, PacLife has taken pains to try to avoid a direct challenge to the Settlement or Mellon's negotiation of its terms. But its claims here necessarily do so. Reduced to their essence, PacLife's claims are that Mellon should have dealt with Countrywide's breaches differently than by entering into the Settlement. The Court thus does not find PacLife's claims in this case any less subject to preclusion.

That conclusion is also supported by Judge Netburn's determination that a trustee's settlement with RMBS sponsors precluded the plaintiff's claims in Phoenix Light v. Wells Fargo. There, the court in a Minnesota trust instruction proceeding ("TIP") approved a settlement entered into by the RMBS trustee, Wells Fargo, on behalf of certificateholders in the trusts at issue. Wells Fargo argued that the Minnesota TIP court orders approving the settlement, relieved it of repurchase-related obligations for 13 trusts and barred over 5,000 of the plaintiffs repurchase-related claims. Phoenix Light v. Wells Fargo, 2021 WL 7082194 at *16. Plaintiffs, who did not object in the TIP proceedings, argued that collateral estoppel did not apply because Plaintiffs' claims against Wells Fargo were not at issue in the Minnesota proceedings. Id. at 18.

Judge Netburn observed that the plaintiff had "identified] the wrong issue: it [was] Wells Fargo's duty to enforce repurchase obligations that was before the TIP courts, the same duty Plaintiffs allege in this litigation." Id. The same is true here - Mellon's obligations to certificateholders to enforce - or compromise - repurchase and other remedies against Countrywide was before the Article 77 court and is now at issue in the instant litigation. While Judge Netburn's ruling concerned Minnesota trust proceedings and Minnesota law, the purpose and function of a TIP proceeding is nearly identical to an Article 77 proceeding under New York law.²⁷ As in the Article 77 Proceeding, the Minnesota TIP court found that the trustee's decision to enter into the settlement was reasonable, within the bounds of its discretion, and made in good faith.²⁸ Id. at 19.

27 The Minnesota statute governing in rem TIP proceedings makes court orders binding "upon the interests of all beneficiaries, vested or contingent, even though unascertained or not in being." Minn. Stat. § 501C.0204. Article 77 is not as explicit, but, as explained above, court orders issued thereunder are binding on all duly-noticed beneficiaries.

28 Judge Netburn found three separate Minnesota rules supporting res judicata: (1) the TIP statute language; (2) Minnesota case law barring collateral attack on facially valid judgments; and (3) Minnesota's law of collateral estoppel. New York's Article 77 does not have similar express language, and Mellon has not pointed to a New York rule regarding collateral attacks on facially valid judgments. Nonetheless, the grounds for invoking New York law of preclusion in this case are no less warranted than invoking Minnesota's law in the Phoenix Light v. Wells Fargo case. In each, the trustee's enforcement obligations to certificateholders with respect to the sponsor's loan deficiencies was at issue in the settlement-approval proceeding and in the certificateholder's later action claiming breach.

In sum, redress for the wrongs of which PacLife accuses Mellon - failing in its duties as Trustee to PacLife in enforcing the Trusts' rights against Countrywide - was resolved in the Article 77 Proceeding, where the court found that Mellon had fulfilled its obligations as Trustee in enforcing the Trusts' rights against Countrywide by entering into the Settlement. The same Trusts at issue here were among those at issue in the Article 77 Proceeding. PacLife had a full and fair opportunity to object to whether Mellon fulfilled its obligations as Trustee but did not avail itself of that opportunity. PacLife's claims in this case are barred by res judicata.

F. Mellon Has Not Lost The Res Judicata Argument "Five Times"

PacLife argues that Mellon has litigated and lost its res judicata argument "at least five times": in the Article 77 court; twice in this court; and twice in an Ohio case. (PacLife Mem. at 51-52.) The Court does not agree.

The two decisions "in this court" refer to Judge Failla's decisions on the motion to dismiss and motion for reconsideration. At that stage, before the development of an evidentiary record, Judge Failla was unpersuaded that the Article 77 Proceeding and Settlement Judgment precluded PacLife's claims for essentially two reasons. First, here, PacLife alleged injuries "over and above" whatever injuries were directly caused by Countrywide "and whatever injuries may have been covered by the Countrywide Settlement." PacLife I, 2018 WL 1382105 at *12. Discovery has demonstrated, however, that all of PacLife's alleged injuries stem from Mellon's enforcement and resolution of the Trusts' claims against Countrywide. PacLife has not identified any injuries, or damages, from anything other than Mellon's handling of Countrywide breaches and defaults. Yet the Article 77 court found that Mellon's resolution of those claims was in good faith, reasonable, and within Mellon's discretion.

Second, Judge Failla reasoned that whereas Countrywide's conduct was primarily at issue in the Article 77 Proceeding, Mellon's "own performance under the PSA is squarely at issue" in the instant case. Id. But as previously discussed, and as discovery has confirmed, the Article 77 Proceeding squarely addressed and focused on Mellon's conduct in enforcing the Trusts' rights against Countrywide by entering into the Settlement. Certificateholders in the Article 77 Proceeding objected that the Settlement was a product of Mellon's self-interest, that Mellon should have pursued litigation against Countrywide, that Mellon had not sufficiently investigated and assessed the breaches and defects in Countrywide's loans and servicing; in a nutshell, that Mellon should have done more and obtained more from Countrywide.

To be sure, PacLife seeks damages in excess of what it received through the Settlement. The Settlement proceeds yielded $191 million to the Trusts at issue, approximately $34.2 million of which flowed to Pac Life. (Milner Report ¶ 111 at chart.) PacLife's damages expert calculates a total of $60.3 million in damages, not including interest, due to Mellon's alleged misconduct in not more aggressively enforcing the Trusts' rights against Countrywide (Milner Report ¶ 14), or $26.1 million more than what PacLife received from the Settlement. Of course, as explained above, those damages assume there is no Settlement and that PacLife instead "pursued enforcement efforts, including filing a lawsuit if necessary." (Milner Report ¶ 14.) The analysis of PacLife's damages expert thus further confirms that PacLife's case is premised on second- guessing Mellon's resolution of Countrywide's failures - a resolution that already has been judicially blessed as within Mellon's discretion as Trustee.

With respect to the Article 77 Proceeding, Mellon argues the court's decision has no preclusive effect because, at the end of the proceeding, Mellon proposed findings and conclusions that the court rejected. The specific proposals were two paragraphs that would have "permanently barred and enjoined" certificateholders from bringing any claims against the Trustee arising from or in connection with the Trustee's entry into the Settlement. In re Bank of Mellon I, 2104 WL 1057187 at *8-9 (provisions "(p)" and "(q)".) The Article 77 court did not adopt those provisions.²⁹ Those provisions, however, say nothing about the res judicata effect of the court's judgment in later litigation.³⁰ Rather, those provisions are injunctive in nature and would have prohibited PacLife and others from initiating claims against Mellon as to its negotiation of or entry into the Settlement. In the instant case, Mellon does not argue that PacLife has violated an injunction or bar to bringing suit.³¹

29 The Article 77 court did not provide any analysis or explanation with respect its consideration of the bar provisions. In one footnote, the court noted that none of the twenty-two proposed findings were appropriate for inclusion an Order or Judgment and that the court instead adopted some of the findings in whole or in part in the context of discussing particular issues. In re Bank of Mellon I, 2104 WL 1057187 at *10 n.5. The Court's discussion of issues did not address the bar provisions one way or the other. In a later footnote, the court noted that one of the certificateholders currently had pending in federal court a suit alleging Mellon's misconduct, and that that certificateholder objected to the bar provisions "which they construe as orders that could preclude the adjudication of their claims." Id. at *13 n. 10.

30 A Mellon brief in the Article 77 Proceeding cites the bar provisions in referencing "the res judicata effect of the resulting judgment." (Kane Deck, Ex. 27 at 10.) Given the express language of the bar provisions that certificateholders would be "permanently barred and enjoined," the Court does not consider the reference to res judicata to be an admission that the bar provisions equate with whether the Settlement Judgment can have res judicata effect in later litigation. The statement was made in the context of a different issue concerning the scope of relief available in an Article 77 Proceeding. (Kane Deck, Ex. 27 at 10.)

31 PacLife argues that Mellon should be estopped from asserting the Settlement Judgment as preclusive because Mellon previously represented in court that certificateholders would not be precluded from bringing claims against Mellon. The proceeding to which PacLife refers is a hearing before Judge Pauley that addressed whether one of the certificateholders in the Article 77 Proceeding had improperly removed it to federal court such that it should be remanded back to the state court. During argument, counsel for Mellon stated, "We're not going to refer to, or cite, the settlement agreement as a reason why [certificateholders] can't proceed in separate litigations against the trustee." (Kane Deck, Ex. 26 at 1274a-75a.) PacLife conflates different issues and plucks the quoted language out of context. Before the quoted statement, Mellon's counsel focused on the question of "release" - mentioning it five times - and explained that the Settlement did not release certificateholders' claims against Mellon. That is true. Nothing in the Settlement releases certficateholders from claims against Mellon. But, as with PacLife's argument based on injunctive provisions that were not adopted by the Article 77 court, disclaiming release is not the same as disclaiming the preclusive effect in a later proceeding pursuant to principles of res judicata.

