Court Sustains Client Phoenix Light's Claims Against HSBC for Breach of RMBS Trustee Duties
June 1, 2015
On June 1, 2015, Judge Shira A. Scheindlin of the Southern District of New York largely denied a motion to dismiss a complaint filed by our client Phoenix Light SF Limited and related entities (“Phoenix Light”) against HSBC Bank USA, N.A. (“HSBC”) as trustee of 11 RMBS trusts. The complaint asserts that HSBC breached its contractual, statutory and common law duties to Phoenix Light and other investors by, among other things, failing to enforce loan repurchase rights and to ensure that mortgage loan servicers prudently serviced mortgage loans held by the trusts. The Court rejected almost all of HSBC’s arguments, including those relating to the RMBS trustee’s duty to enforce repurchase rights, the applicable pleading standards, and the applicability of the New York Streit Act. The Firm’s clients in this and other federal and state cases were the first investors to assert claims against RMBS trustees under the Streit Act.
A detailed summary of the Court’s opinion is available here.