Firm Obtains Appellate Victory in The Virginia Supreme Court in Case Against an RMBS Trustee

The Firm obtained an appellate court victory in the Virginia Supreme Court in a significant dispute on behalf of numerous investment funds that seeks hundreds of millions of dollars against an RMBS trustee. See RMBS Recovery Holdings I, LLC v. HSBC Bank USA, N.A., 297 Va. 327 (2019).

The Firm filed a lawsuit in the Circuit Court for Fairfax County, Virginia, against an RMBS trustee for breach of contract and related tortious conduct. Among other things, plaintiffs alleged that the RMBS trustee allowed the statute of limitations for repurchase claims against the trusts’ sponsors to expire, despite having been directed by the funds to commence litigation or obtain tolling agreements. Shortly after the lawsuit commenced, the RMBS trustee filed an unsuccessful motion to dismiss the case in the trial court on forum non conveniens grounds, asserting that Virginia was an inconvenient forum (despite the RMBS trustee having its headquarters in Virginia) and that New York was a more convenient forum. More than six months later, the RMBS trustee filed another motion in the trial court that challenged venue, this time asserting for the first time that a forum selection clause in an ancillary agreement controlled, and required that the dispute be litigated in New York. A different judge heard this second venue motion, and granted the motion. Plaintiffs appealed from the trial court’s grant of the forum selection clause motion, and the RMBS trustee cross-appealed from the trial court’s denial of the forum non conveniens motion.

On May 30, 2019, the Virginia Supreme Court affirmed the trial court’s denial of the forum non conveniens motion, and reversed the trial court’s grant of the forum selection clause motion. On October 11, 2019, the Virginia Supreme Court denied the RMBS trustee’s petition for rehearing. Together, these decisions represent a complete victory for the plaintiffs, who now are permitted to proceed with their lawsuit in their chosen forum of Virginia. After remand from the Virginia Supreme Court, the case continues to be litigated in the Circuit Court for Fairfax County, Virginia. (Plaintiffs also are represented by Perry, Johnson, Anderson, Miller & Moskowitz, LLP of Santa Rosa, California, and Charlson Bredehoft Cohen & Brown, P.C. of Reston, Virginia.)

A copy of Virginia Supreme Court’s May 30, 2019 Opinion is attached.