The Ohio case cited by Mellon also does not detract from the Settlement Judgment's preclusive effect. That case is The Western And Southern Life Insurance Co. v. The Bank Of New York Mellon, No. A1302490, 2017 WL 3392855 (Ohio Ct. Com. Pl. Aug. 4, 2017), aff'd 129 N.E.3d 1085 (2019). There, RMBS investors asserted claims - such as breach of contract, breach of fiduciary duty, and negligence - against Mellon as trustee for losses incurred in the RMBS. After trial, the Ohio state court ruled entirely for Mellon and against the plaintiffs because it found no merit in any of the claims of the plaintiffs. 2017 WL 3392856 at *1. Despite Mellon having been thoroughly exonerated by the Ohio court, PacLife contends that the case undermines Mellon's res judicata arguments because the court earlier denied summary judgment on Mellon's res judicata argument and stated in the later trial order:

[T]he defendant secured a great deal of money from Countrywide and its successor Bank of America for bad acts

committed by Countrywide. I can find nothing where the defendant has paid for bad acts alleged to have been committed by it. I have never seen a document releasing the defendant from any liability from its actions as trustee in these trusts. The money in the settlement was paid by Bank of America not the defendant.

Id. at *6. That passage is not inconsistent with the application of res judicata based on the Article 77 Proceeding and Settlement Judgment. First, the Ohio court was correct in saying there is no release of claims against Mellon; but, again, that is a different issue than whether the requirements of claim or issue preclusion have been met. Second, the money paid from the Settlement went to the Trusts and thus to the certificateholders, not Mellon, as the Ohio court seems to suggest. Third, as demonstrated above, Mellon's securing of money from Countrywide for Countrywide's "bad acts" fulfilled Mellon's obligations to certificateholders in that respect as so found by the Article 77 court. Finally, the passage is dicta; as the court further stated, "the Article 77 settlement is a moot point" because "the defendant is entitled to judgment in this case in any and every way this case is analyzed." Id. The Court is not persuaded that the Ohio court's dicta on a moot issue warrants any different finding with respect to the res judicata effect of the Settlement.³²

32 PacLife attempts to bolster its argument by noting that Mellon did not appeal either the summary judgment or post-trial rulings in the Ohio case. Yet Mellon had no basis to do so. The Ohio court ruled for Mellon across the board.

G. Claims Not Subject To Res Judicata

PacLife asserts that even if pre-Settlement claims were subject to res judicata, post-Settlement claims would not be. In particular, PacLife refers to Mellon's alleged failure to enforce remedies with respect to Countrywide's servicing failures to repurchase modified loans that occurred post-Settlement. (PacLife Counter 56.1 ¶ 620 (citing Milner Report at 59, 89-90).) Mellon contends that under the Settlement even post-Settlement servicing claims are res judicata because the Settlement released Countrywide from liability for post-Settlement servicing activity. (Mellon Reply at 10-11.³³) To a certain extent that is true. The Settlement absolved Countrywide of complying with certain servicing obligations as set forth in the governing agreements, instead imposing a new set of requirements that are stricter than those previously imposed under the governing agreements. See In re Bank of Mellon I, 2014 WL 1057187 at *3 (setting forth proposed terms regarding release of servicing conduct), *18 (referring to Mellon's argument that undisputed evidence shows that the Settlement will require Countrywide to perform at a higher level than the PSAs require).

33 "Melon Reply" refers to The Bank Of New York Mellon's Reply Memorandum Of Law In Support Of Its Motion For Summary Judgment And Opposition To Plaintiffs' Cross-Motion For Partial Summary Judgment (Dkt. 262).

At oral argument Mellon posited that post-Settlement servicing claims are not viable because PacLife's servicing expert, Ingrid Beckles, did not opine upon Countrywide's compliance or lack of compliance with the post-Settlement servicing standards. (Oral Arg. Tr. at 36-37.³⁴) It is unclear to the Court from reviewing Beckles' report whether she did or did not address post-Settlement servicing. But even if she did not, res judicata would not bar those claims. As discussed below in the context of statute of limitations, at least some of PacLife's post-Settlement servicing claims are based on Countrywide admissions of events of default made in reports and attestations received by Mellon, as Trustee, on a yearly basis, including reports filed year-end 2012 to 2015. (See Houpt Deck, Ex. 57 at 10-26.)

34 "Oral Arg. Tr." refers to the transcript of oral argument held on February 2, 2022 (Dkt. 290).

To the extent the events of default reported (or collateral report issues such as failure to provide, or timely provide, a report) are based on post-Settlement events, res judicata would not apply. Accordingly, res judicate precludes PacLife's claims based on pre-Settlement events but not ones based on post-Settlement events.

III. Most Of PacLife's Claims Are Barred By The Statute Of Limitations

Mellon argues that most of PacLife's claims are barred by applicable statutes of limitations. At the motion to dismiss stage, Judge Failla held that "[e]ach of the Defendant's arguments implicating the statute of limitations is premature; the Court cannot resolve these issues from the face of the Complaints." PacLife I, 2018 WL 1382105 at *7. Following discovery, the Court now addresses the issue and finds that most but not all claims are barred by the statute of limitations.

A. The Applicable Statutes Of Limitations: New York And California

As a threshold issue, the Court must determine which state's laws provide the governing statute of limitations. It is well established that, under New York's "borrowing statute" that "when 'a nonresident sues on a cause of action accruing outside of New York' the cause of action must 'be timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued.'" Homeward Residential, Inc. v. Sand Canyon Corp., 499 F.Supp.3d 18, 24 (S.D.N.Y. 2020) (quoting Deutsche Bank National Trust Company v. Barclays Bank PLC, 34 N.Y.3d 327, 334, 117 N.Y.S.3d 137, 141 (2019)); see N.Y. CPLR § 202 (borrowing statute). The parties agree that New York's statutes of limitations apply to PacLife's claims. They dispute, however, which jurisdiction supplies the second statutes of limitations.

Mellon asserts that California statutes of limitations apply. Mellon contends that PacLife is a resident of California for purposes of the borrowing statute and thus PacLife's claims accrued in California. PacLife does not dispute that its principal place of business is in California. (PacLife Reply 56.1 ¶ 17.) Instead, PacLife asserts that its residence should be determined by the place of incorporation - Nebraska (for Pacific Life Insurance) and Arizona (for Pacific Life & Annuity Company), not its principal places of business. (PacLife Opp. At 59.³⁵)

35 "PacLife Opp." refers to "Plaintiffs' Memorandum Of Law In Opposition To Defendant's Motion For Summary Judgment And In Support Of Their Cross-Motion For Partial Summary Judgment (Dkt. 259).

PacLife's argument is premised on the notion that a corporation's residence can be either its place of incorporation or its principal place of business. (PacLife Opp. at 59.) See Baena v. Woori Bank, No. 05-CV-7018, 2006 WL 2935752, at *6 (S.D.N.Y. Oct. 11, 2006) ("If the injured party is a corporation, then the place of residence for the purposes of CPLR § 202 is traditionally the state of incorporation or the corporation's principal place of business"); Global Financial Corp. v. Triarc Corp., 93 N.Y.2d 525, 530, 693 N.Y.S.2d 479, 482 (1999) (stating that because plaintiff's claims would be time-barred in both the state in which it was incorporated and the state of its principal place of business, it did not need to determine which state "more acutely sustained the impact of its loss").

That does not, however, advance PacLife's argument in favor of using its place of incorporation to determine the applicable statute of limitations. "Courts within the Second Circuit have consistently held that a business entity's residence is determined by its principal place of business." Petroholding Dominicana, Ltd. v. Gordon, No. 18-CV-1497, 2019 WL 2343658, at *6 (S.D.N.Y. June 3, 2019) (quoting Woori Bank v. Merrill Lynch, 923 F.Supp.2d 491, 494 (S.D.N.Y. 2103), aff'd, 542 Fed.Appx. 81 (2d Cir. 2013)); Guzman v. Macy's Retail Holdings, Inc., No. 09-CV-4472, 2010 WL 1222044, at *10 (S.D.N.Y. March 29, 2010) ("A corporation's principal place of business, rather than its state of incorporation, determines its residence").

The question to be answered under CPLR § 202 is where PacLife's cause of action accrued. A non-New York plaintiff's cause of action for economic damages accrues where the plaintiff resides and sustains the economic impact of the loss. Global Financial, 93 N.Y.2d at 529, 693 N.Y.S.2d at 482 ("When an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss"). PacLife has consistently argued that it is located in and operates out of California, particularly to advance its argument in favor of applying California law to determine standing. (See Fiek Decl. ¶¶ 3-8.) PacLife has not provided any sound reason for why the Court should depart from what courts in this Circuit have consistently held and determine instead that its residence is its place of incorporation for purposes of New York's borrowing statute.

The Court finds that PacLife is a resident of California and suffered its alleged economic injuries in California. Its claims thus must satisfy the statutes of limitation of both New York and California. Under those statutes, the applicable limitations periods for PacLife's claims are summarized in the following table:³⁶

36 See Cal. Civ. Code §§ 337 (contract), 339 (fiduciary duty and negligence); N.Y. CPLR §§ 213(2) (contract), 214 (negligence); Elkmakies v. Sunshine, 113 A.D.3d 814, 815, 979 N.Y.S.2d 385 (1st Dep't2014) (New York limitations period for breach of fiduciary claim).

