A New York appellate court unanimously reversed the Commercial Division and dismissed RMBS claims against Barclays Bank PLC on January 7. A panel in New York’s Appellate Division, First Department, dismissed “failure to notify” claims brought by an RMBS trustee arising from a securitization of loans by EquiFirst in 2007. Barclays bought EquiFirst after the securitization closed, but did not have any involvement in that transaction.
The lawsuit, filed in 2013, alleged that EquiFirst breached representations and warranties regarding the loans. The trial court dismissed the case in 2016 as time barred. Given leave to amend, the plaintiff claimed that a new cause of action—an alleged failure to notify the trustee of R&W breaches that it discovered—arose at the time of discovery, which the RMBS trustee contended occurred after securitization. The trial court denied Barclays’ motion to dismiss.
In the appeal, S&C argued that a failure-to-notify claim could not be brought under controlling Court of Appeals precedent as an independent cause of action, separate from the invalid R&W claims, and the court agreed.
The S&C team representing Barclays was led by Jeff Scott, who made the oral argument, and included Jonathan Sedlak and Jason Barnes.