Claim	California SOL	New York SOL	Cut-Off Date
Contract	4 years	6 years	CA: June 23, 2012 NY: June 23, 2010
Fiduciary Duty	2 years	3 years	CA: June 23, 2014 NY: June 23, 2013
Negligence	2 years	3 years	CA: June 23, 2014 NY: June 23, 2013

The "Cut-Off Date" refers to the latest possible date that the relevant cause of action would have had to accrue to fall within the statute of limitations. Put differently, causes of action accruing before the Cut-Off Date are barred by the statute of limitations. Determination of the Cut-Off Dates takes into account the date Pac Life commenced this action, February 23, 2017, and an eight-month tolling period previously found by Judge Failla. See PacLife I, 2018 WL 1382105 at *8.

B. Accrual Date Based On Entry Into Settlement

Mellon contends that because PacLife's claims are at bottom a challenge to the Settlement, PacLife's claims accrued no later than the date of Settlement. While PacLife disagrees with that characterization of its claims, it contends that the date of accrual with respect to the Settlement is the date the Settlement was judicially approved, January 31, 2014, and not the date Mellon entered into the Settlement, June 28, 2011.³⁷ PacLife is incorrect.

37 The statute of limitations for contract claims in New York is six years. N.Y. CPLR § 213(2). The statute of limitations for contract claims in California is four years. Cal. Civ. Code § 337. PacLife commenced this action within six years of June 28, 2011. Thus, the question of whether entry into or judicial approval of the Settlement operates as the accrual date is only relevant for determining whether the claim is timely under California's statute of limitations.

Under New York law, contract claims accrue upon breach.³⁸ Deutsche Bank National Trust Company Trustee For Harborview Mortgage Loan Trust v. Flagstar Capital Markets Corp., 32 N.Y.3d 139, 145, 88 N.Y.S. 96, 99 (2018) ("In New York, the default accrual rule for breach of contract causes of action is that the cause of action accrues when the contract is breached"); Mindspirit, LLC v. Evalueserve Ltd., 346 F.Supp.3d 552, 593 (S.D.N.Y 2018) ("Under New York law, a breach of contract claim generally accrues when the contract is first breached") (internal quotation marks omitted). Further, "a claim for breach of contract 'ordinarily accrues ... upon breach,' even if the claimant does not become 'aware of the breach or wrong' until some point after its occurrence." Maloul v. New Colombia Resources, Inc., No. 15-CV-8710, 2017 WL 2992202, at *4 (S.D.N.Y. July 13, 2017) (Failla, J.) (citing Guilbert v. Gardner, 480 F.3d 140, 149 (2d Cir. 2007)).

38 Although both California and New York statutes of limitations apply to PacLife's claims pursuant to New York's borrowing statute, the question of what constitutes accrual as used in those statutes, is governed by New York law. Global Financial, 93 N.Y.2d at 529.

PacLife claims that Mellon breached various duties by failing to provide notice of and enforce remedies for Countrywide's failures. The culmination of such failures was Mellon's entry into the Settlement with Countrywide. The Settlement was binding upon execution and prohibited Mellon from commencing any litigation based upon any of the released claims. (Houpt Decl. Ex. 17 at ¶ 15(a).) As of entry into the Settlement, Mellon had ceded any further enforcement of remedies against Countrywide beyond what was provided for in the Settlement. Even though the Settlement required judicial approval to be effective, Mellon's alleged breach of its duties to PacLife crystallized at the point of entry into the agreement.

PacLife's claims for any failure by Mellon to act to provide notice to certificateholders or enforce remedies against Countrywide accrued no later than June 28, 2011. Based on the applicable Cut-Off Dates, that accrual date brings PacLife's contract claims within New York's six-year statute of limitations but not California's four-year limitation period. Nor would it fall within either state's limitations periods (two years or three years) for breach of fiduciary duty or negligence claims, which would be outside the statute of limitations even if the accrual date were the date of judicial approval of the Settlement.

By virtue of Mellon's entry into the Settlement, all of PacLife's pre-Settlement claims are barred by the statutes of limitations. But even if PacLife's claims were not grounded in negating the Settlement, most of its claims would still be time-barred. The following sections address the parties' arguments with respect to specific categories of PacLife's claims: claims concerning document defect breaches, claims concerning breaches of R&W, and claims concerning events of default ("EODs"). The last two sections address PacLife's theories of "continuing" breaches and tolling of limitations periods until later "discovery."

C. Pre-EOD Claims: Document Defects

The parties disagree about the date that PacLife's document-defect claims accrued. Mellon argues that any duty to enforce such obligations arose 180 days after the closing date of each trust while PacLife argues that its cause of action did not accrue until after a reasonable time to perform after that 180-day period had expired.

Section 2.02(a) of the PSA states that the Trustee is required to deliver a final certification that identified document exceptions in mortgage files within 90 days of the closing date for each trust; Countrywide then had 90 days to cure the defects or substitute or repurchase the affected loan. (PSA Section 2.02(a).) Thus, Mellon argues, to the extent it failed to identify document exceptions or enforce Countrywide's obligation to substitute or repurchase, that breach accrued 180 days after the closing date. (Mellon Mem. at 21.) The latest closing date of any of the RMBS Trusts was August 30, 2007. (See Houpt Deck, Ex. 56 at I-4.) Accordingly, the latest claim against Mellon for failure to enforce document defect remedies against Countrywide accrued on February 26, 2008 (180 days after August 30, 2007) - almost nine years before PacLife filed suit.

PacLife argues that although Mellon had to deliver a final document exception certification within 90 days of closing, the only cure date under Section 2.02(a) of the PSA applies to Countrywide, not Mellon. In the absence of there being a specified time for Mellon to perform by taking action against Countrywide, PacLife argues, Mellon was obligated to perform after a "reasonable time" expired. The Court agrees that the "reasonable time" rule applies. See Guilbertv. Gardner, 480 F.3d 140, 149 (2d Cir. 2007) ("Where a contract does not specify a date or time for performance, New York law implies a reasonable time period"); Starbucks Corp. v. New WTC Retail Owner LLC, No. 21-CV-400, 2021 WL 4868585, at *6 (S.D.N.Y. Oct. 18, 2021) (same).

The reasonable period of time, however, started to run, at the latest, upon expiration of the 180th day after closing. Mellon had a duty to provide a final document exception report within 90 days after closing. If Mellon did not timely provide a final document exception report, then it failed to act, and a reasonable time would begin to run after that 90-day period.³⁹ Alternatively, to the extent Mellon did fulfill its duty to provide a final exception report and Countrywide failed to cure the identified defects within 90 days, then PacLife's claim against Mellon for breach of its duty to enforce remedies against Countrywide for those defects accrued a reasonable time after the 180-day period.

39 There does not appear to be any claim by PacLife that Mellon failed to delivery final exception reports.

PacLife argues that it alleges breach against Mellon based not on PSA Section 2.02 but rather PSA Section 2.06, which provides that the Trustee "agrees to ... exercise the rights referred to above for the benefit of all [certificateholders] and to perform the duties set forth in [the PSA]," and Section 8.01, which sets forth the Trustee's duties. According to PacLife, Mellon had six years (under New York law) to enforce Countrywide's breaches, and therefore the statute of limitations for PacLife to commence an action against Mellon did not begin to run until the end of that six-year period. PacLife thus would "stack" statute of limitations periods, essentially giving it twelve years to bring its claims.

At least two New York trial courts, ruling on motions to dismiss in RMBS cases against trustees, have accepted the "'six-plus-six' framework for pleading purposes." See Western And Southern Life Insurance Co. v. U.S. Bank National Association, 2020 N.Y. Slip Op. 51307 (U), 2020 WL 6534496, at *7 (N.Y. Cty. Nov. 5, 2020) (citing MLRN LLC v. U.S. Bank National Association, 2019 WL 5963202, at *6 (Sup. Ct., NY Cty. Nov. 13, 2019)). In doing so, however, both courts relied on Judge Failla's decision on the motion to dismiss in this case, not for endorsing the stacking approach, but rather for the proposition that, as a general rule, statute of limitations is not appropriately resolved at the motion to dismiss stage.

Indeed, what constitutes a reasonable time ordinarily is a fact question for a jury. BLD Productions, LLC v. Remote Productions, Inc., 509 Fed.Appx. 81, 81 (2d Cir. 2013) ("The question of what is a reasonable period of time for performance of a particular contract is a question of fact for a jury, unless the facts are undisputed, in which case the question becomes one appropriate for summary judgment") (internal quotation marks and citation omitted). That said, Mellon would be entitled to summary judgment that PacLife's document defect claims were untimely if no reasonable juror could find that a reasonable time began late enough to bring PacLife's claims within California's four-year or New York's six-year statute of limitations for breach of contract. As noted above, the latest closing date for any of the trusts at issue was August 30, 2007, and 180 days after that was February 26, 2008. The earliest Cut-Off Dates are June 23, 2010 (New York) and June 23, 2012 (California). No reasonable juror could find that a reasonable time for Mellon to act, and thus a cause of action accrue against Mellon, was as much as 2 years, 4 months (New York) or 4 years, 4 months (California). The very fact that a defined 180-day post-closing period was contractually set for notice and cure of document defects indicates that passage of time was a concern and that document defects were to be cured sooner rather than later.

Once the 90-day cure period expired without cure by Countrywide, Countrywide was in breach and, according to PacLife, Mellon was in breach every day it did not then take Countrywide to task for that breach. The reasonable time period for Mellon to act and a claim to accrue against Mellon thus started to run upon Countrywide's failure to cure. There is no reasonable scenario under which the Trustee could have waited more than four times (using New York Cut-Off Date) or even eight times (using the California Cut-Off Date) the half-year period before seeking to enforce document-defect remedies against Countrywide.

PacLife contends otherwise, asserting that "[i]n practice, trustees waited until the eve of expiry of the limitations period to enforce put-backs." (PacLife Mem. at 63.) PacLife also cites the opinions of two of its experts, Mark Adelson (securitization of RMBS) and Ingrid Beckles (servicing), as support for the proposition that "the expiration of the SOL for enforcing [repurchase] claims marks the expiration of a reasonable period to enforce." (PacLife Mem. at 63.) But neither expert says that. Rather, they opine that it was imprudent for Mellon to let the limitations period expire without seeking repurchase of defective loans. (Adelson Report ¶ 234 ("In no case ... should an [R]MBS trustee allow the statute of limitations to expire on uncured document breaches or breaches of R&Ws")⁴⁰; Beckles Report ¶ 147 ("it was imprudent of the Trusts' Master Servicer and [Mellon] to allow repurchase claims relating to ... loans with material document exceptions to expire when they could have sought repurchase").⁴¹) Opining that Mellon should not have allowed the limitations period to expire without having sought repurchase, is far different than opining that it would have been reasonable to wait until the last minute before expiration.⁴²

40 "Adelson Report" refers to the Expert Report of Mark Adelson (Dkt. 249, Ex. A).

41 "Beckles Report" refers to the Expert Report of Ingrid Beckles (Dkt. 250, Ex. A).

42 One wonders exactly what PacLife would have Mellon do on the "eve" of expiration of the statute of limitations. If the limitations period were about to expire, then Mellon could not merely begin the process of making demands and trying to negotiate. Rather, Mellon would have to file a lawsuit or obtain a tolling agreement from Countrywide. Yet, again, that scenario cannot be squared with PacLife's primary damages theory, which contemplates no litigation.

To the contrary, PacLife's theory of its case is based on the premise that Mellon did not act soon enough and that it should have enforced remedies by means other than entering into the Settlement with Countrywide. For example, PacLife makes much of the allegedly clandestine "cure project" in which Mellon worked with Countrywide to cure thousands, even hundreds of thousands of loans across all Countrywide trusts, rather than repurchase them, even though Countrywide had earlier failed to cure the document defects within the 90-day post-notice period. (See, e.g., PacLife Counter 56.1 ¶¶ 353-61, 388-400.) At oral argument, PacLife argued that the cure project shows that Mellon recognized that a reasonable time for it to act could extend far beyond 180 days from closing. (Oral Arg. Tr. at 92-93.) That makes no sense. In describing the cure project efforts, PacLife asserts that Countrywide was in breach early on, that the time to cure those breaches had expired, and that Mellon was in breach by seeking to cure loans belatedly and failing to seek repurchase. (See, e.g., PacLife Counter 56.1 ¶¶ 389, 394-98.) As portrayed by PacLife, the cure project was not an attempt to enforce after a reasonable time but rather a breach of Mellon's duties to seek repurchase at an earlier time.

In support of its argument that a reasonable time for Mellon to perform in enforcing remedies for document defects is not constrained by the 180-day period after closing, PacLife seizes upon an August 2010 email exchange between Mellon and Countrywide offering competing interpretations of Section 2.02 of the PSA. As noted above, Section 2.02 prescribes the 90-day period for Mellon to provide the final exception list and the 90-day period for Countrywide to cure, substitute or repurchase. Immediately following description of the obligation to substitute or repurchase is the following clause: "provided; however, that in no event shall such substitution or purchase occur more than 540 days from the Closing Date." (PSA Section 2.02(a).) In the email relied upon by PacLife, Mellon interprets the 540-day provision as allowing Mellon to give notice of document defects as many as 530 days, for example, after closing, in which case Countrywide would have only 10 days to repurchase. The email goes on to say, "In other words we don't think Countrywide's obligations have ceased merely because it has not acted within the deadline for its performance." (Kane Deck, Ex. 158 at ECF 3.)

It is far from clear what the 540-day provision means given the 90-day period to cure, substitute, or repurchase. Perhaps it contemplates the Trustee's discovery of loan defects beyond what was found and included in the final exception report following closing. Perhaps it means that Mellon can provide notice on an extended basis as long as it seeks repurchase or substitution and not cure (as would be accomplished by Countrywide's providing the missing documents). The Court is not persuaded, however, that Mellon's interpretation of the clause changes the outcome of the statute of limitations analysis. At best for PacLife, applying a 540-day period would advance the accrual date by about a year (360 days to be exact). In that scenario, for the reasons explained above, no reasonable juror could find that Mellon's waiting 3 years, 4 months to pursue enforcement would be a reasonable time as would be required to bring the claims within California's statute of limitations. The question might be closer and potentially appropriate for jury consideration with respect to New York, as the time period for failure to act would be reduced to 1 year, 4 months. Because PacLife's claims must satisfy both New York and California's statutes of limitations, however, its document defect claims would still be barred.

In any event, PacLife's claims are time-barred for reasons that come back to the Settlement. The Settlement released Countrywide from its document defect breaches, among others. No later than learning of the Settlement on June 29, 2011, PacLife knew that Mellon was not providing notice or enforcing remedies with respect to document defects beyond what the Settlement provided. Put another way, the Settlement made it crystal clear that Mellon would not be providing notice or enforcing remedies at a later time with respect to pre-Settlement events. Whether or not a reasonable time for Mellon to act could have continued past June 28, 2011 is irrelevant because the undisputed facts are that Mellon did act, reasonably and in good faith as determined by the Article 77 court, with its entry into the Settlement. As explained above, using the Settlement date as the accrual date puts PacLife's claims outside the California statute of limitations.⁴³

43 Additionally, PacLife's claims with respect to document defects in four of the Trusts are outside the California statute limitations period for breach of contract based on PacLife's own admissions. In its answers to interrogatories, PacLife set forth the dates by which it would have been reasonable for Mellon "to enforce the sellers' obligation to repurchase breaching loans or take action to otherwise preserve such claims." (Houpt Deck, Ex. 51 at 4.) For enforcement of document defect breaches, the accrual date (according to PacLife) puts PacLife's claims beyond the California statute of limitations Cut-Off Date of June 23, 2012 for the following Trusts. The Trusts are CWHL 2005-5 (July 27, 2011); CWHL 2005-13 (Oct. 25, 2011); CWHL 2005-17 (Jan. 24, 2012); and CWHL 2005-22 (March 27, 2012).

Accordingly, the Court finds that PacLife's claims based on document defects that were included in the Trustee's document exception reports are time-barred.

D. Pre-EOD Claims: R&W Breaches

Mellon argues that PacLife's claims based on failure to enforce remedies for R&W breaches are untimely. The parties advance similar arguments as they did for the document-defect claims, and the Court incorporates by reference the analysis of those arguments from above, except as follows.

Under Section 2.03(c) of the PSA, the Trustee is required to provide "prompt notice" after discovery of an R&W breach in any loan. Countrywide covenanted that "within 90 days of the earlier of its discovery or its receipt of written notice from any party of a breach of any representation and warranty ... it shall cure such breach," or depending on when the 90-day period expired, substitute or repurchase the loan. (PSA Section 2.03(c).) Mellon's ostensible duty was to give "prompt notice" upon discovery of an R&W breach. But unlike the time frame for document defect reporting, the duty to give prompt notice of R&W breaches is not tethered to the closing date of the Trusts or any other specific date. Rather, accrual depends on when Mellon discovered any particular R&W breach. In other words, unlike the document exception report scenario, no date was agreed to by which a final R&W exception report had to be provided that would then trigger Countrywide's obligation to cure and ultimately Mellon's obligation to enforce remedies.

The Court thus cannot say that no reasonable juror could find that a reasonable time for Mellon to act with respect to R&W breaches expired prior to the Cut-Off Dates, except for five Trusts for which PacLife concedes accrual dates for R&W breaches that put the claims beyond the Cut-Off date for the California statute of limitations for breach of contract (i.e., June 23, 2012). In its answers to interrogatories, PacLife set forth the dates by which, from its perspective, "it would have been reasonable for BNYM to enforce the sellers' obligation to repurchase breaching loans or take action to otherwise preserve such claims."⁴⁴ (Houpt Deck, Ex. 51 at 4.) For enforcement of R&W breaches, the accrual date (according to PacLife) of five Trusts puts PacLife's claims for those Trusts beyond the California statute of limitations Cut-Off Date of June 23, 2012.⁴⁵

44 These dates appear to be based on PacLife's stacking theory that equates a reasonable time with the outer limit of the six-year New York statute of limitations for Mellon to enforce remedies for breach against Countrywide.

45 The five Trusts for which R&W claims are outside the California statute of limitations, even by PacLife's view of when Mellon reasonably should have acted, are: CWALT2006-OA3 (March 31, 2012); CWHL 2005-5 (Jan. 28, 2011); CWHL 2005-13 (April 28, 2011); CWHL 2005-17 (July 28, 2011); and CWHL 2005-22 (Sept. 29, 2011).

Of course, as with the document defect breaches, Mellon's entry into the Settlement drew a line in the sand as to accrual. Any "reasonable time" for Mellon to act beyond that date with respect to pre-Settlement R&W breaches would be irrelevant since Mellon had in fact acted. And, as a result, all of PacLife's pre-Settlement R&W claims are beyond the California statute of limitations and foreclosed.

E. Post-EOD Claims - Not Subject To Continuing Breach Exception

PacLife claims Mellon breached its duties with respect to EODs by failing to send contractually required notices of their occurrence and to prudently exercise the rights and powers vested in it by the governing agreements. More specifically, PacLife alleges that Mellon purposefully avoided declaring (by providing notice) EODs at any time. Mellon seeks summary judgment on the post-EOD claims on the basis that those claims accrued well before the accrual Cut-Off Dates. PacLife argues to the contrary, invoking the "continuing wrong" exception to accrual for breach of contract claims. That argument is misguided.

As noted earlier, in New York, a breach of contract claim ordinarily accrues when the contract is first breached. One exception to that rule is made for claims premised on a continuing wrong. Judge Failla has aptly explained the continuing wrong exception as follows:

New York law allows that where a contract requires continuing performance over a period of time, each successive breach may begin the statute of limitations running anew. However, the continuing wrong exception is narrow. The doctrine distinguishes between a single wrong that has continuing effects and a series of independent, distinct wrongs, and allows an exception to New York's usual accrual rules only in the latter case. Thus, where a plaintiff asserts a single breach - with damages increasing as the breach continued - the continuing wrong theory does not apply. ... The continuing wrong doctrine only extends the statute of limitations when a contract imposes a continuing duty that is repeatedly breached.

Maloul, 2017 WL 2992202 at *5 (internal quotation marks and citations omitted); see also Mindspirit, 346 F.Supp.3d at 593 (quoting Maloul).

PacLife asserts that the continuing wrong exception applies to its post-EOD claims based on Section 8.01 of the PSAs. That section provides that the Trustee shall exercise its rights under the Agreement in prudent fashion "[i]n case an Event of Default has occurred and remains uncured." (PSA Section 8.01 (referring to Trustee's potential liability for negligence with respect to "continuing" EODs).) PacLife argues that Mellon's obligation to prudently exercise rights and remedies post-EOD is a continuing duty because the PSAs require the Trustee to act prudently while the EOD "remains uncured." (PacLife Mem. at 64.)

As Mellon correctly contends, however, the continuing wrong exception does not apply. The PSAs impose a duty on the Trustee to provide certificateholders notice within 60 days after occurrence of the EOD.⁴⁶ (PSA Section 7.03(b).) The contract requires Mellon to act within a defined time period. If Mellon does not act within that defined 60-day period, then it is in breach. New "independent, distinct wrongs" do not occur each day that the same EOD goes unremedied as PacLife would have it. Maloul, 2017 WL 2992202 at *5. Rather, an uncured EOD is "a single wrong that has continuing effects," to which the continuing wrong exception does not apply. Id. at *5; see also First American Title Insurance Company Of New York v. Flserv Fulfillment Services, Inc., No. 06-CV-7132, 2008 WL 3833831, at *2 (S.D.N.Y. Aug. 14, 2008) ("The fact that defendant could have recorded the mortgages at any point before the properties were sold to bona fide purchasers does not mean that its failure to record them initially was not a breach").

46 Section 7.03(b) of the PSAs states "Within 60 days after the occurrence of an Event of Default, the Trustee shall transmit by mail to all Certificateholders notice of each such Event of Default hereunder known to the Trustee, unless such Event of Default shall have been cured or waived."

PacLife's post-EOD claims thus accrued as of 60 days post-EOD. Any such claims based on EODs that occurred any earlier than April 24, 2010 (60 days before the Cut-Off Date) are thus time-barred under New York law, and any that occurred earlier than April 24, 2012 are time-barred under California law.

PacLife's EOD claims fall into seven categories, each based on a different type of EOD. They include EODs relating to: (1) eligible accounts,⁴⁷ (2) non-compliant mortgage loan files, (3) "Reg AB" non-compliance,⁴⁸ (4) "USAP" non-compliance,⁴⁹ (5) master servicer failure to provide notice of R&W breaches, (6) servicing breaches, (7) failure to repurchase modified loans.⁵⁰ (Houpt Deck, Ex. 57 at 2-32.)

47 "Eligible Accounts" refers to the requirement under the PSAs that banks holding accounts maintained by the master servicer for the benefit of the Trustee on behalf of certificateholders must have a certain credit rating. (Houpt Deck, Ex. 57 at 3) The bank for the Trusts at issue was Countrywide Bank. (Houpt Deck, Ex. 57 at 4) PacLife alleges EODs for eligible account violations in May 2008 and December 2011. (Houpt Deck, Ex. 57 at 5-6.)

48 "Reg AB" refers to the Master Servicer and Trustee's obligation under the PSA to provide certain reports regarding compliance with servicing criteria during the immediately preceding calendar year as required under regulation "AB" of the Exchange Act. Reg AB reports are filed on a yearly basis. (Houpt Deck, Ex. 57 at 10.) PacLife alleges EODs with respect to Reg AB reports for each year from 2009 through 2015. (Houpt Deck, Ex. 57 at 16.) However, this EOD category is relevant to only eight of the Trusts: CWALT 2006-32CV, CWALT 2006-45T1, CWALT 2006-OA3, CWALT 2007-5CB, CWALT 2007-17CB, CWALT 2007-18CB, CWALT 2007-24, and CWHL 2006-21. (Houpt Deck, Ex. 57 at 10.)

49 "USAP" refers to the Master Servicer's obligation under the PSA to provide certain reports regarding servicing compliance with the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages. (Houpt Deck, Ex. 57 at 17-18.) USAP reports are filed on a yearly basis, and PacLife alleges EODs with respect to USAP reports for as early as year-end 2006 and as late as year-end 2014. (Houpt Deck, Ex. 57 at 18-18, 23-25.) However, this EOD category is relevant to only four of the Trusts: CWHL 2005-5, CWHL 2005-13, CWHL 2005-13, and CWHL 2005-22. (Houpt Deck, Ex. 57 at 17.)

50 PacLife's interrogatory response sets forth a slightly different classification of its EOD claims as well as sub-categories within some of the categories identified above. The classification set forth above is intended to capture all of PacLife's EOD claims.

In its interrogatory responses, PacLife identified the latest date by which alleged EODs occurred. (See Houpt Deck, Ex. 57 at 2-32.) Using those dates, together with the contractually defined periods for the Trustee to act, Mellon provided a chart that summarizes EOD accrual dates and whether PacLife's corresponding claims are outside or within the statute of limitations. (Houpt Deck, Ex. 1 at Table H.) With two exceptions, the Court adopts that chart as set forth by Mellon and presented in modified form below.

The first exception is the period of time between latest date of EOD and latest date of accrual with respect to eligible account defaults. Mellon's chart indicates a 30-day period as distinct from the 60-day period for all other EODs but provides no cited source for that shorter period. At oral argument, Mellon's counsel did not know where the 30-day period came from. (Oral Arg. Tr. at 97.) Accordingly, the Court applies the 60-day period. Although doing so favors PacLife, it makes no difference to the outcome.

The second exception is for the last EOD date associated with the master servicer's failure to provide notice of R&W breaches; Mellon relies on an allegation in the Complaint (U 123) that does not directly apply, while PacLife asserts that EODs "were triggered on or about 60 days after the date of each notice to the Master Servicer under section 7.01 (ii) of the relevant PSAs." (Houpt Deck, Ex. 57 at 28.) The Court presently is not aware of the date of the last such notice and does not adopt the date proffered by Mellon, October 2009, as the last EOD date for the master servicers' failure to provide notice of R&W breaches.

EODs Outside The Statute Of Limitations Period

EOD Category	Latest Date of EOD	Latest Accrual Date	Outside SOL Period?
Eligible Accounts	June 5, 2008	Aug. 5, 2008	Yes (both NY and CA)
Jan. 5, 2012	March 6, 2012	Yes (CA only)
Non-Compliant Loan Files	Liquidation date of loan w/ uncured exception	60 days after EOD	Accrual before April 24, 2010: Yes (both) Accrual before April 24, 2012: Yes (CA)
Delay delivery loans: Sept. 5, 2007	Nov. 4, 2007	Yes (both)
Reg AB Reports	Date of each report	60 days after report	Reports 2009-10: Yes (both) Reports 2011-12: Yes (CA) Reports 2012+: No

USAP Reports	Date of each report	60 days after report	Reports 2009-10: Yes (both) Reports 2011-12: Yes (CA) Reports 2012+: No
R&W Notices	Date of each notice to Master Servicer	60 days after EOD	Accrual before April 24, 2010: Yes (both) Accrual before April 24, 2012: Yes (CA)
Servicer Breaches	Improper practices: March 2011	May 2011	Yes (CA)
	REO properties: March 2011	May 2011	Yes (CA)
	Foreclosure timelines: 2010	March 2011	Yes (CA)
	Foreclosure documents: Oct. 2010	Dec. 2010	Yes (CA)
Modified Loans	Dates on which Master Servicer fails to cause repurchase	60 days after EOD	Accrual before April 24, 2010: Yes (both) Accrual before April 24, 2012: Yes (CA)

F. California's Discovery Rule Does Not Save PacLife's Claims ⁵¹

51 PacLife also argues that its claims are not barred by the statute of limitations in part because of California's "trust repudiation rule" linking accrual to the trustee's repudiation of its duties. (PI. Opp. at 66.) As PacLife would have it, the statute of limitations for all of its claims against Mellon has not even begun to run yet because Mellon has not yet repudiated the Trusts. The Court does not agree. The repudiation rule is inapt and applies to different claims than those at issue here. See Higgins v. Higgins, 11 Cal.App. 5th 648, 663 (2017) (statute of limitations on a constructive trust claim begins to run when the trustee of an express voluntary trust repudiates the trust); Martin v. Kehl, 145 Cal.App.3d 228 (Ct. App. 1983) (discussing repudiation of a trust in the context of constructive trusts).

PacLife contends that it was unaware of any of Mellon's breaches until May 2016 when such "factual information concerning BNMY's dereliction of its duties" was made public in the Western & Southern lawsuit in Ohio. (Fiek Decl. ¶ 29.). PacLife asserts that California's discovery tolling rule applies so that the accrual of its claims was postponed until PacLife "discovered], or ha[d] reason to discover, the cause of action." NBCUniversal Media, LLC v. Superior Ct, 225 Cal.App.4th 1222, 1232 (2014). Under the discovery rule, "the statute of limitations does not begin to run until the plaintiff either (1) actually discovers the injury and its cause or (2) could have discovered the injury and its cause through the exercise of reasonable diligence." Angeles Chemical Co. v. Spencer & Jones, 44 Cal.App.4th 112, 120 (1996); see also Allen v. Similasan Corp., 96 F.Supp.3d 1063, 1071 (S.D. Cal. 2015) (quoting Yumul v. Smart Balance, Inc., 733 F.Supp.2d 1117, 1130 (CD. Cal. 2010)).

The discovery "rule generally applies to most tort actions" and "rather unusual breach of contract actions," NBC Universal, 225 Cal.App.4th at 1233, and "most frequently applies when it is particularly difficult for the plaintiff to observe or understand the breach of duty, or when the injury itself (or its cause) is hidden or beyond what the ordinary person could be expected to understand." Shively v. Bozanich, 31 Cal.4th 1230, 1248 (2003), as modified (Dec. 22, 2003); see also April Enterprises, Inc. v. KTTV, 147 Cal.App.3d805, 831 (Ct. App. 1983) (courts have applied the discovery rule where the "injury or the act causing the injury, or both, have been difficult for the plaintiff to detect").⁵²

52 New York has no comparable discovery rule. See, e.g., ACE Securities Corp. v. DB Structured Products, Inc., 25 N.Y.3d 581, 594 (2015) (contract); Gerschelv. Christensen, 143 A.D.3d 555, 556 (1st Dep't 2016) (negligence); Kaufman v. Cohen, 307 A.D.2d 113, 122 (1st Dep't 2003) (fiduciary duty).

Mellon contends that the California discovery rule does not postpone accrual of PacLife's claims because the facts underlying PacLife's claims were knowable for "more than four years" before it filed suit. (Mellon Mem. at 26.) Mellon cites to several pieces of evidence - email, third-party letters, news articles, and deposition testimony - that suggest PacLife had reason to be, and was, concerned about Mellon's handling of the Trusts. (See, e.g., Houpt Deck, Ex. 11 (news article about Mellon's response to investor demands); Houpt Deck, Ex. 2 at 141 (statement of concern by PacLife executive that, generally, trustees "weren't doing their jobs"); Houpt Deck, Exs. 12-13 (letter, and PacLife email summarizing letter, from investors to Mellon and Countrywide alleging breaches of R&Ws in over 100 trusts); Houpt Deck, Ex. 14 (message identifying among those trusts ones in which PacLife invested)).

PacLife counters such evidence by putting it in context and focusing on PacLife's lack of knowledge of any specific breaches or EODs in the specific Trusts at issue. (See PacLife Counter 56.1 ¶¶ 19-25.) PacLife asserts that it did not learn of specific information until May 2016 when the parties filed for summary judgment in the Western & Southern case in which the plaintiff presented evidence purporting to show that Mellon discovered R&W breaches and document defects but took no action to enforce repurchases and that Mellon failed to notify investors about EODs or defaults leading to EODs.⁵³ (PacLife Mem. at 69.)

53 PacLife's citations to Western & Southern as providing notice of Mellon's wrongdoing is ironic given that Mellon was thoroughly absolved in that case, with plaintiffs having "failed to prove any case of liability" against Mellon or that any of Mellon's inactions caused plaintiff to lose money. Western And Southern Life Insurance Co., 2017 WL 3392856 at *6.

That argument rings hollow. The plaintiff in Western And Southern evidently determined that it had a sufficient basis to initiate litigation against Mellon before obtaining detailed discovery. The same is true for institutional investor plaintiffs who filed six other cases against Mellon by the end of 2011 asserting claims for failing to notify certificateholders (or others) and pursue remedies against Countrywide for R&W breaches.⁵⁴

54 The cases are Sterling Federal Bank, FSB v. BNYM, No. 09-CV-6904 (N.D. III. Nov. 3, 2009); Knights Of Columbus v. BNYM, Index No. 651442/2011 (Sup. Ct. N.Y. May 26, 2011); Retirement Board Of The Policemen's Annuity And Benefit Fund v. BNYM, No. 11-CV-5459 (S.D.N.Y. Aug. 5, 2011); Bankers Insurance Co. v. BNYM, No. 11-CV-1630 (M.D. Fla. July 22, 2011); American Fidelity Assurance Co. v. BNYM, No. 11-CV-1284 (W.D. Okla. Nov. 1,2011).

PacLife shrugs off those other cases because three of them did not involve any of the specific Trusts at issue here and, even for those that did, many of PacLife's claims in this case did not appear in those cases. It may be that PacLife did not have sufficient information to assert all of its claims in 2011, but it indisputably had "'reason to at least suspect that a type of wrongdoing has injured them.'" Doe v. Pasadena Hospital Association, Ltd., No. 08-CV-09648, 2020 WL 1529313, at *5 (CD. Cal. March 31, 2021) (quoting Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 806 (2005)). At that point, PacLife was obligated to exercise reasonable diligence to find out more. Nor will it do for PacLife to say, as it does, that it did not know of specific breaches in specific loans. As set forth above, PacLife knew full well that almost 100 other institutional investors had claimed a wide range of breaches by Countrywide across an extensive array of trusts, including one or more of the Trusts at issue here.

The ultimate downfall of PacLife's discovery argument is the myriad allegations made by the other investors during the Article 77 Proceeding - that, for example, entering the Settlement "would ... protect [Mellon] from having to face the exposure of its own culpable failings to act against BOA and Countrywide years earlier to enforce the Trusts' repurchase rights" (Houpt Deck, Ex. 89); that the Settlement "improperly release[d] claims against the Master Servicer for failing to repurchase modified mortgage loans" (Houpt Deck, Ex. 90); and that Mellon failed to take any steps "to trigger the noticing of [EODs] ... based on Countrywide's failure, as 'master servicer,' to enforce any of the Trusts' resulting repurchase rights." (Houpt Deck, Ex. 89.) At the very least, PacLife had reason to "suspect" a factual basis for the "generic elements" elements of its claims against Mellon. (Houpt Deck, Ex. 89.) Yet PacLife has not put forward sufficient evidence by which a reasonable juror could find that it exercised "reasonable diligence" to have "discovered the injury and its cause." Angeles Chemical, 44 Cal.App.4th at 120. Indeed, by purposefully not participating in the Article 77 Proceeding, PacLife was anything but diligent in finding out more about what it already suspected.

Accordingly, PacLife may not avail itself of the discovery rule.

G. Mellon Is Not Equitably Estopped From Raising The Limitations Defense

PacLife contends that Mellon is equitably estopped by New York and California law from raising a limitations defense because Mellon "systemically concealed R&W breaches, document-deficient loans, servicing breaches, and EODs." (PacLife Opp. at 72.) PacLife has not, however, presented evidence to sustain its assertion of equitable estoppel.

The doctrine of equitable estoppel applies when it "would be unjust to allow a defendant to assert a statute of limitations defense." Zumpano v. Quinn, 6 N.Y.3d 666, 673, 816 N.Y.S.2d 703, 706 (2006). It is, however, an "extraordinary remedy." Twersky v. Yeshiva University, 993 F.Supp.2d 429, 442 (S.D.N.Y.), aff'd, 579 Fed.Appx. 7 (2d Cir. 2014); MBI International Holdings Inc. v. Barclays Bank PLC, 151 A.D.3d 108, 116-17, 57 N.Y.S.3d 119, 125-26 (1st Dep't 2017). "[T]he doctrine should be 'invoked sparingly and only [in] exceptional circumstances.'" Maloul, 2017 WL 2992202 at *5 (quoting Twersky, 993 F.Supp.2d at 442).

In order for the doctrine to apply, a plaintiff must show (1) they were "induced by fraud, misrepresentations or deception to refrain from filing a timely action"; and (2) "reasonably relied on defendant's misrepresentations." MBI International Holdings, 141 A.D.3d at 117, 57 N.Y.S.3d at 126; see also Abbas v. Dixon, 480 F.3d 636, 642 (2d Cir. 2007) ("Under New York law, the doctrines of equitable tolling or equitable estoppel may be invoked to defeat a statute of limitations defense when the plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action" (internal quotation marks omitted)). "[S]uch, fraud, misrepresentations, or deception must be affirmative and specifically directed at preventing the plaintiff from bringing suit; failure to disclose the basis for potential claims is not enough, nor are broad misstatements to the community at large." Twersky, 993 F.Supp.2d at 442; see also Corsello v. Verizon New York, Inc., 18 N.Y.3d 777, 789, 944 N.Y.S.2d 732, 789 (2012) (equitable estoppel does not apply in cases where the "alleged concealment consisted of nothing but defendants' failure to disclose the wrongs they had committed"); Rustico v. Intuitive Surgical, Inc., 424 F.Supp.3d 720, 733 (N.D. Cal. 2019) (referring to "affirmative acts that trigger equitable estoppel under California law").

PacLife latches onto an exception to the "affirmative" deception where a defendant has a fiduciary relationship with a plaintiff. In that instance, the plaintiff need show only concealment of the claims, not affirmative misrepresentation or deception. Zumpano, 6 N.Y.3d at 675-76, 816 N.Y.S.2d at 707; see also United States Liability Insurance Co. v. Hadiinger-Hayes, Inc., 1 Cal.3d 586, 596 (Cal. 1970) ("where a fiduciary obligation is involved, the courts have recognized a postponement of the accrual until the beneficiary has knowledge or notice of the act constituting a breach of fidelity"). That exception is not helpful to PacLife here. Pre-EOD, Mellon had no fiduciary obligation as relevant to the breaches alleged here. Judge Failla already determined that. PacLife I, 2018 WL 1382105 at *12. And as discussed below in a later section, PacLife's sole post-EOD fiduciary claim based on conflict of interest cannot survive summary judgment.

That does not end the analysis, however, as the absence of a claim for breach of fiduciary duty post-EOD does not necessarily mean there was no fiduciary relationship post-EOD. But even post-EOD, PacLife's attempt to invoke equitable estoppel is futile. To assert equitable estoppel, PacLife may not point to the same acts or alleged concealment that form the basis for its claims. Ross v. Louise Wise Services, Inc., 8 N.Y.3d 478, 491, 836 N.Y.S.2d 509 (2007); see also New York State Workers' Compensation Board v. Fuller And LaFiura, CPAs, P.C., 146 A.D.3d 1110, 1116, 46 N.Y.S.3d 266, 273 (3rd Dep't. 2017) (holding equitable estoppel did not apply because the plaintiffs alleged efforts to conceal the trust's true financial condition were also the basis for its direct claims against defendant); Cusimano v. Schnurr, 137 A.D.3d 527, 27 N.Y.S.3d 135 (1st Dep't. 2016) ("Where the same alleged wrongdoing that underlines the plaintiffs' equitable estoppel argument is also the basis of their tort claims, equitable estoppel will not lie").

Rather, the acts, or inaction, on which plaintiff relies must have been directed to induce the plaintiff to refrain from filing suit. Ross, 8 N.Y.3d at 491-92, 836 N.Y.S.2d at 518 ("even if the Agency made fraudulent misrepresentations, plaintiffs had not been induced to refrain from filing suit, and equitable estoppel is not warranted in this case"); see Rustico, 424 F.Supp.3d at 733 (no equitable estoppel where there was no evidence that defendant misled plaintiff "concerning the California statute of limitations"). That is not the case here. PacLife does not contend that Mellon put off declaring EODs or concealed the extent of Countrywide's breaches to prevent certificateholders from suing Mellon; rather PacLife contends that PacLife was motivated for other reasons, namely keeping Countrywide happy, and avoiding taking on the work of master servicer.

Indeed, the only "inducement" to which PacLife alludes is a financial one, not a legal one: "Had ... Mellon provided the required notice to PacLife when ... Mellon knew of Events of Default, which were ongoing since at least 2006 and which still existed at the time of PacLife's last investment in a Covered Trust, PacLife would not have invested in the later RMBS, and would have sold what it already owned, long before the financial crisis." (Compl. ¶ 173; see also PacLife Counter 56.1 ¶¶ 644-53 (in support of equitable estoppel, merely setting forth instances where Mellon allegedly did not disclose extent of problems with loans in the Trusts).) PacLife cannot invoke equitable estoppel in these circumstances.

H. Some Claims Are Not Within The Scope Of Mellon's Limitations Motion

In sum, most of PacLife's claims are time-barred under a combination of New York's borrowing statute, New York statutes of limitation, and California statutes of limitation. Some post-Settlement claims are not time-barred, particularly those related to REG AB and USAP reports made after June 24, 2012. Given the varied claims at issue, I recommend that the parties be directed to jointly file a statement of which claims are not time-barred as a result of the above rulings. Presumably those will align with the time-bar chart set forth above.

IV. Other Issues

Although the doctrine of res judicata and the statutes of limitation substantially limit the case that remains, the Court addresses certain other issues raised in the parties' motions that also affect the scope of the case.

A. Tort Claims

In addition to its contract claims, PacLife asserts tort claims. Judge Failla dismissed most of those claims at the motion to dismiss stage because, upon scrutiny, the claims were grounded in contractual duties and therefore barred by the economic loss doctrine. PacLife I, 2018 WL 1382105 at *12 (dismissing pre-EOD breach of fiduciary duty claims, and post-EOD claims to extent they are grounded in contractual requirements); see also Phoenix Light SF Ltd. v. U.S. Bank National Association, No. 14-CV-10116, 2016 WL 1169515, at *9 (S.D.N.Y. March 22, 2016) (Failla, J.) (under economic loss rule, "a contracting party seeking only a benefit of the bargain recovery may not sue in tort notwithstanding the use of familiar tort language in its pleadings").

Judge Failla did not, however, dismiss two of PacLife's post-EOD tort theories -namely, due care and avoiding conflict of interest "because Plaintiffs have pleaded that Defendant breached extra-contractual duties for which Plaintiffs are owed damages that do not lie simply in the enforcement of Defendant's contractual obligations." PacLife I, 2018 WL 1382105 at *14. Mellon seeks summary judgment on those theories, arguing that there is insufficient evidence to support either of them.⁵⁵ (Mellon Mem. at 47-48.)

55 Mellon also argues that the economic loss doctrine applies to PacLife's negligence claim because "there are no damages independent of the alleged contract breaches." (Mellon Mem. at 47.) Mellon does not expand on that argument and does not explain what facts or law would warrant a departure from Judge Failla's earlier ruling that the economic loss doctrine does not apply to the two theories.

Mellon is correct with respect to PacLife's duty-of-care theory. The obligation to exercise due care applies only to non-discretionary, ministerial tasks. See Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F.Supp.2d 162, 193 (S.D.N.Y. 2011) (finding no non-contractual breach of duty of due care for actions, such as monitoring servicer and safeguard trust assets, that were discretionary and not merely ministerial); AG Capital Funding Partners, LP. v State Street Bank And Trust Co., 11 N.Y.3d 146, 157, 866 N.Y.S.2d 578 (2008) ("an indenture trustee owes a duty to perform its ministerial functions with due care, and if this duty is breached the trustee will be subjected to tort liability").

Courts thus have dismissed tort claims against trustees grounded in non-ministerial acts such as monitoring trust assets, reviewing mortgage files, and notifying investors. E.g., Commen bank v. U.S. Bank, 457 F.Supp.3d at 262 (granting summary judgment to trustee because duty to review mortgage files or send notice of breaches are discretionary, not ministerial, and do not give rise to tort liability); Commerce Bank, 141 A.D.3d at 415 (dismissing tort claim against trustee where duty to notify investors that other parties to PSA failed to perform their obligations would require monitoring other parties and thus "plainly does not involve the performance of basic non-discretionary, ministerial tasks").

Here, PacLife has not identified any non-discretionary, ministerial tasks for which Mellon did not exercise its duty of care. Rather, PacLife's claims and evidence remain grounded in Mellon's alleged failures to investigate and identify breaches by others, to notify investors of those breaches as well as events of default, and to properly redress the breaches and events of default. PacLife's briefing does not address Mellon's argument in this regard, or the authority it cites, evidently ceding the point.⁵⁶ (See PacLife Mem. at 38-39.)

56 Nor did PacLife have a persuasive response at oral argument. (See Oral Arg. Tr. at 124-25.)

PacLife does put forward evidence of what it purports to be Mellon's failing to avoid a conflict of interest and instead avoiding its obligations as trustee. See generally Phoenix Light SF Ltd. v. Bank Of New York Mellon, No. 14-CV-10104, 2015 WL 5710645, at *7 (S.D.N.Y. Sept. 29, 2015) (recognizing that breach of duty to avoid conflict of interest can give rise to negligence claim). More particularly, PacLife asserts that Mellon purposefully avoided recognition of servicing failures and events triggering EODs so as to protect Countrywide, "its most important client, vital to BYNM's business." (PacLife. Mem. at 39.)

PacLife's assertion, however, lacks evidentiary support sufficient for a reasonable juror to find that PacLife's role as trustee with respect to the trusts at issue was influenced by a conflict of interest.⁵⁷ See Fixed Income Shares: Series M v. Citibank, N.A., 314 F.Supp.3d 552, 562 (S.D.N.Y. 2018) (rejecting conflict-of-interest claim in part because plaintiffs did "not provide any concrete evidence that the Trustee's actions were influenced in any way by a conflict of interest"). Some of the evidence on which PacLife relies for its conflict-of-interest claim relates to conduct it does not challenge and that does not involve the Trusts at issue. (See, e.g., Kane Deck, Ex. 236 (addressing "stature and sensitivity surrounding" relationship with Countrywide in context of requesting original incumbency certificates); Kane Deck, Ex. 237 (opining, in context of bailment letter, that holding Countrywide's "hand to the fire" until it signs a fee schedule is not "going to help Mellon's relationship in a positive manner"); Kane Decl. Ex. 238 (email, in context of newspaper articles about Countrywide's condition, recognizing need to "represent Countrywide with high standards while maintaining our role as trustee").)

57 Mellon asserts that any improper influence arising from its relationship with Countrywide is "virtually impossible" because Mellon's Corporate Trust unit is walled off from from discussing details with other parts of the bank. (Mellon Mem. at 48 (citing Mellon 56.1 ¶ 82).) That fact alone, however, does not dispense with PacLife's conflict-of-interest claim. As explained above, that claim fails for lack of supporting evidence. The fact that the trust unit is walled off may, however, explain the absence of such evidence.

In other instances, PacLife mischaracterizes the evidence. (Compare PacLife Mem. at 39 (selectively quoting portion of email exchange to support statement that Mellon senior executives decided to stand down from addressing servicing problems because they did not want to cause a business problem with servicers: "if you think it would cause us problems with servicers, then I agree - don't want to cause a business problem") (citing Kane Ex. 148) with Kane Ex. 148 (responding about whether to include statement in letter that Mellon will request that the servicers do as much as they can -"not so much as it may cause an issue with our servicers (it may, not sure), but more so in that I don't want us to be viewed as having any sway/influence over what the Servicer does").)

Other evidence supports the notion that Mellon sought to avoid EODs. (See, e.g., Kane Decl. Ex. 35 (email stating, in context of forbearance agreement, that "we [have been] working hard to avoid a formal declaration of an EOD"); Kane Decl., Ex. 146 (email acknowledging that it is "in BNYM's self-interest not to have an alleged ED outstanding").) That evidence, however, does not identify any actual self-dealing benefit that Mellon would garner from avoiding its obligations and does not suggest that Mellon was in any way putting its interests ahead of certificateholders; to the contrary, the evidence shows that Mellon sought to avoid EODs so as not to impair negotiations of the Settlement with Countrywide. (Kane Decl. Ex. 35 (referencing "the whole point of the forbearance agreement"); Kane Deck, Ex. 145 at ECF p.3 (testimony that Mellon entered into forbearance agreement with Countrywide "to avoid the potential impact of an event of default on the settlement negotiations").) See Commerzbank v. U.S. Bank, 457 F.Supp.3d at 262 ("To prove a conflict-of-interest claim, [Plaintiffs] must show 'specific acts of self-dealing'") (quoting Ellington, 837 F.Supp.2d at 193).

PacLife also points to evidence that Mellon was apprehensive about the possibility of having to replace or even take on the "enormous" role of master servicer - a role for which it was ill-prepared to fill - and that that could be avoided by eschewing a declaration of EOD. (See PacLife Counter 56.1 ¶¶ 557-58; Kane Deck, Ex. 145 at ECF p.2.) That Mellon would have to, and was not sufficiently equipped to, take on the master servicer role, however, does not further PacLife's conflict-of-interest theory grounded in a desire to placate Countrywide at the expense of certificateholders.

In short, PacLife has not put forward evidence to sustain its conflict-of-interest claim. Mellon is entitled to summary judgment dismissing the remainder of PacLife's tort claims.

B. Trusts With No Damages

For two of the trusts at issue, PacLife provided no evidence of damages. (Milner Report ¶ 1 n.2 (PacLife damages expert Milner stating that he did not provide calculations for CWHL 2005-5 or CWALT 2005-17 at direction of PacLife).) Mellon contends summary judgment should be granted in its favor dismissing PacLife's claims with respect to those two trusts. PacLife does not contest the absence of actual damages for the two trusts. Instead, PacLife argues that summary judgment may not be granted because PacLife is entitled to nominal damages at the very least.

PacLife is correct. Under New York law, although not always available in tort actions, "nominal damages are always available in breach of contract actions." Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 95, 595 N.Y.S.2d 931, 934 (1993); see also Luitpold Pharmaceuticals, Inc. v. Ed. Geistlich A.G. Fur. Chemische Industrie, 784 F.3d 78, 87 (2d Cir. 2015) (recognizing availability of nominal damages for breach of contract under New York law). Mellon did not address the issue in reply and had no substantive response at oral argument. (See Oral Arg. Tr. at 135-36.)

Accordingly, Mellon's motion for summary judgment dismissing PacLife's claims related to the CWHL 2005-5 and CWALT 2005-17 Trusts due to the absence of damages should be denied.

C. Miscellaneous Affirmative Defenses

PacLife moves for summary judgment on several other of Mellon's affirmative defenses. Pac Life argues that there are no facts to support Mellon's defenses of champerty (PacLife did not finance a lawsuit but instead paid near full price at or near issuance of the Trust certificates), monoline insurance coverage (there is none), and collateral source (there is no evidence that PacLife received recoveries outside of the Trust waterfall provisions). Additionally, PacLife argues that Mellon's defenses of failure to mitigate and absence of reliance are contrary to law.

In opposing PacLife's cross-motion for summary judgment, Mellon did not address any of those defenses. Having failed to do so, Mellon is deemed to have abandoned them. See, e.g., BNP Paribas Mortgage Corp. v. Bank of America, N.A., 866 F.Supp.2d 257, 269 (S.D.N.Y. 2012) ("failure to provide argument on a point at issue constitutes abandonment of the issue"); Maxim Group, LLC v. Life Partners Holdings, Inc., 690 F.Supp.2d 293, 310 (S.D.N.Y. 2010).

Accordingly, PacLife is entitled to summary judgment dismissing Mellon's affirmative defenses of champerty, monoline insurance, collateral source, failure to mitigate, and absence of reliance.⁵⁸

58 At oral argument, Mellon confirmed that it is not pursuing the defenses based on champerty, monoline insurance, collateral source, or mitigation. (Oral Arg. Tr. at 136.) Mellon did not quite do so as to reliance, being concerned about the way in which PacLife addressed the issue in its briefing. Specifically, PacLife began by arguing that reliance is not an element of any of its cause of action. (PacLife Mem. at 73.) Mellon did not dispute that assertion in its briefing. (See Mellon Reply at 50.) But rather than just stop on that point, PacLife proceeded to address loss causation, contending that "proof of loss and loss causation are not elements" of PacLife's claims and all that the law requires is that loan defects made the loans riskier. (PacLife Mem. at 73.) In reply, Mellon did not mention its reliance defense but instead engaged on causation, disagreeing about whether causation and loss causation are required elements. (Mellon Reply at 50.) As the parties have not moved for summary judgment with respect to causation and PacLife merely raised the issue in passing, the Court does not resolve that issue.

CONCLUSION

As noted at the outset, this Report and Recommendation addresses the issues of res judicata, standing, statute of limitations, and a handful of additional issues. Adoption of those recommendations would materially alter the scope of the case. Therefore, in the interest of conserving judicial resources, the Court has refrained from making recommendations on most merits-related issues. Following Judge Failla's determination with respect to this Report and Recommendation, I respectfully request that the matter be remanded to me for further consideration of any remaining claims. In the meantime, I recommend that the Court:

1. GRANT summary judgment in favor of PacLife and against Mellon with respect to PacLife's standing to assert claims in the Sold Certificates.

2. GRANT summary judgment in favor of Mellon and against PacLife dismissing all claims for pre-Settlement events, based on res judicata.

3. GRANT summary judgment in favor of Mellon and against PacLife dismissing claims on statute of limitations grounds as set forth herein.

4. GRANT summary judgment in favor of Mellon and against PacLife, dismissing PacLife's remaining tort claims.

5. GRANT summary judgment in favor of PacLife and against Mellon, dismissing Mellon's affirmative defenses of champerty, monoline insurance, collateral source, failure to mitigate, and reliance.

6. DENY the parties' motions in all other respects without prejudice to renewal in the event any of PacLife's claims remain following the District Judge's determination with respect to this Report and Recommendation.

Finally, the parties are ORDERED to file within 14 days of a final decision by Judge Failla on this Report and Recommendation, a joint letter identifying any outstanding summary judgment issues requiring resolution.

DEADLINE TO OBJECT AND APPEAL

Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules Of Civil Procedure, the parties have fourteen (14) days to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of Court, with extra copies delivered to the Chambers of the Honorable Katherine Polk Failla, United States Courthouse, 40 Foley Square, New York, New York 10007, and to the Chambers of the undersigned, 500 Pearl Street, New York, New York 1007. FAILURE TO FILE TIMELY OBJECTIONS WILL RESULT IN WAIVER OF OBJECTIONS AND PRECLUDE APPELLATE REVIEW.